The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1894-12-10
The Secretary of the Treas
ury Explains Currency
Matters to Con-
greSSmen.
SILVER OR GOLD BASIS
Difficulty of Keeping Small Coin
In Circulation-Guarantee for
Bank Notes.

House this morning Secretary Carlisle
explained in detail to the Banking and
Currency Committee the plan recon-
mended by him for a new banking law
All of the seventeen members of the
committee except four-Messrs. Black
of Illinois Brosius of Pennsylvania.
Haugen of Wisconsin, and Ellis of Ken
tucky-were in their seats as early as
ten O'Clock, the hour at which the near
ing had been called Mr.. Culberson of
Texas, who had been detained at home
by reason of illness in his family, hur-
ried to Washington to attend today
meeting.
The hearing attracted large number
of representatives, in addition 10 the
members of the committee. Among those
present were Mr.. Wilson of West Nir-
ginia, Mr. Hooker of New York, Mr.
Snodgrass of Kentucky, and Mr. turner
of Georgia Mr.. ]. K. Sowen OF Baltl-
more. a member-elect of the next Con
gress. and Senior Romero, the Mexican
Minister, were also in attendance.
When the committee was called to
order Secretary Carlisle was asked py
Chairman Springer to explain what would
be the practical workings of his currency
plan. In answer Mr.. Carlisle said he had
come to answer questions of the commit
tee and to make a statement of his plan,
but not to indulge in general argu-
ment. as that had been done already IN
his annual report.
NATIONAL BANK NOTES.
Proceeding to take up his suggestions
seriatim as they appeared in his report,
fH1rn
lows
81. Repeal all laws requiring or au-
thorizing the deposit of United States
bonds as security for circulation.
80 Permit National banks to issue notes
to an amount not exceeding Is per cent.
of their paid-up and unimpaired capital
but require each bank before receiving
notes to deposit a guarantee fund, con-
sisting of United States legal tender
notes, including Treasury notes of 1880,
TO the amount of 30 per cent. upon the
circulating notes applied for. This per-
eentage of deposits upon the circulating
notes outstanding to be maintained at all
times, and whenever a bank retires It's
circulation, in whole or in part, its guar
antee fund to be returned to it in pro-
portion to the amount of notes retired.
In explanation Mr.. Carlisle said it had
come to be almost generally believed
that that provision of law requiring the
deposit of United States bonds as security
for circulation was a failure. He believed
it prevented the elasticity of the cur
rency.
Passing without further comment to
the second suggestion Mr.. Carlisle said
he believed that this provision was per-
fectly safe in guaranteeing surety to
depositors.
The Treasury reserve, he thought,
should not exceed more than one-half
of the outstanding circulation of National
banks.
Mr.. Springer asked Mr.. Carlisle to ex-
plain the difference between his plan
for retiring circulation and that of the
Baltimore bankers; and the Secretary
gave a brief sketch of each. The Balti-
more plan, he said, provided for cir
culation up to so per cent. of the capi-
tai stock OF the banks without any de-
post whatever, but subject to tax, the
fund raised from which was to be used
in relieving the funds of failed National
banks. If this does not become large
enough, the Government is to relieve
the fund, looking to the banks for re-
payment. The Government plan was that
a separate fund of 80 per cent. OF the
circulation should be held for each bank,
and in addition there should be safety
fund. raised like that of the Baltimore
plan: but if this fund should not prove
large enough, the Treasury Department
might assess National banks pro rata
on circulation The Government, through
this means, could lose nothing.
INTACT SAFETY FUND.
In further explanation Mr.. Carlisle
said that the banks by his plan are called
l5pon to keep the safety fund intact; in
+he baltimore plan the Government was
reouired to do this. my plan,' said
4be Secretary, requires the national
hanking system to support itself en-
tirely, and relieves the Government OF
all connection with the system except
to furnish notes and and hold the safety
fund"
Mr.. Carlisle said his plan did away
with the present system of redemption
of national bank notes. At present ma
tional bank could send their mutilated
notes to the Treasury and receive in re-
turn new notes. By the new plan the
Government was divorced entirely from
the redemption of these national bank
notes The Government was relieved of
all responsibility in the matter.
In answer to Mr.. Johnson of Indiana
Mr. Carlisle said that the idea of the
plan was that the stronger banks should
carry the weaker. If a bank failed so
badly that it could not pay its notes, the
ultimate liability was placed, by the
Baltimore plan, on the Government;
by the plan proposed by himself, the
ultimate liability %as placed on the
banks.
Mr. johnson wanted to know If Mr.. Car
Isle thought the banks would agree to
this, and the Secretary answered that
the banks must speak for themselves;
he was looking out for the interests Of
the Government.
Tp Mr.. Johnson (Dem., Ohio) Mr..
Carlisle said that one great advantage
of his plan was that it woild furnish
an elastic currency. The entire national
bank deposit would not be filled up to
the limit of the plan unless the busi-
ness of the country required It. Under
the present system, if a national bank
desired to retire its circulation 1t must
send to the Treasury lawful money of
the United States of the requisite amount
but it was not allowed to withdraw this
amount for circulation under six months.
Under the new plan a bank might retire