The Democratic press. [volume] (Ravenna, O. [Ohio]) 1868-1901, 1894-12-19
Secretary Carlisle,s Currency Plan.

The action of Secretary Carlisle in formu-
lating an essentially new currency system
for the country has very naturally attracted
the attention of politicians and monetary
theorists, and indeed at the present time
commands the earnest thought of the entire
nation, for the proposed plan contemplates
a radical departure in a number of important
particulars from present methods of issuing
to the people the medium of exchange known
as paper money, while the effect on silver
coinage viii be such as to greatly increase
the demand for the white metal in the daily
commercial life of the Republic.
The Secretary detailed the scheme in his
late official report of the Treasury and in his
recommendation of its adoption, is warmly
supported by President Cleveland. The plan
briefly outlined is as follows. Repeal all
laws requiring or authorizing the deposit of
Federal bonds as security for circulation of
bank notes. Permit national banks to issue
notes to an amount not exceeding 75 per cent.
OF their paid up and unimpaired capital, but
require each bank before receiving notes to
deposit a guarantee fund of U. s. legal tender
notes amounting to 30 per cent of the circu-
lating notes outstanding, to be maintained at
alltimes stockholders to beindivIdually be liza
BILE and the circulating notes to constitute a
first lien upon all the assets of the bank. No
national bank note to be of less denomination
than $40, and banks desiring to redeem their
notes in gold may have them made payable
in that coin. Each bank to redeem its notes
at its own Office orat its own official agencies.
Tax the average circulation of each bank
until the fund amo4nts to per cent of the
combined circulation outstanding, this to
constitute a safety fund for the immediate
redemption of the circulating notes of failed
banks. The guarantee fund of failed bank
to be added to this safety fund, and if this is
insufficient to redeem its notes, it shall at
once be made good by pro rata assessment
upon the other banks.
Remove the limitations upon the reduction
and increase of national bank circulation.
Repeal the laws requiring banks to keep a
reserve fund on account of deposits. The
Secretary of the Treasury may, at his option,
use any surplus revenue of the United States
in the redemption and retirement of the pres.
ent U. s. legal tender notes not exceeding 20
per cent. of the additional circulation taken
out by National and State banks under the
proposed system.
The circulation of State banks to be un-
taxed when it is shown, lst, that the bank
has at no time had outsta anding its circulating
notes in excess of rs per cent of its paid up
and unimpaired capital; End, that its stock
holders are individually liable for the re-
demption of its circulating notes to the full
extent of their ownership of stock; 3rd, that
circulating notes be by law first lien upon
all the assets of the bank 4th, the bank keep
at all times the guarantee fund required of
national banks under the proposed law 9Th,
that it promptly redeem all its notes on de-
mand at its principal Office or at one or more
Of its brances. State banks, under proper
restrictions, may use the distinctive paper
used in printing U. s. securities, but no such
bank shall print similitude Of any Federal
currency.
The plan would exempt the U. S. govern
ment from all liability for the redemption
of National bank notes and places that re-
sponsibility entirely upon the banks them
selves, thus divorcing Uncle Sam from the
banking interests entirely, which latter must
stand or fall the same as any other private
institution. The government, in enacting
suitable laws to protect the holder of the
proposed bank notes, and in imposing reg
ulations upon the banks so as to make of
them safe and reliable institutions, has dis
charged all its obligations to the people in
the premises, just as it does when it protects
the people by adequate legislative control of
railroads, which, like any bank, are quasi
public corporations, subject in part to gov
ernmental control, but not associated in any
sense with Uncle Sam as business partner.
In view of the interest engendered by the
proposed plan, we have interviewed num-
ber of bankers and others familiar with the
banking business, of Ravenna, thinking that
their opinion on the subject would be both
interesting and profitable to read. AS far as
the PRESS is concerned we have been unable
as yet to see any valid objections to the lead
ing features of the plan, which = seems to
us would constitute much more solid fouh-
dation for future business and economic
prosperity than ever has been or can be re-
allied under the present system While ex-
perience can alone demonstrate the propo-
sition one way or the other. we believe some
change is imperative, and this seems to be
the most rational and practical of any plan
yet presented.
Hon. D. C. Goldman says of the proposed
system:
81 have read the proposition submitted by
Secretary Carlisle, with much interest. Our
currency is mixed and complicated affair.
A uniform and elastic monetary system
should be adopted. Seven kinds of currency
are now in circulation, including gold and
silver coin, and it seems to me that all this
should be simpli6ed SO as to provide for a
single form of paper currency with the gold
and silver. 1t is clear that the present sys-
TEN of National Banks must soon go out of
existence as such, as no prudent banker will
nav the large premium commanded by Fed
eral Bonds for the purpose of securing its
circulation and furthermore, in few years
these bonds will all have matured, and it
would be folly for any Government to issue
bonds expressly as foundation for banking
purposes. The next important feature OF
the proposed plan is its effect in discovering
the Government from private business, which
cannot be done under the present system. A
further important consideration is to have
an elastic currency, one which can expand
and contract automatically, so to speak with
the needs and condition of the country. The
present system is rigid and limited to the
amount of bonds the banks are disposed to
purchase as collateral for their currency.
Fn INV opinion, the deposit of Treasury netes
enuaI to 80 per cent. of the paid up and un-
imnaired' capital of the banks, together with
the Individual liability OF all the Banks for
the redemption of the paper of each other,
makes security ample and beyond any
Contingency to the bill holder. AS Secretary
Carlisle well says, the fruitful cause of our
recent financial panic was the issuing of
treasury notes and silver certificates re-
deemabie at the Treasury on demand, and
subject to reissue. This is dangerous under
any circumstances, as the moment foreign
eTchange advances in price so it is profitable
to EXPORT gold, the holders of these obliga-
lions rush into the Treasury and withdraw
gold for that purpose. Reissued, these notes
esetnrn to the Treasury in short time for a
second redemption, and SO on indefinitely,
,mneriling the credit of the Government
and bringing disorder and panic upon the
country. The proposed system would eff
fectnaily eliminate this danger, as the Gov
eminent would then have no paper to re-
deem. The repeal of the tax upon the cir
cnlation of the State Banks would be nee
essary and natural incident to the establish
ment of this system, and any suggestion of
a ret,1rn thereby to the wilde banking of
former times is an insult to the intelligence
If the country. Not the least important
proposition contained in the Secretary's plan
E the restricting of issuing paper currency
- --ctoo Of S1O and multiples thereof, thereby