The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-12-11
MONEY in PLENTY
Carlisle on His Scheme
of Currency.
ELASTICITY is THE THING.
Too Much Rigidity in the Pres
ent Circulation.
GIVE STATE BANKS A CHANCE,
And Promote the Use of Silver and
Silver Certificates of Smaller
Denominations.

WASHINGTON, Dec. 10.-The principal
interest at the Capitol to-day centered in
the room of the Committee of Ways and
Means, where Secretary Carlisle and
Comptroller Eckels appeared by invitation
by the House Committee on Banking and
Currency, to explain and advocate the
new banking plan prepared by those two
officials and indorsed by the Presidents
message.
The room was crowded with members OF
the House and intense interest was mani
tested. Secretary Carlisle was examined
| and cross-examined by the members of
the committee. He had the rough draft of
a bill in his possession, but after his ex-
animation it was concluded to revise 1t
before submitting it to the committee.
Mr.. Carlisle and Mr.. Eckles differed
somewhat as to the details of the proposed
banking scheme. but agreed upon the prin-
ciples to govern it. Mr.. Carlisle will ap-
pear again on Wednesday. Tomorrow
Mr.. Hepburn, Horace White and other
New York bankers will be heard.
Carlisle took up each section of his
recommendations: First, to repeal all
laws requiring or authorizing a de-
posit of United States bonds as secu-
rity for circulation; second. to permit
national banks 10 Issue notes to an amount
not exceeding 70 per cent of their paid
up and unimpaired capital. but to require
each bank. before receiving the notes, to
deposit guarantee fund consisting of
United States legal tender notes. including
treasury notes of 1890, 10 the amount of 80
per cent upon the circulating notes ap-
piled for. This percentage of deposits
ho nir III tom hlp0 IN
he maintained at all times. and. whenever
bank retires its circulation in whole or
| in part, its guarantee fund 10 be returned
| to it in proportion TO the amount Of notes
| retired.
Carlisle said he was satisfied that the
law requiring the present deposit of bonds
| to secure circulation prevented elasticity
of The currency. 1.-The provision outlined"
said Carlisle, gives ample protection with
| out the deposit of bonds. as required by
/ the present law" He added that the prac-
tical value of the reserve fund currency
was shown in 1893. There was demand
| for money aggregating S40.o0o,0oo. The
| treasury did lis best tn meet the stringency.
| but by the time the notes were ready to
| distribute the demand had gone by and
many of the packages of notes were re-
criticism Oh this particular section.
Chairman Springer asked how the Sec
retary's plan differed from the Baltimore
plan. Carlisle explained the technical
| difference. The Baltimore plan proposed
a deposit of 80 per cent under certain con-
| ditions, while the treasury plan proposed
a deposit of 80 per cent. When a bank
| fails the treasury plan contemplated an
II 4txo
| in turn having lien on the failed bank.
| Hail of Missouri suggested that there
was prevailing opinion that it was un-
safe to place the power of the currency in
the hands of corporations and banks.
"It will work automatically" said Car
lisle. "They will not expand the cur
| rency unless the public needs It, Their
| interest will be to expand and contract a
| the common interests demand it. The Sc
| interests will, therefore. control at all
| times" The Secretary stated that this
| fiexibllity was much more desirable than a
rigid system, by which certain amount
of currency was the understanding. At
one time the stringency was so great
that the banks drew out $13,000.000 under
the pressure, and if it had not been for the
Canadian banks, who sent currency into
this country, serious results might have
ensued.
Carlisle SAID that the ultimate liability
was on the Government by the Baltimore
plan and on the banks by his plan.
johnson asked if the ultimate liability
of the Governm ent would not inspire more
confidence in the currency. The Secretary
said it undoubtedly would, but that his
plan would insure ample protection and
therefore ample confidence. He explained
that In case of the failure of bank iss 80
per cent goes into the general safety fund
below the 3 per cent, then all the banks
are assessed to meet the liabilities. The
banks then have lien on the assets of the
failed bank.
Concerning the State bank feature Of the
| plan, Secretary Carlisle said: ut suggests
merely plan by which State banks could
| act if they saw fit. But the Government
has no direct concern with State institu-
tions. The plan simply gives them the
privilege of acting under certain condi-
tions If they see fit"
| The Secretary then took up the PROPOSE
| tior that no national banknotes be issued
| of less denomination than $40. Ii would
encourage the circulation of silver coins of
| small denomin atious These certificates
were now crowded in the treasury,
| Sperry asked if silver certificates were
redeemed in gold.
"No," said the Secretary. There are
| two classes of notes redeemed in gold,
viz. the greenbacks and the treasury notes
under the Sherman act of 1890"
| Concerning the ninth provision, Repeal
all provisions of the law requiring banks
to keep reserve account of the deposits, !"
the Secretary said: "The present law
keeps bank from using It's reserve at a
| time when it needs it most"
Cobb Of Alabama asked. "Do you hold
that the Government owes no obligation
to depositors?"
mo more" said the Secretary, ''than
that it is obliged TO protect private citizens
who invest their funds in manufacturing
| concerns and corporations"
| Carlisle then went back to section IL,
the state bank" feature of his plan. He
| said as 10 this that he wonld consider
! such State bank notes safe-perhaDs per-
fectly safe would be too strong. but