Evening star. [volume] (Washington, D.C.) 1854-1972, 1894-12-03

became so reduced, and its further deple-
ton in the near future seemed so certain
that in the exercise of proper care for the
public welfare 1t became necessary to re-
plenish this reserve. and thus maintain
popular faith in the ability and determine
ton OF the government to meet, as agreed,
its pecuniary obligations.
1t would have been we'll If in this emer-
gency authority had existed to issue the
bonds OF the government bearing a low
rate OF interest and maturing within a
short period. but, the Congress having
failed to confer such authority, resort was
necessarily had to the resumption act Of
1875. and, pursuant to Its provisions, bonds
were issued, drawing interest at the rate
OF per cent per annum, and maturing ten
years after their issue, that being the
shortest time authorized by the act. 1 am
glad to say, however, that on the sale Of
these bonds the premium received operated
to reduce the rate of interest to be paid
by the government to less than 3 per cent.
Nothing could be worse or further re-
moved from sensible finance than the re-
lations existing between the currency the
government has issued, the gold held for
its redemption, and the means which must
be resorted to for the purpose of replenish-
ing such redemption fund when impaired.
Even IL the claims upon this fund were
confined to the obligations originally In
tended, and II tina redemption of these
obligations meant their cancellation, the
fund would be very small But these obli-
cations, when received and redeemed in
gold, are not Cancelled, but are reissued.
and may do duty many times by way Of
drawing gold from the treasury. Thus we
have an endless chain in operation, con-
stantly depicting the treasury's gold, and
never near final rest. AS IL this was not
bad enough, we have by a statutory dec
Iaration that it is the policy of the govern
ment to maintain the parity between gold
and silver aided the force and momentum
Of this exhausting process, and added
largely to the currency obligations claim
ing this peculiar gold redemption. Our
small gold reserve is thus subject to drain
from every side. The demands that in
crease our danger also increase the neces-
sity OF protecting this reserve against de-
pletion, and 1t Is most unsatisfactory to
know that the protection afforded is only
a temporary palliaticn.
Congress Held BInmeworthy.
It Is perfectly and palpably plain that
the only way under present conditions by
which this reserve when dangerously de-
pleted can be replenished Is through the
issue and sale of the bonds of the govern
ment for gold; and yet Congress has not
only thus far declined to authorize the is
sue Of bonds best suited to such a pur-
pose, but there seems disposition In some
quarters to deny both the necessity and
power for the issue of bonds at all.
cannot for a moment believe that any
of our citizens are deliberately willing that
yho 1afn ,,1t in,
pecuniary obligations or that its financial
operations should be reduced to a silver
basis. At any rate. 1 should not feel that
my duty was done If omitted any effort
could make to avert such a calamity.
AS long. therefore, as no provision is made
for the final redemption or the putting
aside Of the currency obligation now used
to repeatedly and constantly draw from
the government it's gold, and as long as no
better authority for bond issues is allowed
than at present exists, such authority will
be utilized whenever and as often as 1t
becomes necessary to maintain a sufficient
gold reserve, and in abundant time to save
the credit Of our country and make good
the financial declarations of our govern
ment.
Questions relating to our banks and cur
rency are closely connected with the sub
ject Just referred to, and they also present
some unsatisfactory features.
More Elastic Currency Needed.
Prominent among them are the lack of
elasticity in our currency circulation and
its frequent concentration in financial GEN.
tiers when 1t is most needed in other parts
Of the country. The absolute enforcement
of the government to the circulation of the
currency of the country. This condition
cannot be Immediately reached; but, as a
step In that direction. and as a means of
securing more elastic currency and OBJ
waiting other objections to the present ar
rangement of bank circulations, the Secre-
tary Of the Treasury presents In his report
a scheme modifying present banking laws.
and providing for the issue Of circulating
notes by state banks. free from taxation,
under certain limitations.
lndOrscs Secretary Carlisle.
The Secretary explains his plan SO plain
ly, and its advantages are developed by
him with such remarkable clearness, that
any effort on my part to present argument
In its support would be superfiuous 1
shall, therefore, content myself with an
unqualified Endorsement of the Secretary's
proposed changes In the law and a brief
and imperfect statement of their promi-
nent features.
1t is proposed to repeal all laws pro-
v:ding for the deposit of United States
bonds as security for circulation; to per-
nit national banks to issue circulating
notes not exceeding In amount IS per cent
of their paid up and unimpaired capital
provided they deposit with the government
as a guarantee fund, in United States
legal tender notes, including treasury notes
of 1880, a sum equal in amount to 30 per
cent OF the notes they desire to issue, this
deposit to be maintained at all times, but
whenever any bank retires any part of
it's circulation a proportional part of It's
guarantee fund shall be returned to 1t; to
permit the Secretary of the Treasury to
prepare and keep on hand ready for issue,
in case an increase in circulation is desired,
blank national bank notes for each bank
having circulation. ard to repeal the pro-
visions of the present law imposing limi-
tations and restrictions upon banks desir-
ing to reduce or increase their circulation,
thus permittin such increase reduction
within the limit of 10 per cent of capital
to be quickly made as emergencies arise.
In addition to the guarantee fund re-
uuired 1t is proposed to provide safety
fund for the immediate redemption of the
notes of failed banks, by i'm
hal