Evening star. [volume] (Washington, D.C.) 1854-1972, 1894-12-12
c U r RI ENJOY PLAN S
The Further Hearing Today Before the
House Committee
Some Views OF Well-KnOwn Men SUBJ
Notc-Issuing Business.

"A letter was read from Lyman j. cage,
the prominent banker and nnancier Of
Chicago, at the opening Of the hearing OF
the House committee on banking and cur
rency today. Mr.. Gage had been invited
to appear before the committee. but as he
was unable to come, his views were briefly
summarized by letter. Referring to the
recommendation Of the President and Sec
retary of the Treasury Mr.. Gage says:
agreeing with the criticisms made by
these officers of the government as to the
present weakness Of our situation, and the
great desirability of separating the gov
ernment from the direct responsibilities OF
currency issues, I am persuaded that the
country Is not ready to accept their recon-
mendations as to the methods proposed
In making any change the method should
be so simple that all can comprehend It,
and 1t should be seen that the incidental
effects would not be in any direction dis
turbing to trade, commerce or industry.
/ believe the Baltimore plan carries the
true principles of a credit currency, but
we cannot reach 1t by any one step, ana
years may intervene before 1t could be
realized. In the meantime the way for the
government to step out OF the currency
business and place the burden OF redemp-
ton on the banks is plain o ooo ooo
two and one-half per cent bonds, payabie
at such time as Congress may elect 60
years IL desirable), to be offered TO suDscrio,
ers at par. Accept in payment United
States legal tender notes or treasury notes.
the same to be Cancelled.
Amend the national bank act SO that
banks can obtain note issue to the race
value of bonds deposited as security for
circulation. Reduce the tax on circulating
notes to one-half Of one per cent.
The Note-Issuin9 Business.
This done, national bank notes would
make good the vacuum caused by the re-
tirement of government notes. In TACT
there would be some expansion under 1t, to
be followed later by some contraction,
through forced redemption Of bank issues,
If it be true. as some claim. that the vol
ume Of circulating media IN the United
States is larger than can be maintained ana
that the outflow of gold Is natures method
of euualizing things. If this be so, If con-
traction through the expectation OF gold
or by a retirement OF portion OF the pa
per money be q logical sequence OF our
situation, then, in that case the govern
ment being safe from demands, the banks
with circulation outstanding would be
obliged to bring their issues within mar
rover limits. But all this would work It
self out and need not be dwelt upon at
length now.
'The problem is this-to take the govern
ment out of the note-issuing business.
First. without contracting the currency
in the process.
Second without inviting expansion.
Secretary Carlisle's plan is subject to
the danger involved under the last sugges-
ticn.
Were the above suggestions to receive
serious consideration there are some feat
uIes of the national bank act that would
require amendment, in order to give note
holders easier and cheaper access to the
points of redemption than now exist. Re-
demption agents in cities should be re3tor-
ed-but these are details which will pass
by"
Other Views.
A letter was also read from Edward n.
Gibbs, treasurer of the New York Life In
surance Company, approving the national
bank system, with some modification.
George c. Butler Of New Haven, Conn.,,
then addressed the committee. He present
ed currency plan differing somewhat
from the Secretary Carlisle or Baltimore
plan. Its features included note issues up
to 50 per cent of a banks capital; removal
of controller of currency to New York,
where he is to have control of the specie
re eserve, made up of % per cent of notes
issued. Mr.. Buffers plan also proposed a
board of bank officers in New York pre-
sided over by the controller of the cur
rency; also the erection of a suitable build
ing in New York for the currency bureau.
Mr.. Butler was questioned at great length
by every member Of the committee, show
ing exhaustive familiarity with practical
banking. He said that the requirement of
Secretary Carlisle's plan that all national
banks guarantee the notes of each bank
would nullify the law. Banks would not
accept such unknown responsibility. There
might be no real risk owing to the safe
guards provided by MIR. Carlisle. but boards
of directors would never vote to accept the
risk.
recess was then taken until 2 o'clock.