The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-01-17
TALKED OF CURRENCY
J. n. WILSON OPPOSES BALTIMORE
PLAN BEFORE CENTURY club.
Says 1T Was Conceived by Bankers
for Their Benefit without Adequate
Protection to Depositors.

terest manifested in the subject. The first
to discuss the system was Mr.. John r. Will
son. He gave a brief synopsis of the plan,
citing the proposed repeal of the bond Sc
curity for circulation; the right of banks to
issue circulation otes up to so per cent. of
the unimpaired capital stock, and the emer-
gency circulation of % per cent. more; the
redemption fund of 5 per cent. to be main
tanned in the treasury of the banks; the
guarantee fund to take care of the notes of
insolvent banks, and the government to
have a prior lien upon all the assets of the
bank. Mr.. Wilson called attention to the
fact that the principles advanced in the
plan are merely fundamental to the law
which was recommended, but the details
would have to be worked out on the lines
laid down. Mr.. Wilson then continued:
THE first valuable feature to be noted
cure. and doubtless would secure, a uni
form national currency. 1t perpetuates the
national banking system. II Is lndlspensa-
system of national. as distinguished from
State currency; the people are accustomed
to this system of banking, and they have
great confidence in it. Moreover, a number
of the States in the Union, by c%onstitu,
experience of wildcat banking systems
prohibit such State bank issues; Arkansas,
Washington prohibit by constitutional pro-
visions State bank issues; a number of
OIQer states nave come 10 rely So COn-
pletely upon the national banking, system
that they have no general adequate State
c canaiins iowa iaWs' Kansas unls i and M Michigan. It IS
obvious. therefore, that the Baltimore plan.
in no, seeking king to q give oers a Uniform nnd currency
Two noteworthy features in. the way OF
a departure from the present banking law
are found, first, in dispensing with the de-
post of government honda to secure cir
culating notes, and second. in the provisions
or what is termed the elasticity of the cur
rency system. / do not say the Baltimore
plan will secure an elastic currency. but UNI
doubtedly the main purpose of the plan is
to secure such a curreny.
FAULTS OF THE SYSTEM.
"This brings us to a criticism of the Bal
timore plan, and it is with some hesitancy
that a lawyer approaches in a critical spir-
it a system proposed by bankers, recognized
as sound by the American Bankers Assoc
citation, and receiving the appreciation, prac-
tically, of the bankers of the whole United
States.
1.-The first criticism of the proposed sys-
tenn is found in what one might p~ropably
expect in a system that emanates entirely
from bankers. It is a bankers plan; I'M
doubtedly it Is in the interest Of the BAN
ker. and while it may be true that the
banking interest is effectually bound up
with the interests of the country, yet this
bankers system does not make adequate
provision for the depositors In banks; in
exist existin asm natio enery ba nleRUse system s I While int it
may protect the noteholders of banks, is in
derogation Of the rights and the safety of
depositors. Under the existing system the
notes of a national bank are secured by
government bonds, deposited with the
liability Of the stockholders and the entire
assets Of the bank, practically, to look to.
d gndep the w Ia[tlm snS p fba n sSeds a are to to be be
| protected by a first lien on the assets ON
the double liability. and a redemption and
fled in the treasury. When it is remem-
bered that the deposit feature is the largest
in legislating on the subject of banks,
should at least do nothing to disparage or
| weaken the limited existing security Of the
depositor. EXaggerati0n here is scarcely
What is called technically deposit cur
| rency' is the most important basis of do
ing business. AS said by an eminent authori-
ty recently, ITO enumerate the media OF ex-
ing only gold, silver and paper money.
and leaving out the colossal system of
ignorance. 1t would be as if in writing a
treatise on the transportation system of
the United States one should include only
canals, and should omit all mention of rail-
ways and steamships To get an idea of
how much business is done on the basis of
deposits 1 call your attention to a
statement made by a leading banker of the
operations of his bank in one day. The
paper money received over the counter dur
ing the hours of one banking day was
| $Z69, $40. the total amount OF cneckS, drdltS
and bills of exchange was So, Sss. s45.' AS
/ a matter of fact, it may be said to be a
s tTulsm that os goods 90 to is 80 p esr seet. b Of t al s sId
of this deposit currency; and every BUSH
ness man looks to the volume of clearings
to see whether the business of the coun-
try is increasing or diminishing. This bust
ness is based upon deposits, and the char
acter and extent of this business is of such
transcendent significance that any system
which omtts to pay marked attention 20
the safety Of the deposits Is undoubtedly
open to criticism.
DON'T TOUCH THE VITAL POINT.
1.-The Baltimore plan is the outgrowth of
a condition in our finance, as well as in
our banking, which imperils the credit of
the Nation; yet it fails to touch, in any
way, upon what is universally conceded
to be the great source of danger. 1t does
not say one word about the retirement
of the paper money of the United States;
it does not make a suggestion which looks
| towards the suspension of banking by the
Treasury Department. 1t makes no pro-
vision which will stop the drainage of gold
from the treasury. In other words, 1t is
not a currency system, but rather a bank
ing system.
AS has been said, we have a dime museum
of finance-the greatest aggregation of
curiosities ever before exhibited under one
canvass in this world; There are nine diff
! ferent and confusing kinds of money; two
kinds of gold money, four kinds of silver
money and three kinds of paper money. "
: 5 Briefly, about So per cent. is gold, 80 per
cent. silver and 80 per cent. is paper A
large percentage of the money is mere
credit money. 1t is Indispensable to the
credit of the United States that we keep a
certain amount of gold reserve in the treas
ury. With the existing income in the shape
of revenue, and the existing right of credit
money to withdraw the gold, this is an
impossibility. To relieve the treasury in
this situation is the problem proposed by
the currency bill OF Mr. Carlisle; the Balti-
more plan, as l have said, does not aim to
do anything of the sort.
One of the most important objects con-
templated by the Baltimore plan is to Sc
cure an elastic currency; in other words,
there are periods when there Is an extraor-
binary currency demand. These occur an
nually in moving crops, and periodically in
panics. Under the existing national bank
ing system, when over Sill, 900. 900 is neces-
sary to secure an issuance of $780, 90,0 600 in
notes, banks will not issue notes to meet
demands: 1t costs too much. The Baltimore
plan provides for an emergency circula-
ton to the extent of % per cent. on the
paid-up capital; burdened. however. with a
heavy tax to induce its retirement when the
crisis is past. This tax is expected to be
SO much as to deprive circulation of profit.
and would be a guard against constant ex-
pansion. The plan does not say what the
amount of the tax shall be. but 1t does say
that it shall be so heavy that, in ordinary
times, 1t will cause a loss of profit to the
bank Undertaking TO maintain a circulation
- tha axfent of this Ok nor cent IT * nhyi-