Evening star. [volume] (Washington, D.C.) 1854-1972, 1895-08-01
Mr.. Edward Atkinson's Plan to
=. Avoid It's Payment.
PLAN TO issue DEPOSIT CERTIFICATES
How They Can Be Put Into Genera
Circulation.
EXPANDING THE CURRENCY

The plan of Mr.. Edward Atkinson OF
Boston to drive "a coach and four" through
the law imposing a 10 per cent tax on the
circulating notes of state banks and pri-
vate bankers by the issue OF certificates Ct
deposit is attracting a deal Of attention
from the advocates of a change in the cur
rency. 1t is believed in some quarters that
this discovery of the limited character OF
the 10 per cent restriction will change the
| entire character of the contest over the
currency question, and give a decided
| vantage ground to the advocates of a
banking currency. They have occupied the
position heretofore of suitors for the favor
| of Congress, and it has been necessary for
them to undertake the task of winning
both houses to their view and getting the
approval of the President in order to give
| force to any new legislation. Some of them
now believe that they will be able to die
| tate terms to the advocates of government
| paper money and u circulation secured by
nigh priced bonds, and to demand conces-
sions in favor of a banking currency in
| return for their votes in Congress, to cx-
tend the 10 per cent tax law 20 certificates
of deposit issued by small private bankers.
| They may be overconfident in this view OF
the case, but they have teen congratulate
ing themselves good deal since the publi-
cation OF Mr.. Atkinson's plan Monday over
| the opportunities for contest which they
| No Hope I'm the Next House.
1t is doubtful If they can accomplish any
| thing with the big republican majority of
the House of Representatives which meets
In December. for both Joseph Fl Walker
of Massachusetts, and Henry L. johnson of
! Indiana, who are contasting for the chair
manship of the banking committee. favor
some form of secured circulation. These
| gentlemen VIII be confronted, however
win the possibility that the monetary cir
| culatton may be expanded to Indefinite
| limits II certificates of deposit NAV he
issued In even amounts by any bank or
| banker In form suitable for circulation
RESTRICTIVE legislation upon private banks,
| II not upon state and national banks will
| be eagerly demanded in many quarters and
1t will be difficult to let the session Of Con-
| sress end without taking note of the de-
| mand.
No Tax ON Deposits.
The prcpo sition of Mr. Atkinson is sub
| stantially that there is no federal law i'm
| posing 10 per cent tax, or any other
special rate of taxation, upon Certificate
OF bank deposits. 1t is in the power of any
bank OF banker, according to this view, to
print simple certificates that there has
been deposited one, five or ten dollars as
the case may be, and that the certificate is
| redeemable out of this deposit upon pre-
sentatlon at the bank of issue There are
several ways in which the certificates
might be put in circulation. They might
be issued in printed books, containing eou-
pons for even sums, which could be paid
out like Checks, when they bore evidence
of an actual deposit in the bank In this
form they would form convenient medium
OF payment for manufacturing and other
corporations and would be more negotiable
In the hands Of employees than ordinary
checks. The bank would keep a record CT
the certif' ates in the hands of each de-
positor and would be responsible for their
redemption without regard 10 his personal
sclvency.
An Advantage Over Checks.
The certificates would have an advantage
In this respect over checks, because their
issue to the depositor would be evidence
that he had the credit and that his ac-
count was not overdrawn. The certificates
would not be in the form Of promissory
note, however, for that is subject to the 10
per cent tax. but would be in the form of
warehouse receipt, certifying to the
actual possession of credit by the holder
They would be charged against the account
OF the depositor when issued to him, SO
that the bank would have practically in
its own possession the means of redemp-
ton. A system like this has already been
proposed by the Hungarian Bank of Com
merce and Industry to- make up for the
deficiency of circulation caused by The with
drawal of the government paper money oi
the Austrian empire This bank is not au-
thorized to issue circulating notes, but has
prepared to put out books of certificates of
deposit in even amounts, capable of use as
a a'circulating medium. and to pay interest
on deposits until the presentation of the
certificates for redemption.
Could BE Used in Making Lonns.
The certificates could be put in circula-
ton in making loans, well as upon the
actual receipts of deposits The British
system would be adopted in this case of
carrying to a mans credit account the
amount Of the loan and then issuing the
certificates against it. The issue of such
certificates and the expansion of the cir
culation would be thus limited only by the
amount of commercial paper offered for
discount and the willingness of the public
to receive the certificate. Some doubt is
expressed at the treasury whether they
would be received readily into general cir
culation, but there appears to be no reason
why they should not be accepted as readily
as checks, and they probably would be ac-
cepted at mills and factories where it is
the custom to pay In checks and by trades
people dealing with the employees The
general use of the certificates and their
flee circulation might require an agree
Inent among the associated banks of some
city or state, but such an agreement would
meet any deficiency of the circulation, and
might obviate. the necessity for other de-
vices which were employed during the
panic of 1888. There is no reason in the
opinion of some of the advocates of the
system, why certificates of deposit issued
by national banks should not circulate as
freely as bank notes. They would not be
secured by United States bonds, but they
would embody the pledge of a specific
credit, and would not be repudated except
In the case of the absolute collapse of the
bank of issue Even this danger could be
guarded against by an agreement among
the banks to guarantee the certificates of
their own association. The case would be
different with certificates issued by private
bankers, and might call for restrictive
legislation.
An Attorney Generals Opinion.
The opinion of Attorney General Olney.
which was given during the panic Of 1893,
Seems to support Mr.. Atkinson's position
that the 10 per cent tax could not be levied
upon such certificates as he proposes. A
tax law can be construed only to lew
taxes upon the person or goods specifically
enumerated. This is fundamental propo-
sition of law. and is referred to in the two
decisive head notes to Mr.. Olney's opinion
which sum up its force and bearing These
head notes are as follows:
1.-THE tax on state banks imposed by the
act of February 8, 1875, chapter 36, section
10, applies only to promissory notes, and
lot to other negotiable or quasi-negotiable
paper.
ere fhara iS apy doubt 70 tho -,,o,,;,r