New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1895-01-18
CARLISLE'S CURRENCY BILL.
SOME OF THE OBJECTIONS UkdED
AGAINST 1T.

THE RECENT pEFALCATIoN IN SOUTH pAkoIA
ILLUSTRATES ONE OF THE DANoERs-"HAi
corID BE DONE WITH A NATIONAL BANK
Under DISHONEST MANAGEMENT.
Try TELEGRAPH TO THE rRIBuNEI
,,h,roton Ian lin view OF the determina-
,or ~ the Administration, as expressed through
chairman Springer, TO continue to urge upon I'm
Dress the adoption Of its currency scheiie' ~ -
nertlnent to call attention TO TWO VI me- ~ IT,
that have not made especially p'o,.'', ,. .
flight of the State Treasurer OF aou'" nI,,h he
loft behind him an empty State treasury "ie ,'v
ana otber State officials had looted, Is resafueu "
| 49, onnorents Of the bill in the House OF hep'e'
! sn,,,tives as an unanswerable and conclusive Us
nsnt against the State bank provisions u 'ni'
| measure In conversation with ii''"'
| spondent Mr.. Hopkins, Of Illinois saiu, r,ou,d
What has Just happened in South Pak H acsrisie
a ' been Infinitely more disastrous II me Sa'I md
State banking scheme had been ~ n SS Banks had
been in the custody Of the state Treasurer as
undoubtedly have been the case IL oou to Only
s. 900 which would be exceedingly low eena
and notes had been l1sea the he total deposits of
United States Treasury notes IN u tde have
tCdy Of the he o sta,s sum q s5o which IN all
probabity would have gone the way OF me Sc nuld
ba naS crushed every bank in the state and south
| Dakota State bank notes would nave INSANE ~
|
=, ,hn son,h Dakota Treasurer had been the only
| state Treasurer to become defauter WITHIN recent
years his case might not seem TO be SO s's''.1"'
| OF the risk and danger that the Admlhistia ''oI'
scheme would invite but when one recaHs 'ne .as'
OF Honest" John Tate, State treasurer u nc" -
| tlcky and the cases OF the State treasure"
Arkansas, Missouri, Mississippi, tennessee anu :
eral other States who have become defauers' II 10
! certainly pertinent ard timely TO point OUT wa,
dangerous weakness in the scheme when the Au-
| mnistration is not only wiling. but ahA!ous W
| foist upon the country That scheme provides that
| the guarantee funds OF all state pahNs Vi 'S'
| shall be deposited with State officials III 'ne ,e
| snectiye States 90 that the number OF such oe
postories would be fortyfour If all the states nav
such banks one probable result OF TINS "ou'a "
| A large increase in the number and frequency Va NC
falcations by State Treasures and other oi'o'a's
having the custody OF such funds, the ideHuy u
which IL lost or stolen. 1t would be imposslOe "
| establish All OF the advocates OF the stare Dailh
| sections in the Banking and Currency Committee
as well as in the House OF Representative nav
! laid great stress upon the fact that the oaiN'ie
business is so much better understood mat the pc
ne are so much more intelligent and tha' crooheu
operations and dishonest methods in banking are 50
much more easily and quickly detected now thah
they were say forty years ago. that there wou!a
be no danger OF return 10 the WIZ cat ieu
dog and stump tail" currency with wncn the
country was afflicted for long time prior 70 tle
| establishment OF the present NatlOilat OoiH.A'e
| system Well the banking business is probably as
| well understood the PEG lie as intelligent ana
dishonesty and crookedness are as quickly detected
| in Illinois and Indiana as in other parts OF 'he
country and yet the i.lus,rious Zimr Dwisgihs ana
! his methods hourished for time despite all 'he
! modern safeguards. and that within very recent
| period
| As Mr. Johnson OF Ohio, who Is member OF
| the Banking and Currency Committee. pointed out
! In his speech in the House. the Administration
scheme also invites dishonest men TO organize Ma
tlonal banks. Their object in so DONG anu '"'"
plan OF operations he set forth as follows;
Let show you in simple lnus,rfa y do no%
one dishonest man with 10000 ana hat ao1e IN
two weeks And do not think there Is any Pssuc-
uar limit can place on me nufnoef o
e., i NV S II they could do il safely in two weeks
Under the National Banking Law any I'VE men men
subscribe $4,000 apiece and that they are perfectly
irresponsible. There is nothing In the law ma,
70 scrntlnize the list There is nothnsg IN the sp,
to say that these men s sSa s oe ve
Smiths or Robert Rces. e YOU PleaseS,nd they
each sues ,hd rs Nationa Bank Of Kalamazoo
lie furnishes them with 10000 British sold' OF any
0I Remember the hypothesis. They have $1,000
They 20 TO the Treasury and say: our unimpsrea q
cSrtificate OF deposit In some good bank They can
show the actual eoin In heir vaps cana thew
are entitled TO take out $4,000 or lsgal-tehueI
| money. National Bank currency, lecelN dpt W Ine
Government FOR internal revenue dues lsga rehV t
| at every other National bank IN the country lot
| any debt due that National bank Iney put UP
Sa1 500 which Is 80 per cent or the S'OVp. ,
The wicked mar, who thus gets among ,ne pan m
ers has in his vaults. after transaction through ms
SO go and ne has the $4,000 He can the next
day entirely within the law under the pro.ih!ohs
OF the law without violating II either IN letter OF
In spirit loan out that money on two-name paper 70
another lot OF dummies. lie cannot ioah 10 any
one ~ IN, Se dummies more than $VVH, because
YOU cannot loan TO one man more than 10 per ce'l'
| of your capital. lie can loan the money 10 NJ
teen men on their notes with three or four names
ON the notes. but all bad names. and no one can
question them. The Controller OF the currency
has no right 10 scrutniZe the value OF the names
on paper. The restriction Is that the BANK sna
loan any one man more tnan w per CEN
! OF it's capital. our bad banker loans the mon'y
To fifteen mon, and the money comes BACK 10 hlni
| The bank falls and the banker goes ABROAD:
have assumed a case in which no deposit has be r
| received | am purposciy leaving out mat am
assuming that bank that Is started In THIS way
loans out this money at once. so man VINO
puts in 10000 through his dummies can IN less
| than two weeks got back S52,JO what is there
| i'm law prevent "A dishonest man from DONG
| thisP n there is nothing to prevent II, can you
not count on enough dishonest men WORKING withlI
the law to manipulate that plan not 10 the extern
OF one bank, but OF many banks
In reply to this, Chairman Springer artlessy sug
gested that the same thing might be done under
the existing law. and when IL was shown that tina
would be an impossbillty the only reply he had
10 make was that Congress could not lcSisate te
prevent dishonesty or crime. but only to punish II
He did not even deny that the process outlined
would be AZ easy and practicable as MI John
| son had asserted