The Saint Paul globe., 1896-12-09


ent banking laws given to any class of
cltlzens beyond that which comes to
any person having investable canitaJ
IL Is to be doubted whether the re-
turns upon the capital invested in
banking, propOrtionate to the amount
inolcate as large percentage of profits
as that invested in merchandise TIE
net earnings on the capital stock and
surplus rund of national banks for the
past year was "a per cent including su
pront made on the issue of circulation
AS compared with the profits accrnin..
20 those interested in many mining and
Hianuiactur1ng enterprises the rate Is
exceedingly small.
The actuary of the treasury has for
recent years estimated the profit unon
cank circulation, secured by all classes
OF accepted government bonds, to be as
follows: %
0a.et Oatei >, 80 Profit.
Oetober 81 iSS5 '.'..... ................ 0.967
October 81, 1896 ........ . so
Upon this basis the amount Of ma
tional bank circulation OUTSTANDING.
secured by deposit of bonds, was:
November l. 1895 1o0 iSa13SS1 iSd SSf
November l, 1896 ...... - 91S 5i0'HY1
The monetary difficulties of ths
treasury affect every class of naon1l,
and embarrass the administrators A,f
the affairs of the treasury departmeTtt
Gnu @ can no longer continue without en-
ta1Ilng still greater loss and more wiIA-
spread financial disaster They do n6+
Iind their origin in any mere surface
ana temporary weakness, nor are tbsSs
que TO recent and passing conditions, )
Iney are inherent in the fnano.ai
poicy which has been built up in the
toN7 onIlJu states and constitute an in
tegral part of it. Instead of Iessani,,o,
IL Ill effects with time, thev will nn97
cumulate more strength for harm o.
edcn recurring season of financial ond
business disturbance
Inc policy of having the treasury a
canK OF Issue, as it is in the issuing Of
lhe treasury notes. without attac9iror
TO 1t needed bank of-issue powers anS
making of it a bank of-deposit in tha
maintenance of the subtreasury system
WITHOUT corresponding bank-of-denosit
essentials, violates the laws of all sue
cessIul government financiering. If
nc tIedsufy is TO be bank of issue if
should be clothed with complete poWers
IN this regard. If it Is to be a hank 70
deposit. 1t should be governed by prin-
c1ples invoked by such an institut3n,
ana make of benefit to trade and com
merce the moneys which come into jts
vaults. 1t ought not to embarrass the
e,o,sal. DuSiness world py locking up vast
sums. resulting at times in artifciaI11r
cfeatlng a money stringency. and ot
others, by suddenly expendine aonalITr
large amounts, creating a plethora r.
the hafm worked by this latter feature
ol our financial policy is less than thar
inowlng in1M from the former, it is neverthe
Tess source of very great weakness
A policy in finance wrong in nrin.
Ciple never becomes right in practice.
he Ihe truth of the statement is fully
Illustrated by the course of the legal
lender treasury issues of the United
states They have been always A dis
lurplng element in business, and their
ness and anxiety to the treasury. They
eompei the treasury of the United
states to carry reserve of gold which,
their use makes the basis of supplv for
all places and all people They have
nor even the merit of being without ex-
pense TO the government At one lime
1T was argued in behalf Of continuing
their issue and compulsory reissue. that
10 cancel them meant to dangerously
contract the currency. That arguments
mas given way to one which assumes
that they are what is termed "a nom
lntereSt-bearing debt" and are conse
quently carried without additional tax
upon the public. Those who advance
this as argument either disregard or
are ignorant Of, the facts
Figures are then given showing the
cost to the United States Of maintain
ing the legal tenders and the difference
In such cost If the notes had been con-
verted into per cent bonds, which diff
ference is shown to be $339, ,984 4222
With this cost is compared the profit
10 the government on account of the
national banks, which has been $157,-4
/ 439,24S.9S Concluding, the comptroller
says:
The efforts in other countries have
been directed toward divorcing the
treasury department of governments
from the bank-note function That
function has been given to corporations
created for the purpose. There is no
state of affairs peculiar to the United
States which makes it wise to employ
different methods or to invoke different
rules in the same line of conduct.
The current credit instruments, enter
ing into the movements of finance,
trade, and commerce, ought all to be
issued by the banks as needed under
government supervision, in order to in
sure uniformity and to guard against
loss The responsibility for their re-
demption in gold coin should be wholly
borne by the banks, and upon the
banks should rest the duty of furnish
ing whatever gold is needed for domes-
tic or foreign business purposes. In
order to attain this end the credit cur
rency of the government now out
standing, should be redeemed in gold
and retired, through funding or other
wise, as speedily as safety will permit,
and the banks made to assume the
rights and burdens which properly be-
long to them. The question is not one~
Of ability on their part to meet such de-
mand, but one Of opportunity, freed
from government competition and un-
restricted by unrequired government
control. It is respectfully submitted
that legislation by congress, based
upon safe and prudent lines, having in
view the gradual payment and cancel
lation of the credit currency now main
tanned by the government and the is
suance hereafter of all OF such cur
rency through the banks, with full re-
sponsibility therefore placed upon
them, should be had at the very earliest
practicable moment. The results
which would follow such enactments
would be beneficial, and neither would
monopoly be created nor favor shown
thereby