The sun. [volume] (New York [N.Y.]) 1833-1916, 1896-11-19
TIE ouRnnxor ouEsr1oN.

or Massachusetts, Chniruann OF the Come
uittee or BnnkinE and Currency,i In the
u. =. House of representatives.
In reply to the question put to him by q
reporter of THE SUN What should be done
TO improve ana strengthen the currency of the
country Mr.. Walker expressed himself as fol-
lows on the defects Of our banking systcm;
The consequences for good or III Of the cam
paign recently closed were 30 momentous as TO
be beyond the estimate of the most thoroughly
Informed.
While the contest ragod ostonsibly around
the money question, II was really a socialistic,
and some say anarchistic. uprising. The storm
centre for the time being was In the United
States, hut the seat OF its strongest power aud
influence is in Germany, next in France. and
somewhat in England. II wise legislation pre-
walls, this country may hope to escape further
serious agitations Of tho ftnd. The very foun-
dations Of republican institutions, and. in fact,
of all practical civil government, was called
In question.
In order to obviate Its repetition, the existing
financial and banking systems of tho country
need to be thoroughly reformed. The people of
the South and West have a right to complain Of
the fact that loans and discounts In those local
tiles are made by vicious law. fully two per
cent. above the normal rate. 1t is incontsstably
JTu0 LnhL ~ COInpuTeu VIII u phuklnk byb-
tens Of Germany. France, or England. the banks
in this country are compelled to carry the whole
thousand millions OF paper IN circulation prac-
tically without profit
Rates on loans and discounts, In order to pay
existing dividends on the banking capital, are
fully one-third. take II the country over, higher
than they would be were the currency Of the
country Issued upon sound banking principles.
or course, this hardship rests most severely in
localities where the highest rate OF interest pro-
walls.
Tho banks In each locality have a Legitimate
cause of complaints unless they can make on the
currency they issue while it is out tho rates of
interest charged on loans and discounts, thus
reducing the rates on loans and discounts, and
pay the Same dividend to their shareholders. to
the full amount of what tho bank makes on
its currency.
Six per cent. localities are entitled to mako
half us much again as per cent. and . per cent.
double as much AZ 4 per cent. localities, and 10
per cent. twice and o half, and l2 per cent. To-
calitles three times as much; while the facts are
exactly the reverse under our system.
Furthermore, bonds are fatal to the economy
and safety OF any banking system. By the use
Of bonds which are invariably above or below
par and constantly vary In price. the profit to
banks on their currency Is never two days the
pNAhSs eAa NS hAANo
OF bonds varies.
In a recent speech Senator Sherman declared
in effect that In case OF war the banking system
OF the United States would prove a failure. We
know 1t did in 1861. resulting In a loss to the
Government OF more than one billion Of dollars
In the conduct OF the civil war.
This country has spent nearly $500, 600. 900
in the last ten years on its army. and nearly the
same on its navy, and yet in case OF war II
would stand before the world absolutely desti-
tute Of tho sinews of war. which to-day are
sound bankers credit. not gold or silver.
Furthermore. our banking system requires tho
officers of banks. in justice to thor clients. who
really are the widows and orphans and depend
ent persons of the country, as their bank stock
Is owned very largely by savings banks and
trust and insurance companies, TO become bond
specula~tors-selling their bonds and reducing
their circulation when the most currency is
needed and when the credit of the Government
is high. and buying bonds and increasing circu-
lation when the credit OF the Government and
OF bu siness is injured or ruined aud less currency
is needed.
The national banks. when the price Of bonds
in the market paid an income OF 3 per cent
had in circulation in 1851 SAFE. 000, 900; In
1891. when bonds had averaged to sell on the
market at n price paying an income Of 2.45 per
cent, the currency in circulation wasonly Sl23,-
900. 900; in 1890, when the credit of the Gov
ernment was high. tho New York banks had in
circulation only three ard one.half millions OF
currency; in October. 1893. when the Govern
meut was in distress. circulation had run up to
SIS, 500. 900. more than four times as much.
The system that produces such results calls
Loudly for reformation. There 10 O very urgent
demand for the repeal OF the per cent, tax on
currency issued oy the onhHs; ana also that
par value of their bonds. While this would In
crease the profits of the banks. and in time re-
Al N., ffA.F IN TAa ~ Inn ma mt ftANnlntQ li~hfl
II would not to the slightest degree remedy the
iniquities Of our. system OF issuing currency
using the 4 per cent. thirty-year bonds recently
sold at a cost OF l;O4t9. assuming that all the
to the bank III a i per cent. locality are 200 per
cent; In IA 6 per cent. locality LII per cent:
in an s per cent. locality lbs per cent; and in
n 10 per cent. locality .gS per cent.
Thus the profits in n 4 per cent. locality to tho
bank is III per cent more than In a 10 per cent.
cent. locality. and 20 per cont. more than in u q
per cent. locality.
1t il perfectly obvious that the existence of
such conditions is a damage to this city OF New
York more than even To the localities which
suffer such hardship. The best way to build up
New York ID TO increase the business of the
country, and nothing tends more TO increase tho
business OF a country than confidence, and con-
and business are doing II at u profit. and no ono
thing make profits possible more than low rates
OF Interests: and whatever builds up the country
builds up New York and the cities of the coun-
But the story OF the unavoldAOle hardship OF
the use OF bonds is not half told. Using tho
same bonds bought at their normal price of
l.307s, which Is less even than the average our
bonds sold for during the eight years previous
To the panic OF 1893, which would pay the pur-
chaser at the rate OF 29 per cent. interest per
Rnnum in localities charging 4 per cent. inter-
est, the profit would only be .02 per cent. and 1t
would be an actual loss Of ~ per cent. in q per
cent. localities. and a loss OF fully ! per cent. in
8 per cent. localities. and n loss of LISP per cent.
In 10 per cent. localities.
II the national banks all over tho country
were compelled TO take ont currency propor-
tIoDntely to the full amount OF the one thou
said millions of paper of various kinds now ex-
listing when the credit of the Government was
highest, and RsSuming that tho $3.50. 900, 900 of
banking capital was distributed equally In I. q,
4. and 10 per cent. localities of $40 ,0OO.0 900 to
each locality, and TINT each locality took, out
S25O. 600. 900 in currency, tho gain TO banks In
Increased dividendS ON the capital In 4 per cent.
localities would be 10 per cent in j per cent.
localities IL would he IN actual loss of 80 per
cent. and in y per cent. localities u loss OF l.047
per cent. and in 10 per cent. localities the
enormous, sum Of zoos per cent. loss Oh every
dollar OF banking capltal.
II Is believed by well informed persons that
hUd our banking system been put upon tho
proper basis Immediately succeeding the war.
and the United States treasury relieved from
IL alA -l