The Providence news. (Providence [R.I.]) 1891-1906, 1897-11-16

coin. There L. danger from the fact that
they are liable tobe presented for reieinp-
ton at times when the Treasury Is EN-
barrassed, thus ton Hog 20 injure tho
credit OF the Government They interfere
with the functions OF banks OF issue anu
restrict the usefulness OF the latter. IL Is
not properly the busiEess Ct the Unitsd
states Treasury To ISSUE demand notes.
? Tney are apt TO be redundant at one
tlms and scarce at Others with no way y'of
adjusting themselves TO the actual do.
mands Of business. Nevertheless if both
Treasury notes nnd legal tender notes
were reduced In volume 10 about &l5N. 600 9.
900 the main practical dangers OF their re-
demptiOn from time 10 time would no
doubt be abrogated. Still TO retain any
OF them might at some juncture be q
reason and temptation to. increase thoir
volume.to dangerous extent, and there
fore IL would be better To retire them AL.
2. On what grounds, IL any. would you
favor the gradual but entire withdrawal
of the Treasury notes Of 1890 and of the
United States notes?
Answer 1T would rolievs the treasury
from tho necessity and expense of holding
and replenishing the gold Ie serve.
3. IL 10 shall be decided 10 retire the
United States notes, how can IL be done
without adding to our bonded debt?
Answer. by using United States notes
as "A basis for National bank circulation,
instead of bonds
The United States notes would he held
in the Treasury just as bonds are now
held. The government as lis revenues
permitted could gradually substitute gold
Tor them and cancel the notes. This
process could be extended over a period
SO long that a very small amount OF an
nual surplus revenue would I'm the end
cancer ali these notes. In the meantime
tney would cease % be a demand obliga-
ton. The notes OF banks issued upon
their security would take their place in
tAe circulation of the country.
I. Meanwhile what security or gold re-
sorve would you recommends
Answer "A very small gold reserve
would be- necessary. There would bo no
call for IL unless bank failed or went
into liquidation. When this happened
the treasury woud redeem the notes Of
the failed or liqCidating bank in gold. aud
cancel corresponding amount OF the
United States notes held as security.
3. How in that case can provision De
made for maintaining an adequate
amount of currency available for the pur.
pos es Of pusinessf
Answer bank notes would simutane-
ously with the retirement Of the United
States notes take their place in the circu-
lation.
G. II It be thought inexpedient to fund
the United States notes, row can they he
redeemed with an assurance that bank
currency will take their placer
Answer. The replies To the 3D., 4th and
9Th questions show how this eau b. ac-
compiishcd.
T. In case provision should b. made for
the retirement of the United States notes,
how could their presentation for redemp-
ton be best secured?
Answer. The banks will find IL for
their interest To deposit the United
States notes as n basis for their circula-
ton. Once SO deposited these nufeS will
be in the physical possession Of the United
States, and they can be retired ana can
celleI just ~ fast or just as slowly as the
resources of the Treasury permit
s. Should Governme mt issues be with
drawn only as hank notes are put out?
That is. IL an elastic system OF bank is
sues should be adopted, would it be de
sirable To define and maintain any given
quantity of circulation?
Answer. .-Tns retirement of Govern
ment notes being accomplished by depos
iting them Us security for bank nots is
Sues the bank notes viii certainly be
equal in amount and perhaps exceed the
amount OF the Government notes on
which they arc based.
70 induce the banks to deposit the
United States notes as security. for every
500 deposited the bank should be per-
mitted to issue sl30 of its own notes The
excess of thirty dollars wuuld bs secured
by tbs general assets OF the bank and
by n safety fund. The limit of ninety
per cent of the banks capital would.
however, still be kept in force. Thus u
bank of Sl00, 900 capital could issue SD0.-
100 i'm circulation "A on deposit of s69, 23i in
le yal-tender notes OF this 500, 900 S20,-
77Q would ba secured by safety fund and
be first lien on all the assets of the
bank. If the United States notes did
not prove sufficient as a basis Tor all the
"A
Inittcd ~ deposit gold coin as basis for
circulation.
Woulu the banks in fact furnish the
currency which the country needs. If the
Government notes Were Withdrawn?
Answer -Tnore seems to be no serious
reason why they would ntt be able, and
at the same time find il profitable 10 do
so under proper inducements ana restric-
tions. There is not a civilized country in
tue world where the banks have proved
inaGe quate.
BANKING.
I. Is il possible to rely upon national
bonds as security for circulation?
Answer debt were stationary or
tending 70 increase. yes. If the debt tends
to decrease, no. Because in the latter case
the bank notes would gradually diminish
in Volume and finally become entirely III
adequate.
. Ian any safe and practicable plan hs
dcyis d tor using any other sccur. ties as IA
tasiS fer bank notes iSsursg
Answer Securities other than nation
al, such as state, county or municipal
bonds. or railroad or Industrial bonds,
ore ton diverse in character and valuo end
ara issued under conditions and laws 20
various that 10 would he tasi; Of great
uiiliiuits, II nos of utter i'm mpossib:lity, to
hass u homogeneous National bank cur
rencv upon them.
The general assets Of n bank. however.
IN do az Of commercial paper and other
valuable instruments whicn each separate
bank sc,erts and loans money uoon in It's
capacity of well-manaRei business in
st,tution, afford a rational security upon
which the issue of bank notes cGn he