The daily morning Astorian. [volume] (Astoria, Oregon) 1883-1899, 1897-12-09

| W hhe NPfpthiiftA% " MI NANhiatulA uoAt
Of tho bank. whether issued against de
posted securities or against assets
slxth-To secure the government agains
loss. n any attaching 10 Is guaranty. (
tax Of per cent per annum on secure,
circulation shall b levied 20 create I
safeey fund WFlfdh fund shall be invested
by the secretary Of the treasury and tn
controller Of the currency IN government
bonds. In addition 20 such funds the gov
eminent shall be further protected by
having a first lien upon all assets IN case
OF failure Of the issuing bank.
Seyenth-All notes shall be redeemed in
the city Of New York al the subtreasury
and at such other subtreasuries as may
be designated by the controller OF the
currency wfth the approval Of the secre-
tary OF the treasury. The control Of such
redemption shall be under the direction
Of the controller Of the currency and made
from a redemption fund o6 10 per cent to
be provided and maintained by the banks.
Elghtf-Restrdct the issue Of national
bank notes TO the denomination OF 80 and
upwazd.
To illustrate the benefits Of this plan.
the secretary cites the fact that the ma
tional banks with a capitalization Of So. =
GO 900. have a circulation Of only 1880
Ooo, and were compelled TO borrow S13.-
54s. OO0 from Eastern banks with which to
move last years cotton crop. His plan.
he believes. would induce them to issue
sufficient circulation to transact all their
business without borrowing.
The secretary quotes figures from tfs
records Of the controllers Office 10 show
the 2 per cent tax on unsecured circula-
tlon would more than reimburse the gov
ernnent for its losses By failed banks.
That loss since the first organization OF
national banks would have been sisi.s2s,
while the funds produced by the proposed
tax would have amounted to s24Si, l4O.4S.
The secretary then -oes on % argue
that the greenback in the present status
Is constant menace to the gold reserve
and the nations credit. and that the ne
cessity being for a reduction Of the de-
mand Liabilities OF the government. these
offer the most convenient agents for that
action.
After answering possible objections
from those who demand the permanent
retirement OF these notes. he says:
Il am moved to press the recommenda-
. -. Al naHrT-
ing considerations.
Paper money is THE product Of an In
dustrial. commercial and financial evo'u-
ton. Its economiziug effect sn the use
Of metallic money precludes the idea of
abandonment until society shall lapse in
TO anarchy.
Credit is the base upon which it rests.
Paper money is the evidence that thing
OF value has passed into the possession
OF the issuer, and that the holder OF that
paper is wiling TO await payment When
payment is made the evidence Of the
transaction should be withdrawn to ap-
pear again only when similar transac-
tion occurs.
'The bank is an agency. the result, also
OF a pure evolutionary movement whose
functions it is to issue its various fords
OF credit instruments. Of which paper
money is one. against the pledges and
promises Ito it of the less publicly known
members of the Industrial community.
1t thus becomes an intermediary in much
the larger part of all trade and industry.
'Vwhatever operates to render the bank
a safe. eficient and available agency 10
the people, operates to the general pros
pertty.
'SThe requirement. that the bank shall
invest its capital in public securities. as
a precedent to the issue Of its credit in
struments-paper mnney-is a requirement
which operates by so much to reduce the
efficiency to commerce and industry. II
cannot use its capital in two directions at
the same time. Only necessity to con-
troll the banks capital for the public use
or an Indispensable need for security in
such form to the note holder can jus
tity the requirement
'The exigencies OF the governments f.
nances in 1868 induced congress 70 require
from AID note issuing hanks a preliminary
investment OF their capital in the gov
ernment's bonds. The many disastrous
losses incurred by the people from the
note issues OF irresponsible banks previ-
ously authorized to do business by ILL
considered provisions Of many separate
means seems to justify the government
in requiring from banks of issue pledge
Of bonds in trust for the security Of their
noteholders.
Without further extension cf the his
torical statement, It is recognizable that
the exigencies of the governmeat do not
now require the absorption of banking
capStal in aid of its own finances. In fact
with treasury conditions once normally
established as to revenue and expenditure,
the funded debt will, within few years,
be entirely liquidated
THE importance Of banking In its rela-
tion to industry and commerce demands
for It. in view of the considerations thus
enumerated. careful and timely attention.
The question is complicated by the fact
that for a whole generation our people
have been schooled in system Of bank
note issues secured by pledges IN the
hands Of a public trustee. 1t Is not a
good system. but it ought not to be YIELD