Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1897-12-11
ADVISES REDEMPTION FUND
SECRETARY GAGE ON FINANCE,
Relieves the Present system Is Full
of Evils and Recommends More
National BANKS. With Small Cap
itai and Note Issuing Power.

an exhaustive review of the currency
question. with recommendations. After
detailing the evils OF the present system,
according to his view, the secretary offers
the following recommendations, of which
he says:
The recommendations | make must be
construed as tentative steps in drec-
ton which, if constantly pursued, will I'll
timately lead to conditions Theoretically
desirable, rather than as being IN them
selves final measures to that end. The
condition of the treasury in its relation
to demand obligations requires that one
of two steps be taken. The one may be
a large reinforcement of the permanent
gold reserve; the other may be by an inn
portant reduction in the Objectionable
form of liabilities. The latter is, i'll my
opinion. the more desirable
First. | recommend that proper leg
islation be enacted which will establish,
separate and apart from the ordinary OPP
erations of the treasury as they relate to
revenue and expenditures, a department
to be designated and known as the issue
and redemption division. 70 this dlvl-
sion the sum of $l25000 900 i'll gold
should be set over from the general fund
in the treasury. to be used only for re
demption purposes, and all the silver dol
lars now held for redemption of silver Ger
tifcates and all the silver bullion and
dollars coined therefrom bought under the
act of 1890 should be passed to the same
account Further, that the sum OF $500
100000 in legal tender notes of the
United States known as greenbacks be
collected as hereinafter described and de-
posted in the said issue and redemption
division. to be disbursed thcrefrom only
upon the receipt in exchange therefor of
an equivalent amount OF gold com. Such
gold. when SO secured. to be neld in said
division as part Of the general redemption
fund.
Second. | recommend that provision be
made for the issue OF refundmg loan bonds
payable after 10 years at the pleasure OF
the government. such bonds to bear in
terest at the rate of p per cent per an
mum, PAYABLE. principal and interest IN
gold coin. and that the secretary of the
treasury be authorized TO issue such bonds
and receive in payment therefor, with an
equitable allowance for the difference IN
interest, any part or all OF the outstand-
ing loan of the United States which ma
ture by their terms of payment III the
years 1904, 1907 and 1925
The secretary then goes on to show
that the course suggested has precedent
in the act of congress of 1869, plcdging the
government to the payment of all interest
bearing obligations i'll coin or its equiva-
lent To obyiatc the difficulties in the
way of this method of supplying the de
fcency, he recommends the following
changes in the national banking law:
First-Permit national banks to be or
gained with 4 minimum apital of 500
600 in any place having population of
1000 inhabitants or less.
Second-Reduce the rate of taxation ON
circulating notes secured by deposit of
bonds to one-half OF | per cent per an
mum.
Third-Pcrmit banks now organized or
hereafter organized to issue circulating
notes to the par value of the refundino
bonds hereinbeforc suggested, when de
posted by them with the treasurer of the
United States, and further allow such
banks as shall avail themselves of the OPP
portunity to deposit as security with the
treasur of the United States, green
backs, treasury notes or silver certificates
to a total amount Of $500, 900 against
which there shall be at once issued to
them, by the comptroller of the currency,
national bank notes to an equal amount,
it being further provided that from time
to time, at his convenience, the secretary
of the treasury shall substitute for the
greenbacks, treasury notes and silver GER
tificates so deposited to secure circulation,
bonds of the same class and character as
the refunding bonds first named to the
amount of 5000 600 600, such bonds to be
chargeable to said banks and by them
accounted for at such price mot less than
par) as the market quotations may indi-
cate to be their fair market value. Dur
ing the period of time intervening be-
tween the deposit of greenbacks, treasury
notes and silver certificates, and the sub
stitutiCn of the bonds by the secretary
of the treasury, the circulating notes
specifically issued therefor shall be eX-
empt from taxation. Upon the substitu-
ton of bonds the funds released thereby
shall at once be transferred by the secre-
tary of the treasury to the issue and re-
demption division.
Fourth-After said banks have depos-
tied such bonds, greenbacks, treasury
notes on silver certificates to the amount
of 50 per cent of their capital, they shall
be permitted to issue bank notes in addi-
ton to the 80 per cent thus provided, to
the extent of 25 per cent of such deposit,
which said % per cent may be unsecured
By any direct pledge Of security but IS
sued against the assets of the bank.