Red Lodge picket. [volume] (Red Lodge, Mont.) 1889-1907, 1897-12-18
ADVISES REDEMPTION FUND
SECRETARY GAGE ON FINANCE.
Believes the Present System Is Full
of Evils and Recommends More
National Banks, With Small Cam
itnI and Note Issuing Power.

I Washington, Dec. lo.--The report of Sc
L retary OF the Treasury Gage closes wit
$ an exhaustive review of the currepc
Il question, with recommendations, Afte
> detailing the evils of the present systen
according to his view, the secretary offe,
the following recommendations, of whic
he says:
The recommendations [ make must b
construed as tentative steps in a direc
ton which, if constantly pursued, will ul
tlmately lead to conditions theoreticalF
desirable, rather than as being in them
selves final measures to that end. Th
condition OF the treasury in its relation
TO demand obligations requires that on,
OF TWO steps be taken. The one may bt
large reinforcement of the permanent
gold reserve; the other may be by an i'm
poftant reduction in the Objectionable
form OF liabilities. The latter is, in nv
opinion, the more desirable.
First, [ recommend that proper leo.
lslatlon be enacted which will establish
separate and apart from the ordinary op-
efatlons OF the treasury as they relate to
revenue and expenditures, department
to be designated and known as the issue
and redemption division TO this diyi-
sion the sum of Sl25,O0O,O0O in gold
should be set over from the general fund
III the treasury, to be used only for re-
delhptlon purposes, and all the silver dol
lars now held for redemption of silver GER
tltlcates 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 s2O0.-
100000 i'll 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 therefrom only
upon the receipt in exchange therefor of
an equivalent amount of gold coin. Such
gold, when so secured, to be held in said
division as part of the general redemption
fund.
Second, I recommend that provision be
made Tor the issue of refunding loan bonds
payable after 10 years at the pleasure of
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 I
interest, any part or all of the outstand- |
ing loan of the United States which ma
ture by their terms OF payment in the
years 1904, 1907 and 1925"
The secretary then goes ON to show
t'at the course suggested has II precedent
in the act of congress of 1869, pledging the
government to the payment of all interest
bearing obligations i'll coin OF its equiva-
lent. To obviate the difficulties in the
way Of this method of supplying the de-
ticiency, he recommends the following
changes in the national banking law:
Fnst-Permit national banks to be or
ganized with minimum apital of S25.-
300 in any place having population of
1000 inhabitants or less.
Second-Reduce the rate of taxation on
notes secured by deposit of
bonds to one-half of per cent per an
1uln.
Third-Permit banks now organized or
hereafter organized to issue circulating
notes to the par value of the refundng
ponds hereinbefore suggested, when de-
'oslted by them with the treasurer of the
United States, and further allow such
'anks as shall avail themselves of the op-
'ortunity, to deposit as security with the $
reasurer of the United States, green
'acl>s, treasury notes or silver certificates
o a total amount of $2O0,OOO,OOO against
which there shall be at once issued to {
hem by the comptroller of the currency,
ational bank notes to an equal amount,
being further provided that from time z
o time, at his convenience the secretary !
t the treasury shall substitute for the I
reenbacks, treasury notes and silver GER 4
lficates SO deposited to secure circulation, Y
onds of the same class and character as q
he refunding bonds first named to the
mount of $200,000,0O0, such bonds to be o
hargeable to said banks and by them /
ccounted for at such price mot less than +
ar) as the market quotations may indi- +
ate to be their fair market value. Dur h
1g the period Of time intervening be-
Neen the deposit of greenbacks, treasury
otes and silver certificates, and the sub
itution of the bonds by the secretary C
the treasury, the circulating notes c
issued therefor shall be ex- G.
npt from taxation. Upon the substitu II
on of bonds the funds released thereby a
lall az once be transferred by the secre- Il
ny of the treasury to the issue and re- c;
amption division. p
Fourth-After said banks have depos- p
ed such bonds, greenbacl1s, treasury u
otes or silver certificates to the amount t,
so per cent of their capital, they shall
permitted to issue bank notes in addi-
on to the so per cent thus provided, to
le extent of 25 per cent of such deposit, K
hich said 25 per cent may be unsecured o
Y any direct pledge of security but is a
led against the assets of the bank.
Fifth-Extend the guaranty of pay II
ent by the government to all circulat- d
g notes of the bank, whether issued n
,ainst deposited securities or against as V;
is. IL
Sixth-To secure government against
IS, if any, attaching to its guaranty,
x of per cent per annum on secured T,
shall be levied to create -
fety fund, which shall be invested by =
e secretary of the treasury and the i;
mptroller of the currency in govern 80
ent bonds. In addition to such funds y.
e government shall be further protect y
by having first lien upon ali assets
case of failure of the issuing bank.
Seventh-All notes shall be redeemed
the city of New York, at the subtreas c.
Y, and at such other subtreasuries as II
ay be designated by the comptroller of in
e currency, with the approval of the in
cretary of the treasury. The control
such redemption shall be under the di-
ction of the comptroller of the currency
ID made from a redemption fund of 10 st