The morning news. [volume] (Savannah, Ga.) 1887-1900, 1897-11-11
BATTLES PLAN FOR BANKS.
WELL-KNOwN EDUCATOR WRITES
\ THE MONETARY COMMISSION.


Capital he In Legal Tender Specie.
Close scrutiny by Examiners.
Washington, Nov. 10.-Several weeks ago
the monetary commission, now in session
at Washington, sent to the leading bank
ers business men, and students of econ
omics throughout the country, a set of in
terrogatories designed to elicit the views
of the gentlemen addressed upon such
points of the commissions work as lay
within the field of their thought and OBJ
servation. AS the purpose of the COM
mission is to prepare report recommend
ing change In the currency laws, the in
terrogatories bore chiefly upon the ques-
tons of banking, metallic currency, and
the demand obligations of the government
One of the gentlemen from whom a reply
was received was Kemp P. Battle of the
University of North Carolina, at Chapel
Hill, whose views in full are herewith
given:
''The national banking system has had
since its foundation grave defects, which
l am persuaded, have been exceedingly in
furious to all sections not possessed of ac-
cumulated capital.
81. 1t operated to send out of a COM
munity more currency than it brought in;
e. g., if a $4,000 bank bought a like
amount of United States bonds, the COM
munity lost in currency at least the diff
ference between $4,000 and the cost of the
bonds Counting the reserve and redemp-
ton fund, it lost more.
20. No matter what were the demands
of that community, no matter what gilt
edged paper was offered for discount, this
bank could not obtain additional currency
except from the neighborhood deposits.
''S. The bank bought it's bonds in New
York or other great commercial centers,
thus accommodating money in those cen
tiers. These would not lend to distant Dor
rowers, as a rule, because their officers
did not know them, and because they
would not risk the laws of distant states
"a. The result was disastrous TO far
mers and other business men, who needed
advances. Their local banks could not ac-
commodate them, and they We're forced to
buy supplies of commission merchants on
credit at ruinous prices. have known of
many farmers paying prices equivalent to
forty and even fifty per cent per annum
interest. OF course, many of them failed,
thus infiicting losses on the merchants.
THE evils Of the system fell more heav-
lily on the South because the confederate
and state war currency being repudlated.
and the old bank money being dscredited
and withdrawn from circulation, they
started new business life in 1865, with
no money except a little specie which had
been hidden in stumps and mud holes. and
which went north for clothing and other
necessaries within few months after
Lees surrender.
"5. Another acknowledged defect of the
national banking system is the want of
elasticity in its currency. No matter what
may be the pressure for DISCOUNTS no
matter what financial storm may threaten
which might be averted by prompt sup
plies to frightened Debtors, not a dollar
can be had beyond fixed limit. In Eng
land the prime minister the agent of the
parliamentary majority, aids the Bank of
England in averting such panic by prom
Using to ask parliament to indemnify the
bank for issuing currency beyond the ie-
gal limit. George Peabody was saved
once by loan granted under such cir
cumstances. Our President and his Secre-
tary OF the Treasury cannot take such re-
sponsibilty. The Associated Banks of
New York have invented a poor substitute
in their clearing house certificates, but
these are useful only in the city and SUI
burbs, while other communities are liza
Bile to ruin.
Assuming that the present national
banking system will be substantially re-
tanned, can II be amended so as to avoid
these evils. 1 believe it can be.
PROPOSED AMENDMENTS.
LET the national banking laws be so
amended that in place of the United States
bonds each bank may have its capital in
legal tender specie. Then allow the bank
to issue notes, redeemable in specie on de-
mand, to an amount not exceeding three
times the specie on hand, and also not
exceeding twice the capital. The notes
to be paid out for short time paper, say,
not over ninety days, and to be a first lien
on all the assets.
Then let Il tax of 49,. per cent. on cir
culation be imposed and the proceeds kept
for the redemption of notes of broken
banks; the United States to guarantee the
notes If the assets and redemption fund
are not sufficient.
LET the bank examiners be required to
inspect at unexpected times the assets,
etc., not less than six times year, such
examination to include the solvency of the
securities, with power to examine wit.
nesses on oath. If a bank becomes insol-
vent the examiner under whose charge
1t Is should be removed from office and
an inquiry be had as to whether he was
culpably careless, the burden of proof be-
ing on him to show that he was not.
Let a committee of three able lawyers
be appointed to draw up bank CODE so
as to make conviction for malfeasance by
bank officers and examiners sure and
speedy.
81 recommend no special provisions for
the safety of deposits, other than those of
the government already sufficiently pro-
tected, because / think that the watchful
eyes of depositors are extremely useful On
keeping officers faithful.
II think 1t best that the banks have
the custody of their specie other than the
redemption fund. There is too much dan
ger that in war times the Secretary of the
Treasury, with the consent of congress,
will seize the great sum If deposited at
Washington. as Charles II seized the de-
posits of the goldsmiths.
1.-THE government ought to guarantee
the notes even If 1t costs something-just
as the deficiencies of the postoffice are
paid. Congress has power to fix the
standard of weights and measures Mon
ey is the most important Of all measures.
But experience of many years shows that
a moderate tax on circulation more than
pays the notes Of all the broken banks.
tt1rha limit nf fha fgauas rafUht ba 49,