The representative. [volume] (St. Paul, Minn.) 1893-1901, 1897-11-10
PRES. HILL ON FINANCE
HE REPLIES TO QUESTIONS FROM
THE MONETARY COMMISSION.
Uncle Sam n Banker-The Govern
ment Should Stop Issuing Small
Paper Bills.
Special Dispatch to The Tribune.

WASH1NGION, u. e., NOV. IA part OF
the work undertaken by the monetary COM
mission which has recently resumed it's
sessions at the Arlington in this city, is
to ascertain from the leading business
men Of the country their views upon the
subject of the currency, and suggestions
as to needed legislation.
President j. J. Hill of the Great North
ern railway, was one Of the men to whom
the commission first addressed series
OF interrogatories. Mr.. Hill, who ranks
among the best financiers of the country,
has replied to the questions submitted, in
an interesting communication Just re-
ceived. He starts out by saying, that in
his opinion. all of the circulating money
Of equal value and redeemable in gold;
and furthermore, as long as the govern
ment declares it's intention to maintain all
lts money on gold standard and shows an
ability to do this, he thinks the country
can readily absorb the outstanding silver
coins and certificates In his opinion the
use OF existing silver currency would be
facilitated If the smallest denomination
OF United States and bank notes were
liked at ten dollars.
Upon the subject Of the demand obliea-
t1ons of the government Mr.. Hill writes:
so long as the present system, which
makes the United States government re-
sponsible for the quality and quantity Of
circulating money, continues the United
States treasury must remain the largest
bank of issue in the world 1t is, and must
continue to be, governed entirely by
statute; and the position o. secretary Of
the treasury and the various offices under
him do not command salaries that will
compare In any way with those paid by
large financial institutions 1t is fair to
conclude. therefore, that aside from the
impossibility of using the ordinary methods
winch experience has approved, the United
States treasury will always be at a disad-
vantage when compared with any large
commercial bank or financial institution.
All the United States notes are obliga-
tions Of the nation, and can only be retired
by substitution of other forms Of Indebted
ness. An issue Of United States bonds at
three per cent. and possibly at two and
One-half per cent per aflnum convertible
into treasury notes at par on demand and
re-convertible into bonds on the return Of
such treasury notes, would, to the extent
OF these notes, make this currency flexi-
ble Tor the reason that when money was
plenty and rates of interest low the notes
might be converted into bonds and when
money brought higher rates Of interest the
bonds would be exchanged for treasury
notes. one reason now why government
bonds are not bought for short investments
is the premium, and the fear that If sold
the seller might not be able to repurchase
them except at higher premium than
he received. If the general government
would ny law provide for the quality of the
circulating notes of the country and re-
stIct the government issue of money to
com alone, leaving the f1exibility of the SUD-
ply OF circulating medium to the law of
supply and demand, l think the general
financial conditions OF the country would
soon adjust themselves to a permanent
basis which would provide adequate means
for carrying on the business of the coun-
try"
In reply to the commissions interroga-
tories If 1t be possible to rely on national
bonds as
SECURITY FOR BANK NOTE 1ss17Es
ana II any practical plan can be devised for
using other securities as basis for such
issues, Mr.. Hill says:
II there Is not an adequate supply of
government bonds at a rate of interest lou,
enough. TO keep the price of such bond.
about par, such bonds cannot be relied upon
as security 1or oank nosc issues. 1t would
follow, therefore. that some other securi
ties would have to be used in place of ma
tional bonds; and it would further follow
that national comptroller of the currency
or some other officer designated bv law
should approve the quality of all securities.
as
basis for bank note issues.
AS to reserves, in case government bonds
did not furnish the basis of bank note
issues, the bank reserves should be- to a
considerable extent. held in coin-eold and
sllver-so long as the government main-
talns the parity between these metals"
Mr.. Hill expresses the opinion that clear
ing house associations, where properly con-
Quoted, are an excellent means to preserve
the credit and good conduct of banks: and
he thinks the strict enforcement of the
law and It's penalties as against the officers
and directors of banks would go still fur
ther to maintain the business of banking
on safe and permanent basis. The exam-
nation and inspections made by the comp
trOler of the currency, If such officer is
allowed to employ good men and pay them
a reasonable compensation, would. he
thinks, be all that is necessary in that re-
gard.
Mr.. Hill thinks it would be better IL
national banks did not pay interest on
current deposits Of other banks, but main
tains that they are compelled in self-de-
fenSe, to do this so long as the large trust
companies pay high rates of interest on
current accounts. He sees no objection.
however, to counting the deposits Of coun-
try banks in reserve cities in banks an
proved by the national comptroller. as a
part of the required reserve. He fayors
permitting large rational banks with a
capital of $1,OOO, 600 and upwards to establish
branches on a basis of one branch to each
$250,0C0 or $5OOOOO of capital; the redemption
of such notes to be made by the parent
bank. He regards the existing 10 per cent
tax on state bank notes war measure
and longer needed; and believes in
conclusion that it would be better for the
country at large if the general government
was out of the banking business. At the
same time, he asserts, it will not be taken
out of this business until some approved
method is found which will take the place
of the present condition.
OTHER PLANS ARE SUGGESTED.