Audubon Republican. [volume] (Audubon, Iowa) 1894-1925, 1897-12-16


and silver certificates so deposited to Sc
cure circulation, bonds Of the same class
and character as the refunding bonds first
named to the amount of $500, 100000, 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 indicate to be their fair market value.
During the period Of time intervening be-
tween the deposit of greenbacks, treas
substitution of the bonds by the secretary
of the treasury the circulating notes spe-
officially issued therefor shall be exempt
from taxation. Upon such substitution Of
bonds the funds released thereby shall at
once be transferred by the secretary Of
the treasury to the issue and redemption
Fourth. After said banks have deposited
such bonds, greenbacks, treasury notes or
silver certificates to the amount Of so per
cent. of their capital they shall be permit
ted to issue bank notes In addition to the
80 per cent. thus provided to the extent Of
p per cent Of such deposit, which said
rs per cent may be unsecured by any d.
rect pledge of security, but issued against
the assets of the bank.
= Fifth. Extend the guaranty of payment
by the government to all circulating notes
OF the bank, whether issued against de-
posted security or against assets.
Sixth. To secure the government against
loss, II any, attaching to its guaranty a
tax or two per cent. per annum on unse-
cured CIRCULATION shall be levied to create
safety fund, which fund shall be invested
by the secretary of the treasury and the
comptroller of the currency in government
bonds. In addition to such funds the gov
eminent shall be further protected by hav-
ing first lien upon all assets in case Of
failure of the issuing bank.
seventh. All notes shall be redeemed in
the city of New York at the subtreasury
and at such other subtreasuries as may be
designated by the comptroller of the cur
rency, with the approval of the secretary
demption shall be under the direction of
the comptroller of the currency and made
from redemption fund of ten per cent to
a N m n in q i'm RI hty n J. 1fNly
Eighth. Restrict the issue of national
bank notes to the denomination of ten dol
lars and upward.
Would Dignity the Greenback.
In submitting these recommendations
l am not unmindful of the convictions, pre-
conceptions and prejudices so widely prev
alent among the people in much that re-
Iates TO our currency and banking system.
1T Will at once appear to many that the
proposal herein made TO place in condition.
al retirement the sum of 5000, 000, 900 in our
legal tender (greenback) issues is dis
elimination against form of paper money
which, under the influence of a worthy SEN
timent, has become to them a symbol of the
unity and power of nations life little
reflection, however, will lead to a con-
clusion quite the contrary of such an in
ference Bearing in mind the fundamental
truth upon which this argument rests, viz,
the necessity for a reduction in the volume
of demand liabilities, now constituting a
menace to the public treasury, it is, eco
nomicapy speaking, a matter of indiffer-
volume of silver, silver certificates, treas
ury notes, grecnbaCks, or in some agreed
upon proportions of each; but the histor-
ical fact is that it has been through the
greenback, the only unalloyed credit note
OF the government, that the endless
chain has been worked Once disbursed,
these notes find their way, by a purely nat
ural process, to the banking centers, where
in case of an outward NOV ement of gold
or because of any internal movement Of
distrust they have been a ready agency to
deplete the gold reserve in the public treas
ury: The proposition to retire a large
p0dreIOn OIL tneSe notes into an issue and
the public is willing to offer for them in
falr exchange an equal sum in gold, is
proposition to dignity them with the honor
of actual gold equivalency when they are
passed out, as they have hitherto been
honored with actual gold equivalency when
pushed in upon the treasury for redemp-
ton. The proposition is therefore quite diff
ferent from proposition to retire and de-
stroy them.
On the other hand. the proposal to thus
preserve and honor them will excite OBJ
jections from another class who will al
iege that the notes now in question should
be retired and utterly DESTROYED They
will aver that so large sum, no matter
how held, will prove an irresistible tempta-
ton to which congress will yield when in
some eXigency extraordinary and pressing
needs for public expenditure shall rest upon
the treasury, and that the restrictions now
proposed, If adopted, will then be disre-
garded. In considering this objection it
must be remembered that if it were granted
full force and yielded to as a determinatiye
objection there is nothing whatever to pre-
vent the laWmaking power from issuing
at any time and in any amount the legal
tender notes of the United States to cir
culate as money. Such is the final opinion
of the supreme court, from which there
is no appeal. Neither must it be forgotten
by such DIRECTORS that use and custom
gradually, acquire restrictive power but
little less binding than statutory enactment
or constitutional prohibition.
Further Argument Advanced.
The important nature Of the subject I'M
der discussion tempts to a fuller treatment
l must, however, be content with referring
once more to that feature of this series Of
recomme ndations which touches the ques-
ton of note issues by national banks I
am moved to press the recommendation as
submitted, in view of the following consid-
erations:
Paper money is the product of an indus
trial, commercial and financial evolution.
Its economizing effect in the use of me-
tallic money precludes the idea of its ADAM
Comment until society shall relapse into
anarchy. Credit is the base upon which it
thing of value has passed into the pos
session of the issuer, and that the holder
of that paper is willing to await payment.
When payment is made the evidence of the
transaction should be withdrawn, to APP
pear again only when a similar TRANSACT
ton occurs.
The bank is an agency, the result also of
pure evolutionary movement, whose
function 1t is to issue its various forms of
CfeQlt instruments, Oh winch paper money
is one, against the pledges and promises
to it of the less publicly known members
of the industrial community. 1t thus be-
comes an intermediary in much the larger
part of all trade and industry. Whatever
operates to render the bank a safe. eff
ficient and available agency to the people
operates to the general prosperity.
A TwOfOld Problem.
The problem is a twofold one: How TO
withdraw the specific form of security now
provided, since it will ultimately disappear:
how to provide substitution which will be
recognized by the people as adequate Sc
curity, and which will at the same time
allow to banks within we'll guarded limits
the most useful freedom in their note is
sues. The problem is too large, It's results
too far-reaching, to be solved offhand or
by expert dctum. Its solution must be
gradually reached by the path of safe ex-
pertinent To allow national banks to issue
circulating notes equal to 25 per cent of
their capital upon a payment of two per
cent. per annum as an insurance or safety
fund upon amounts so issued Is, If the DEM
onstraton drawn from the comptroller's
office can be trusted, a proposition well
within the limits of safety. Nevertheless,
whatever risk there is should be assumed
by the government, obnoxious as 1t may be
to the general principles of governmental
action. 1t is by such action that the situ-
atom as il exists has been evolved JDOn