The sun. [volume] (New York [N.Y.]) 1833-1916, 1897-12-08

a. IL now atands is not directed toward. the
safety guaranteed 10 the note holder. y is
directed toward those restrictions It embodies,
tSe fui f0'S Sono n i' d failure to to eS SSsSmp TSo
requirement OF tho law now makes i imp9ssi.
BILE to ORGANIZE a bank with q capital of loss than
IT is to DO located, or how restricted tho volume
Of business, there to DO transacted. Because OF
national. and local, many communities arc de:
priyod OF the aid OF banks OF Issue and onrdened
with onerous rates Of exchange and interest
In order to obviato to as great an extent as
possible these defects and make the act more
recommend that II DO amended in the following
PARTICULARS:
Mrst-Pcrmit national banks to be organized
having q population OF . 900 Inhabitants or loss.
Second-Reducc tho ratio Of taxation on eircu'
lating notes secured by deposit OF bonds to one
Third Permit banks now organized or here
nftor to be organized TO issue circulating notes
TO tho par value of the refundlng bonds herein.
before suggested. when, deposited by them with
allow such banks, as shall avail themselves OF
Treasury of the United States greenbacks,
amount Of 900. against which there
shall ut once DO issued to them by the Comp.
troller OF the Currency national bank notes TO an
equal amount, 1t being further provided thatfrom
time to timc. at his convenience, the secretary
o. S1c the rLrSssnry shall s snes si,xHr c iSf the Erse 80
deposited to secure circulation, bonds OF the
same class and character as the refunding bonds
first named to tho amount OF 5000. 200. 900, such
bonds to DO chargeable to said banks and, by
them accounted. for at such price mot less than
pRr) ns tho market quotations may Indicate. TO
be their fair market value. During tho period
Of time intervening between tho deposit OF
green6nGks Treasury notes : and nd s hnrSs G Ger A.
Secretary of tho Treasury the circulating notes
specifically issued therefor shall be exempt from
funds released thereby shall at once be trans
ferred by the Secretary of the Treasury to tho
Issue and Redemption Division.
Fourth-After sal banks have deposited such
bonds. grecnbacks, Treasury notes. or silver
certificates to the amount OF 50per cent. OF their
capital they shall be permitted to issue bank
vided, to tho extent OF 20 per cent. OF such dc;
BY any direct pledge OF security. but issued
against the assets OF the bank.
Garernmsntt to ali in eiTFe "fiains nj notes OF the Bank
whether issued against deposited security or
Sixth-To secure the Government against loss.
IL any, attaching to Its guaranty a tax OF per
cent. per annum on unsecured circulation shali
shall be invested by the Secretary OF the Treas.
nry and the Comptroller q the currency IN
tSS GnTeTnm S9nds sba II be sad far'her 70 pr SIee tSn By
having a first lien upon all assets In case OF fail
urc of the issuing bank.
city of New York at the Sub-Treasury, and at
such other sub-treasuries as may be designated
Dy the comptroller OF mt currency VII luO
proval Of the Secretary, of the Treasury. The
control of such rodemption shall be under tho
direction of the Comptroller OF the Currency
and made from a redemption fund OF 10 per cent.
to be provided and maintained by the banks.
eighth Restrict the issue OF national bank
notes TO the denomination of $40 and upward.
IN FAVOR OF THE PLAN.
An examination OF the plan herein proposed
will show that the amendments suggested are
not of n distinctly radical character. II IS be,
licved that banks organized under tho national
bank act, with these amendments. would. within
the limitations named, give upon a thoroughly
safe basis a desirable credit currency, and lead,
as the result OF time and experience. ultimately
to freedom of issue. A careful Investigation OF
the commercial conditions of tho country at
different periods of the year shows how essen
tial to those sections depending upon the
prompt moving of the staple crops Of cotton.
blcs the local bank TO supply its customers with
the means necessary for such purpose within
cost. Such an Investigation will also indicate
how inadequate is the Government note to meet
these eXigencies. The Government notes. like
gold, or coal, or salt, or lumber. exist at II given
time in fixed amounts. The local bank note, on
the contrary. is, within legal limitations subject
needs OF the community unite with the motive
Of the banker in supplying these wants as they
n ane 9fpp1 Is called ~ 10 N the extent 10 Which III tn the
crop-producing sections OF tho country are now
dependent as borrowers of money upon other
The national banks located in the Southern
States have an aggregate capital Of $6s. $50 ;Ooo.
Ou oCt. o., 1SoO, lnCy "a " iioh
ton crop. sIs.5is.ooo On March . following
They succeeded in borrowing for a part OF their
needs, but commercial necessities required
more. With proper banking facilities the ncces-
sity for such borrowing now existing would be
reduced to q minimum.
lam confident that under, an act allowing a
rates of taxation those banks would find II to
their interest to issue, instead OF $lS.95O,OOO.
the amount which they haye at present out:
afandipp n gum canal to the full amount OF
their capital. and. In addition, In the season OF
crop activity, an additional unsecured volume
OF circulation approximating 20 per cent. or
From data gathered from the records of the
found that during the existence Of the national
banking system $50 associations. having a com
PIN Sa Gspi oe r of S2e;o I; Of SP3 TIM na na4 ofer p of thos se
in this list whose affairs are fully closed only ls.
having a capital Of S1.61O.000. would have
to fully provide for their circulating notes, had
such notes been outstanding to the full limit:
Il tseir hf FAILURES, 0n respecsiSeiy. Ut The defciency
would have required to cover 1t n con-
s s5s u hnd from ,pa w the Euar nmEsr i ~ as % fa ens S asso.
Citations maintained IN current use an amount
OF note Issues equal to 25 per cent. OF their cap
such circulation would have produced the sum
OF $2,454, l4O.4S available to meet the deficit OF
ure Of the eighteen banks which failed to yield
from their own assets tho amount hat would
have been necessary 10 provide Tor all their own
outstanding credit currency.
THE PREJUDICE IN FAVOR OF
CURRENCY.
In submitting these recommendations. I am
not unmindful Of the eopvictions. ,preconcep-
the people In much that relates to our currency
and banking system. II will at once appear to
many that the proposal herein made to place in
conditional retirement the sum Of $500. 900. 900
In our legal tender (greenbackl issues is q dis
elimination against n form Of paper money
which. under the influence OF a worthy senti-
ment. has become 10 them a symbol of the unity
and power of the nations life. A little reflection.
however, will! lead TO n conclusion quite to the con-
trary OF such an inference. Bearing in mind the
fundamental truth upon which this argument
rests. namely. the necessity for n reduction In
the volume OF demand liabilities, now consti-
economically speaking, q matter OF Indifference
whether this reduction be mado in tho volume
of silver, silver certificates. Treasury notes,
greenbacks. or in some agreed.upon proportions
~1Y q A AZ f