The Saint Paul globe., 1897-12-06
RETIRE THE GREENBACKS.
LET THE NATIONAL BANKS ISSUE
ALL PAPER CUR
RENGY.
MENACE TO THE GOVERNMENT.
United States the Only Government
to Issue Government
Notes.


Oct. 81, 1897, opens with a brief re-
view of the history of the LEGISLATION
which constitutes the present national
| bank act, and invites the attention of
congress to amendments to the law rec
commended in former reports, without
specifically repeating them. On the sub
ject of bank note circulation the comp
troller says:
1T is noticeable that in all the
changes which have been wrought in
the national currency act from it's in
ceptfon to the. present time, the fea-
ture subject to criticism, but which was
intended should constitute the princi-
pal benefit to be conferred. has re-
mained comparatively unchanged.
namely, the note-issring function.
Whatever Justification there was in the
first instance for restl :cting the issu-
ing of notes against tie bonds of the
government, deposited with the treas
urer of the United States to 90 per cent
of the par value the, eOf, long since
ceased. In the report of every COMP
troller Of the currency during the past
twenty years the wisdom of changing
the existing law so that the banks.
and through them the communities in
which located, might have the addi-
tional benefit of an added loanabie CAP
ital, has been urged. Despite all this.
the law still renaiCS without amend
ment. Not only should the bank act
be amended in this particular but con-
gress should seriously consider such a.
change in the method of bank note is
sues as will enable the banks of the
tO o6
demands of trade and commerce in all
sections of the country. The business
of banking, like other forms of invest
ment, must be made attractive to cap
1tal. If it is placed upon a footing diff
ferent from other undertakings, en-
barrassed through unnecessary restric-
tions and deprived of proper sources of
profit, the result cannot be otherwise
than that investible capital will seek
other means of employment, and to
such extent deprive the people of the
benefits of the agency most requisite
to commercial activity.
1T is considered by every great com
mercal government, except the United
States, to be the sole province of the
banks to issue the paper which cir
culates as currency The belief in a.
bank note currency as being better and
safer than government paper cur
rency prevailed unquestioned in this
country UNTIL under the apparent ex-
igencies of the war, the government un-
dertook to issue paper currency Even
under such circumstances the promise
was always given, however, that it
should be retired at the earliest prac-
ticable moment and the admission free
ly made that it was neither a wise
measure nor a safe form of currency.
Between the competition Of the gov
ernment note issues on one hand ard
the unnecessary restrictions imposed
by law upon the other, together with
the increasing price of bonds reuui red
to be deposited as security, TIE note is
suing function of the banks has cen
permitted TO become merely an il ci-
dent to the conduct of the natio laI
banking associations of the country.
1t has been seriously suggested more
than once that the bank note issue be
done away with and all paper be is
sued by the government instead. The
danger Of such a course is not to be
over estimated. The experience of
every government has been that gov
ernmental currency paper is a source of
weakness and danger. In the United
est approach to success, with the vol
Ume of the federal paper comparative
ly limited in amount, the credit of the
government has been more than once
put in Jeopardy through 1T and the
business interests of the country sub
jected to unnecessary loss and confu-
sion.
THE argument that the government,
better that the banks, can provide for
the redemption of paper note issues
will not stand the test of a careful an
alysis. The government has no means
for caring for it's demand liabilities eX-
ccpt through borrowing and through
the levying Of taxes. Upon the other
hand, the banks have assets which can
be promptly converted into cash to
meet their outstanding notes when pre-
sented. Their ability to command gold
has always been beyond that Of the
government, for in, each financial ex-
igency which has confronted the gov
ernment the banks have furnished to
it the amounts necessary to maintain
it's solvency. 1t is impossible to be-
lieve that with a system CT bank note
issues based in part upon securities
and in part upon bank assets the
country cannot be provided with a
sound, safe and elastic bank note is
sue, always commensurate with and
responsive to the demands of trade.
The Bank of England, the Bank of
Scotland and the Bank of Ireland have
been found to have ample resources
to provide the note issues for use in the
trade of the United Kingdom. The
same is true of the Bank of France.
The Deutsche Reichsbank, or German
Imperial bank, has for more than
twenty-five years issued a bank note
paper against assets which has main
tanned it's value and has been so con-
trolled as to successfully meet the COM
mercial needs Of the empire"
The comptroller calls attention to the
method of organization of this bank,
and publishes some interesting statis-
tics in connection Herewith.
The total number Of national banks
organized since the system was put
into operation, in 1868, is shown to have
been 5,095. On Oct. 81 last there were
in active operation 3,617 having an au-
thorized capital of $500, ,23O, 295. The to-
tai outstanding circulation Of banks
then in operation was 1929, $780, $780, Of
which $202 1894, ,555 was secured by bonds
of the United States and the balance
by lawful money deposited with the
treasurer Of the United States. The
total circulation outstanding Of all ma
tional banks on Oct. 81 last was $780,
131, ,005, of which amount s., ,55S,S00 was
secured by bonds held for account Of
insolvent and liquidating banks, and
$26,205,3 1926 by lawful money deposited
for their account and by active banks
reducing circulation. The net decrease
in the amount Of circulation secured
by bonds during the year was S125S4,-
334, and the gross decrease in the total
circulation was $4,S51, ,292.
The SIT ho In fiOn oro Si-