The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-01-13
j. III. WALKERS ADDRESS.
He Reviews the Conditions Existing
Under Present Currency system.

tnOer Present currency system.
]. H. Walker. chairman of the House of
Representatives committee on currency
and banking. on being invited to address
the convention, referred briefly TO some of
the remarks made during the progress of
the conference and dwelt upon the neces-
sity of emphatic action by the convention.
When he asked the delegates what they
proposed to do there was a shout of "Actr'
Continuing in his address, Mr.. Walker
said:
We meet under circumstances hat al
ways attend any convention or assembly Of
citizens seeking what they believe 10 be a
great reform of existing evils. Those who
benefit by, or, at least, are not injuriously
personally affected by, the evils declare
they have no existence. and a very large
number who admit their existence are in
different to them and will render no assist
ance. Those who from personal interest or
motives of philanthropy are ready to assist
in the reform have to overcome. first of
all, the inertia that always hinders all
progress, and, secondly. to meet those who
are interested in maintaining existing evils.
Before entering into the merits of the
question it is best for us TO examine a little
of its elements. The first question is, What
is a bank of loan and discount AS i I'M
derStand il, 1t is Il corporation having a
certain amount of capital of its own and
also of capital deposited in ii by other per-
sons in the community in which ii is To-
Gated which those persons do not need to
use on that day, both OF which sums the
bank loans from day to day to those who
do need il on that day, but do not need it
all the year around. In every kind of bust
ness some bank becomes a limited partner
In the business. The profit of the business
which the bank receives is in the form of
the interest charged on the loans and dis
counts made by the bank to the business
man. Banks can no more be taken out of
our civilization to-day than the heart and
blood can be taken out of the human body
and have it still live.
CItr~anoy notes have como 70 no nf x-arv
great Importance in banking. What is a
currency note? Legally, or in form. ii is
nothing different from an ordinary demand
note given by an individual other than that
custom compels the bank 10 deliver coin for
the note Instantly upon demand. as the law
requires every person, corporate or sole, 10
deliver coin in payment OF every debt If re-
quested to do SO. The essential character
of currency notes will be illustrated by a
operations of a cahny Scotchman named
George Smith. who came to this country in
1884, settling in Chicago. Being unable to
get a charter for his bank in Illinois. he Sc
cured from Wisconsin "A charter for the
Wisconsin Marine and Fire Insurance
Company" on Feb. %, 1899. He issued the
demand notes of this insurance company,
printed in the form OF bank currency notes.
promising on their face a coin draft on New
York at any time upon the delivery of these
notes to a certain banker, either i'm Chi
cago. St. Louis. Detroit. Buffalo or Galena,
to the amount of the notes so delivered. In
1916 there was an average amount OK about
&loV.uyD OF lncSe notes IN clTculstIlOn. anu
they reached as high as 81. 41O.235. OF course.
Smith got full interest on all these notes
payable of his own instead of paying in
terest on them. He returned to Great Brit
ain about 1850 with his wealth. estimated at
about $40. 000,0c0 and was known in London
as Chicago Smith.
THE CASE OF SMITH.
The question arises as to exactly what
was the operation of George smith when
he discounted a note for one of his Gus
toners. They delivered their own notes to
him, or the note OF some other man with
their Endorsement, in exchange for the de
mand note of George Smith. OF course
George Smith made a profit on these notes.
while they were in circulation. to the full
amount of whatever interest he charged
on the paper he took from his customers.
BY keeping a small deposit of gold in New
York and borrowing what he needed upon
whatever securities ne originally had, prob
ably TO a very small amount. and increas-
capital, he easily paid THESE notes in gold.
Never was one of his notes diScredited
in New York. George Smiths money was
the only really sound money that existed
unquestioned IN the Northwest for many
years.
What Smith did is precisely what a bank
does in issuing its circulating notes. What
ever money banks can make in interest on
such notes while in circulation reduces the
interest necessary for them 10 charge their
customers in order TO pay good dividends
on their stock. Before 1soc all the paper
money I'm circulation was issued by state
banks. 1t is very curious. and interesting
as well. 10 see how widely IL varied in diff
ferent sections in proportion to the loans
and discounts and the deposits OF banks.
and also 10 the specie held by them-itS
capital stock and it's deposits
Remember that a currency note paid out
by a tank is identical. 10 the man who own
II. to a certificate of deposit 10 him or a
certified check. so that the potential depos-
its I'm a bank are always its nominal de-
posits. plus the currency notes 1t actually