The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1897-12-08

Paper money is the product of an In
dustrial, commercial and financial evolu-
ton. Its economizing effect in the use OF
metallic money precludes the idea of aban-
anarchy.
Credit is the base upon which it rests
Paper money Is the evidence that a thing
OF value has passed into the possession of
the fssuer. and that the holder of that
paper Is willing to await payment. When
payment Is made the evidence of the trans
action should be withdrawn, to appear
again only when similar transaction
occurs.
..'The bank is an agency. the result also
OF a pure evolutionary movement whose
functions It is to issue its various forms
OF credit instruments, of which paper
money Is one, against the pledges and
promises to II Of the less publicly known
members OF the Industrial community. It
thus becomes an intermediary In much the
larger part OF all trade and industry.
Whatever operates to render the bank
q safe. efficient and available agency to the
people operates to the general prosperity.
1.-THE requirement that the bank shall
Invest Its capital In public securities. as
a precedent to the issue Of its credit in
struments-paper moneys a requirement
which operates by SO much to reduce its
efficiency to commerce and industry. 1t
cannot use It's capital in two directions at
troll the banks capital for the public use
or an Indispensable need for security IN
such form to the note holder can justify
this requirement.
1.-THE exigencies OF the governments
finances in 1863 induced congress to require
from all note-ssuing banks preliminary
investment OF their capital in the governs
ments bonds. The many disastrous losses
incurred by the people from the note is
sues Of irresponsible banks previously au-
thorized to do business by ill-considered
provisions OF many separate states seemed
TO Justify the national government in re-
curing from banks of issue pledge OF
the bonds In trust for the security of their
note holders.
Without further extension OF the his
torlcai statement it Is recognizable that
the exigencies of the government do not
now require the absorption of banking
with treasury conditions once normally
established to revenue and expenditure,
the funded debt Will within a few years
be entirely liquIdated.
The importance OF banking In its re-
lation to industry and commerce demands
for 1t, in view of the considerations thus
enumerated. careful and timely attention.
The question is complicated 10y the fact
that for whole generation our people
have been schooled In a system Of bank
note issues secured by pledges IN the hands
of public trustee. II Is not a good sys.
tenn, but IL ought not TO be displaced until
in some other form adequate guarantees
for the soivency of bank note issues are
provided.
culating notes equal TO % per cent. OF their
capital upon payment of per cent. per
annum as an insurance or safety fund
upon amounts so issued is. II the demon
stratlon drawn from the comptrolier's Of
flee ran be trusted. a proposition well
within the limits Of safety. Nevertheless.
vha fever risk there Is should be assumed
hy the government. obnoxious as Il may
ha to the general principles OF govern
mental action. It IS by such action that
the situation as u exists has been evolved.
Upon the government therefore. rests the
duty Of seeing Il Droperly solved.
some years OF experience along the
line suggested viii prove what ia an ade-
duate provisional tax for the security of
note holders, ard Will allow such amend
ments as time Will Justify. involving. as
ore Of its features, a complete withira " al
~ the governments guaranty from bank
note issues"