The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-11-08
Outlines 1t to the None
PLAN. s tary Commission.
FIexibiiFy, He Says, Can Be Secured by
Use OF Bonds OF bow Per Gent lnfer-
chanSeabIe For Treasury Nofes
Plan Of John G. BuIiiff.

WASHINGTON, Nov. 1.-THE none
tary commission is receiving, in an
sWer to it's invitation, many interest
ing propositions for reform Of the
banking and currency systems of the
country, and among these is one from
Mr.. J. J. Hill, of st. Paul, the presi-
dent of the Great Northern railway
Mr.. Hill expresses the belief that all
the circulating money furnished by the
government should be Of equal value
and redeemable in gold; and, further
more, as long as the government de-
clares its intention to maintain all its
money on a gold standard, and shows
an ability to do this, he thinks the
country can readily absorb the out
standing silver coins and certificates.
In his opinion the use of existing sill
yer currency would be facilitated If the
smallest denomination of United States
and bank notes were fixed at ten dol
lars.
Upon the subject Of the demand OBJ
legations Of the government, Mr.. Hill
writes:
So long as the present system, which makes
the United States government responsible for
the quality and quantity OF circulating money,
continues, the United States treasury must re-
main the largest bank of issue in the world.
1t is. and must continue to be- governed en-
tirely by statutes; and the position of secre-
tary Of the treasury and the various ofnces
under him do not command salaries that Will
compare in any way with those paid by large
financial institutions 1t Is fair to conclude,
therefore, that aside from the impossibility
of using the ordinary methods which expert
ence has approved, the United States treasury
a1J hp a. q disadvantage
pared with any large commercial or financial
institution.
All the United States notes are the obliga-
tions Of the nation, and can only be retlred
by the substitution of other forms of indebt-
edness An issue of the United States bonds
at 3 per cent, and possibly at 212 per cent
per annum, convertible into treasury notes
at par on demand, and reconVertlble INTO
bonds on the return Of such treasury notes,
would, to the extent of these notes, make this
currency flexible, for the reason that when
money was plenty and rates OF lnterest low
the notes might be converted into bonds, and
when money brought higher rates OF interest
the bonds would be exchanged for treasury
notes. One difficulty now why government
bonds are not bought for short investments
is the premium and the fear that if sold the
seller might not be able to repurchase them
except at a higher premium than he received.
If the general government would by law pro-
vide for the quality of the circulating notes
of the country and restrict the government
issue of money to coin alone, leaving the
fexibility of the supply of circulating medlum
to the law of supply and demand, think the
general financial conditions of the country
would soon adjust themselves to permanent
basis which would provide adequate means
for carrying on the business Of the country.
In reply to the commissions inter-
rogatories if it be possible to rely on
national bonds as security for bank
note issues, and if any practicable plan
can be devised for using other securi-
ties as a basis for such issues, Mr.. Hill
says:
If there is not an adequate supply of gov
ernment bonds, at rate Of interest low
enough to keep the prices or such bonds about
par. such bonds cannot be relied upon as
security for bank note issues. 1t would fol-
low, therefore. that some securities would
have to be used in place OF national bonds;
and it would further follow that national
comptroller of the currency, or some other
officer designated by law, should approve the
quality of all securities, other than govern
ment bonds, to be used as basis for bank
note issues.
AS to reserves, in case government bonds
did not furnish the basis of bank note issues,
the bank reserves should be, to considerable
extent held in coin-gold and silver-so long
as the government maintains the parity be-
tween these metals.
Mr.. Hill expresses the opinion that
clearing house associations, where
properly conducted, are an excellent
means to preserve the credit and good
conduct of banks; and he thinks the
strict enforcement of the law and it's
penalties as against the officers and di-
rectors of banks would go still further
to maintain the business of banking on
a safe and permanent basis. The eX-
animation and inspections made by the
comptroller of the currency, if such Of
ficer is allowed to employ good men
and pay them a reasonable compensa-
ton, would, he believes, be all that is
necessary in that regard.
Mr.. Hill asserts that it would be bet
ter if national banks did not pay in
terest on current deposits of other
banks, but maintains that they are