The sun. [volume] (New York [N.Y.]) 1833-1916, 1897-12-08
THE SUN, WEDNESDAY. DECEMBER 8. 1897.

OF each; but the historical fact is that Il has
been through the grecnoack; INC only nnelioyed
less chain" has been worked. Once disbursod,
these notes find their way, by a purely natural
an outward movement. O.. gold. or because OF
any internal movement Of dietrustS thet have
been ssssr made e a re, ready yyu sEsnf Tro 40 aspleI fb the Or sSls
notes into N Issue and Feasmntien a.:
willing to offer for them in fair exchange
IN oqaal. sum in gold Is a propo;
sitI9n to dignity them hem With ,Ssv the art honor q actual
they have hitherto been honored. with actual
gold eauivalency when pushed In upon tho
therefore quite different from a proposition to
retire and destroy them. On tho other hand,
the proposal htot,htnmns. p qrom nno a ! honor them hem
should be retired and utterly destroyed. They
held. viii prove an Irresistible temptation TO
which Congress will yield, when in. some ext
gcncy extrsordinHry and pressing needs for pub
and that the. restrictions now proposed, II
adopted, will then, be disregarded.
membcred that II IL wcro granted full force and
yielded 10 os n dcterminativo objection, there 10
poWer from issuing at any time and In amy
amount the legal.tender notes Of the United
States to circulate as money. Such is the final
opinion OF tho supreme Court, from which there
Is no appeal. Neither must 1t be forgotten by
such directors that use and custom gradually
ing than statutory enactment. or constitutional
'The so.cailed Treasury reserve Of $780, oo,-
600 Of gold has no warrant In specific legisla-
ton. although its propriety has been indirectly
recognized by Congress. and yet. there 10 a SUI.
provision will ever be authorized or sanctioned
by Congressional action. The only real differ
ence, then. between holding these Government
struction is a difference which could at any
time be covered by Legislative action.
discussion tcmpts to II fuller treatment. / must.
however be content with referring once more to
that feature OF this series OF recommendations
which touches the question Of note issues by
national banks. am moved to press the rec
ommcndation as submitted, in view Of the fol-
Paper money is the product OF an industrial,
commercial, and financial evolution. Its econo-
MIXING effect in the use of metallic money pre-
cludes the idea of it's abandonment until society
shall relapse into anarchy.
Credit Is the base upon which 1t rests. Paper
money is the evidence that a thing of value has
passed into the possession of the issuer. and that
the holder Of that paper is willing to await pay.
ment. When payment is made the evidence Of
the transaction should be withdrawn. to appear
again only when n similar transaction occurs.
The bank is an agency. the result also OF q
Is to issue its various forms of credit instru.
ments. OF which paper money Is ono, against the
known members of the industrial community.
1t thus becomes an intermediary in much the
larger part OF all trade anu industry.
Whatever operates to render the bank a safe.
efficient. and available aEcn y to the people
operates to the general prosperity;
capital in public securities as u precedent to the
issue Of its cred / Observation-Disclosures money-is
a requirement which operates by SO much TO re.
duce its efficiency to commerce and industry. 1t
cannot use its capital In two directions at the
SANG, time. Only a necessity to control the
banks capital for the public uso or an indis.
pcnsable need for security in such n form to the
note holder can Justify this requirement;
in 1853 Induced Congress to require from all
noie-issuing banks preliminary Investment of
many disastrous losses incurred by the people
from the note issues of irresponsible banks pre-
viously authorized to do business by ill.consid.
to justify the national Government in requiring
from banks OF issue a pledge OF tho bonds in
trust for the security Of their note ct , holders;
statement. it is recognizable that the eXigencies
Of the Government do not now require the alb
finances. In fact. with Treasury conditions
once nosn% normally ,h established tnbdsh d.S Is w tE r wi, 8 , and and
years be entirely liquidatei.
The Importance OF banking in its relation to
industry and demands for it, in view
and timely attention.
The question is complicated by the fact that
schooled in a system of bank note issues secured
by pledges In the hands of a public trustee. II
Yielded until tiiiGin in some other form V adequate nS' e 10 Ts
antics for the solvency of bank note issues are
provided.
The problem is a two-fold one: how to with
draw the specific form Of security now pro
vided. since 1T will ultimately disappear. and
how to provide a substitution which will be
recognized by the people ms adequate secu'
rity, and which will at tho same time allow
to banks within well.guarded limits the
most useful freedom in their note issues. The
problem is too large, its results too far-reaching,
to be solved Oft hand or by expert dictum. It's
solution must be gradually reached by the path
of safe experiment. To allow national banks to
issue circulating notes equal to IS per cent. OF
their capital upon n payment of . per cent. pei
annum as an insurance or safety fund upon
amounts SO issued is. as shown by the demon,
s~tratiOn drawn from the Comptroller's office, a
proposition we'll within the limits Of safety
Nevertheless. whatever risk there is should b
assumed by the Government. obnoxious MS II
may be to the general PRINCIPLES of Govern
mental action. 1t is by such action that the
situation as 1t exists has been evolved. .Upor
the Government. therefore,, rests the duty oil
seeing 1t properly solved.
Some years Of experience along the line suR
gested will prove WHAT is an adequate provision
al tax for the security of note holders. and will
allow such amendments rs time will justify, in
volving as one OF their features a complete with
drawal Of the G~overnmentsg guaranty from banl
note Issues. l.. J. GAGE, Secretary.
TO the Speaker of the House Of Representa-
tives.