The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-03-24
Its Provisions Explained by SubcOm-
mittee of Republicans of the House
Committee on Banking.
SUBSTITUTE FOR GREENBACKS
STANDARD SILVER DOLLARS TO BE
REDEEMABLE IN GOLD,
But silver Certificates to Be Ex-
changed Only for silver Dollars
Other Washington News.

WASHINGTON, March 23-The report of
the Republican subcommittee of the House
committee on banking and currency was
made to-day before the full Republican
membership of the committee. This SUBJ
committee, which was appointed a month
ago to report a general banking and cur
rency measure, consists of Mr.. McCleary of
Minnesota, chairman; Mr.. Prince. of Illi-
nois and Mr.. Mitchell of New York The
bill they have reported is entitled "a bill to
provide for strengthening the public credit,
for the relief of the United States treasury
and for the amendment of the law relating
to national banking associations" The
method of dealing with the greenbacks is
not by direct retirement, but by the substi-
tuition of a lega-tender note, which the
banks are required to assume. and for the
redemption of which they are required to
find the gold so long as they are conducting
a solvent business The principal provi-
sions of the bill follows:
F'irst-A division of issue and redemption
is established in the treasury for which the
secretary of the treasury is authorized to
set aside the general cash balances in eX-
cess of $4,000 900. This excess on March Il,
1898, was SIG, 1879 532. United States notes re-
ceived by this division for redemption in
gold are to be Cancelled and retired in pro-
portion as certain substitute currency is
again paid out except under exceptional con-
ditionS.
Second-NationaI banks are required to as
sumo the current redemption of United
States demand notes, in order to obtain cir
culation based upon their commercial
sets. A new class of notes, called national
reserve notes, is to be issued in lieu of
legal-tender notes deposited by the banks
with the treasury, and these reserve notes
are to be redeemed upon demand by the
banks out Of the redemption fund when
they are required to maintain in gold. These
reserve notes are not treated in any re-
spect as bank notes, because the banks are
not liable for their ultimate redemption.
Third-The basis of national bank note cir
culation will eventually be the commercial
assets of the bank, but this will be reached
only after a series of years.
Fourth-National banks are to be permit
ted to issue currency notes upon their COM
mercial assets to the amount of the reserve
notes issued to them in return for deposits
of United States notes.
Fifth-Treasury notes issued under the act
Of July IA, 1890, are to be dealt with eventu-
ally upon the same basis as United States
notes.
Sixth-A tax of 2 per cent is levied upon
currency notes issued in excess of 60 per
cent. of the capital of any national bank
and of per cent when in excess of 80 per
cent.
Seventh-The national currency notes
based upon commercial assets are to be Sc
cured by bank note guaranty fund. made
up by the contribution In gold coin of 3 per
cent. of the entire circulation of the bank,
and provision is made for replenishment of
this fund within certain limits
EghthIThe national reserve notes will
continue to be legal tender until received
into the treasury from failed and liquidat-
ing banks, wnen liability for them will be
assumed by the government and they will be
redeemed and Cancelled
Ninth-Standard silver dollars are to be
redeemablc in gold but silver certificates
are redeemable only in standard silver dol
lars. The parity of silver with gold is Sc
cured by gold redemption fund.
Tenth-Silver certificates are hereafter to
be issued only In denominations of 81, y and
currency are not to be issued in denomina-
tons below So
Eleventh-National banks are required to
pay a tax of one-eighth of per cent. semi
annually upon their capital, surplus and UNI
divided profits.
TWelfth-National banks are permitted TO
establish branches under regulations to be
prescribed by the secretary of the treasury.
The committee says, in explanation OF the
provision regarding the assumption of the
legal-t tender notes by the banks that it
has endeavored to adopt system which
would be subject to none of the criticism
made against the issue of interest bearing
bonds or the taxation of the people for the
payment of this demand debt. 1t declares:
THE system adopted is such as to con-
tinue to the government all the benefits of
the loan without any of the disadvantages
of its character as demand obligation.
The proposed bill imposes upon the banks
tha whole burden Of carrying and sustain
ing this debt. There is no profit or return
to the banks in thus carrying the national
H.,
assume the entire obligation as compensa-
ton for the franchise and privileges grant
ed as national banking corporations.
1.-THE heavy burden assumed by the banks
must have it's due weight in measuring the
additional privileges which are given them
by this bill: The banks are required to re-
deem this debt of the government, assumed
by them, upon precisely the same terms as
the redemption of their own notes while
ey aTf IS on4 bH he 70 ons
such notes they become 'insolvent that the
government recognizes again it's demand
debt and assumes it for the complete pro-
lection of the holder of the note and for
the benefit of the creditors of the bank by
leaving the remaining assets unimpared for
the settlement of their just claims. The
form of note thus assumed by the bank.
with the final redemption guaranteed by the
government, combines the strongest of all
resources for its ultimate payment.
by the bill the country Will be provided
with an ample legal-tender currency, con-
ssting of all the notes substituted for the
present legal-tender notes, and OF all the
gold and silver coin in circulation, to the
maintenance of whose parity the faith of
the government is sacredly pledged
The report states that there are several
possible results which may follow the au-
thority given the banks to assume the gov
eminent debt and issue reserve notes 1t
is conceivable and probable that a large
proportion of the present legal-tender notes
will be converted into reserve notes. and
will cease absolutely to be redeemahle at
the treasury except in the restricted cases
of the failure or liquidation of the bank
through which they are issued. IT. how
ever. only small portion OF the legal-ten-
der notes are thus absorbed, the fact that
they are Cancelled when redeemed in gold
by the treasury will give them q value
which will at once remove all question of
their prompt redemption. and will give them
substantially the character of gold certifi-
Gates. The fact that note is to be can
celed on redemption and not reissued will
tend very greatly to prevent its presentation
for redemption.
The purposed effect of the proposed bill, +"
says the report, lis to throw upon the ma
tlonal banks the entire burden of finding
gold for the notes of the country. There is
no doubt of their ability to do this if it is
required by law. They have the power to
regulate interest rates. within the narrow
limits marked out by economic law, In such
a manner as to attract gold to the country
by restricting their circulation when neces-
sity arises The system proposed by your
committee provides an easy and adequate
method of obtaining geld for export from
the banks without exposing the country or
the United States treasury TO the alarm and
CONFUSION which have attended gold ex-
ports during the last five years"
ThOrp Given Epes's Seat.
WASHINGTON, March PR r. Thorp