The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-05-16
REFORM OF CURRENCY
III. II. HANNA TALKS OF THE PRO-
VISIONS OF THE NEW MEASURE.
House Committee Has Incorporated
the Essential Features of the
COmmissiOn's Bill.

The character and operation or the new
banking bill, which has just been completed
and favorably voted upon by the committee
on banking of the House, was set forth in
an interesting manner by II. ii. Hanna,
chairman of the executive committee OF the
Indianapolis monetary convention, IN talk
yesterday with a Journal reporter. Mr.
Hanna has believed that any comprehensive
action by the banking committee would be
a step in the right direction, because 1t
would tend to provoke discussion ard crys-
tallize public opinion upon the necessity for
complete reform of the currency system. 1t
will be seen by what he said that the bill
actually reported meets his approval and
contains, in his opinion, the elements of a
satisfactory adjustment of the currency
problem. In response to question as to
the general scope of the DILL, AIR. llama
said:
THE two important features of the meas
ure are those dealing with the greenbacks
and the bank-note currency. There are some
other valuable improvements in the banking
law, but could not discuss them in short
talk without detracting from the promi-
hence which should be given to the leading
features of the bill. think the measure is
view in its manner of dealing with the
greenbacks, without the necessity of bond
issue and WITHOUT any other charge upon
the treasury. The banks are given an OPP
portunity to assume the burden, for which
they are much better fitted than the treas
ury. The proposed manner of doing it is for
the banks to pay into the treasury p per
cent. or more of their capital in the green
backs which they now hold or may obtain.
They receive in return a new form of note
known as national reserve notes. These
notes are available for their reserves, or for
any other purpose for which currency is en-
ployed. They are legal tender and their SUBJ
stitution for the greenbacks does not reduce
the legal-tender money of the country nor
the currency in the hands of the people"
m 10 VnI of
porter
:. That is the very essence of the PROPOSE
tlon,' replied Mr. Hanna, land 1 am glad
you asked me that question. Perhaps the
pest way TO make the matter clear is to
take the case of a big demand for gold for
export. Under the present system, as it has
operated since the passage of the Sherman
law, the gold exporter gets together a mass
OF greenbacks or Sherman notes, takes them
to the subtreaSury at New York and de-
mands redemption in gold. The government
is bound to pay the gold in order to main
tam the gold standard and prevent the
plunge of the country to the Silver basis.
The only way of obtaining the gold when
the people and the banks are boarding it,
is 10 sell bonds, imposing heavy interest
charges upon the people. The pending hill
proposes that the banks shall take care CT
t Eao Surrent redemption OF the reserve notes.
Each reserve note will bear upon it's back
the pledge of the bank to which it is issued
70 care Tor It's current redemption. "A C'lr-
rent redemption fund equal to per cent of
the outstanding reserve notes will be held
IN the subtreasury for their redemption, Lut
tnlS fund VIII be contributed by the banks
ana must be made good by each hank as
fast as any of its notes are redeemed The
presentation of reserve notes, therefore, for
redemption would simply. result III calls
upon the banks to replenish the redemption
Lund. These calls would not he seriously
felt, for most of the reserve notes would
be securely locked up in bank reserves, and
with the treasury out of the banking bust
ness gold would be sought cnly for the ordi
nary purposes of settling commercial bal
ances; The treasury is thus completely pro-
tected, so far as the reserve notes are is
sued IN exchange for greenbacks. The green
PACKS received for reserve notes are cam
celed and retired and can never again be-
come charge upon the treasury
What inducements are offered to the
banks to take reserve notes in exchange for
greenbacks?" was asked
- There are two direct inducements" was
me me reply. but there is a third. which
tnlnk, is not without Importance This in
dlrect lnducement is the general desire of
the banks to have the currency of the coun-
Try placed upon stable foundation. Doubt
ana uncertainty reduce the volume of bank
business and impair the profits of the banks
Even If the current redemption of the green
PACKS were assumed at small cost to the
Ddhks, therefore, they could afford to pay it,
Ii should not be forgotten, moreover that
1t ls much easier for the banks to obtain
gold than for the treasury. They are in the
banking business and have a tremendous
volume. of quick assets constantly at com
mand. The bill, however, gives the banks
two important privileges in return for their
assumption of the current redemption of the
reserve notes. One of these is a remission
of the tax which is imposed by the bill upon
capitai' surplus and undivided profits. This
remission Of taxation is sufficient to pay the
interest upon the redemption fund held
against the reserve notes. This is matter
which mainly concerns the banks. The i'm
portant consideration for the public is the
privilege of issuing asset currency This
will give an elasticity to our banking sys-
tenn winch ought to greatly promote the ex-
tension of credit"
But Is it not fact Mr.. Hanna" was
asked, that some conservative bankers are
distrustful Of the asset currency to which
you refer?"
There is undoubtedly some feeling of
that KIND among some of those who have
not carefully considered all phases of the
subject" was the reply. II cannot give
you all the reasons in a short talk for be-
leVlng that the American banking system
is SO conducted at present that it would be
as safe with asset currency as the systems
OF European countries based upon the same
principle have proved to be. What 1 would
like to have you lay stress on is the fact
mat, even If asset currency were a doubt
full experiment-which it is not-it is so care
fully safeguarded in the bill reported that it
need not excite any doubt The maximum
amount or currency based upon commercial
assets which bank can issue without pay
ing nigh tax is 40 per cent, of its capital
Ihls 40 per cent. is hedged about with pro-
lection on all sides. In the first place, not
dollar of currency based upon general assets
can be issued unless an equal amount is
taken upon bonds and an equal amount is
TAKEN TAX IN reserve notes. The premium on
fund OF ~ or IL per cent against the asset
notes, If the old per cent. bonds were de-
posted. and would afford a premium more
than twice as great If the new fourS were
used. The asset currency itself is secured
by first lien upon all the assets of the
bank, by the liability of shareholders to as
seSsment and by a gold guaranty fund con-
tr1buted by all the banks to the amount of
per cent. of their asset currency. This
gold guaranty fund is available in the ag-
gregate to pay the notes of any one failed
bank If its other assets are insufficient, and
the banks may be called upon to relinquiSh
1t II 1t is reduced. The step taken by the
committee In regard to currency based upon
guarded that 1t involves no possible risk
but may afford an opportunity for testing
the system in this country
What do you think will be the effect Of
the passage of the bill upon political con-
.ditions?"
Il think it will be very beneficial to those
members of Congress who stand up cour-
ageously FOR a sound currency. This bill
does not offend the prejudices of those who
are attached to the greenbacks nor those
is better than one which requires interest
payments 1t meets the demands of the
business community. expressed by our two
large conventions at Indianapolis, and the
cover an unusual warmth of support from
business men, irrespective of party. The
provision for asset currency, moreover, if
1t IS not too much hedged about with re-
strictons to be profitable to the banks, will
go 1ar towards meeting the sincere and we'll
founded desire of some of the southern and
Western States for more adequate crcu-
latlon at certain seasons of the year, and
VIII thus tend to remove forever the causes
winch gave such strength TO the free silver
| those who have been interested in the fight
| for a sound currency will indicate to their