Evening star., 1898-12-06

| raw products are raised. and where the
busy wheels of shop and factory certify that
labor wages are to be paid.
The power of the bank note. tempora-
rily suspended, will always be restored In
full upon the call of industry. The power
of present currency, on the contrary,
is not suspended. 1t is. pointed out,
inevitably misdirected. Ii artificially stimu-
lates speculative activity in securities at
the centers. 1t periodically absorbs the
credit powers at times when they should
be made serviceable to the whole country.
1t ministers to the specuator, 1t prejudices
the producer. the merchant, and the man
ufacturer, though, at last, all suffer from
its deranging influences.
These are the reasons, the more impor-
tant reasons, why banking system
should be reformed and made effective to
commercial and industrial needs; and these
same reasons. with others not here set
forth, call for the elimination. in a safe and
proper way, of the injurious Interference in
our currency system by the legal-tender
paper money of the government
II it be conceded that the legal-tender
money issued by the government does not
possess the qualifications to make 1t a prop
er factor in the cOuntrys exchanges OF
products and manufactures; If the fact also
be admitted that IT is deranging and dis
turbing factor in its relation to industry and
commerce, then the time has come to sub
sutute for it a currency which will ade-
qCately, economically and safely meet the
eVergrowing needs Of the country, rapidly
developing, il is in the power OF pro-
duction, in the number of it's people. and
the Importance of It's domestic and foreign
trade.
Can a bank-note currency be established
which will be adequate, economical and
safe. and thus serve, in a better way than
| is now served, the public needs? Limited
by space in this presentation, L point to
the countries before named where these
conditions are realized. Our neighbor on
the north, Canada, may be cited as near
by witness in the same direction. with
power TO issue notes Is profitable employ
ment for their use in productive industry
can be found, the power has never been
overtaXed or exhausted. The rates Of IN
terest have varied but little between The
richer provinces of Ontario or Quebec and
the sparsely settled districts of Manitoba
The terms of interest are substantially as
favorable TO the farmer of the west as to
the merchant of the metropolis.
While these conditions, in contrast with
our own, which stimulates the operation or
credit at the centers and starVes ii at the
circumference, are due in part to other
features Of its banking system, the inhu-
ence of the currency is most important
Certain 1t is that were bank-note issues IN
Canada repressed by restrictive laws, as
they are with us. and If the field of clrcula-
ton these notes now occupy We're nlled with
the legal-tender notes OF the DOMINION, the
facilities Of banking now enjoyed on the
frontiers would not be afforded. The same
tendency toward congestion at the centers
and scarcity IN InS outlying NtetIlCtS "ouiu
be there as It is here, plainly observable.
1t is not intended by anything here said
to offer the Canadian system as model
from which We should make exact copy. In
certain particulars 1t would not at present
suit our different conditions. The right of
the Canadian banks to issue their notes
without any special pledge of security for
their redemption; the law which gives TO
the note holder, in case of bank failure,
priority of claim over the depositors, while
not operative TO perceived INJURY, under
their system Of large banks with small
branches might, if adopted here, with a
multitude of small banks, each independent
of the other result in an unjustifiable in
yasion of the equitable rights of the de-
pcsitor. The dangers in this regard are
| ably discussed and fully illustrated IN the
annual report of the controller of the cur
rency. To his argument nothing need DE
added. While the question OF terms Is I'M
! portant in itself, it is nevertheless a suoor-
dinate one.
| The facts set forth by the controller re-
| ya+a exclusively TO the proposition that the
| notes of a failed ban.- shall be paramount
lien upon the assets for their nun value oe-
| fore any rights accrue TO other p cIeuneoi -
| The issue of notes upon the general as
| sets of national bannS may be MADE per-
! fectiv secure without the requirement that
| the notes be a first lien upon their assets.
| If would only be necessary TO award 10 the
| note holder the same ratahle proportion OF
| The assets which went TO other creditors
| and TO provide that the amount required 10
| paV the dlUefencS be pptdtIAeu hs OH
| ment upon all the national banks, collected
| ratably in proportion to their share IN the
| circulation of this character Inc Nltal
| question is What percentage or assesstnent W
| tlpon this circulation would be required III
| order 10 cover the losses to note holueFS III
| the case of faie>- banks? The experience
| of the national banking system demon
! strates that the assessment Woulu pe III
| significant. ,,. ,+
! The total circulation of failed banks out
standing at the time OF laIlurg; M up 10 10 ,,op
| her a 1897, was $40, ,s93, ,s21. The ioss upon
| these notes if the security Tor theh hdu
| haep Unmarried in the same degree as tle
| security for other Liabilities WouIu nay
| heen IS 319 1876, an annual average ot
ahont Sfd3 600 This loss would nave Deen
| n,oSa GOOD by a tax of about one-twellth OF
| i nor cent per year upon the clrcuittloh OF
the solvent banks. - tax OF e.Ii.n VI Z
| ner cent upon the average clrcuiauoh OF
tbe national banks since the foundation OF
| W sMStsy,, would have paid such losses up
| to October 81 1897, amounting 10 $3.50, l6o
| anS 1eft surplus of about $9,00O,ooO in the
guaranty fund .. 80 a. ....
| Whether preference be gwen 10 the note
| his sbara of risk with the depositor, as in
| tIermany France and Scotland, or whether
| the note holder shall De protected by the
| snecial pledge of security as now provided
| IN o,Ir ma ational banking act, these consider
| ations AFFECT the question relatively, not
ahsolutely Under either of these condi
tions provisions may be made which will
furnish to the country paper money ade-
ouate TO commercial needs, economical to
l the people, and safe In its general work.
ings-
proper agency for operating this important
| function. He must have motive for his
action or he w.. not exercise il. Given this
motive, he will, like the laborer, the mer-