The daily morning journal and courier., 1898-12-30

form as to insure much greater elastic
 ity than exists in the present system,
 provided always that the security of i, the issue shall be in no wise impaired,
 As respects the method to be em-
 ployed for attaining this needed in
 crease in elasticity, it is believed that the really successful one must involve
 issuing some portion of the circulation
 upon ordinary banking assets The
 chief reason for this, as already indica-
 ted, is that such ordinary banking as-
 sets are the only ones which are uni
 versally and readily available when eX-
 pansion is needed. The superiority of
 such system is further insured by the
 fact that there is a very close corres-
 pondence between the amount of such
 assets in the possession of the banks
 and the need of the community for cur
 rency; since these assets like the need
 for money, vary in amount with the
 volume of business. AS respects the
 security of such notes, there need be no anxiety, provided the system is SUD-
 plemented with the device of safety
 fund, or with one or ore of the various other eXpedients which have been pro- posed. If it be urged that nothing can
 make this system really safe, at least for the banks considered as guarantors of each others notes, so long as the se-
 curities on which those notes are based
 remain in the custody of the issuing bank, the objection might be met by enacting that notes of this character
 shall be issued only through Clearing House associations whih are to hold in trust the commercial paper or other collateral by which the notes are se- cured, just as they now do in the case
 of loan certificates, and as the treasury of the United tates does in the case of l national bank notes.
 It may, however, prove impossible to secure legislation of the character de-
 scribed In such an event the existing system of notes based on United States bonds should be so amended as to give to it as large a measure of elasticity as is possible. The provisions of the law of 1882 which limit the amount of notes that may be retirted in any month, and 1 prohibits reissue within six months af- ter retirement, should be repealed. To se4lre in some degree that increase in
 profitableness which, as we saw earlier, i is indispensable to elasticity, it would l be well to raise the ratio of notes to | bonds deposited and to lower the tax,
 or better still to leave it on capital and surplus. In order still further to enlist l the self-interest of the banks, espec- I ially on behalf of the prompt retire. ment of redundant notes, we should | be inclined to prohibit any bank from 1 paying out the notes of any other banks except to the issuer or to the ra I demption agency. As respects making
 easier the processes of expansion and
 contraction, some gain would probably
 result from requiring the comptroller
 to keep on hand supply of notes in
 blank, and still more from an increase
 in the facilities for redemption.
 B. COUNTRY BANKING.
 l As already remarked, there is real need for increased banking and cur
 rency facilities in the newer or more l backward parts of the country, and leg l islation could do something towards l satisfying this need In the judgment
 of your committee, the most effective 1 as well as the safest expedient for &C., l complaining this object is some system l of branch banking similar to those in
 vogue in Canada, Scotland and other ] countries. Under such a system, bank l ing facilities can be furnished to com
 munities too small to support even the smallest independent bank of issue; and capital can be most cheaply and 1 easily transferred from districts over-
 supplied to those needing it; while, at
 the same time, the dangers of fraud or
 mismanagement incident to all bank
 ing are far less serious than under a ! system of small independent banks /, There are doubtless objections to the
 plan; but the experience of other coun- ! tries has shown that they are not of great moment.
 | If, however, the apparent tendency
 towards excessive concentration of capi- tai shall prove too strong an objection | to this system, other alternatives offer | themselves. A decision to permit the | issue of any portion of the circulation
 upon general assets would greatly in- crease the banking facilities of the country districts; since the chief ob stacle at the present time to the estab- | lishment of national banks of issue in such districts is to be found in the cir
 constance that they could not afford to | invest their capital in assets so unpro- ductive as United States bonds. An l other remedy for the difficulty in ques- | tion would be the exemption from the l federal ten per cent. tax on circulation of such date banks as should comply i with the regulations of federal law and
 submit to federal supervision. This
 change would, without doubt greatly
 increase banking facilities, while, at the same time, it would probably prove
 quite safe. Again a lowering of the
 minimum capital for a national bank ] from the present figure to twenty or | twenty-five thousand dollars would be
 better than nothing, and would prob
 ably work no evil effect of any mo-
 ment.
 CONCLUSION.
 l In conclusion, your committee cannot 1 refrain from expressing the conviction l that it will be a genuine misfortune if the very notable movement toward
 monetary reform which has filled so | large a place in the history of the last | few years, shall pass away without having left any results in legislation Never bfore have there existed among all classes so great an interest in this subject, so near an approach to unan- 1 unity of opinion, and so strong Q pur-
 pose to see something accomplished To | this very promising attitude of the pub