The record-union., 1898-12-05

severe losses, because of this unjust
prior lien of note holders upon the as
sets Of the insolvent banks.
The measure will stimulate in still
greater degree the tendency of the
money Of the country to flow to the
great money centers, where to fewer
institutions, az time and competition
progress, would pass the management
and control of the savings and capital
of the country.
We cannot agree to the wisdom Of
any measure which accelerates the GEN.
tralization of capital in the great cit
les, and by separating in location those
who lend from the many who use mon
ey will encourage the growth of COM
merce only in the form which has q
tendency to crush out general busi-
ness individualism.
In the bank-note issues of foreign
countries in case of insolvency says
the Comptroller, the note holder
would, it is understood. enjoy no peri
erence over the deposit holder They
would share ratably in the assets. To
give the credit which enables the notes
of these great banks to circulate, re-
stricted by stringent laws as they are,
no injustice to depositors such as is
proposed in these plans for the United
states is necessary. In one country
only, Canada, are the note holders pre-
ferred over the depositors in case of
insolvency. The note-issuing banks of
Canada are but thirty-eight in number,
with a combined circulation of about
$3S, O0O,OOO.a
The Comptroller states that he can
not accept as safe any deductions
drawn from the bank-note system of
these few central institutions of East
ern Canada which would tend to justify
the application of the laws governing
that system to the 1900 national banks
of this country.
The Comptroller calls attention. as
summary Of his views upon the pro-
posed plans. to these propositions:
First-As a fundamental PROPOSE
tion, any bank-note system depending
for security upon the commercial as
sets of banks and sanctioned by Gov
ernment should be inherently fair in
it's relation to the deposit-holding
creditors and the note-holding creditors
of an insolvent bank !
"Second-No system is inherently
fair which creates a preference of the
note holder over the deposit holder in
the distribution of the assets Of an in
solvent bank
Third-In none of the older coun-
tries, to the success of whose uncov-
cred note system We are referred as
tending to justify the experiment in
this country, is the note holder by the
law preferred over the deposit holder
in case of insolvency of banks Of is
sue. Canada, with it's thirty eight
central banks of issue. as compared
with $500 scattered national banks in
this country, furnishes the only excep-
tion to this rule.
"Fourtf-The necessity of the prefer
ence under any such system in this
country to give security and credit to
the notes demonstrates that it is the
depositors Of the country, and not the
banks, upon whom the great weight
of the guarantee of the note issue
must fall
"Fifth-A fairer system would pro-
vide that when receiver took charge
of an insolvent bank he should not
first pay into the general redemption
fund held by the Government an
amount derived from the assets of the
bank sufficient to pay the note hold
ers in full before paying anything to
depositors, but he should pay into the
fund that pro rata share of the pro-
ceeds derived from the assets which
should go to the note holders, not as
preferred creditors, but as creditors in
the same class as depositors. The tax
upon the solvent banks for the cur
rency privilege should not then, be
limited to not exceeding per cent.
per annum of their annual note issue,
or in any other amount, but should
be made sufficiently large to provide
for the deficit. whatever it should
prove to be.
''Sixth-If under such a system.
owing to causes to which we have re-
ferred, the tax upon the solvent banks
would be so large as to render the is
sue of such currency improbable and
unattractive TOT the banks. it would be a
demonstration of the radical difference
in the environment and condition of
our banking system as compared with
the more centralized and older systems
OF Europe It would be a demonstra-
ton of the; fact that under the proposed
legislation, while the banks would take
the profits upon the circulation, the de-
lcsses It would be a conclusive demon
stration Of what we believe to be the
fact that, under our banking system as
at present organized, the absolute
safety of notes secured only by COM
mercial assets and issued to the extent
proposed in these plans can be secured
only by resort to a grave injustice upon
depositors, which can not be justified
upon any grounds of public policy.
''Seventh-Such system of uncov-
cred notes as this proposed, providing
for preference of the note holders over
other creditors, would interfere radio
ally with the more important functions
of national banks to which the note is
suing function is secondary and sub
ordinate This would be against pub
lie policy and would operate against
banking in the smaller communities,
and in the western, southern and CEN
trail portions of our country.
"Eighth-The Government Of the Uni
ted States is not in such straits, in con-
nection with it's present currency sys-
tenn, as to compel it TOT enter into plan
of currency changes by which it in ef-
feet sells extended and valuable cur
rency privileges to the national banks
of the country in exchange for assist
ance from them in meeting its present
governmental currency obligations pay
able in gold.
'-Ninth-If the present conditions of
governmental currency demand re-
forms, to secure which will entail cost,
representative of all the people, and
4, as ac+za tad