The record-union., 1898-01-03

need of aScertalnlng the staioS -
any bank.
The objection that is sometimes mAue
that the larger banks in the great cllles
would not issue notes because Oh an
apprehended liability for otner pahhs
lis shown by statistics to be grounuless.
Eighteen hundred and n1nety-tnree
was the year of the largest banK Tall
ures; but had all the banks OF the
country then issued notes up TO SO
per cent of their capital, the amount OF
their assessment to make good the as
certained deficiencies Of that year up
to the time of the Comptroller's report
of 1896 would have been only small
fraction of l per cent. HAD. oo per
cent. of the capital of all national banks
been issued in notes upon the proposed
plan since the beginning or the ma
tional banking system in 1868, the as
sess.nent upon the banks annually
would have been an amount SO lnsig-
nifcant that it need not be taken into
account Taking the country banks
as a whole, it is found that on 9th
October last they had S4Ol, ,OOO,OOO Oh
the S631 .OOO, 900 of national bank cap
ital; should they issue notes, up to SO
per cent. of that capital, they would
have $321 ,OO0,0 900 of notes, and there
would be 81, ,956, 100000 of resources
against these notes, not counting stock
holders liability.
If these resources of the country
banks are insufficient security for this
amount of notes. they will be INSULT
cient only because there would then be
such a condition of business paralysis
that Government, municipal and rail-
way bonds would be valueless, and also
few If any banks in the reserve cities
would remain solvent. The occurrence
of this disaster is so improbable that
its consideration may be dismissed. In
some quarters fear is expressed that
there would be an undue expansion
under this plan. There is no danger
of this. The system of redemption, not
only at the banks but at the Treasury
in Washington and at the sub-treaS-
uries, would strongly guard against
that. The expansion over that which
could be effected were no notes issued
at all will be found, upon investigation,
TO be small. Dangerous expansion does
not take the form of the issue of bank
notes, but of the extension of credits.
Very few borrowers take their loans in
the form of bank notes. The bank note
is only one form in which he to whom
credit is given will use that credit; he
can use it equally well for most pur-
poses if the loan is placed to the credit
of his account by the bank making the
loan to him, or by some other bank or
by a private person.
The existing tax Of l per cent. per
annum on circulation is repealed; in
it's place taxation of capital surplus
and undivided profits is provided. The
issue of circulating notes is only one
form in which bank expresses it's de-
mand liability. The other form, de-
posits, is. under the development of
modern banking operations, of vastly
greater Importance, and the one which,
fin cities and highly organized CONNER
cial communities, is most used. In Oc-
tober, 1897. the country banks issued
more than Y per cent. of all notes
issued. The reserve banks, except
those of the central reserve cities. New
York. Chicago and St. Louis, issued
more than 1S per cent, New York more
than per cent, and Chicago and ST.
Louis together about half of l per
cent. Surplus and undivided profits
and capital show the profits and prop
erty of banks, and these are certainly
more legitimate objects of taxation
than the mere instruments which banks
may be called upon by their CUSTOM
ers to issue TO serve chiefly the conve-
nience of those customers. This tax
MAX es as equitable an apportionment
of the expenses of the system as can
be devised
PLAN OF CURRENCY REFORM.
Q.-Metallic Currency and Demand OBJ
ligations.)
l. The existing gold standard shall
be maintained; and to this end the
standard unit Of value shall continue,
as now. to consist of 25.S grains of gold
nine-tenths fine, or 1922 grains of
pune gold as now represented by the
one-tenth part of the eagle. All obli-
cations for the payment of money shall
be performed in conformity to the
standard aforesaid; but this provision
shall not be deemed to affect the pres
ent legal tender quality of the silver
coinage of the United States, or of
their paper currency having the quality
of legal tender. All obligations of the
United States for the payment of
money now existing, or hereafter en-
tered into, shall, unless otherwise ex-
pressly provided, be deemed and held
to be payable in gold coin of the
United States, as defined in the
standard aforesaid.
2 Qn substance) Gold coinage as
now.
3. No silver dollars shall be hereafter
coined
4, 5 and G. In substance) Coinage
and redemption of subsidiary and
minor coins as now
Z. There shall be created a separate
division in the Treasury Department,
10 be known as the Division of Issue
and Redemption. under the charge OF
an Assistant Treasurer Of the United
States, who shall be appointed by the
president by and with the advice and
consent of the Senate
:. To this division shall be commit
ted all functions Of the Treasury De-
partment pertaining to the issue and
redemption of notes or certificates, and
TO the exchange of coins: and this di-
vision shall have the custody of the
guaranty and redemption funds of the
national banks, and shall conduct all
the operations of redeeming national
bank notes, as prescribed by law; and
10 this division shall be transferred all
gold coin held against outstanding gold
certificates, all silver dollars held
against outstanding silver certificates.
all United States notes held against
outstanding currency certificates, and
all silver dollars and silver bullion held
against outstanding treasury notes of
1890 and all subsidiary and minor
coins needed for the issue and exchange
OF such coins, and the funds deposited
with the treasury for the liquidation