The San Francisco call., 1898-12-05
PROBLEMS OF H TIE CURRENCY
 ARE SET FORTH Report of Comptroller
 Dawes. GREATER ELASTICITY NEEDED PRESENT BANKNoTE SYSTEM SHOULD BE ABANDONED. Trade Situations in the New Colonial Possessions of the United
 States Require Special
 Laws.
GREATER ELASTICITY NEEDED
PRESENT BANKNOTE SYSTEM
 SHOULD BE ABANDONED.
Special Dispatch to The Call.

WASHINGTON, Dec. 1.-The annual report of Charles G. Dawes, Comp troller of the Currency, for the year ended October 31, 1898, has been sent to Congress. With respect to the con- dition of national banks during the year, as shown by the five reports re- quired from the banks, the Comptroller says:
 Notwithstanding that the number of banks in operation on September 20, 1898, is less than at any date of report since Decem- Der 19, 1890, the amount of individual de- poSitS, loans and discounts and total re- sources is greater than at any time dur ing the existence of the national banking system. On September 20, for the first time, the aggregate resources reached and exceeded the four billion-dollar mark, the increase since October D, 1897, being S-9S,- 303I 16 A comparison Of the last re- turns with those of October 5. 1Ss7s indi- cates an increase during the year of $l04,- y52, ,lS9 "A in loan and discounts; S19 194 ,3S0 in Government securities on deposit with the Treasurer of the United States to se- cure circulating notes ana public deposits and the amount held by the banks; $57,- 304,S27 S4 in specie and legal tenders. The reduction of $25 ,465,000 in the amount of United States certificates of deposit for legal tenders results in a net increase, of lawful money of S31, ,S39 ,S27 34. On October 5. 1897, the deposits aggregated Sl,S53 349,- 12S 50, and on September 20, 1898, S2, ,03l, ,454,- 540 29, the increase being S17S, ,105, All 79 The balance due other banks and bankers shows an increase of $52.62, ,3SS 09 and United States deposits of $5s ,023,0 ,019 27.
 The Comptroller states that he does not review in their details the plans for the modification of the currency and banking systems, which are now the subject of economic and general discussion throughout the country, but confines his discussion to the general principles underlying all of them, be- cause they seem to ignore the interests of bank depoSitorS, with whose protec- ton the Comptroller is peculiarly charged. He states that those plans which are now most generally discussed may be considered as based upon the following propositions:
 First-That the disproportion between outstanding currency liabilities of the Government payable in gold and the gold held for their redemption should be less ened by contraction in the amount of these demand currency liabilities.
 -Second-That the void in circulation caused by such contraction should be filled by an extension of the circulation deemable in gold, Is ultimately to depend for its chief security upon first lien upon the commercial assets of the issuing banks.
 He states that the assumptions which seem to underlie these plans are these:
 
 rency contraction, some radical extension of bank-note issues is absolutely neceS- sary to the securing of the proper adjust ment of Government currency liabilities to its gold reserve, by which adjustment the greater safety of the gold standard is subserved.
 Second~That through this radical exten- sion and change in the present form of bank-note issues alone is elasticity to be secured in our currency.
 The Comptroller discusses the ques- ton of the elasticity needed in bank currency, commenting upon the great elasticity of the check and draft cir culation of the country. In this con- nection, and as embodying his recom- mendations on this branch of his report, he says:
 While in this country, with it's ex- tended system of banks and it's great de- velopment of the check and draft system, some degree of elasticity in banknote issues is desirable, 1t is not essential that it should be an amount so large as to make necessary for its security an in- justice upon the depoSitor, and thus, by interfering with the check and draft sys- tenn, defeat one of it's own prime objects. The general principles and regulations under which such elasticity might be ob- with the principles and arguments we have endeavored to set forth. AS cover ing these general principles, and as a con- clusion from the views hereinbefore ex-
 
 following recommendations in regard to the present laws governing the issue of national bank notes.
 F'irst-The existing banknote system, based upon deposit of Government bonds as security, should not now be abandoned. Second-For the purpose of allowing elasticity to banknote issues to protect the banks and the community in time of panic, a small amount of uncovered notes. in addition to the secured notes. should be authorized by law under the following limitations: They should be subjected to so heavy a tax that they could not be issued in normal times for the purpose of profit but would be avail able in times of emergency. The tax should be so large upon the solvent issu- ing banks as to provide a fund which, in competitor with the pro rata share of the assets of an insolvent bank. would be sufficient to redeem the notes in full with out necessitatipg any preference of note holders over depositors of any insolvent issuing bank. The tax should be so large as to force this currency into retirement as soon as the emergency passes.
 Such currency could be used only to