The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-01-12
WHY NOT o 1T.

1t is not to be expected that a complete
reform Of our currency and fiscal system
will be accomplished at once, but before
the work is laid aside Congress should con-
slider the proposition of abolishing the SUBJ
treasury system of the United States. Ger
tain it is hat the government win never
be out of the banking business nor out of
a position where it may and does exercise a
dangerous control over the business of the
country until that is done.
The subtreasury system is a legacy of
former Democratic administrations 1t had
fits origin in Jackson's successful warfare
en- the old United States Bank. When
Jackson's blood was up he cared very little
for consequences. Having enlisted for the
war against the United States Bank, his
chief aim was to destroy it, regardless Of
what might happen afterwards. AS for
financial results, he was as little capable Of
judging as he was Indifferent what they
might be. His sole object was to carry
his point. One effect of the result Of the
overthrow of the United States Bank was
to distribute government deposits among
AdAO OdAAh db0 dliOt1ANA Us ~ 49, 49,
to a great number of new and insecure
banks. Jackson. though he called himself
a h~ard-money man, and probably thought
he was, was really the father of wild
cat banks. Alexander Johnston, the United
States historian, says:
During Jackson's struggle with the Bank
of the United States many new banks had
been formed in many States, generally
VIZ tel M ~ - ~ u hi nnfnG
which they issued. They bought large
quantities of cheaply printed bills. As these
bills cost them very little. they could afford
to offer a higher price in paper money for
lands in distant States and Territories than
others could afford to offer in gold n
silver. Having bought the lands with this
worthless money, the wildcat bankers sold
them for good money, hoping that their
own bills would not soon find their way
D oa6K dor n P PSiys bone the he bba a9Ek Vailed "is and
the managers started a new one.
This first era of wildcat banks was the
immediate result of Jackson's policy. The
establishment of the subtreasury system
was another. 1t was created ostensibly for
the purpose of furnishing a means of hand
ling government deposits. The panic of
1886, another result of JacKson's policy, and
the era of initiation and speculation in
duced by it, left the business of the coun-
try so thoroughly Frustrated that jack
sons successor, Van Buren,, called a special
session of Congress in September, 1887. A
bill creating a subtreasury was considered
at this session of Congress and in subse-
quent sessions, and finally passed in 1910.
It was abolished during Harrison's term,
in 1871, and re-established in 1916 under
President Polk. 1t has been in force ever
since, and the government now maintains
subtreasuries in New York, Philadelphia,
Boston, Baltimore, Cincinnati, Chicago, st.
Louis, New Orleans and San Francisco. 1t
has been often and severely criticised as an
interfering factor in pushes and a men
ace to the banks and currency Of the coun-
try. In 1867 ]. S. Gibson, author of Public
Debt of the United States" said: THE in
dependent treasury aggravates every dis
advantage of the public debt, increases the
expenses, gives no special security to the
custody of the funds, is a vast lever of
political corruption, a perpetual threat over
the market and a violation of the first
principles Of economy" The author of
money, Trade and Banking declares the
subtreasury to be "the obstacle that stands
in the way of a prompt withdrawal of all
forms of government demand notes. He
further p~ronounces it a great curse, as CIV
ing to the secretary of the treasury powers
that no man should have, making him lock
up money from circulation, alternately
initiating and contracting the currency and
thus keeping the whole people in suspense,
and, finally, he declares that 1.-The vicious
subtreasury system and the government
legal-tender-note system supplement and
support each other, to the good of none
and the injury of ALL" Prof. j. Lawrence
Laughlin, in an article published in 1883,
said: '"The chief objection to the subtreas-
ury system Of to-day is that it has been
outgrown by the country, that it is Geo.
nomically wasteful in proportion to the
magnitude of its dealings, and that, by its
effects on the reserves of the banks, it is
becoming dangerous TO the banking and
business of the public" A Senate commit
tee during the Forty-ninth Congress re-
ported that 1.-THE causes which led to the
adoption Of the subtreasury system no
longer exist" Nearly all recent authorities
who have investigated the subject regard
the system as a useless and cumbersome
excrescence, if not a constantly interfering
factor IN the business of the country. ANY
complete plan of financial reform should
consider the propriety of doing away
with it.