Eagle River review. [volume] (Eagle River, Wis.) 1890-1927, 1898-01-06
TO CURE FISCAL ILLS.
MONETARY COMMISSION PRE-
SENTS A PLAN.
Suggests a Scheme for the Redemp~.
ton and Retirement of Treasury
Notes and for National Bank Re-
fOrms-DetaiIs of Report.
Plan, of Currency Reform.

Notes and for National Bank Ke-
forms-DetaiIs of Report.
Plan, of Currency Reform.
Washington correspondence: "a
The reeDrtof the Monetary Commission
appointed under authority of the con-
vention of business men held in Indianap-
oils last January, has been made public.
1t retains practically unchanged the ex-
, listing metailic money. The existing gold
standard on which business has been
done since 1879 is maintained, on the
ground that industrial interests demand
certainty sto what the standard shall be.
To this end, it is urged that the United
States should remove all uncertainty as
to the meaning of "coin" in its Obllga-
tons, thereby saving the taxpayer by the
ability to borrow at low rate of interest
No attempt is made to remove the exist
ing silver dollars, nor to change their
legai-tender quality; on the contrary q
place is provided for them in the circula-
ton by forbidding the issue of any paper
money other than silver certificates i'm
| denominations below $40.
1t is regarded by the commission as
dangerous to maintain the present prac-
tice of using government demand obliga-
tons as money. They were issued be-
cause there were no resources in the
Treasury; and so they deprecated, drove
out gold, furnished fuctuating stand
| ard, increased the national debt enormous
| ~, caused a change IN prices whenever
the credit of the paper standard huctu-
, ated, and by causing unexpected changes
in the level of prices gave rise to extra
ordinary speculation, increased the sever
ivy Of o.ol nd nj
small producer at disadvantage with the
large operator.
For these and other reasons the COM
| mission strongly urge the government TO
withdraw it's demand obligations now
used as money, decline to provide gold for
exporters and put the burden and ex-
pense Of maintaining redeemable paper
circulation upon the banks. In order to
meet the demand obligations, the pres
ent reserves of gold in the treasury fur
| nish sufficient sum to BE set aside in the
| Division of Issue and Redemption; and to
| meet possible contingencies the Secretary
of the Treasury is authorized to sell
| bonds whenever the reserves need re-
Punishment. In this way, or from sur
plus revenue, the demand obligations
| (that is, United States notes and treas
| ury notes of 1S90) can be removed In such
| a way that the cost to the country can be
reduced; while this will also give the in
estimable advantage of ceaslng to use
| demand debts as money, simplifying our
| currency and adding to confidence In the
| certainty of our standard. BY the plan OF
| the commission the withdrawal of govern
ment paper is SO arranged that contraction
| cannot possibly take place; If United
| States notes are cancelled their place VIII
| be taken by the gold paid out for them,
i or by the expansion of bank notes (under
| the new syste1. --rnnosed).
| The demand oblighhons Of the United
States were not atmoney based on prop
erty; they were only debt. On the
other hand a bank note is never issued
| fraud, of course, excluded except for
consideration in negotiable property of
equal or greater value. The bank note
comes forth as the sequel to business
transaction, and is based on the active
property Of the country, which is passing
| between producers and consumers. The
currency of the country, moreover, IN
creases as the transactions of the coun-
| try increase; hence the rigid unchanging
| issues of the government make them an
| inelastic part Of the circulation, While by
| the very process of their issue bank notes
alone can be automatically adjusted to
| the changing transactions OF the busl-
| ness community.
In amending the present national bank
| ing system, tho commission were actuated
| by desire teAsecure absolute safety to
| the note-holder; to make the notes uni
| form and of equal currency in all parts OF
| the country to create an elastic system,
which, while expanding in response to
| increasing transactions, should heaithily
contract when transactions diminish; and
which would help in q better distribution
of banking facilities throughout the
Western and Southern States.
In view of the scarcity of United
States bonds they cannot long be regard
| ed as basis Of circulation. Moreover,
any bond security of a high character
Yields q low rate of interest; and in q
/ time of stringency, when borrowers need
| loans and the market rate of interest is
high, there is no inducement to buy these
| bonds to increase circulation. Hence, un-
der the present system, when notes should
| be most needed, it is least profitable to
issue them. While providing for par
| tial use of bonds for securing notes (25
| per cent of the capital) the Commission
| proposed that notes beyond this should be
| issued on all, instead of part of, the
| resources Of a bank; and within few
years that no special bond security should
| be required Banks may issue notes mp
to 60 per cent. Of their capital without re-
straint; for issue beyond 60 per cent and
up to so per cent. they pay a tax Of two
per cent; for those beyond 80 per cent.
and up to 100 per cent, they pay tax
of per cent. These notes would be
prior lien upon all the resources of the
Eank, and, in addition, upon the stock
| holders liability. Moreover all banks
issuing notes contribute per cent. of
| their circulation as permanent guaranty
| fund. For daily redemptions, banks
should keep a per cent. redemption fund
| in the hands of the Comptroller of the
Currency. Banks4of $4,000 capital may