Kansas City journal. [volume] (Kansas City, Mo.) 1897-1928, 1898-03-24
twelve PRINCIPAL FEATURES.
BURDEN OF GREENBACKS PUT UPON
NATIONAL BANKS.
Basis of Note Circulation of Banks to
BE Their Commercial Assets-Sil-
yer Dollar to BE Redeem-
able In GOld-COmmit-
tees Argument.

tO-tsty DeIOTe fscpupiiSdlA
bership of the committee. This sub-com-
mittee. which was appointed month ago
to report a general banking and currency
measure, consists of Mr.. McCleary, of Min
nesota. chairman: Mr.. Prince. Of Illinois.
and Mr.. Mitchell. of New York. The bill
they have reported is entitled. "A bill to
provide for strengthening the public credit.
for the relief of the United States treas
ury and for the amendment Of the laws
relating to national banking associations"
The method of dealing with the green
backs is not by direct retirement, but by
the substitution of Il legal tender note.
which the banks are required to assume
and for the redemption of which they are
required to find the gold so long as they
are conducting solvent business. The
principal provisions of the bill are as fol-
lows:
First-A division of issue and redemption
is established in the treasury. for which
the secretary Of the treasury is authorized
to set aside the general cash balances IN
excess of s50O00.ON0. This excess last Thurs
day was s11s 13e. So United States notes
received by this division for redemption
in gold are to be Cancelled and retired
in proportion as certain substitute currency
is issued. No note redeemed in gold is to
be again paid out except under exceptional
conditions.
Seccnd-National banks are required 20
assume the current redemption of United
States demand notes In order to obtain cir
culatfon based upon their commercial as
sets. A new class of notes. called national
reserve notes. is to be issued in lieu OF
legal tender notes deposited by the banks
with the treasury. and these reserve notes
are to be redeemed upon demand by the
banks out of the redemption fund which
they are required to maintain in gold
These reserve notes are not treated in
any respect as bank notes. because the
banks are not liable for their ultimate re-
demption.
Third-The basis of national bank note
circulation will be the commercial assets
of the banks. but this will be reached only
after a series of years.
Fourth-National banks are to be per-
mitted to issue currency notes upon their
commercial assets to the amount of the re-
serve notes issued to them in return for
deposits of United States notes.
Fifth-Treasury notes issued under the
act of July II. 1880. are to be dealt with
eventually upon the same basis as United
States notes.
Sixth-A tax of per cent is levied upon
| bank notes issued in excess OF 60 per cent
| of the capital of any national bank. and
a tax of per cent when in excess OF 50
per cent.
Seventh-The national currency notes.
based upon commercial assets of banks.
are to be secured by a bank note guaranty
fund made up by the contribution in gold
| coin of per cent of the entire circulation
| of the bank, and provision Is made for re-
Punishment of this fund within certain
| limits.
Eighth-The national reserve notes will
| continue to be legal tender until received
into the treasury from failed and liquidat-
| ing banks, when liability for them VIII be
assumed by the government and they will
| be redeemed and Cancelled.
Ninth-Standard silver dollars are TO be
redeemable in gold. but silver ceTtiicatss
are redeemable only in standard silver dol
lars. The parity OF silver with gold is Sc
BY gold are Hereafter to
| be issued only in denominations of 81. s.
J and s. Legal tender notes. reserve notes
| and currency, are not to be issued In de-
| EIeventh-Nationai banks are required to
| pay tax of one-eishth of per cent semt-
| annually on their capital. surplus and undi-
| Tweifth-National banks are permitted to
establish branches under regulations to be
| The committee say. in explanation Of the
tender notes by the banks. that they have
| endeavored to adopt a system which would
be subject to none of the criticism made
or the taxation of the people for the pay
| ment of this demand debt. 1t declares:
THE system adopted Is such as to continue
| notes without any OF the disadvantages OF
| its character as a demand obligation the
| proposed bill imposes upon the banks the
whole burden of carrying and sustaining
There is no profit or return to the banks
| thus carrying the nations debt. and they
are required by the bill to assume the entire
! obligation as compensation for the fran,
| chise and privileges granted as national
Il lit,
| 1.-The heavy burden assumed by the banks
\ must be given its due weight In measuring
any ANN do tS b Ths banks are
| to redeem this debt of the government now
| assumed by them. upon precisely the same
| terms as the redemption OF their own notes
| while they are conducting solvent bank
| ing business. 1t is only when, by the re-
fusal to pay such notes: the, become a9n,1ns In.
| again its demand debt and assumes II for
the complete protection Of the holder Of
of the bank. by leaving the remaining as
| sets unimpaired for the settlement of the
just claims. The. form Of note thus as
sumed by the bank. with the final redemp-
| tion guaranteed by the government. COM
| bnes the strongest Of all resources for Its
ultimate payment; ,u =. NM
| vided with an ample legal currency. con-
| sisting of all the notes substituted for the
present legal tender notes and OF all the
| gold and silver coin In circulation TO the
maintenance Of whose parity the faith OF
the government is sacredly pledged"
| The report states that there are several
| possible results which may follow the au-
| thority given the banks to assume the
| government debt and issue reserve notes.
| 1t Is conceivable and probable that large
| proportion of the present legal tender
! notes will be converted into reserve notes
| and will cease absolutely to be redeem
| able at the treasury except In the restrict
| ed cases of the failure or liquidation OF the
| bank through which they are issued. IL.
| however only small portion of the legal
| tender notes are thus absorbed. the fact
| that they are Cancelled when redeemed
| in gold by the treasury will give them n
| value which will at once remove all ques.
| rion of their prompt redemption and viii
| give them substantially the character OF
gold certificates.
| The fact that note Is to be Cancelled
| on redemption and not reissued will tend
very greatly to prevent its presentation
| for redemption.
1.-The purpose and effect OF the proposed
BILL" says the report: zig to throw upon
| finding gold to redeem the notes of the
| country There is no doubt of the ability
to do this If 1t Is required by law. They
| have the power to regulate interest rates
within the narrow limits marked out by
economic law in such manner as to at
tract gold to the country by restricting
| their circulation when necessity arises.
| The system proposed by your COMMITTEES
| provides an easy and adequate method OF
obtaining gold for export from the banks
| United States treasury to the alarm and
| CONFUSION which have attended gold ex-
pcrts during the last five years"
| Especially when none will laugh at his
i1ofes'-Indianapolis Journal.
/ N>-~