Natchitoches populist. [volume] (Natchitoches, La.) 1898-1899, 1899-02-17
GAGE ON BANK NOTES.
HIS POSITION LIKE THAT OF
THE BANKERS AGENT.
Gloats Over Great Holdings of Deposist
In Banks-Gosd Times Would Send
These Deposits Into Circulatlon-The
Real Point of Danger.

real Polnt of Danger
Secretary Cages argument for "cur-
reney reform" will, of course, be &C.
cepted as remarkably clear and forci-
BILE by those who share in his ideas,
but If one will stop to analyze his
propositions they will not be SO for
chile. Unquestionably the plans pro-
posed all give banks power to issue
notes to an extent exceeding the vol
ume of the present paper currency, and
undoubtedly the banks will issue their
notes up to the limit when they could
do SO with safety and profit to them
selves. But the question OF advantage
to the business world does not de-
pend on the existence of such a power
but on the exercise of 1t at times when
business called for 1t. The experience
of this country has shown an alterna-
ton OF money stringencies and money
COMPOSITIONS, and presumably we shall
have similar experiences in the future.
At present the country is enjoying a
money congestion. There is more
money than there is any use for, and
this appears to be general throughout
the country. Although the national
treasury holds more money than at
any time since the war the banks are
overcrowded with deposits. Two weeks
ago the Indianapolis Sentinel publish
ed the statement of the four national
banks at this point, showing cash
items of $7,399, 36A07,or practically the
same as last year-about $50, 700 less
and loans and discounts show about
an equal gain. These banks would,
Of course, not make any issue Of notes
under such conditions. There is no
call for it. In fact, the deposits show
an increase of nearly SS,300,000 In one
year, which demonstrates that people
have less use for money than one
year ago. The evident trouble now
is that there is lack of opportunity for
profitable use of money, or people are
afraid to invest because af falling
prices. The tendency under such
condition would be for banks to con-
tract the currency to prevent fall of
interest rates. But suppose time of
stringency occurs The pressure then
would be on the banks to issue more
notes and they would unquestionably
do SO, but the embarrassment that
would then arise would be from the
presentation of these notes for re-
demption. Mr. Gage admits that even
under ordinary conditions such presen-
tation would be the rule saying:
THE desire to obtain legal money
In their place would cause the banks
receiving them to push them horne for
redemption in legal money, but the
general effort in this direction would
neutralize, to large degree, the eff
feet desired. Bank A sending home
the notes of Bank B would be met, not
by payment in legal money. but as
an offset by the presentation of the
notes of Bank A. There would be
mutual retirement of their respective
bank note liabilities"
This Is very true, and 80 far as a
bank could not offset demands for re-
denption by returning notes of other
banks, it would have to do so by pay
ing out legal tenders, and therefore,
IN time of stringency the bank that
issued notes most freely would be call
ed on most freely for redemption of
the notes, and that is the very thing
all prudent bankers would desire to
avoid. If liberal note issues were in
dulged in at time Of stringency and
panic, when depositors were with
drawing money from banks, the inevi-
table result would be a suspension of
redemption, and the country would be
put on basis of dishonored bank pa
per. This is the very condition in
which the greatest strain has been put
on the national treasury to maintain
the paper currency, and is the point of
danger which currency reform" Is
expected to relieve. The question Is
simply whether under the same pres
sure the banks could or would resort
to the heroic measures to support
specie basis which the government did.
They could not issue bonds without a
money sacrifice, or without calling at
tention to lack Of funds which would
increase the panic. even If they could
find q market for their bonds. There
is every probability that they would
do as in former panics-suspend
money payments altogether--or refuse
to redeem and let the country use
bank notes or nothing. Indianapolis
Sentinel
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