Omaha daily bee., 1899-12-02
ZOE AN ELASTIC CURRENCY.

The arguments presented by Mr..
Dawes, comptroller of the currency, for
legislation to secure greater elasticity
in the currency, offer little on the sub
iect that Is essentially new. The comp
troller urges, as has been done by his
predecessors. that the banks be allowed
to issue circulation to the par value OF
their bonds on deposit with the treas,
ury, instead of being restricted to 80
per cent of the bonds, but he recon-
mends that for the extra 10 per cent
OF issue there should be n special tax
at the rate of or per cent per annum
and that in connection with this special
tax on the extra issue there should he
reduction of the present tax of l per
cent on the issue up to 90 per cent OF
the bonds, to n small fraction of cent,
IL not abolished altogether, and that the
same amount of revenue should, If
necessary, be raised from tax on fran
chises and surplus.
The comptroller figures that under the
plan he proposes the profits of the banks
would not be reduced so that these in
stitutions cannot reasonably object to
II on this score. Then under this sys-
TEN of taxation, it is argued, the banks
could not afford to issue the extra lo
per cent except in cases of emergency
when the interest rates are excessively
hiph. In that way the extra circula-
ton authorized would only be used In
panicky times. On the other hama, the
comptroller says that if no such pro
vision is made and the banks are al
lowed to issue up to the par value OF
the bonds, they will issue the circula-
tion the same as they do now to the
full amount authorized and then in case
of a panic or of excessive interest rates
there would be no way to meet the emer-
gency and the country would be in the
same condition as 1t is now so far as
these times of emergency are concerned.
AS the banks would make just as much
under the comptroller's system as they
would under the plan to allow them
to issue to the par value of the bonds
with q uniform tax it would be imma-
teral to the banks which plan the gov
ernment adopted. The comptroller says
that under his plan there will be pro
vision for about $30,000,OOO of extra
circulation in times of emergency, while
under the plan contained in the house
caucus bill there will be no provision
for an emergency circulation.
1t is said that the comptroller's recon-
mendation is favorably regarded by both
the president and the secretary of the
treasury and also by members of the
house caucus committee, but it is not
probable that the bill framed by that
committee will be changed to meet the
recommendation. AS " further means
of securing more elastic currency the
comptroller favOrs allowing national
banks to issue small amount of un-
secured notes in addition to the secured
notes, the unsecured notes to be sub
iect to a heavy tax, so that they would
only be issued in case of emergency
and would be retired when the emer-
gency had passed.
1t is understood that the secretary of
the treasury will in his annual report
elaborate on this question of Il more
elastic currency and the matter is
manifestly of such Importance that 1t
may be expected TO receive careful at
tention in congress. The comptroller's
plan, as he quite conclusively shows,
is in the interest of the public and not
of the banks and it therefore merits
thorough consideration.