The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1899-01-01
DEFECTIVE BANK MEASURES
DEPOsIToRS NOT PROTECTED IN
PLANS OFFERED CONGRESS.
Preference Given NOtehOIders in Re-
formers Bills Would Injure the
Whole Community, Mr.. Dawes Says.

fore the American people for settlement was
that Of the maintenance of tie gold stand
ard and a sound governmental currency. The
commercial crisis of 1898, with the conse-
quent reduction in governmental revenues,
had developed an inherent weakness in our
present monetary system, which before that
time had been latent. This weakness was
largely due to two causes: i rst, the dIsprc-
portion existing between demand govern
mental currency liabilities and the gold
held by the treasury for tleir redcnlption
second, the demand that these demand cur
rency liabilities, like greenbacks, being
once redeemed in gold, could be paid out
again for government expenses, thus max
ing possible further presentation for gold
redemption and creating what has become
commonly known as the endless chain
1.-The question now before the Congress of
the United States is that of the proper in
depreciation into law of the voice of the
people, expressed in 1896 in favor of sound
money and the gold standard. The Presi-
dent of the United States has in two sue
cessive annual messages to Congress recon-
mended a plan, by the adoption of which
the government can protect it's outstanding
currency liabilities and break the endless
chain without contracting the currency or
seeking assistance from private corpora
tions in meeting its obligations of gold re-
demption.
THE lessening of the disproportion of the
demand currency liabilities and the gold
IN the treasury with which to redeem them,
for the accomplishment of which surplus
governmental revenues seemed one year ago
absolutely essential has been brought about
by the financial operations of the treasury
incident to the war, and the growing conf
dence of the people in the stability of the
gold standard which has led them to freely
deposit gold in the treasury in exchange for
notes. AS pointed out in the PRESIDENT
last message, the proportion of net gold
holdings to demand currency liabilities of
the treasury Nov. l, 1898, was 1856 per cent,
as compared with 1886 per cent. on Nov
l, 1887 Recognizing these conditions the
president, in his last annual message to
Congress, makes recommendation which,
II enacted into law, would break the endless
chain and still further strengthen the condl-
tlon OF governmental currency, already so
gffeahtIy improved by the treasury operations
OF the last year. His words We're as follows
In my judgment the present condition of
Ine treasury amply Justfies the immediate
enactment OF the legislation recommended
one year ago, under which a portion of the
gold holdings should be placed IN IL tn'nt
1und from which greenbacks should be
redeemed upon presentation, but when once
redeemed should not thereafter be paid out
except for gold
nc words OF MS recommendation In 1897
are: 'Ihat when any of the United States
roles are presented for redemption in gold
ana are redeemed in gold and notes, they
shall be kept and set apart and only issued
out in exchange for gold. This in an OBJ
vious duty.
PRACTICAL AND SIMPLE.
This is the Interpretation placed by the
President of the United States upon the
nature of the demand of the people in 1895
for monetary reform, and while not deny
ing, as his message shows. the necessity Of
other legislation, which he leaves to the
wisdom of Congress, he strongly urges it's
enactment into law. Before consideration Of
any of the banking bills, upon which there
Is such diversity and conflict of both expert
and popular opinion, this plain, practical
and simple solution of the governmental
currency situation suggested by the Presi-
dent should pass into law 10 his Man
easily comprehended by the great body Of
our citizens, all those in favor of currency
reform should give their unqualified and
loyal support.
ITO press consideration of other proposed
remedies at this time will prove a hindrance
ana obstruction to the adoption of This
recommendation, which is plainly a step in
advance. After this recommendation is
enacted into law those who have what seems
10 them more complete remedy can then
present 1T for consideration. There are
many sincere and able men who maintain
that the government can, to its own advan-
tage and for the common good, avail Itself
indirectly OF the nOte-issulng function of
national banks. They believe that this can
De accomplished by removing the present
restriction requiring as security for bank
notes the specific deposit of government
ponds. SO. that the bank will assume the
burden of gold redemption of government
notes in order to secure the profit from the
issuing OF bank circulation to take their
place.
1t must be remembered, however that
the present condition of the revenues
finances and credit of our government clear
~ lndlcate that there is excuse to be
iound IN governmental necessities for any
legislation which would be unwise if the in
terests of the people and the business ccm-
munlty alone were considered. If the i'm
proVement in governmental currency could
not De secured except by a radical Grange
in bank-note currency there would he
ground for demand for the concurrent
consideration of governmental and banking
currency legiSla ton. But when the improves
ment or governmental currency is possible
otherWlse the chances for 1t should not be
Jeopardized by the refusal of the advocates
or pank asset currency to present their case
upon Its own merits alone AT present
among those who favor a system of bank
notes secured by the commercial assets of
banks there does not seem to be that definite
ACRE 9ment upon and acceptance of terms
which will enable any of these plans to
receive even the united support of those
banking system of bank asset currency.
WOULD INJURE DEPOSITORS.
Some of the plans of one year ago differ
from those advocated to-day. The two bills
having their source in the House committee
on banking and currency differ materially
from each other and neither commands the
united support of that committee Each of
these bills differs from other plans sug-
gested. Evidently time must elapse before
even the friends of this particular kind of
currency can be united on a measure.
maintain that the fundamental proposition
which underlies all present bills providing
for bank currency without government bonds
as securlty-namely. the preference of the
noteholder over the depositor IN the distrbu-
ton OF assets of an inSolVent bank-would
work grave injustice upon the depositor
class or the country with results in the
highest degree injurious to the whole COM
munity.
IF the preference of the bank-asset note
holder over the depositor provided first by
pending plans be decided unjust and irnprac-
ucable, and additional tax upon circulation
be proposed TO remove this injustice new
elements of uncertainty are introduced and
the question must also be discussed whether
In new estimates of the tax upon solvent
participating banks necessary to make up
the losses on the notes we have any right 10
assume that all or a large proportion OF
the sound banks will go into the uncovered
note-issuing business. and If only q few
banks issue notes, how we could prevent
those few from being the smallest and weak
est banks IN the system, and how, IL few
banks and weak banks only issue notes at
first, the tax on such circulation to make
UP losses can be held down so as to invite