The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1901-11-08
FAVOR LOWERING BILL
CURRENCY SYSTEM NOT ELASTIC
ENOUGH AT PRESENT
Banks to Be Allowed to Issue More
Money. and Public to BE Pro-
tected by Ample Re-
serve Fund.
GLOBE WASHINGTON BUREAU,
Posi- Building, Room 45.


WASHINGTON, D. c., Nov. 7-Strong
pressure will be brought to bear on con-
gress this wintei for the passage Of
law authorizing the national banks to
issue currency based on their capital
stock. The banking interests of the coun-
try are naturally i'll favor of the PROPOSE
ton, and it is being Systema tically push
ed by the monetary league, Of which II.
H. Hanna. of Indianapolis, is chairman.
The latter has called on the president in
regard to the matter and it is under
stood that Secretary Gage has advised
that it be made the subject Of recon-
mendation in the presidents message to
congress.
The plan is embodied In what is known
as the Lowering bill. This was present.
ed at last winters congressA and that
body was Systematically polled by. its
friends. It was finally decided to post
pone the real campaign until this winter.
The object which it is claimed the act
will secure is greater elacticity in the
currency. The bill proposes to permit
national banks to issue notes to the value
OF 10 per cent of the banks capitaliza-
ton. This for period Of three years
from the date of the acts passage. At
the end of this time the banks will be
allowed to issue 20 per cent of the capt.
tai for another period of three years.
Then, at the end of six years, the banks
would be permitted to issue the notes for
an amount equal to 40 Per cent of the
capital
The idea in thus increasing the per
centage is that the law shall be put into
effect tentatively. If at the end of three
years it is found to be dangerous or 9TH
erwise undesirable, it could be repealed
Otherwise it would go on becoming more
liberal. With something like $1,000,0000 900
capitalization in the national banks the
currency of the country would be in
creased $4G0. eco.
In order to protect the public against
the failure of national bank, it is pro-
posed in the bill to create redemption
fund. AT first tax of 5 per cent against
the amount of currency issued would be
contributed to a general fund to be held
in custody by the treasurer of the United
States for the redemption of notes of in
solvent banks. Later it is planned that
this fund be kept UP by tax of | per
cent on the issue of notes. When a bank
fails the notes which it might have our
would be redeemed by this fund, and
when the banks affairs were nquidated,
the fund would do business with the bank
on the. same basis as another creditor
The fund would naturally suffer some
permanent loss, but this would be made
up by the per cent tax.
The people who are urging the plan say
the present currency scheme lacks elias
ITCHY. In case of panic, when there
is a sudden and urgent demand for
money, this plan would make it easy for
the national banks to respond to that de-
mand, and put out notes as fast as they
could be printed. When the demand SUBJ
sided they could be called in. Meantime
the banks would make a comfortable
margin of profit on the money which they
would lend.
1t is early yet to predict what position
will be taken by the Democratic members
of congress when this bill comes up for
discussion, but It is reasonable to assume
that they will oppose it. The president
has not committed himself to those who
have talked with him, but he does not
seem very anxious to make it the subject
of specific recommendation. This, how
ever, will not discourage the interests
which are preparing to make the fight
for, it this winter.