The sun. [volume] (New York [N.Y.]) 1833-1916, 1901-12-05

10 tiIC kIOntr3lt out Nh0 abAhhy ~
deposits would even there be necessary
to induce a banks or ganization. The ad-
vantage Of circulation as proposed would
be helpful to sustain a bank where deposit
must be small. and thus the two cooperat-
ing would no doubt bring the benefits OF a
hank to localities much in need Of the SER
vices p bank renders.
Again, IL will he alleged that the security
furnished by the proposed guarantee fund
would be INADEQUATE. that bank failures
would soon exhaust its supposed protec-
ton. and losses would sooner or later fall
upon bank ncte holders. This IL an i'm
portant matter, ard all reasonable doubts
In this particular should I've removed. The
proposition involves the contribution OF
one-eighth of / per cent. annually on the
capital of all banks which may avail them
selves Of its provisions.
In order TO get some data on this point
and TO bring the light OF experience TO bear
upon il, n careful analysis Of the history
Of national banks for the last thirty;
six years has been made. A hypothetical
tax of one-eighth Of l per cent. was charged
against all the national banks from their
organization TO date, and the amount
so accruing was passed TO the credit OF
the imagined guarantee fund. As individ-
ual banks from time TO time have actually
failed, il was assumed that had these banks
enjoyed the privileges above proposed
they would at the time OF their failure have
had outstanding the full amount OF notes
allowed. The guarantee fund was then
charged with the difference between the
value Of the securities held by the Treasurer
of the United States in trust and the face
amount OF their outstanding notes, After
ward the guarantee fund was credited
with the amount which would have been
realized by the Treasurer had he received
the same percentage In dividends upon his
claim for the guarantee fund as the final
liquidation Of the banks showed was paid
to depositors. The result of this shows
that all noteiolders would have realized
the face value Of uch notes without any
delay; that the guarantee fund. instead
Of being exhausted, would have steadily
grown and that on the list of January Of
the present year there would have been
an unused surplus TO the credit of the
guarantee fund Of s27,+2l, $50. This demon
s~tration, drawn from past history, furnishes
better evidence OF the entire sufficiency
Of n guarantee fund. TO the end designed.
than IL usually enjoyed in human Affairs
when II Is sought In any direction to guard
against the contingencies OF the future,
There il one more objection which will be
advanced-the only one that In my opinion
possesses any real merit. II will be
affirmed that, with our system as II is
banks constituted independent units,
scattered over the land, with no general
effective control anywhere lodged, with
no principle of coordination or cooperation
the note-issuing function should be quite
prohibited except on absolute security,
with ample margin deposited In advance.
II might be broadly affirmed that while
this weakness continues to exist banks
should create no liability. either to note
holders or depositors, and in what Is said
under the Mad of Banking ! have argued
that TO this general weakness there should
be addressed an appropriate cure.
The best that can be said under present
conditions Is that II our system be defective
II is much better than none. Banks are
az essential in the business affairs OF the
people as railroads and ships ara essential
In the transportation Of commodities.
The note-issuing function, within the
limits OF entire safety, is as legitimate and
as serviCeable TO the community as II the
issuing OF bank credit in any other form.
1t Is a qucstion In which the convenience
of the people and the economical Use OF
bank credit are concerned. The objection
last considered. then, is good as n general
criticism TO our system of banking. but
will not apply with any peculiar force to
bank-note issues OF currency under the con-
ditions OF joint security from bonds and
a sufficient guarantee fund.
PRESENT CONDITIONS TO BPoRM
On April /. 1895. the DEMONSTRATING
debt Of the United States was ss47 800. ESQ.
Incidental to the war with Spain the debt
was increased 20 that ON Nov. l, 1899, its
highest point, the amount stood at sl.O40.-
Ot9. o2o. Two years later. or on Nov. is.
1901. the debt stood at 1854 OF. $50. moving
a reduction of $e2. OIL $40.
This statement covers only the face
amount of the debt. Interest Ia a. much
a part of a debt a. is the principal. and this
feature Of the debt has been anticipated
and paid 10 an amount nearly as great
a. has been the reduction OF the principal.
BY the application Of 1856 .O04 Of the
public moneys. interest 10 the amount OF
t5t. 54s. 424. which would otherwise have
been a charge against the Treasury during
the next seven years. has been paid.
20 that. broadly speaking. the public debt
within two years has been reduced by the
sum Of si4o. $40. 294
II is 20 I've noted also that the cash fund
In the Treasury has risen from ere. 1885,
ga on April /. 1898. TO t32? 5l4. 1872 at close
OF business on Nov. 10. 1901. an increase
Of 500. S47. 7ss. The enectiv" reduction Of
the debt and Increased cash ON hand eK-
cAed In their total the Spanish war bonds
sold, amounting TO "A little less than $500
OOO.OOO.
A. a ~nsequen Of the operations re-
sulting In this very satisfactory condition
Of things. the annual interest charge on
account Of the publc debt has isen reduced
from So. 3ii .ss4. where n stood Nov. !.
1895. 10 81. al. ~ OH Nov Is 1904
On Apui O. 1875 thr annual Interest charge
Wa lIi,Js7.i7s luri" D., therefore. shown
an annual reduction ~ lht rect daiIng from
the present time. ot . glt, lgs a. compared
With IA pupd Jus' ai'''lhtiug 90" Spanish
War The fart- Indicate "a condition ~
un UNPARALLELED sirrugihlnt the Treasury and gD
fuI Co explain 10" superior credit 81 tho
I uiivi Ntatrr a. Wrd7ufsi aud Illustrated
by urioo quotations n the World b financial
markets.
Il would. lhru arls,sr that the present
b. tis mY-f ]UIuUItuIn IHIf 900 al HAf lI-tuiN.
aui az iaNorau.a % uu. a. wr u.ay urIz iui
lu the fIt4ir. fH enter unHu Iut4uluu-
u4ra-uurr Go eliminate b4ul 'l,W.uts -
hnaurlsI H,abU... Hr tAls.u"ipf has
lIH4EUH INTO ttr. aU.I a.. To- rf,sH d u.rt-IuIr.
A- Ia