New-York tribune., 1901-12-05

nent TO the EoyeTnren ,S ssrsuea Tor the re-
funding Of these notes into time tbe neope
1EsResS 6 aess csnar si ts M Ss
h Bsrsn e s5fa =; eres sYgahs ass
IN mobilization TsIat.sg to s,fa hsab bT cue BE-
the bs5asn 5 ss Of 70 m St
out Interest the government tnep h tne e6
a seto1h rhs ho rasn can Be ane
ssie that 69F 9ssyRs saRsms
9Ifaos @iad may when the @ light Of criticism rom
many minds be thrown upon t. sppsaF defefv f tna IN
PPesuIt the following notifications of the national
fsna & t f I fHF in 6e mae
claim for originality in conception & Is M sio M
| bT those who have most Iefuliy considered the
| important questions involved
AMENDMENTS OF LAW SUGGESTED
BY necessary amendments TO the aw Pro'Ghhi Hhc
That any national banking assoclatonh IL he wTn farm
Of United States bonds their par value and ana ~
Rotes Ret se NTH G ths ifs % re Of the United States
security therefor shall be emitted 10 lsae its paid in
untmpaired capital In addition TO t4e to
post 0I a aboye shah pay semi-annually
the Treasurer of the United States I'M III 'rust m bsir a
capital respectively such 70 Of cGh fh
shall become unable to pay its notes on oehano. no,
vent the treasurer of the United States trustee
cnrtT and credit the amounts so realized spe
cial fund for the redemption of the notes of such
count an amount equal to the United States legal
tender notes originally deposed 2y a sano the en m
erai guarantee fund to the credit of the special
On d i ,nd no % noaG sufricent to equal the total
| of the outstanding circulating notes of such IN,
| solvent bank. and this fund so constituted snan
notes. For the amount thus taken from the guar
antee fund the Treasurer Of the United states: ia as
claim against the receiver Of the nsoTGnt ID bank b
| same proportion the general creditors OF such
bank Dividends so received BY h!n fd Sa De re-
Neither he present l9w reGnrns depsI5 gpsnt OF
| dempton fund. nor the present system OF redemp-
| tion need be changed. ., :. .,u
| There are minor details. non-essential in char,
| acter, which for the sake Of simplicity are omitted
| / venture now TO present some estimates of the
| effects of these amendments if incorporated into
an important Increase in the capital of the national
| banks. Their total capitalization at present is
| 1868 0G0 O00. They have a surplus and UNDIVIDED
| earnings fund OF s43oGGo0G0. the larger part of
the moderate advantage afforded under the law
amended. movement toward reorganzation i- nE-
national would take place in banks
doing business under State laws 49,,
a IS he af thf 70 of m ond
@ m 5o WIN f 4Es qgh TO issue o ercGating
notes to par Of their capital there would be the
as ton i increased by the dierence in
amount between present supply tgreenbacks ana
s. coo coo 09 or in round aIn9pt M oS $50 5 She ] When
the banking capita! reacned ~ u00O @ ~ 'heTe "oIiq
500 100000 in greenbacks as security for equal
suits would follow: Some $50 100000 in United
States bonds now imhTisonsd 81 as ,h seGaTy would
ket TO the advantage of the private investor The
bank notes would relieve the government from ali
the burden now incident tc their redemption TO the
extent Of $2o0cO,O0O For the balance Of S46 100000
in legal tender notes OF o which would then he out
cial redemption fund would be excessive II this
were reduced to Sl46ooo0oo. the greenbacks would
hlH r a hoy he
gold certificates
In my opinion. the obligation of the government
to pay the notes Of Insolrent banks should be
scinded- Fidelity in the discharge OF IT'S duty
While its absolute guarantee remains a feature of
Jaw Il fhf b er2&a T n % asan m amq aga 1d Te
final risk of bank notes. why should It not enjoy
the dao of 6Fq a8a nony e aFTf hqF o E
good answer this plausible inquiry. but it is
require NOR extended treatment than this op-
Thus the problem Of national finances would be
greatly simpliiied.
OBJECTIONS ANSWERED
Objections Of various and vigorous kinds VIII be
offered the propositions above indicated. II will
privileges so great win induce the creation Of
banks orsanz'q for tn" sole purpose "t note issu-
of the former evils Of a wildcat currency. on
ments 10 embrace The provisions Contemplated
that reason. The FIRST named objection will not
stand the test Of fair examination A TO the
noted. the advantage o a bank issue circulation
under present laws is equal. under best pos
siblc conditions, TO seventy hundredths of l per
| cent on its capital stock, ana perVersey enough
tle present system "orks 10 fenuce the advantage
IN IN those regions where bank notes are the most
useful form IN which bank credit can be extended
per cent the advantage or pront Is seventy hum
dredths OF per cent; where the rate of interest
per cent the profit falls to thiry-one hnndredths
! In comparison with this statement il may be
bPeu
| carefully worked out by the government actuary
| rate at per cent, there would be profit of 2.0S
! per cent, provided the whole circulation could be
limit allowed could be kept In Circulation the profit
! ~oud De III In a per cent locality, under like
the proht would be 20 and "a respectively, and in
an per cent locality the profit would rise 3S If
M "a per @ cent f 3h cTGld ] oe Kept our or - II oniy
| quite contrary TO our present system. banknotes
| 6anknotes are most required for the peoples use
| Yet under no conditions anywhere would the ad-
view to the profit on circulation alone. Where capi
tai is scarce and interest the highest. the induce
cure deposits would there be necessary TO in
duce a banks organiza ton The advantage OF
bank where deposits must be small. and thus the
! two cooperating would doubt bring the benefits
OF bank 10 localities much in need of the services
| bank renders
Again it will be alleged that the security fur
| nished by the proposed guarantee fund would be
| inadequate; that bank failures would exhaust
| its supposed protection, and losses would
portant matter. and all reasonable doubts in this
particular should be removed The proposition in
| annually on the capital of all banks which may
| avail themselves of its provisions.
| bring the light Of experience to bear upon it,
| careful ana ysia of the history of national banks
| hypothetical of one-eighth OF per cent was
charged against All the national banks from their