Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-06-26
FOR ELASTIC CIRCULATION
TREASURER TREATS PLAN OF
EMERGENCY NATIONAL BANKS.
Would Have Notes Issued Based ON
Approved State or Municipal
Bonds-Explains His Plan.

Charles II. Treat. United States treasurer.
! In speeches before conventions OF bankers
at Kansas City and Clarksburg, w Va
advocated plans for an emergency national
| pank circulation that have attracted wide
| attention In financial and business circles
| Since the delivery OF the speeches he has
| been flooded with letters favoring the put
| ting into law of his plans. Newspapers with
| banking and business clientele have come
| out for the proposition Mr.. Treat outlined
his plans to Star reporter today. and said
| that he was impressed with the widespread
! friendly attitude shown to his views. As
the next Congress will probably undertake
! to reform the currency laws. Mr. Treats
ideas are sure to be given close attention by
| the committees that will deal with the SUBJ
| ject.
Mr.. Treat presented his views for The
| Star as follows:
Amy national bank that has 90 per cent
| or more of its capital invested in United
States bonds should have the privilege to
apply for the issue OF national bank vmer-
gency currency under the following condi-
tons: That amendments be made to the
present national bank act permitting any
national bank that has not less than so per
cent OF It's capital invested in United States
bonds to take out emergency bank note
| currency to an extent not exceeding 90 per
cent Of the amount invested in United
States bonds that these emergency notes
be similar in form and design to the pres
ent national bank notes; that the form,
which now reads This note is secured by
United States bonds deposited with the
treasurer of the United States be changed
to, This note secured by bonds and guar
anteed by the United States: that the issue
shall be made on four, eight and twelve
months, dating from August 1 or Septem-
Der l. or any other date, according to the
needs Of the crop moving period.
Basis for Circulation.
THE collateral, or security, for these
emergency bank note issues should be, IL
desired, in other than United States bonds.
which means that the issue shall be secured
by state or municipal bonds, according to
the standard Of the states of New York ana
Massachusetts for savings bank invests
ments. These securities to be accepted at
20 per cent of their market value, ana tne
United States government guarantee the
payment and redemption OF ell notes SO is-
sued at a charge OF i per cent. Inc price
at which state and municipal bonds are TO
be received GO per cent OF their market
value) will safeguard the market price OF
United States bonds the investments IN
which must always be kept sacredly IN view
to protect the large investment now IN
them for banking and also for their future
supremacy in the security market
THE acceptance OF other than Chlteo
States bonds makes them more easily at
tainable for banking purposes. Ihey can
be easily secured from private lndividuais
at very moderate charge, propapiy no.
made in the kind of security received as q
basis for circulation, which probably would
be for longer time than that applying 10
the temporary deposit OF pupnc ruhos: ans
utilizing of securities other than united
states bonds for circulation Will cause a
great uplft in the price and stapinty Oh
these securities which will have iaI-
reaching benefit to the h seear'' stated the
government will be absolutely secured, ana
snecifically SO, far transcending the SAFETY
embodied in the general assets OF BANK.
Compulsory Elasticity.
.aThese emergency notes have compui-
sorv elasticity, because they must be re-
deemed at a stated period, ana at every
cron moving period the same accommoda-
ton can be granted. Congress will decide
whether a percentage of 33 1-3ce or 500 on
outstanding circulation is adequate to move
the crops. Authority can be vested IN the
Secretary of the Treasury, the treasurer OF
the United States and the controller of, the
currency, or any financial power Congress
may authorize. -,
This plan is simply a progressive devel-
opment of the ideas Of Secretaries Chase
and McCulloch, who forty-ive years ago.
forecast that the time would come Wneh
such an ARRANGEMENT would be required,
owing to the high cost of bonds of the gov
eminent and the Importance OF securing
safe currency that would float at par
throughout the country and yet be not TOO
expensive for the peoples needs ! have
talked over this plan with scores of the
most experienced bankers as we'll as finan-
cial writer's, and it is gratifying to note
that 1t is SO generally approved. The mat
ter Of working out the details is of little
moment, If the principle is recognized. The
government has monopoly OF the cur
rency; Uncle Sam lie practically banker,
therefore his facilities should be adequate
to meet the conditions of trade and COM
merce. We have in this all the advantages,
without the drawbacks, Of q great central
bank 1t is absolutely safe. and of such
an economical character that no borrower
could feel that the government was initiat-
ing scheme Of usury In high charge for
the use of emergency currency, which the
banker might take as an excuse for adding