Democratic Sentinel, Volume 19, Number 14, Rensselaer, Jasper County, 12 April 1895 — NEW CURRENCY BILL. [ARTICLE]

NEW CURRENCY BILL.

SUBSTITUTE FOR CARLISLE’S PLAN INTRODUCED. So Many Objections to the Old One that Mr. Springer and Secretary Carlisle Decide to Submit a New Mcasare—News Notes. Some Important Changes. After conferences between the Democratic members of the House Committee on Banking and Currency and with the approval of the Secretary of the Treasury Mr. Springer introduced a substitute for the Carlisle currency bill. It is substantially a new measure, although some of the sections of the original measure are retained in the new bill. Two very important features make their appearance for the first time in the substitute. The main one will have the effect of allowing the national banking system to run along, without an arbitrary provision that banks must organize under the new system. The original Carlisle bill contemplated that all national banks must reorganize under the new plan. This would have required them to surrender the government bonds which now constitute the basis of their circulation. But the substitute does away with this imperative change. If national banks wish to continue to hold their United States bonds and issue circulation thereon they may do so. It is felt that they will soon discover the advantages of the new system, and will, therefore, adopt it voluntarily. The other important feature of the substitute is that it does away with the unknown liability of banks to guarantee the notes of nil other banks. This feature of the original bill has been much criticised. It contemplated that if a national bank failed its notes would be paid out of its assets and the general “safety fund” made up by all the banks. But if the assets and safety fund were insufficient to pay the notes of the failed bank, then the comptroller of the currency was to make a pro rata assessment on all the banks of the country. The banks said this prospective assessment shouldered them with an unknown risk. In. effect it made them supply insurance on all the notes of banks in which they had no concern. In view of these criticisms the substitute will do nway with the assessment plan. The “safety fund” will bo the limit of the. joint liability of all the banks for the failure of individual banks. They will, however, be compelled to keep up this safety fund by more rigid provisions than appeared in the original bill. The new bill is arranged so as to show the new features in parentheses. The first section is as folows: “(a). That (so much of) all acts and

parts of acts as required or authorized the deposit of United States bonds to secure circulating notes issued by national banking associations (or as required such associations to deposit or keep on deposit United States bonds for any purpose except as security for public money) be, and the same hereby are repealed (as to associations taking out circulation under this act); and such notes shall not contain the statement that they are so secured.” Section 2 is changed so that banks can not only deposit legal tenders to secure circulation, but also “currency certificates issued under section 5193 of the revised statues of the United States.” Section 3 is retained entire, except that •ts provisions are restricted to apply to national banking associations “taking out circulation under this act.” Section 4 inserts “the comptroller of the currency” as the officer to designate the place where notes are to be redeemed. In Relation to the Safety Fund. I In section 5 provision is made for keeping up the safety fund, and in addition to the terms of the original bill it is provided that “the collection of said tax of onefourth of 1 per cent, for each half-year shall be resumed and continued until tho said fund is restored to an amount equal to 5 per cent, upon the total circulation oul standing. All circulation notes of failed national banks not redeemed on presentation to the treasurer of the United States or an assistant treasurer of the United States shall bear interest at the rate of <» per cent, per annum from the date of the suspension of the bank until thirty days aften public notice has been given that funds are on hand for their redemption, and sueh notes shall constitute a first lien upon all moneys thereafter received into the safety fund.” Section 6, allowing the Secrete*/ of the Treasury to invest money in the safety fund in bonds, is the same as the original bill. Section 7 is entirely new and takes the place of a section which has been eliminated. The new section is as follows; “Section 7. That every national banking association heretofore organized and having bonds on deposit to secure circulation may withdraw such bonds upon the deposit of lawful money of the United States, now provided by law, aud 1 hereafter such association may take out circus lotion tinder this net and be entitled to all the rights and privileges aud immunities herein conferred.” Section S specifies that the portion of the national banking act to be repealed is limited to so much of section 12 “as directs the Secretary of the Treasury to receive deposits of gold and to issue certificates thereon.” Section 9 is substantially the same as in the original bill. Section 10, providing for State banks, is also the same as in the original bill, except that in the restrictions on State banks a new provision is made that the guaranty fund maintained by them may include “currency certificates issued under section 5,193 of the revised statutes.” “Section 11. (That any banking association organized under the laws of 'any State may deposit with the Treasurer of the U nited States lega 1 tender noses, and receive certificates therefor in tho manner provided in section 5,193 of the revised statutes of the United States and) the Secretary of the Treasury may, under proper rules and regulations to be established by him, permit such banks to procure nnd use in the preparation of their notes the distinctive paper used in printing United States securities; but no State bank shall print or engrave its notes in similitude of a United States note or certificate, or national note.”