Show FINANCE PERVERTED i Secretary Gages Scheme in Behalf of the Banks ONE FdRM OF CURRENCY AND THIS TO EMBBACE NATIONAL NA-TIONAL BANK NOTES Banks to Be Allowed to Issue a Amount Fully Up to Their Bond 3 Deposit and a Further Amount Equal to TwentyFive Per Cent of Assets Washington Dec Secretary Gages report gives the receipts and expendi gves tures of the fiscal year Total receipts 43038716789 the expenditures for the same period were 14843962230 showing show-ing a deficit of 1805245441 As compared with the fiscal year 1896 the receipts for 1897 increased 20911 75911 There was an increase of 1359471349 in the ordinary expenditures The secretary gives a table showing the estimated amount of money out eiiflVi fhe trAnsurv to hp 10r 732 S04 r which he estimates is 2323 per capita I of the population of the United States A table is given Of the receipts from internal revenue taxes showing a decrease de-crease of 211022 from last yeats figures fig-ures An analysis of the exports show that those of the products of agricultural decreased from 78 per cant to 66 percent per-cent while manufactures increased from 15 per cent to 26 per cent A note is made of the fact that silver has become be-come one of the most important items for export The number of immigrants arriving is given at 230832 which is the smallest number since 1879 Of this number 1880 were refused admission to the country The appropriation of 40000 is urged to provide a vessel for service on theY the-Y lon river next spring The secre ryer sprng tary says it could be built on the Pugef Sound in sections and put together to-gether and equipped at St Michaels The recidrd of the life saving service is given briefly showing that in 699 disasters i I dis-asters during the y a involving the I lives of 4445 persons only 53 were lost and that out of 7329570 worth of property I prop-erty involved 5291175 was saved REVIEW OF CURRENCY The report closes with an exhaustive review of the currency question with recommendations recommendatons t After detailing the evils of the present pres-ent system according to his view the secretary offers the following recommendations recom-mendations of which he says The recommendations I make must be construed as tentative steps in a direction di-rection which if consistently pursued will ultimately lead to conditions theoretically the-oretically desirable rather than as being be-ing in themselves final measures to that end The condition of the treasury in its relation to demand obligations requires that one or two steps be taken The one may be a large reinforcement of the permanent gold reserve the other may be by an important reduction reduc-tion In the objectionable form of bills The latter is in my opinion the more desirable ISSUE AND REDEMPTION FirstI recommend that proper legislation be enacted which will establish es-tablish separate and apart from the ordinary operations of the treasury as they relate to revenue and expenditures expendi-tures a department to be designated and known as the fssue and redemption redemp-tion division To this division the sum of 125000000 in gold should be set over I from the general fund in the treasury to be used only for redemption purposes I pur-poses and all the silver dollars pow I held for redemption of silver certifi cates and all the silver bullion ana I dollars coined therefrom bought under un-der the act of 1890 should be passed to the same account Further that I the sum of 200000000 in the legal tender ten-der notes of the United States known as greenbacks be collected as hereinafter herein-after described nlf deposited in the said issue and redemption division to be disbursed therefrom only through receipt in exchange therefor of an equivalent amount of gold coin Such I gold when so secured to be held in said division as part of the general redemption fund l REFUNDING LOAN BONDS SecondI recommend that provision pro-vision be made for the issue of refunding re-funding loan bonds payable after ten at the pleasure of the years government govern-ment such bonds to bear interest at I the rate of 2J per cent per annum payable principal and interest in gold I coin and that the secretary of the j I treasury be authorized to issue such bonds and receive in payment there I for with an equitable allowance for I the difference in interest any part or j I i I all of the outstanding loans of the I United States which mature by their i terms of payment in the years 104 1907 and 1925 THE WORD COIN I Continuing he says The advantage advan-tage involved in the proposed action lies in this I removes an ambiguity from our contract obligations ambiguity I am-biguity which affects unfavoraoly the government credit The word coin now used to express the obligation in I the public debt is an ambiguous word It is no doubt understood by the more discriminating public creditor to mean gold coin and the solemn act of congress con-gress pledging the maintenance of silver I sil-ver coin upon a parity with fold coin I makes it possible to construe the word i I i coin as therein used to mean any j I thing other than gold or its full equivalent I equiv-alent Yet as this is a conclusion of I logic rather than a clear statement of fact the simpler and more humble investors in-vestors or wouldbe investors in the I j public debt are confused and doubtful j and the public credit is the weaker I i therefor The secretary then goes on to show i that the course suggested has apre I cedent in the act of congress of 1869 pledging the government to the payment pay-ment of all interestbearing obligations obliga-tions in coin or its equivalent READY PAPER MONEY 11 Headds To accomplish the objects ob-jects herein suggested without contracting con-tracting the circulation some other form of paper money must be allowed to fill the vacuum which would otherwise other-wise be occasioned The national banknote bank-note now familiar to our people is the readiest and most practical agent to accomplish that object and under tea sonable conditions i will be found responsive re-sponsive to the call To obviate the difficulties in the way of this method of supplying the deficiency defici-ency he recommends the following changes in the national bankiiig law CHANGES SUGGESTED First Permit national banks to be organized With a minimum capital of 25000 in any place having a population popula-tion of 2000 inhabitants or less SecondReduce the rate of taxation on circulating notes secured by deposit of bonds to onehalf of 1 per cent per annum Third Permit banks now organized or hereafter organized to issue circulating circu-lating notes to the par value of the refunding re-funding bonds hereinbefore suggested when deposited by them with the treasurer treas-urer of the United States and further fur-ther allow such banjjs as shall avail themselves of the opportunity to dei posit as security with the treasury of the United States greenbacks treasury notes or silver certificates to a total amount of 200000000 against Which there shall at once be issued to them I by the comptroller of the currency national na-tional bank notes to an eQual amount it being furtjier provided that from time to time at his convenience the secretary of the treasury shall substitute substi-tute forthe greenbacks treasury notes and silver certificates so deposited to secure circulation bonds of the same I class and character as the refunding bords first named to the amount of I 200000000 such bonds to be chargeable I to said banks and by them accounted for at such not less than price pa as the market quotations may indicate i to be their fair market value EXEMPT FROM TAXATION During the period of time intervening interven-ing between the deposit of greenbacks treasury notes and silver certificates and the substitution of the bonds by the treasur the circulating notes specifically spe-cifically issued therefore shall be exempt ex-empt from taxation Upon such substitution sub-stitution of bonds the funds released thereby shall at once he transferred by the secretary of the treasury to the issue is-sue and redemption division Fourth After said banks have de posited such bonds greenbacks treasury treas-ury notes or silver certificates to the amount of 50 per cent of their capital they shall be permitted to issue banknotes bank-notes in addition to the 50 per cent thus provided to the extent of 25 percent per-cent of such deposit which said 25 per cent may be unsecured by any direct di-rect pledge of security but issued against the assets of the bani Fifth Extend the guaranty of payment pay-ment by the government to all circulating circu-lating notes of the bank whether issued is-sued against deposited security or against assets SAFETY FUND SixthTo secure the govermnent I against loss i any attaching to its I guaranty a tax of 2 per cent per annum an-num on unsecured circulation shall be levied to create a safety fund which fund shall be invested by the secretary of the treasury and the comptroller of the currency in government bonds In addition to such funds the government shall be further protected by having a first lien upon all assets in case of the failure of the issuing bank Seventh All notes shall be redeemed I re-deemed in the city of New York at the subtreasury and at such other sub I treasuries as may be designated by the comptroller of the currency with the I approval of the secretary of the treasury treas-ury The control of such redemption I shall be under the direction of the comptroller of the currency and made from a redemption fund of 10 per cent to be provided and maintained by the banks TENDOLLAR RESTRICTION EighthRestrict the issue of national na-tional bank notes to the denomination of 510 and upward To illustrate the benefits of this plan the secretary cites the fact that the national banks with a capitalization of 68080000 have a circulation of only 18950000 and were compelled to borrow bor-row 13548000 from eastern banks with which to move last cotton years coton crop His plan he believes would induce them to issue sufficient circulation to transact all their business without borrowing bor-rowing The secretary quotes figures from the records of the comptrollers office to show the 2 cent tax per on unsecured un-secured circulation would more than reimburse the government for its losses by failed banks That loss since the first organization of national banks I would have been 194824 while the fund produced by the proposed tax would have amounted to 245414048 CONSTANT MENACE The secretary then goes on to argue that the greenback in its present status is a constant menace to the gold reserve re-serve and the nations credit and that the necessity being for a reduction of the demand liabilities of the government govern-ment those offer the most convenient agents for that action He says The importance of banking in its relation re-lation to industry and commerce demands de-mands for it in view of the consideration considera-tion thus enumerated careful and ton timely attention I How to withdraw the specific form of security now provided since it will ultimately disappear how to provide a substitution which will be recognized by the people as adequate security and which will at the same time allow banks within well guarded limits the most useful freedom in their note issues is-sues The problem is too large its results re-sults too farreaching to be solved offhand hand or by expert dictum Its solution solu-tion must be gradually reached by the path of safe experiment SAFE PROPOSITION 0 To allow national banks to issue circulating notes equal to 25 per cent of their capital upon a payment of 2 per cent per annum as an insurance I or safety fund upon amounts so issued is i the demonstration drawn from the comptrollers office can be trusted i a proposition well within the limits of safety Nevertheless whatever risk I there is should be assumed by the government gov-ernment obnoxious as it may be to the general principles of governmental action ac-tion I is by such action that the situation situ-ation as it exists has been evolved I Upon the government therefore rests I the duty of seeing it properly solved |