Second. With regard to the silver reserve of the national banks— But the amount of Treasury notes now outstanding is $102,357,636, all of which will be taken up and canceled to obtain the above reserve. In other words, all the Treasury notes will have been canceled as well as the greenbacks, and the Government will have no demand obligations out but the silver certificates, which, after a given date, are to be canceled as fast as received and the silver coin securing them issued in their stead. Thus the Government will have gone out of the banking business, all its demand obligations having been converted into coin reserves of the banks, or put into circulation among the people, and its guaranty taken from the bank notes. SEC. 6. That any corporation organized under this act may, with the permission and under the supervision and control of the Board of Finance, issue its own circulation, which shall be furnished by the United States Government and be known as United States national-bank notes. Said United States national-bank notes shall be issued in denominations of $5 and multiples thereof, and may be issued only in the following manner and upon the following conditions: First. Every bank issuing United States national-bank notes shall at all times maintain against the amount of such notes outstanding a reserve corresponding to that required against its deposits. Second. Any bank that has complied with the law may, with the consent and under the control of the Board of Finance, issue an amount of United States national-bank notes equal to 20 per cent, or one-fifth, of its paid-up and unimpaired capital, and shall pay upon such an amount thereof, as may be at any time outstanding, a tax at the rate of one-half of 1 per cent per annum. Third. Said bank may issue a second amount of notes equal to 20 per cent, or onefifth of its paid-up and unimpaired capital, and shall pay upon such an amount thereof as may be at any time outstanding a tax at the rate of 1 per cent per annum. Fourth. Said bank may issue a third amount of notes equal to 20 per cent, or onefifth of its paid-up and unimpaired capital, and shall pay upon such an amount thereof as may be at any time outstanding a tax at the rate of 2 per cent per annum. Fifth. Said bank may issue a fourth amount of notes equal to 20 per cent, or onefifth of its paid-up and unimpaired capital, and shall pay upon such an amount thereof as may be at any time outstanding a tax at the rate of 4 per cent per annum. Sixth. Said bank may issue a fifth amount of notes equal to 20 per cent, or onefifth of its paid-up and unimpaired capital, and shall pay upon such an amount thereof as may be at any time outstanding a tax at the rate of 6 per cent per annum. So much detailed information has already been adduced showing, in the cases of Germany, France, England, Ireland, Scotland, and Canada, that such a currency has always proved a safeguard against panics and money famines, and that it has invariably proved safe, that I shall only speak here of its adaptation to our condition and needs, and the advantages that must grow out of its adoption by us. CONDITION AND NEEDS. First. As to our condition and needs, it is to be observed that a comparison of our domain, commerce, and population with those of the countries mentioned clearly establishes the fact that, if an elastic currency has proved of an inestimable advantage to them, it would be of a still greater benefit to us. For, owing to our immense products at great distances from our financial centers, it becomes absolutely necessary that the local banks provide money by expressing bills of lading and the notes of our merchants and farmers to the great commercial centers and borrowing money upon them, ship it out to the various sections thousands of miles away, and when our crops and products are marketed, ship the money back to the far-off centers and express the > notes and other collateral home again. What we do in this line of business is without a parallel anywhere in the civilized world. Lingering prejudice may breed pernicious suspicions, but experience, common sense, and reason plainly point the way. Second. What advantages will necessarily follow the adoption of this system in this country may be more clearly seen by some concrete illustration. Choose, if you will, the city of New Orleans, the cotton center of the South; or Kansas City, handling the varied crops of the central West; or Fargo, lying in the lap of our greatest wheat region in the central North; or Seattle, struggling with the diversed products of the great Northwest; or Los Angeles, unable to handle the golden fruits of southern California for the want of an adequate currency; and what is true of these greater centers is equally true of every community having banking facilities throughout the entire length and breadth of our country. Certainly it will not be denied that the notes and bills of lading in the banks of New Orleans, or any other city, are just as good security there for the redemption of any notes the banks themselves may issue as they are tied up in bundles and held in New York City for the security of the currency that may be shipped South. The amount of money used in either case would be the same; the amount of security the same. Then, what is the difference? Let us see. A New Orleans bank which has a capital of $200,000 ties up in a bundle $125,000, or perhaps $150,000, of its best notes and ships them to its New York correspondent, and borrows, if perchance there is no panic on, $100,000 of money, paying on an average about 6 per cent per annum for it, and loans it out to move the cotton crop in its section. As it must pay the express two ways on the $150,000 of discounts or notes and the express two ways on the $100,000 borrowed, the producers of the South must pay anywhere from 8 to 10 per cent for the money, and should do so considering the risks and what it costs the bank, for we must remember that the banking business pays no great return upon the capital engaged in it. The report of the Comptroller of the Currency shows that the average earnings of all the national banks of the United States was only 5.21 per cent for the year ending September 1, 1895, which is a low rate considering the risks involved. NATIONAL BANKS NOT FAVORED INSTITUTIONS. Some of our people seem to think that national banks are favored institutions. That this is a mistaken idea and that its advantages, if any, are open to all of our people alike, let me call your attention to the following facts: First. If the national banks are specially favored, why do not the several thousand trust companies, State banks, and private banking firms organize at once under that law? Second. No one who is a conservative adviser ever suggests nationalbank stock to the widow or aged, or those with limited means, because the risk in holding it is so great. Third. The shares are only $100 each, so that any frugal person may invest in the stock of a national bank if he desires to do so. Fourth. We must not forget that if banking under a national-bank charter was so much more profitable than any other business, men of means stand ready at all times to engage in it, bringing the profits down to or below the level of all other investments. This suspicion or misapprehension that the Government is extending through the national banks to someone something that everybody else can not get has given birth to a kind of prejudice-the child of ignorance-excited an unwarranted jealousy, and developed a groundless opposition in some localities to a system that has raised the standard of banking in this conntry and provided the American people with a currency as sound as any in the world, and calling for the admiration of all civilized nations. Now, recurring to the special matter in hand, let us suppose that this same New Orleans bank, with its $200,000 capital, was organized under this bill. What could it have done under the section now being discussed? The bank need not tie up and ship away $150,000 of its best securities, but keeping them in its own safe issue $100,000 of its own notes, as follows: First. It would issue the money just as it needed it, and no faster, and therefore no part of it would ever be idle and a source of expense. December 1, 1895, issued 20 per cent, or one-fifth of capital, $200,000 (tax onehalf of 1 per cent).. December 15, 1895, issued 20 per cent, or one-fifth of capital, $200,000 (tax 1 per cent). $40,000 January 1, 1896, issued only 10 per cent, or one-tenth of capital, $200,000 (tax 2 per cent).. 40,000 20,000 100,000 Certainly long before the 1st day of July, 1896, the crops will have been disposed of and these notes retired, the money having cost the bank one-fourth of 1 per cent for the first $40,000; one-half of 1 per cent for the second $40,000, and 1 per cent for the $20,000; or an average cost to the banker of one-half of 1 per cent for the six months the money was out. $40,000 for six months at one-fourth of 1 per cent... Making a total of ............. $100 200 200 500 Or one-half of 1 per cent on $100,000 for six months against 3 per cent, at least, in the former instance for the same length of time. Will it be necessary to state that this difference of 3 per cent in the two instances will, every penny of it, amounting to $3,000, come out of the merchants, farmers, or producers, and practically all of it out of the farmers or producers? Will anyone seriously urge that any portion of this heavy charge will be borne by the bankers? Nor will anyone at all familiar with the laws of trade doubt that the people-farmers and producers-will ultimately get every farthing of the advantage gained, for competition would very soon bring the bankers' share of profit to a fixed limit, not varying much from its present margin, thus saving to the people, the producers of our country-farmers and laborers-anywhere from 1 to 5 per cent per annum upon the capital borrowed to carry on the commerce of the country. The value of our finished product, it will be remembered, now annually exceeds $12,000,000,000. EDWARD ATKINSON'S ESTIMATES. Mr. Edward Atkinson, the statistician, has estimated that the transformation from the unmined coal and iron, the unbroken forest and the fallow fields to the homes in which we live, the things we wear and those we eat, there are at least three transfers of this vast property, or $36,000,000,000 passing from man to man. Is it not reasonable to suppose that at least two-thirds of this amount is handled with borrowed capital? If so, even if the loans run but sixty days and 1 per cent can be saved on this two-thirds, or $24,000,000,000, the people— the producers-will be the gainers by $240,000,000 every year, or more than all the greenbacks now outside the United States Treasury. Shall we not cancel them if we can more than make up for them in every succeeding year, to say nothing of the frightful loss they are entailing upon the country every month, and the danger to which the Government is subjected because of them? Let the reader estimate what the gain to the producers would be if the loans on this $24,000,000,000 ran six months! What if they ran for each current month in the year, just three and six times, respectively, the amount saved every sixty days. It is not a mere fetich to hang on to them, deceived by the hallucination that the Government can make something out of nothing, when it has been proved in this case, as in all others, that mistakes and falsehoods only lead to misfortune and disaster? If the experience of all other great commercial nations added to this fatal delusion is not convincing enough to determine our action now, we shall simply have to wait to be taught by more bitter lessons still, and more crushing disasters, what has already been demonstrated beyond the shadow of a doubt. EQUALIZATION OF RATES OF INTEREST. Under the operation of this provision of the bill there is still another object to be attained that is founded in justice and conserves the welfare of the people in all portions of our country alike. It is the equalization of the rates of interest in every section of the land, from Niagara Falls to the Gulf, from Cape Cod to the Golden Gate. Wherever there is banking capital, a demand for money, and an equally abundant supply of equally good commercial two-name thirty, sixty, and ninety day paper, there the rates should and will be practically the same. Rates of interest will not then be, as now, particularly low in one locality, because there is considerable wealth in the form of money and securities, and particularly high in another, notwithstanding there is abundant wealth in the form of cotton, corn, cattle, wheat, and the various other products of the earth simply because it awaits a better day for disposition or sale. The question will not then be so much whether it is stocks and bonds on the one hand and cotton and corn on the other as whether it is good liquid wealth in some form, cattle, hogs, corn, cotton, and wheat being regarded as good wealth, as quick assets if only the banks have the facilities for carrying them. TAX UPON CIRCULATION. It will be observed that the tax imposed upon the circulation is an increasing graduation. The object is to give it a repressive effect just in proportion as the expansion increases under the varying pressure from the crop movement to the demands of an acute and general panic. The same principle is illustrated in the 5 per cent tax imposed upon the credit circulation of the German banks whenever it passes a certain limit. It is also illustrated in the operations of the clearing houses of New York, where they charge 6 per cent upon clearing-house certificates, and in Boston, where they charge 7 per cent upon them, confident in all these instances that the tax will compel the retirement of the issues. So far this system has worked perfectly, the retirement of the circulation fol lowing quickly upon the disappearance of the cause. SEC. 7. That all taxes so paid to the Government upon said United States nationalbank notes shall be set aside and held by the Government as a guarantee fund exclusively for the redemption: First, of the United States Government bond notes; second, for the United States national-bank notes, in the event of the liquidation of any bank organized under this law: Provided, however, That whenever said "guarantee fund" shall exceed 5 per cent of both the United States Government bond notes and the United States national-bank notes, such excess shall belong to the United States Government and may be used by it to defray its general expenses. It is to be observed in this connection that if there had been no United States bonds deposited to secure national-bank notes from 1864 down to 1894 the loss to note holders could not have exceeded $1,139,253, and of this amount $958,247 were still unclosed accounts at the time of the statement. I am informed by Hon. James H. Eckels, Comptroller of the Currency, that a guarantee fund of one-quarter of 1 per cent per annum during the past thirty years would have protected all note holders. Certainly 5 per cent will cover the remotest possibility of loss, and then the income will be covered into the Treasury for general expenses until the fund is reduced below 5 per cent, when the tax will again be turned to the guarantee fund account, bringing it up to the required. amount. I think no one will doubt that the provisions of this bill will produce more than enough to cover the one-quarter of 1 per cent that the experience of our national banks for thirty years has shown to be sufficient for all losses, even if there had not been one dollar of security deposited to protect them. SEC. 8. That the Board of Finance shall divide the United States into clearinghouse or reserve-city districts, and each corporation shall belong distinctly to some one district, and the number of such district shall be plainly and prominently printed upon the said United States national-bank notes issued by the banks located therein. The several banks of each district upon receiving United States national-bank notes belonging to any other district shall forward the same to a reserve city, which shall return them to the district to which they belong. CONSTANT REDEMPTION OF BANK NOTES. The object of the foregoing section is to insure the constant redemption of the United States national-bank notes, to materially strengthen our banking system, and becomes essential for the following reasons: First. Our individual banking system does not in itself give us the same facilities for forcing current redemption that large banks with branches in all parts of the country would. Second. This system of districts will draw the normal money-gold, silver, and United States Government bond notes-to the redemption or clearing-house centers and keep it better distributed throughout the year. Third. The tendency will be to keep the credit money at home, so that it can be retired whenever the bank issuing it desires to do so, |