Mr. ECKELS. Yes. Mr. HILL. And that this would be abundantly large and even more than sufficient. Mr. ECKELS. Yes; more than sufficient. Mr. HILL. Let me ask you whether, in your judgment, it would not be full as well to include those expenses in the assessment, as now laid, and not have any tax at all? Mr. ECKELS. It would be virtually the same thing. Mr. HILL. If it was an assessment, as the redemption charges are now made, and as the examination charges are now made, the banks then would absolutely pay the expenses and nothing more?! Mr. ECKELS. Yes. Mr. HILL. Do you know any reason why money should be taxed? Mr. ECKELS. No; I do not know of any reason why money should be taxed. I do not know of any reason why a country should undertake to get out circulation and put barriers in the way of so doing, in the shape of unnecessary taxes. Mr. HILL. Section 2 is as follows: SEC. 2. That in lieu of all existing taxes every national banking association shall pay to the Treasurer of the United States in the month of January of each year a duty of one-quarter of one per centum upon the average amount of its notes in circulation during the preceding year. I have drawn that section in deference to your judgment-contrary to mine, because I think there should be no tax on money, myself. RETIREMENT OF LEGAL TENDERS. Section 3 is as follows: SEC. 3. That whenever and so often as circulating notes shall be issued to any such newly organized banking association, or to an existing association increasing its capital or circulating notes, it shall be the duty of the Secretary of the Treasury to redeem and cancel legal-tender United States notes issued under acts passed prior to July first, eighteen hundred and ninety, to an amount equal to the sum of nationalbank notes so issued to any such banking association; and whenever the Treasury shall not have in its possession United States legal-tender notes issued as aforesaid, the provisions of this section shall then apply to the like redemption and cancellation of Treasury notes issued under the act of July fourteenth, eighteen hundred and ninety. That provides for the redemption and cancellation of the legal-tender paper money of the United States exactly as fast and no faster than the national bank circulation is issued under the liberal provision of this bill. Mr. ECKELS. That is virtually Mr. HILL. A reenactment of the old law, except that it provides for 100 per cent when the other provides for 80 per cent. Mr. ECKELS. Yes. Mr. HILL. To keep the volume exactly alike. GOLD BOND ISSUES AUTHORIZED. Section 4 is as follows: SEC. 4. That to enable the Treasurer of the United States to comply with the requirements of this act and to redeem and cancel the United States legal-tender notes and Treasury notes named therein, he is hereby authorized to issue from time to time, on the credit of the United States, coupon or registered bonds, redeemable at the pleasure of the United States after five years, and payable twenty years from date, bearing interest at the rate of three per centum per annum, payable semiannually, to such an amount as may be necessary for the purpose herein expressed, and the proceeds of the same to be used for no other purpose whatsoever. The bonds so authorized shall be payable in gold, and shall be of such denominations, not less than one hundred dollars, as may be determined upon by the Secretary of the Treasury, and may be disposed of by him at any time at not less than their par value for either class of said notes or for gold in this country or elsewhere. That provides for authorizing the Treasurer of the United States, whenever it becomes necessary and at his discretion-for this purpose and this purpose only, the proceeds to be used for nothing else-to issue bonds distinctly and specifically payable in gold, with authority to sell them here or elsewhere. Have you any objection to that? Mr. ECKELS. I see no objection to the bonds being paid in gold. Mr. HILL. You think there is no harm in such a discrimination? Mr. ECKELS. I do not. I think there ought not to be a bond issued by this Government except distinctively payable in gold. Mr. HILL. That meets your approval? Mr. ECKELS. In that respect the section meets my approval. Mr. HILL. Is there any other respect in which it does not meet your approval? Mr. ECKELS. I have stated a number of times that I thought the manly and creditable thing to do would be to get rid of these legal tenders, by the funding of them, but the question this committee has to deal with is whether or not it is the most practical way. If I had. the doing of it I would do it in that way. Mr. HILL. If I had the doing of it and it was dependent on me and my vote, I would do it in that way, but I recognize the fact it has to meet the approval of the people, and consequently I have aimed for maintaining an exact equivalent in the issuance of bank notes for the retirement of the greenbacks. Mr. ECKELS. I do not see any reason why the United States ought not to pay its debts, whether it has its debts in the shape of a bond, drawing interest, or in the shape of promises to pay not drawing interest. The funding of these legal tenders would be simply the payment of a just debt. The objection that this method of disposing of them substitutes an interest-bearing debt for a noninterest-bearing one is not a very substantial one. There is no reason why, if the Government has the property of the citizens and uses it for the benefit of the Government, the Government ought not to pay for so doing. Mr. BROSIUS. Will the Comptroller have the goodness to explain why the Government, or even an individual, should pay a debt that costs no interest when the creditor does not want it paid? Mr. ECKELS. An individual or the Government ought to pay a debt that is a source of danger to it, whether it bears interest or not, and it ought to have it known definitely when these debts will be terminated. Mr. BROSIUS. Then you mean to qualify your former statement that the Government ought to pay any debt that is a source of danger? You did not have that in your other statement. Mr. ECKELS. The Government ought to pay all of its debts, whether they are dangerous or otherwise. The CHAIRMAN. Isn't it a fact that individuals pay debts when it is for their interest to pay them, without consulting the interest of the creditor? Mr. BROSIUS. Can anybody ever say it is to the interest of the debtor to pay a debt not drawing interest, if the creditor doesn't want to receive it? AUTHORIZING BANKS WITH SMALL CAPITAL. Mr. HILL. I call your attention to section 5. Section 5 is as follows: SEC. 5. That section fifty-one hundred and thirty-eight of the Revised Statutes is hereby so amended as to read as follows: "SEC. 5138. No association shall be organized with a less capital than one hundred thousand dollars, except that banks with a capital of not less than fifty thousand dollars may, with the approval of the Secretary of the Treasury, be organized in any place the population of which does not exceed six thousand inhabitants, and except that banks with a capital of not less than twenty-five thousand dollars may, with the sanction of the Secretary of the Treasury, be organized in any place the population of which does not exceed three thousand inhabitants. No association shall be organized in a city the population of which exceeds fifty thousand persons with a capital of less than two hundred thousand dollars." This committee has already passed a bill, and it has passed the House, providing for the organization of small banks with a possible capital of $20,000 in towns of 4,000 inhabitants. This section varies from that, limiting the capital to $25,000 in towns to 3,000 inhabitants. Personally I would prefer not to go below $25,000. Mr. ECKELS. All the members of the committee agree in all these bills that banks ought to be allowed with a smaller capital than at present. RETIREMENT OF SILVER CERTIFICATES. Mr. HILL. Section 6 is as follows: SEC. 6. That from and after the passage of this act the Secretary of the Treasury be, and he hereby is, forbidden to issue silver certificates in excess of the amount then outstanding, or of the amount as it may hereafter be when reduced by the cancellation of such certificates, because of the issuance of guaranteed national-bank notes in place thereof, as provided in section eight of this act. That provides for the retirement of silver certificates or for no further issue of silver certificates after they are retired under section 8 of this act. Mr. Cox. How do you retire them? Mr. HILL. Section 8 retires them. RETIREMENT OF NATIONAL-BANK CIRCULATION. Section 7 is as follows: SEC. 7. That so much of section nine of an act entitled "An act to enable national banking associations to extend their corporate existence, and for other purposes," approved July twelfth, eighteen hundred and eighty two, as reads as follows, “And no national bank which makes any deposit of lawful money in order to withdraw its circulating notes shall be entitled to receive any increase of its circulation for the period of six months from the time it made such deposit of lawful money for the purpose aforesaid: Prorided, That not more than three millions of dollars of lawful money shall be deposited during any calendar month for this purpose: And provided, That the provisions of this section shall not apply to bonds called for redemption by the Secretary of the Treasury, nor to the withdrawal of circulating notes in consequence thereof," be, and the same is hereby, repealed; and the Comptroller of the Currency is hereby authorized and directed to have prepared and keep on hand, ready for delivery on application, blank notes, to such an amount as he may deem advisable for each national banking association having circulation. I wanted to call your attention to that section in comparison with the section in the Carlisle bill which we have just had under consideration, which repeals other sections providing for the retirement of the national bank circulation. The section in the Carlisle bill and the recommendations made by the Secretary of the Treasury revive the previously existing law, which limits the retirement to sums of not less than $9,000, which, it seems to me, and I think you would agree with me, would be a mistake, certainly for small banks. So I have only provided for the repeal of a portion of that section rather than the whole of it. Mr. Cox. Let me understand that. What is the proposition involved in that? Mr. HILL. The proposition here is to repeal so much of the previous law as prevents the banks, when they have retired their circulation, taking it out within six months; also so much of the existing law as forbids all of the banks of the country together retiring in excess of $3,000,000 a month. The Carlisle bill repeals the whole section, so that it leaves the previous law in force, which would prevent any bank from retiring circulation in sums of less than $9,000. If we were to have a $20,000 bank this would make an excessive sum for them to retire at once. Mr. ECKELS. I do not think the Secretary had that in mind—I mean the small banks. Mr. Cox. The proposition to allow the organization of small banks was not before the Secretary. Mr. ECKELS. No, it was not. But I suppose it would follow as a matter of course, when the bill was perfected upon the lines of small banks, that that provision would go. Mr. HILL. You would not think it wise to leave that standing? Mr. HILL. With that thought I have drawn this section in this way, and have added at the end the provision which will require the Comptroller of the Currency to keep a supply of bills on hand at all times, which it seems to me is necessary. Mr. ECKELS. That was also provided for by the Secretary's bill. BANK NOTES ISSUED IN LIEU OF LEGAL TENDER. Mr. HILL. Sections 8, 9, and 10 cover an optional privilege about which I have a little doubt myself, but upon which I would be glad to have your opinion. Those sections are as follows: SEC. 8. That any national bank now organized, or that may be hereafter organized, may, in place of a deposit of bonds to secure circulation, pay to the Treasurer of the United States gold coin of the United States to the sum of not less than twenty-five per centum nor more than fifty per centum of the capital of said bank, and thereupon the Treasurer of the United States shall retire and destroy a corresponding amount of the legal-tender notes or Treasury notes or silver certificates of the United States, selecting such issues in the order herein named, and thereupon the Treasurer shall cause to be issued to said national bank an equal amount of national-bank notes of distinctive color currently redeemable by said bank in gold at its own office and at the Treasury of the United States and guaranteed as to their final payment by the United States; but such guaranteed notes shall not be subject to taxation and shall not constitute a lien upon the assets of said bank. SEC. 9. That any national bank taking out guaranteed national-bank notes, as provided in section eight, shall be entitled to receive from the Treasurer, and is hereby authorized to issue national-bank notes to an equal amount without deposit of bond security therefor, but the amount of such notes shal, at no time exceed the amount of guaranteed notes issued by the Treasurer to said bank and remaining outstanding, and such notes shall not be subject to taxation. SEC. 10. That national-bank notes not guaranteed as to their final payment by the United States shall be of a distinctive color, and shall declare upon their face that they are secured by a first lien upon the assets of the bank by which they are issued, and said notes shall be redeemable in coin at the bank of issue and at such other redemption agencies and under such regulations as may be approved by the Comptroller of the Currency, and all such redemption agencies shall be plainly indicated upon said notes; but such notes shall not be redeemed at the Treasury of the United States, and the United States shall not be in any way responsible therefor. SEC. 11. That the Treasurer of the United States is hereby authorized in his discretion to use any coin or bullion in the Treasury made free by the cancellation of United States legal-tender notes, Treasury notes, or silver certificates in place of guaranteed notes, issued as authorized in section eight, for the purchase and retirement of any of the bonds or other obligations of the United States, reserving, however, such sum as in his judgment he may deem necessary for the final payment of such guaranteed notes as may become due because of the lapse or expiration of charters of banks to which such notes were issued, and any reduction of said guarantee fund not offset during any fiscal year by deposit of gold for guaranteed notes by other national banks shall be included in the estimates of the Treasury Department for the ensuing year and covered by an appropriation for the guarantee fund. The proposition is this: That in lieu of the deposit of Government bonds any bank may pay gold to the Treasurer of the United States, whereupon it becomes the duty of the Treasurer of the United States to destroy greenbacks, Treasury notes, or silver certificates, to a like amount, in the order named-greenbacks, if he has them or can get them; Treasury notes next; and silver certificates next; and in lieu of that, the money being paid in, to issue to this bank a guaranteed note, guaranteed as to its final payment by the United States Government, but the current redemption of which the bank itself shall maintain, both over its own counter and as national-bank notes are now redeemed by the Treasury of the United States. The amount to be not less than 25 per cent of its capital nor in excess of 50 per cent of its capital; but such notes being all paid for by the banks, shall not constitute a lien upon the assets of the bank, and shall be absolutely free of tax, the theory being that such notes will be probably permanently outstanding, as a substitute for the legal-tender paper and silver certificates that are withdrawn. Mr. ECKELS. But with the coin dollar back of each. Mr. HILL. A gold dollar back of every one paid into the Treasury of the United States, so that they can ultimately take care of it when the charter of the bank lapses or when the bank fails, and the current redemption being maintained by the banks over their own counter. The banks make no money out of that, of course. They assume an obligation; they assume a burden by doing it; but it is practically taking up so much of the debt of the United States and maintaining the current redemption of it in gold, which the Government does now. Now, why should they do it? Why should they do that in orderMr. BLACK. What makes you doubt about that provision? Mr. HILL. I do not doubt about that part of it. In order to induce them to do it or persuade them to do it, I then add in section 9 that in consideration of doing that a bank shall be allowed to issue an equal amount of their own notes, redeemable-there is but one thing in which they can be redeemed, and that is in legal-tender coin, and that means gold and silver. REDEMPTION OF NOTES IN GOLD AND SILVER. Mr. Cox. Do you mean to redeem them in gold and silver? Mr. Cox. At the option of the bank? Mr. HILL. At the option of the holder of the note. Mr. Cox. Do you mean the option of the holder of the notes? Mr. HILL. I do not know whether I mean the option of the holder of the notes or the banks. It seems to me both. Either is legal tender. |