VIEWS OF THE MINORITY. The minority of the Committee on Banking and Currency, to which was referred bill 8149, "To amend the laws relating to national banking associations, to exempt the notes of State banks from taxation upon certain conditions, and for other purposes," having had the same under consideration, most heartily and enthusiastically join the Democratic majority of the committee in repudiating bill H. R. 8149, known as the Carlisle bill. We find the Democratic majority using the following words: The extraordinary conditions which confront the Treasury Department have constrained the members of the majority of the committee, while not agreeing to all the provisions of the bill nor to all the reasoning employed in this report, to concur in reporting the measure to the House for its consideration, each reserving to himself the right to offer such amendments as he may deem proper and to vote on the bill finally as he may determine. We submit the following statement of why we were shut up to a disapproval of the Carlisle bill, and this course only, much as we appreciate the pressing demand for wise and prompt action by Congress to relieve the strained financial condition of the whole country, and more especially the pressing necessities of the United States Treasury. The whole action of the party majority of the committee was most extraordinary and not approved by its voting majority. Secretary Carlisle read a part of the bill on the first day of his address to the committee, saying he had not finished dictating it and would bring it in when he finished his address to the committee on the following day, which he did. It was not again read or in any manner considered in committee, and an opportunity to consider or amend it was refused to all members, Democrats and Republicans alike. On Saturday at 4 p. m., immediately upon the close of the examination of Mr. St. John, of New York, a motion was made to close the hearing and go into executive session. Upon the attempt of a member of the minority to make a motion to take up the bill for consideration they were informed by the chairman, Mr. Springer, that the Democratic party majority had concluded not to submit the bill to the committee for any motion whatever, but to report it to the House on Monday, and that each member could offer what amendment he chose in the House. We, therefore, make no apology for neglecting to obey the House, as bound on our oaths to do, in reporting bills submitted to us, viz, to report them to the House in as perfect a draft as we can devise, in order to relieve the House from considering and perfecting imperfect and even crude bills designed to accomplish what it is the desire and duty of the House to do. This plain statement is due the Republican minority, who really represent the voting majority of the committee, in order to excuse us from a share of the just criticism which should fall upon those who, with unseemly haste precipitate upon the House a bill which, in our judgment, is as faulty in its text, as well as in important provi sions, to accomplish the object it purports to attain as any bill any committee has ever reported to any Congress. 11 This criticism of the bill will not only be found to be eminently just, but far within the truth when the Carlisle bill is compared with the magnitude of interests that would be injuriously affected by its enactment into law as it is reported. It is the opinion of a number of the most clear-headed and eminent financiers in the country that if the Carlisle bill was enacted into law within twenty days that it would precipitate a panic far more severe than that of 1893, as it would compel the forced sale upon the market of nearly two hundred millions of United States bonds within six months. This haste to report this bill is all the more inexplicable when it is remembered that Secretary Carlisle testified that this bill, which he had drafted himself for the relief of the Treasury, would not, in any event, relieve it materially for five years, and might not for twenty years, as follows: Mr. WALKER. Have you thought of how long a time it would take to retire the greenbacks? Secretary CARLISLE. It might be that it would take twenty years, and it might be done in five or six years. Section I, line 3, repeals "all acts and parts of acts which require or authorize the deposit of United States bonds to secure circulating notes," etc., instead of "so much of all acts and parts of acts," etc. How many thousands may be seriously injured by such needlessly wholesale repeal of statutes, or whether the Supreme Court, after years of litigation, might by construction reenact some parts of such statute which Secretary Carlisle had repealed, no one can tell. Section V, lines 11 to 14, provides that "each association hereafter organized, and each association applying for additional circulation, shall pay its pro rata share into the said fund before receiving notes," without defining how the total fund or each share shall be ascertained. Lines 16 to 19 of the same paragraph provide that "when a national banking association becomes insolvent its guaranty fund held on deposit shall be transferred to the safety fund herein provided for and applied to the redemption of its outstanding notes." That is to say, it is merged in the safety fund, and again there is no provision in the bill for the use of the safety fund except by implication in the lines quoted. Lines 19 to 24 of the same paragraph provide that "in case the said last-mentioned fund (safety fund) should at any time be impaired by the redemption of the notes of failed national banks, and the immediately available assets of said banks are not sufficient to reimburse it, said fund shall be at once restored by pro rata assessments upon all the other associations," and lines 25 to 28 read: "Associations so assessed shall have a first lien upon the assets of each failed bank for the amount properly chargeable to such bank on account of the redemption of its circulation," and these are all the provisions in the bill of how anyone is to proceed, and without defining who shall proceed to do it, or as to how the notes of failed banks shall be redeemed. That is, on the face of the Carlisle bill, when a bank fails its guaranty fund is to be paid into the safety fund. Then the notes of the failed bank are to be paid out of the safety fund. Then all of the national banks in the country are to be assessed to make up the safety fund, if depleted in the process, and then all the national banks of the country are to put in their claims to the receiver of the failed bank for the moneys they have paid on assessment for the payment of the notes of the failed bauk. Probably Secretary Carlisle intended to provide that the guaranty fund of the failed bank should be first expended in taking up the currency notes of the failed bank and that whatever additional sum was necessary should be taken out of the safety fund to complete their redemption, and the safety fund should be replenished out of the assets of the bank, and if there was a deficiency in the assets of the failed bank which was made up out of the safety fund, that all of the banks should be assessed to make good the safety fund. These two oversights are accounted for, probably, by the haste with which the bill was drawn, for, as before stated, Mr. Carlisle informed the committee that he had dictated it very hastily to his stenographer, when it is the opinion of many that there is not a man in the country who can draw any bill to accomplish what the Secretary has attempted without spending nearer a month than a week in studying the farreaching effects of its provisions, in order to make it safe to enter upon legislation affecting interests of such magnitude. But these things are of little consequence and belittle rather than enlarge the fatal and inexpressibly important objections to the bill as a whole. Whatever legislation is had with reference to the finances of the country or banking in its effect upon national banks should be permissive and not mandatory as to national banks while their present charters continue. To provide, as in section 7, "that every national banking association heretofore organized and having bonds on deposit to secure circulation shall, on or before the first day of July, eighteen hundred and ninety-five, withdraw such bonds and deposit with the Treasurer of the United States a guaranty fund consisting of United States legal-tender notes, including Treasury notes," can not be justified upon any principle of safe legislation. As has been before stated, it could not fail to produce a panic, and the recklessness of such legislation would startle not only financiers in this country but of the world. To pass over many most serious objections in minor details that the great and fundamental objections may not be obscured, the provisions of exemptions as to State banks, notwithstanding the many restrictions imposed upon them, would drive every existing national bank that desires to take out circulating notes into the State bank system if the bill were enacted. The taxation of national-bank notes is one half per cent per annum in section 3 of the bill and one-half per cent per annum under section 5 of the bill, making a total of 1 per cent per annum, which would be a taxation of five million per annum upon the banks under the national system, which there is no reason to believe from any experience of the past would be imposed upon them under any State system. Furthermore, the States, even the most conservative among them, would be far more liberal than the United States will ever be or ought to be as regards bonds or any other security or redemption fund, for they require the deposit of no bonds whatever. We can not believe that it was the intention of the framers of the Carlisle bill to make the conditions under which national banks should issue currency any more onerous than those imposed or likely to be imposed upon State banks, or that it was the intention of Secretary Carlisle or of those who now enthusiastically support the Carlisle bill or will vote for it in Congress to force the national banks to operate under State charters, and yet frankness compels us to say that we feel assured from our examination of it, and from the testimony taken before the Banking and Currency Committee, that such would be the inevitable effect of the bill if it became a law in its present form. Time has not been allowed us for a careful examination of the evidence or a more methodical and thorough analysis and formal objection to the various provisions of the bill, but we particularly desire to call the attention of the House to the fact that of the witnesses not more than one or two who appeared before the committee failed to seriously object to the Carlisle bill, and even those witnesses upon cross-examination repudiated many sections of it. The witnesses were not voluntary witnesses, whose most conservative and reasonable fears have been aroused lest the bill be enacted, but witnesses invited by the chairman of the committee, of his own motion, without consulting the committee. These gentlemen were eminent as financiers, and as unprejudiced as any men are likely to be, and yet there are scores of men in the country as eminent as they who would gladly have appeared before the committee and have spoken in tones that would have given pause to any such legislation as that proposed in the Carlisle bill. The chairman, Mr. Springer, presented a letter to the committee, read it, and proposed to put it in the record, approving the Carlisle bill, from a western banker, and when asked if he had other letters from bankers concerning the bill he replied, "Yes; many-fifty," and when asked if they all approved of the bill, his reply was, "No; only this one." The passage of the Carlisle bill may meet some political exigency, of which we do not know, but we do know that its passage will aggravate rather than relieve the perplexities of the financial situation, and especially that of the United States Treasury. The United States legal tender notes withdrawn from circulation, did all existing national banks take out all the circulation permitted under the bill, would only be $151,000,000, still leaving $350,000,000 to vex the Treasury. This would not afford any substantial relief to the constant drain of gold from the Treasury. It would make still more conspicuous and thus more urgent the demand made for gold upon the Treasury and the notes issued under the bill would make confusion worse confounded in the currency by adding from 1 to 45 more kinds of money to those already existing. Twice within a short time has the House declared its unalterable opposition to allowing State banks to issue currency notes, once on June 6, 1892, by a vote of 84 for to 118 against it, and again under the leadership against State banks of the gallant and versatile gentleman from Illinois, the Hon. William M. Springer, on June 6, 1894, by a vote to repeal the 10 per cent tax of 102 for to 172 against. Therefore, we protest against again consuming the time of the House in a profitless discussion of that objectionable section of the Carlisle bill. Finally, we are of the opinion that it is not safe for the House to enter upon the line of legislation proposed until some bill is brought before it that has received far more attention than the Carlisle bill, and we recommend that it be indefinitely postponed. Respectfully submitted. WASHINGTON, December 17, 1891. J. H. WALKER, M. BROSIUS, THOS. J. HENDERSON, THE NATIONAL CURRENCY AND BANKING SYSTEM. NOTES OF HEARINGS BEFORE THE COMMITTEE ON BANKING AND CURRENCY OF THE HOUSE OF REPRESENTATIVES. WASHINGTON, D. C., Monday, December 10, 1894. The committee met at 10 o'clock a. m. in the room of the Committee on Ways and Means. Present: The chairman (Mr. Springer) and Messrs. Sperry, Cox, Cobb of Missouri, Culberson, Ellis, Cobb of Alabama, Warner, Johnson of Ohio, Black, Hall, Walker, Brosius, Henderson, Russell, Haugen, and Johnson of Indiana. The CHAIRMAN. The committee has met at this time for the purpose of carrying out its order embraced in three resolutions, passed at the last meeting of the committee, as follows: Resolved, That, beginning with Monday next at 10 a. m., this committee take up the recommendations of the President and the Secretary of the Treasury with reference to the currency, and that there be invited to appear before us the Secretary of the Treasury and the Comptroller of the Currency. Resolved, That the chairman of this committee be authorized to invite such persons as he may think proper to appear before us in the same matter, and to arrange for hearing them, with a view to completing all hearings on or before the 15th instant, at which date all hearings shall be closed. Resolved. That meetings of this committee for the purpose of these hearings may be called by the chairman at any time during the coming week, and that five members present shall be a quorum for the purposes of such hearings. In pursuance of those resolutions. I have invited the Secretary of the Treasury to appear before the committee at this time and to make a statement in relation to the general banking system which he proposed in his annual report. I suggest that that part of Mr. Carlisle's report relating to the currency be incorporated in the minutes of this hearing. The following is the portion of the annual report having reference to the subject of the currency and the banking system: "In my last annual report I called attention to the unsatisfactory condition of our financial legislation, and especially to the issue and redemption of circulating notes by the Government, and the inability of the Secretary of the Treasury, under existing laws, to make prompt and adequate provision for the support of the public credit. The experience of the past year has confirmed and strengthened the opinions then expressed, and I therefore respectfully but most earnestly urge upon Congress the necessity for remedial legislation during its present session. The well-known defects in our financial system and the serious nature of the evils threatened by them have done more during the last two years to impair the credit of the Government and the people of the United NAT CUR-1 |