L7I 



CONGRESS. (THE CURRENCY.) 



for the payment of the entire outstanding notes 

 SMjISnilllil Unk*. nnd there would I, ax. 



been A surplus of ov.r $n.io.OOO Mill in the 

 fund. 



hat suspended 86 re- 



turned payment within a short period. and there 

 was no M in those easts either to tb 

 holder* or to the depositors. There wen only 

 65 national bank* that went int.. \\w hands of 

 that crisis. and they had a cap- 

 it*l rtock of $10.965.000. If we assume that t lu- 



las of those 95 hanks only were to he paid out 

 of the guarantee and safety fund, then there 

 would have been only fS.SOO.Oo- mding 



notes of all the hank* which passed into the 

 hands of receivers evrn if they had all taken out 

 their maximum amount*. The 80-per-cent. 

 fund would have paid $2.460,000 of 

 hieh would have left onlv $4,100,- 

 ..ut of the .Vner-cent safety fund. 



notes, which would have left onlv $4,100,- 

 e paid out of the .Vner-cent safe 

 t all of those banks had available assets, 



000 to he 



and the stockholders were individually liable to 

 amount- equal to their stock, so that here was 

 an additional fund out of which the notes 

 could have been paid. The unavailable assets 

 could have been realized on in the end, and that, 

 with thr liability of the stockholders, would have 

 yielded a considerable additional sum. If it 

 should be assumed that all the national banks 

 which were in existence on Oct. 81 last were 

 organized under the proposed law, and that all 

 of them in a great financial crisis had failed, 

 and if it should be assumed that all of them 

 had taken out, under the pending bill, the 

 entire circulation to which they would have 

 been entitled, the condition would have been as 

 follows: The circulation would have amounted 

 to $504.000.000. The guarantee and safet y fund 

 would have amounted to $176,000,000. That 

 would leave $838,000,000 of circulating notes 

 the payment of which would be secured and 

 paid W a pro rota assessment from the resources 

 of all the national banks in the United States. 



- These resources, as I have before stated, 

 amounted on Oct. 1 last to $8,478.000,000. The 

 amount of the notes, it will be seen, would not 

 equal 10 per cent of the fund out of which they 

 could be paid. This does not include the fund 

 which would be derived from the personal lia- 

 bility of the stockholders. In view of these 

 fart* it seems to me conclusive that under the 

 proposed bill, even in a great crisis such as that 

 swept over the country in 1808. th.r. 

 could be no possible loss to any person who had 

 in his possession a bill issued by a national bank 

 under the provisions of this proposed law. 



M Objection has been made in some quarters 

 to the provision of the bill requiring the Secre- 

 tary of the Treasury to levy a pro rota ass MM 

 rornt upon all the banks in the system f 

 purpn* of making good any deficit that then- 

 may be in the available asset! of the bank and 

 in the guarantee and safety funds for the pay- 

 of the notes of a failed bank. It has been 

 that the national banks of the Tnit.d 

 will not take out circulation under this 

 provision. I do not heli- be national 



beakers met in convention in Baltimore last 

 October and formulated a bill which carried out 



"Thc bill formulated by that convention is 

 known a> tin' Halt inion* plan. and it dilTcrsfroin 

 tin* plan submitted by your commit!. .- in )- 

 ouirmg that the Government of the I'nited 



States, if tin- safety fund and tin- available as- 

 sets of a failed bank should be insufficient to 

 pay the notes of that bank, shall pay the differ- 

 ence out of the Treasurx. Hut I want to call 



n of gentlemen to the fact that there- 

 is a provision in the Haltimotv plan which au- 

 thon/* rnment immediate]} to levy a 



tax ujM.n the banks for the purpose 'of making 

 good the funds advanced by the (l<>\ rnment 

 for such purpose and for the purpose of making 

 u" \ the safety fund: so that in practical' 

 lion the Baltimore plan subjects the banks in 

 this respect to practically the same responsibility 

 as the bill which your committee reports. 



" I desire to call attention to another feature 

 of the Haltimore plan. That plan pro\jd-- lir>t 

 that the redemption fund now required by law- 

 shall be deposited in the Treasury, amounting 

 to 5 per cent, of the circulation in each bank. 

 That fund belongs to the bank and is a | 

 its assets. In addition to that redemption fund, 

 which is to be used for the redemption of the 

 notes of the failed banks for the purpose of 

 current redemption at the Treasury there i.s 

 what is called a guarantee fund provided in the 

 sixth section of this Haltimore plan through the 

 deposit by each bank of 2 per cent, upon the 

 amount of the circulation received b\ it the fii>t 

 year. 



Then-after impose a tax of one half of 1 \> 

 upon the average amount of OUtStandlnff circulation. 



the same to be paid into thin fund until it shall cmml 

 ut. of tin- entire circulation outstanding, u hen 

 lection of Mich tax shall l>e BUP ponded, to be 



restm.e.l whenever the Comptroller of the < 

 shall deem it necessary. 



- This one half of 1 per cent, per annum may 

 be imposed whenever necessary to restore this 

 fund. 



The note* of insolvent banks shall be !*! 

 by the Treasurer of the United States out of the 

 guarantee fund if it shall be sufficient 



" And it i- j.rovided previously that the re- 

 demption fund shall also be applied for that 

 purpose 



if it nhall be sufficient, and if not sufficient, then out 

 of any money in the Treasury, the name to !> 

 burned to the Treasury out of the "guarantee fund" 



-h. .1 either from the asset* of th- 

 banks or from the tax aforesaid. 



"There is precisely in effect the same provi- 

 sion in the Haltimore plan for the ultimate lia- 

 bility of all the banks for the notes of any failed 

 bank in the entire system." 



Mr. Springer submitted a substitute 

 for the Carlisle lull. Among the changes of im- 

 portance was one in section 2. allowing cum -ncv 

 certificates issued under section 510:', of the lie 

 vised Statutes to be deposited as part of the :;(- 

 :it. guarantee fund. The closing part of 

 section 5 was amended so as to read as follows : 



i a national banking association becomes in- 

 it* guarantee fund held on deposit shall be 



. transferred to the safety fund herein provided for, and 



their wishes in regard to a national-bank sys- applied to the redemption of it* outstanding 

 :;.. and in cane the said last-mentioned fund should at 



