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The Commoner.
''VOLUME 0, NUMBER 4
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PREPARE FOR THE ASSET CURRENCY QUESTION
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Commoner readers will desire to be thor
oughly prepared fpr the discussion of the asset
currency question. That question has frequently
been discussed by TheJ3ommoner, and now that
the American Bankers' association has inaugur
ated a determined effort to bring about asset
currency the subject is now of special interest.
A gentleman who has made a careful study of
finance and of banking business generally has
written for The Commoner a series of articles
relating to asset currency. The first installment
is presented in the following: . ,
Numerous schemes forf reforming our cur
rency have been threshed out in congress during
the past few years. Most of these bills have the
same purpose in view but differ in details. The
end ultimately sought is to hand over to the
national banks the issuance of paper money, with
tho power, of course, to expand and contract its
volume at will. The retirement of United States
notes, or "greenbacks," is also provided for in
nearly every bill.
The liill bill provided for a division of issue
and redemption in the treasury department under
the control of three comptrollers of the currency,
and to this division all funds in excess of a cask,
balance of fifty million dollars, and all gold and
silver "coin and bullion, was to be transferred, far
the- purpose of redeeming 'greenbacks, treasury
notea: and certificates in gold, which were to; b
cancelled, and in their place "national reserve
notes" were to be substituted. These new notes
were to be issued by any national' .bank 'to any
.w w w vu vav.v-i ifco jjiu-uij ungual, tu uu.uk.
to' surrender to the treasury 'an; dqual ainoiitit'of
greenbacks. They were'to be1 legal tender and"
the issuing bank "Was required' to provide 'for
their current redemotian'm crrtlrii 'Vntihhrii ftWhift?"
redemDtion'ln errilrii
tnon in. existence were required to take out ''na
tional reserve notes'" to the1 anibunt of twenty--'
five per cent of their capital, but in compensation
for the assumption of their current redemption
the banks were to be given the privilege of issu
ing, currency based upon commercial -assetst With
out the .deposit -of United States bcmdg,-itd. the
amount, of forty per. cent of their priid up capital,'
on condition jthat bond-secured notes (present
' national bank, notestf, and new 'rederve notes were
taken in equal amounts. Thus a bank with $100,000
capita would be required to take, out $25,000 in
nWpnal reserve notes and tp deposit in the treas
ury.. $25,000 -of United States, bonds5, against which
Itcould issue $25,000. in, national bank notes and
also a like amount of asset currency notes, and
an, increase of asset notes' could be issued if bond
deposits and holdings, of reserve notes were in-.
S?'a n eual proportions. This process could
be continued until the bond-secured notes, asset
currency notes, and reserve notes, were each
equal to forty per cent of the pai&up capital,
Sft nSF an SWte of $80,000. bank notes and
'-5S;0?LreT?rye,lotf8' wiAh0Ut the Parent of
' ? , , If notes In excess of eiShty Per cent
of paid-up capital were taken out, the excess was
liable to a tax of one-half of one per cent month
ly? 8ix B?r ?ent annually, but bond-secured
5Saoi,5n f SSUm2 t0 ful1 amoimt of caPItal
without any tax. The banks were required to
fivTer rTiT 50teS' and to SSSfii a
?reaSSrv bW UA ? thIs purpose In the
UoS Tba . this was only tor current redemp-
as: srsswstfsS
much after the bank had failed. This bin Was
before the second session of the Fifty-fif h con
gress in 1898. . y con
in lift? FWr F1' whIch was before congress
in 1902 was similar in many respects." It differs
Ssea'd of bHtai!S 0t the grSSS
instead of bringing in a new form of paper money
wn ? oG 1G Placf of the genbaclc, the PowS
Ti$giXhimli the current eSS
or greenbacks, to the amount of twenty per dent
granUn ?;U?i,oaP tal ? a conditlon Precedent ?6
5? L Plght .t0 lssue assct currency as
or LSf'1; f lts pal(i:"P caPai year
Jww? tW0 ars upon wnIc a tax of one-
fourth of one per cet must be paid Thin tax
could not bo increased long as the bank con-
backs' 'Burr red? l? Potion ofgreen
Dacics. But if the greeriimcks were finally re
deemed by the government, then the tax was'
lo do increased to one and one-fourth per cent
After the expiration of two yars and yearly'"
thereafter for four years the bank could take
out an additional ten per cent of its capital in
currency based upon its assets, for wlilch it would
pay a tax of one and one-fourth per cent. With
the approval of the board of control, the bank
could, after the expiration 6f six years, take out
twenty per cent of its capital in asset notes for
which it would .pay a tax of one and one-lialf per
cent, and after seven-years " another twenty 'per
cent for which it would; pay a tax of two and one
half per cent, risl
The greenbacks which the banks were re-
quired to currently redeem were to be. indorsed
as. follows: . jt.
"For value received, the... ;.,. .National
Bank of (city and, state) will currently redeem -
this, note in gold cpin until the same has
been paid and canceled in accordance with the . . .
provisions of law." . ....'..
Any note so endorsed was to be a legal tender
for, all debts? public' and private, except duties
on imports and interest on the public debt.
So far there appears no intention to retire
the greenbacks, but to place the above, endorse
ment on them would "be an insult -to the intelli
gence of the "people. For pver forty years the
greenback' hs been a 'legal.' tender , without any
endorsement, except that of the government, and
with the United States'.back of it 'it was even
honored' in Europe; But tHe following provision
would1 Wave put the gdd.d old greenback out for
ever. '' .:.! -
'"Wh'emeve'r a hatfonaf bank shall pre
fienr'ahyUiilted States notes at the; United
States treasury for endorsement, as afore
said, it shall at the same time surrender to
rthe United States trdasury ah additional
amount of United States notes equal" to one
half of the United States notes presented for
such endorsement; and receive In exchange
therefor gold coin; and the United States' -notes.
so. redeemed shall not be re-issued, but
shall be cancelled and -destroyed."
.h -Then the act provides that when the national
banks shall have assumed -the current redemption
of $130,000,000 of greenbacks, and the govern
ment has redeemed and cancelled $65,000,000, no
national .bank shall pay out any greenbacks, the
current redemption of which has not been as'
sumed by some national bank, but shall return
them to the treasury where they shall be redeemed
and cancelled.
After getting the greenbacks out of thoway In
the manner described, the banks whicih'had not
assumed the current redemption of any of the
greenbacks were .to be permitted to 'takeout as
se,t notes, on-an equal footing with banks -which
had assumed the redemption of greenbacks
While these asset- notes were to be a first
lien upon the assets of the banks, yet the banks
were only required to deposit United States
bonds or gold coin to an amount equal -vto. five
per cent of the notes taken out. The-security
was the assets plus five per cent. These notes
were to be receivable for all public dues except
duties on imports, and when so received ' they
could be paid out again, which would give. them
currency, though not a legal tender. s
, The secretary of the treasury was authorized
to deposit all public funds in excess of fifty mK
Hon dollars (and the money In the dlvfsjtbnoi
issue and redemption), in national banks, the
banks to' deposit United States bonds in equal
amount, the government to receive one per cent
interest on average balances. Section twenty, per
mits national banlra to open branches without
limit in the United States, and banks with a'cap-"
ital.of fiv,tf million could, open branches in any
part of the? world. .":.
Neither of these bills, nor any of tjiq other
bills' before 'congress dealing with asset cur
rency, p&saed for the reason that the banks and
banking interests were riot unanimously agreed
on the subject. While the various Dills gave
them the right to Issue money based uiftjntheir
assets, yet this privilege was always coupl'dd with
some provision which they did not approve, in
short, they wanted the government to granevery
privilege they desired without any responsibilities
i attached. i ; i
' Now that the American Bankers' ' association
has entered the field with a plan of their own
i?'We m exPect asset currency le8isla
tlon at the comine: Rosoinn . . ltglsla- ;
less of thn Hzhfe n w;:" " UBri,M- rcsard.
shall then have govVrnment of ? Zjl 11
banks, .directly. -and GmnwY,' :L a?,(1 by
& thG iof,
Anyal
year, and having a surplus of twenty Pecento
info??11' SbaU have authorlty toy iss ie crlli
notes' to, an amount equal to .forty per cent of
0?d;SCvS?rfed circulatlon' uPn .which it S 1
a tax of two and one-half per cent per annum
Provided, that if at any time in the future tS
present proportion of United States bonds to the
Sta,!, italiaation of: all solvent national banks
shall diminish, then the authorized issue of credit
notes may be increased to a correspondingly
greater percentage of Its bond-secured notes
A further amount of credit notes equal' to
twelve: and one-half per cent of the capital may
be issued, on which' the tax will be five per cent.
The takes paid on credit notes are to be paid in
gold to the treasurer of the United States, and
r a ; - "suttiuuty mna ior tne redemp- I
tion of notes of failed banks, in order to provide
Vx0 buoiau iuua xrom tne ueginning, any
bank -malcim? nnnHiafr j r ,
a .t-f..Mu wi wcun uutus must
deposit an amount of gold equal to five per cent
YYl tT ""cu. uui, iiuu il iniB sum is not
USCT Si s,ha11 be an asset of tne contributing bank,
and shall, be refunded from time to time when
the guaranty fund exceeds five per cent. The
provisions of existing law limiting the retirement
of bond-secured notes "to $3',b60,'000 per month
shall t be repealed. All public moneys above a
reasonable working balance shall be deposited
ironr Aav in flntr nn.innni i n.i
j - - 3 uuwuuiu uitiiHg witnoui re
quiring- any security or guaranty therefor, but
no bank shall receive an amount of public funds i
. i'I r,""' tJOi wi ui iis capital, au
banks receiving public moneys shall pay two
Tier t.en tntoroof Vior.An
.. The' general outline of these three proposi
tions will enable the reader to. make a compari
son and form an intelligent opinion on the subject.
In- a subsequent issue the merits of asset cur
rency will be discussed and its dangers exposed.
THE PRIMARY PLEDGE
As this copy of The Commoner may be read
by some one not familiar with the details of tho
primary pledge plan, it is necessary to say that
according to the terms of. this plan every demo
crat is asked to pledge himself to attend all of
the primaries of hi party to be held between
now and the next democratic national convention
unless unavoidably prevented, and to secure a
clear, honest and straightforward declaration of
the party s position on every question upon which
the voters of the party desire to speak. Those
desiring to be enrolled can either write to Tho
Commoner approving -the object of the organza
tion and asking to have their names entered on
SLV011' 7, ??y Ca,n fil1 out and ail the Wank
pledge, which is printed on page 14
- - James Daniels, Webster, 111. i send vou
twenty-nine primary pledges. . y
Henry Hayes, Guise Millq p ., i ,
With four 3lgers'to .the vHmaryse "
. Roy R. Hall, Weston, w v-i-S .
algnatures to the primary piel1 Send you sil
William Huffman, BroofcvlIIe lev inT .
flndseventeen primary piedje SgnS'uT "
.BSue, I Seevrei e hTTo iTtuat Z
iTaiero? irr a sssnss
lieve the plan is working well. Tt D
W. M. Cooper, Sprang Dale, Ark.-r-You will
flpd enclosed a primary1 pledge with ,thrty signa
tures. You will probably think I anlxa, tardy old
fellow. I am past the Eightieth mile,ppst and yel
l. nope to live to seejone more democratic presi
dent in the chair at Washington.. I have been
a resident of Benton County, Ark., for" fifty-four
years and' never voted for anything but democratic I
principles. Success to The Commoner and thm i
cause it advocates, 1
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