Issuance Of Bonds

During thp Ust tuonth the gold reserve ta the treasury for the purpose of redeeiuing the note of tilo noverninent circulatmg now iu the h'indi of the ppople b'cama soreduced, and Itb furtiier depletion in the near future seeniet1 30 certain thut in the exerci-e of proper cart For the public welfare it bec&oue necessury te repleuisb LUe reaene aud thus malntain popular faith in the ibility and determinution of bhe government to mèit, as agreed. its pocuuiary obligations. lt would bare been vel if m thia emerg.-ucy. autliority had ölteted to issue the bonds of the {ioveruineut bearinu a !ow ra. e of interest and maturing within a short periocl, but the congre shaving failed t oonfer such rt,uthority, reso 1 was necésdarlly had u the resumí) ion a t of 1875, aud pursu&nt to its provisio 18 i were issued arawing intereot at tlu' rato ot 5 per cent, peraniuiin aud iiiuutíuií ten v lara arcer tnsir issue, that bintz tne siiOrteat tme autiiorlz dbytheaot. lam glad to si , howe i', that on 1 h ■ sale ui the-e bonds the ijrouüuni received operated to reduce the rat;1 ot 1 i ; u be paiü by ihe goveiumeuL to 1 isa than ;■ ■■-. cenf. Nutuiugc 1 be Y( i.s.-or further removed f ruin sensii Ie Önanco than the relations exi tini; bel we n the currency the govfium ut h&a issued, the gold held for its reuem.ttion. aud the mea 3 which most be reeorced t tur the purpose of repienlabiog such redemptioa funa wüen izapaxred. Even if i he cla ! ins upou this f uud were 'onñned to the obiÏL;a,i.m:i oriinally iuteuded and ifthe redemption of these obligations maant their caucellation, the fund would be ver y sinall Bui these obUgationa when reoèirea aud redeomed iu gold are nut eancelled but are reisüued, and uia do duty m my times by way of drawing gold innn the treasury . Thus we have an endies ehajii iu operatioQ constantly depletmgtlie treasOty's gold aud never near anual rest. As if ;his vraB not bad enough, we have by ;t atatutóry declaratlon that it 13 tne i, i cy oí Ule gov rnment to mahuain ui1 p&rity betwern gold and silver, aided ibe lor1.' and momentuni of this xhausting procesa and udded ïai-yely to the currency obngations cluiium tlüs peculiar yold redeinption. Our small goiü res rve is thus subject to dratu frunveyery sids. The dumands that Increaie our danger :.lso iuerease the necess:ty of protectini; this reserve aainst deiüeiiou and it is ra0.1t un-iatisfaciory to kiow that tlie proteoti a a.forde t i.s ouly a temixjrary palliatiori. H U perfectiy and iialpably plain that the ouly wav ander present comlitions by which this reserve wlu;n dangerously denUïted, eau bc replenished, is ihruugh the issue and uk ui the bonds of the government t'or ffoldj and yet congi'osshas uot only thus lar decliued to a .thorize tae iósue ot t oud txjst suited to such a purposö, but üiere seenxs a tiispos tioo in sonie quariers to deny boih the necs3ity and uower for the issue of i ouds at all. Will ütilize tho Authority. I oannot for a moment believe that any of our . itizens are dei bcrafely w Hing t at their aovernment shon d deiault in its pecuniary obligations or t a: it.s ñuancial operations snould be reduced to u silver basis. At any ate I s .oiüd not teel that my duiy was done if l Otaitted any eit'ort I oould ma e to avert such a f-alamity. As long. thereïore, as no provisión is made for the tinal redempriou or the jïutting aslde of the currency obligation now used to repeatedly aud coiiatautly draw trom the government its gold and as long as 110 better aulhority for bond issues is allowed thau at preseut exists, uotl authority will l)e utilized whenever and as otten as it bscomes necessary to malntaiu a sumcient gold reserve, and in abundant time to save the credit of our country and good tüe flnancuil deilarations of our gove nment. (juestions rehiting to our b;inks and curroncy are elosely counected with the subject just referred to and they also present some unsatisfactory features. Prouiinent ainong theui are the lack of elasticity in our cuirjncy circulation and its frequent concentraron in financial centers when it is most needed in otiier parts of the countr y. The absolute divorceinent of tue government from the business of banking is tha ideal reíationship of the government t tae circulatiou of the currency of the country. This ooudition cannot be iinmediately reacued; but as a step in that dirèctl 11 and as a means of securing a more elastic cm'eucy and obviating other ol)jections to tiie [.reseut arrangement of Dank rirculation, the secrêtary of tbe treasury presents in his reporl a scheme modif yin yresent ba'iMng luws and providiug for th ■ issue sf oircnlating notes by state banlcs, free froin taxa ion undur eertaiu limjtations. The se re ary explams his p an s . pluinly and lts ndvantages ai-c dev loped by him vritn such remarkabie clearness tha any effort on my pa t to ptvsent argument in us support woald be superflaous. I shall therefore co . tent rayse f with an unqualifled endorsemeutofihe secretary'a propossd euanges in the law and a b ief and imperfect stateine it of their promi jent features. It isproposed to ïepeal a.l luws providing for the d posit of United Staies bo ds as seonrity for cireulition; to permit uatioual banks to issue circulating notes not exjeiiing ia amount 75 per oeiit. of tháir pii.l-uy and uuitupaired capital, providetl thy depout witli the jovirnine it, as a guarantee fund, in ÜDJted Stated legal teadea notes, incluiliug treasi.ry notes of ldï)O, a suin equai in ainouut to 30 per cent. of thá nales tuay desire to issue, this daP'it to be uiaintained at all times, but wiioiiever any bnnk retires any part of its ciroulation a proporcional part of its guaraatee fund shall be returned 10 it; to permit the secret ary of the treai-ury to prepare &nd keep on hand ready for issue in case au increase in circulation is desired blank national bank notes for each bank having oirculation and to repeal the provisions of the present law imposing limitations and restrictions uion bauks desiring to reduce or incrtase their circulation- thus permittiug such increase or reduction within the limit of i5 per cent. of capital to be quickly made as emereu;ies arise. For a, Safety Putul. In addition to the guarantee fund required, it is proponed to provid.i a safety [and or the immediate redemption of the eirculatin! notes of failed bauks, by iinposing; a small annual tax, say, one half o, one psr cent., upon the average circulation of each oank until the fuiid amouuts to 5 per ceut. of the to al circulatiou out tanding. Wueu a bank fails, its guarantee fund is to be paid into this safety fund an i its notes are to ye redtemed in the tlrst inslance froni such safety fuud thus augmented, any impairmont oL' such t'uu l caused ihereby to ba made good froni the immediately available cush assete of said bank, and if these hould. be insufficient, such imairment to be made good by pro-rata assessment among the other bauks. their coutributious co.,stituting a ftrst Hen upon the atsets of the failed bank iu favor of the uontributing banks. As a further security it is contemplated that the existing provisión fixiug the individual liability of stockholders is to be retaiued and tha bank'sindebtednesi on account of its circulatint; notes is to be ma i e a first lien on all its a-aets. For the purpose of meeting the expense of printing notes, official supervisión, cancellatiou and other like charges, there sha 1 be paid a tax, say, one-half of one per ceut. per annum, on the average amount of noies in circulati on. It is further provide l th:it there shall be no national bank notes issued of less denomination than 810: that eah uational bank except in cae of .i fa led u.n , sn 11 redeem or retire its notes in the tlrst. mstancu at its own office or agencies to be designated i y it, and that no fixed r ae,u n ed t-e maintsined on account of deposits. Kxemption i'rom Taxatlon. Another very im, ortant l'eatur of ihi- pita i- the . xempti'on of t-tate ban from tuxatiou by the Ümte St tes in cash, where ït is suown to the at alac'.ion o. ihesecr. tary of the treasury and cumptroller of the curreney by Lan .s claiming sucn exemption that they hive not i.ad uut tanding their circulatitg notes excee.ling per c ut o their paid up and unimpurtd caoital; that their stockholders are individually Hable for the redemption of their circulatlng notea to the full extent of their owuership ui stock: that the liability of said banka upon th-ir circulatiug notea constituios under their atatü law a nrst lien upon their assets; that such luniks have kept aud maintaineil a guarautre tund in Unitea States legal tender mcluding treatiury notes of 1890 equal to 30 par cent, oí their outstanding circula tmg noies aud that such banks have prumptly redeemod their circulating notes wuen preBeuted at their priocipal or brauch omcu-.. It is quite likely that this scheiue may be usef ully amended ín some of its details; uut I ani satisfled it furnishes a basis for a very great improvement in uur present bauking and currducy system. 1 couclude this cominunication fully apiireuiftting that the resj onsibility lor all legislatioii affecting the peuple of tho Unitod ötatöd resta u,un their representativea in tue congi-esa aud aasuring them that wheiher m accordauce witb ruconiniciidittions I huve uiade or not, I laall be glaU to co-oper&te in perfecting nnv ;. iM-lau -n thai t;n s to the pro&perit) aud lutry. txecutivB Muunlou, Dec. 3, wat.