He Baltimore Plan

The secret.ary explains hls plan so plainly and lts advantages are developed by him with such remarkable clearness that any effort on my part to present an argument in its support would be superflucus. I shall therefore content myeelf wlth an unqualifled indorsement of the secretary's proposed changes in the law, and a brief and imperfect statement of their prominent features. It i3 proposed to repeal all laws providing for the deposit of United States bonds as Eecurity lor circulation; to permit national banks to issue circulating notes not exceeding in amount 75 per cent of their paid-up and unimpaired capital provided they deposit with the government, as a guarantee fund, United States legal tender notes, including treasury notes of ISitO,' a sum equal in amount to 30 per cent of the notes they desire to issue, this deposit to be maintained at all times; but whenever any bank retires any part of of its eirculation a proportional part of its guarantee fund shall be returned to it; to permit the SJcretary of the treasury to prepare and keep on hand ready for issue in case an increase in circulation is desired, blank national bank notes for each bank having circuU.tion, and to repeal the provisions of ths present law imposing limitations and restrictions upon banks desiring to reduce or increase their circulation- thus permittlng such increase or reduction within the limit of 75 per cent of capital to be quickly made as emergeneiea arise. In addition to the guarantee fund required, it is proposed to provide a safety fund for the immediate redemption of the circulating notes of failed banks, by imposing a small annual tax, say one-half of 1 per cent, upon the average circulation of each bank, until the fund amounts to 5 per cent of the total eirculation outstanding. When a bank fails its guarantee fund is to be paid into this safety fund; its notes are to be redeemed in the flrst instance from such safety fund thus augmented- any impairment of such fund caused thereby to be made good I from the immediately available cash assets of said bank, and if these ehould be insufflcient, such impairment to be made good by pro rata assessment among other banks, their contributions to constitute a first lien upon the assets of the failed bank in favor of the contributing banks. As a further security it it contemplated that the existing provisión flxing the individual liabüity of Btockholders is to be retained, and the bank's indebtedness on account of its circulating notes is to be made a flrst lien on all its assets. For the purpose of meeting the expense of printing notes, official supervisión, therè shall be Imposed a tax of say one-half of i per cent per annum on the average amount of notes in circulation. It is further provided that there shall be no national bank notes issued of less denomination than $10; that each national bank, except in case of a failed bank, shall redeem or retire its notes in the flrst instance at its own office or at agencies to be designated by it. and that no fixed reserve need be maintained on account of deposits. Another very important feature of this plan is the exemption of staie banks from taxation by the United States, in cases where it is shown to the satisfaction of the secretary of the treasury and comptroller of the currency by banka claiming such exemption that they have not had outstanding their circulation notes exceeding 75 per cent of their paid-up and unimpaired capital; that their stockholders are individually liable for the redemption of their circulating notes to the full extent of their ownershlp of stock; that the liability of said banks upon their circulating notes constitutes under their state laws first lien upon their assets; that such banks have kept and maintained a guarantee fund in United States legal tender notes including treasury notes of 1890 equal to 30 per cent of their outstanding circulating notes, and that such banks have promptly redeemed their circulating notes when presented at their principal or branch offices. It is uite likely that this scheme may be userully amended in some of its details; but I am satiáfled it furnishes a basis for a very great improvement in our present banking and currency system. I conclude this communication fully appreciating that the responsibility for all iegislation affecting the people of the United States rests upon their representatives in congress, and assuring them that whether in accordance with recommendations I have made or not, I shall be glad to co-operate in perfecting any Iegislation that tends to the prosperity and welfare of our country.