amount sufficient to liquidate all outstanding notes, before the claims of any other class of creditors are administered upon under the State laws. (7) That the notes of a failed bank shall bear 5 per cent. interest from the date of failure until the Comptroller of the Currency shall formally announce that the principal of the notes is payable. (8) That the notes of all banks shall be printed by the United States Government, after such uniform design as the Comptroller of the Currency may approve, the printing of the issues of National banks to be in one color and of the State banks in a different color. (9) That the denominations of the notes shall not be in lower amounts than $5, unless the Comptroller is satisfied that the public convenience requires lower denominations, in which case notes of $1 or $2 may be issued to such amounts as the Comptroller may authorize. (10) Now existing National banks shall have the choice of continuing to issue against deposit of U. S. bonds under the present National banking laws, or accepting, in lieu thereof, the conditions of issue herein prescribed. IV. In order to insure ample and expeditious current redemption of circulating notes, there shall be established six Redemption Districts by the Comptroller of the Currency, in the manner following: (1) The limits of the districts shall be determined with due regard to an equal division of banking capital and of geographical area. (2) The redeeming agents shall consist of banks situated centrally in their respective districts, and shall be appointed by the Comptroller of the Currency. (3) The banks shall keep a deposit in gold with the redemption agencies of their respective districts, at no time less than 2 per cent. of their outstanding circulation, from which the agencies shall make redemption of their notes. (4) The agencies shall receive from the banks within their respective districts the notes of banks situated in other districts and shall forward the same for payment to the agency for the district in which such notes were issued. (5) Each agency shall forward a report to the Comptroller of the Currency, at the beginning of each month, showing what was the average ratio of redemption deposit to circulation of each bank in its district for the month preceding. (6) In case of the failure of a bank, the agency shall suspend redemptions for such bank and shall hand over any balance to its credit to the receiver of such bank. V. From this date, no bank note shall be a legal tender for any payments, except for debts due to the issuer. VI.-All bank notes shall, from date of act, be redeemable in gold coin of the United States. VII.-From date of act and until the United States notes and the Treasury notes of 1890 have been entirely redeemed, the provisions of law requiring reserves against deposits may be suspended at the discretion of the Secretary of the Treasury. SOUND CURRENCY is a semi-monthly publication devoted to setting forth accurate and timely Information upon currency questions. THE SUBSCRIPTION PRICE PER YEAR IS $1; IN CLUBS OF 10 OR MORE, 50 CENTS; AND IN Clubs of 25 OR MORE, 40 CENTS.. The numbers so far published in 1895 are: 1. NATIONAL AND STATE BANKS. Horace White. 16 pp. 6. THE CURRENCY FAMINE OF 1893. John De Witt Warner. 20 pp... 9. OUR PAPER CURRENCY-As It Is and as It Should Be. W. Dodsworth. 10 pp.. (Reprint of Adam Smith's discussion-first published in 1776.) 13. NEW ENGLAND BANK CURRENCY-Current Redemption Developments. L. Carroll Root. 32 pp... 14. THE BULLION REPORT-Parliament Committee, 1810.... .13 4.00 20.00 Pamphlets, Speeches, Leaflets, etc. ATKINSON, EDW.-Forced Loans, Greenbacks, Sherman Notes and Silver Certificates........... ATKINSON, EDW.-The Banking Principle. .05 .20 .50 ATKINSON, EDW.-Why Money Is Scarce in the Southwest. Dodger.. DODSWORTH, WM.-Cheap Money: A Talk Between Sam Silver, Frank Flat and Ben Banks. Leaflet... .05 HAZARD, ROWLAND-Do You Want "Cheap Money"! .. .03 .C2 MCLEOD HENRY DUNNING-Silver Coinage Historically Considered. .05 333 23 WINDMULLER, LOUIS-What We May Expect from Free Coinage.. SOUND CURRENCY. PUBLISHED BY THE SOUND CURRENCY COMMITTEE OF THE REFORM CLUB. Vol. II., No. I. NEW YORK, DECEMBER 1, 1894. SUBSCRIPTION, $1.00. SINGLE COPIES, 5 Cents. Each number contains a special discussion of some Sound Currency question. All new schemes of fiat money must be strenuously resisted, whether proposed in the form of depreciated silver or of legal tender Treasury notes. A safe and elastic system of banknote currency must be devised and put in operation, both to pave the way for the retirement of the greenback issues of the Federal Government and to puż a stop to the constant and dangerous demands upon Congress for 66 more money." The Treasury of the United States, thus relieved from the responsibility imposed upon it in respect to the currency, will then be free most effectively to perform its legitimate functions—the collection and disbursement of Federal revenues.-PLATFORM OF THE REFORM CLUB. OBJECT OF NATIONAL BANKING SYSTEM. The national banking system was recommended to Congress by Secretary Chase in his first annual report, December, 1861. He urged its adoption both as a measure of currency reform and as a means of replenishing the public treasury. As a matter of fact, the act brought little aid to the treasury until after the need of it had passed by. The war ended practically in April 1865. The whole amount of national bank notes issued up to the third of that month was only $98,896,488. The sum total of fiscal aid gained by the operation of the act up to that time therefore did not exceed $109,000,000, and this was only 3 6-10 per cent. of the borrowings of the Government. THE TAX ON STATE BANKS' NOTES. The national bank bill was not favored by Congress during the first or the second year of the war. It was reported adversely by the Committee of Ways and Means on the eighth of January, 1863. The bill was then started in the Senate, where it was passed February 12, 1863, by a vote of twenty-three to twenty-one. A few days later it passed the House by seventy-eight to sixty-four. It was revised and repassed on the third of June, in the following year, but neither in the orig. inal nor in the amended act was there any discriminating tax on State bank notes. It was proposed by Mr. Hooper, of Massachusetts, in the House, on the seventeenth of February, 1865, and in the form in which he offered it, it was defeated. It was again offered in substantially the shape in which it now stands, on the same day, by Mr. Wilson, of Iowa, and it was adopted by an accident. The vote was sixty-eight yeas to sixty-seven nays, but Mr. Brooks, of New York, who had bitterly opposed it in debate, voted in the affirmative in order to move a reconsideration. When he moved the reconsideration, Mr. Washburne, of Illinois, moved to lay that motion on the table, and on the latter motion the vote was a tie, seventy-one to seventyThe speaker then voted in the affirmative, and his vote saved the Wilson amendment. If Mr. Brooks had voted in the first instance as he had fought, there would have been a majority of one against it. one. In the Senate the Committee on Finance reported adversely to the tax, but was overruled by a majority of two. I mention this merely to show how small was the preponderance of sentiment, if any, in favor of the tax at the time when it was enacted. Although enacted on the third of March, 1865, the tax did not go into effect until August 1, 1866, or fifteen months after the close of the war. The constitutionality of the tax has been called in question. The Supreme Court held, in the case of Veazie Bank vs. Fenno, that it was not repugnant to the Constitution. There may be room for difference of opinion as to the scope of the decision, but according to my reading the court held that the right of Congress to tax bank notes had existed, and that the judicial department of the Government could not prescribe limitations to the legislative department upon the exercise of its acknowledged powers. A different question is raised when we look at the moral and economical features of the tax. If you can tax bank notes, not for the purpose of revenue, i.e., not for the usual purposes of taxation, but for something quite different, you may tax anybody or anything on the same principles. The debate shows that the tax was imposed to kill State bank notes, not to obtain money for public uses. Such a power can be invoked to destroy any industry, to take away any man's livelihood, and to reduce him to beggary. This power was invoked a few years ago to destroy the oleomargarine industry, and there is now pending a bill, which has passed one branch of Congress, to tax out of existence the business of making a certain class of contracts called "futures." This bill has created far more commo. tion during the past twelve months than the tax on State bank notes ever did. It was and is advocated by some who have no pecuniary interest to serve, as an antigambling statute. Dealing in futures, they say, is gambling. Ought we not to suppress gambling by every means in our power? Whether dealing in futures is gambling or not, whether some of it is gambling and some not, I observe that orthodoxy is brought in to give a lift to every such measure. It was especially so in the oleomargarine case. The making of this article was pronounced immoral and even infamous, although it turned out that the most deceptive and deleterious compounds in the market going under the name and guise of butter were really butter done over with chemicals. Now orthodoxy, according to a well known formula, is my doxy and heterodoxy is your doxy. If I want to tax your business out of existence because it interferes with mine, I shall begin by persuading Congressmen that you are a bad fellow and that your influence over the young is pernicious. I confess that I was captivated with the idea of taxing the Louisiana Lottery out of existence by act of Congress, but I see now that a better way was found. I hope, if another round is to be fought with that monster, that means may be devised for overcoming it without resort to so doubtful an expedient; for there is no limit to its oppressions if the principle is admitted that you may use the taxing power for other purposes than those of the public fisc. But we are confronted with the fact that the thing has been done. If the means were questionable, still we are not responsible. The blame, if any, is on the last generation. Are we required, upon sentimental or other grounds, to undo what they did, even at the risk of producing chaos? I consider the sin of inflicting a bad currency upon the people the deadliest that a government can commit. Hence it becomes us, before answering this question, to look at the probable consequences. STATE BANK SYSTEMS. If we are to assume that one of the consequences will be the circulation of bank notes as bad as some of these which existed before the war, no further argument is needed. There were good banks and bad banks before the war. There were good bank systems and bad bank systems. Let us glance at some of both kinds. STATE BANK OF INDIANA. The State Bank of Indiana was incorporated by a special charter in 1834. The capital stock was originally fixed at $1,600,000, and of this sum the State was to subscribe one half and private individuals the other half. The State really supplied the whole capital by an issue of bank bonds, and advanced one-half of it to private individuals on mortgage security. The capital was afterwards increased, the State reserving to itself the option to take one-half of the several increments. All the stock subscriptions were required to be paid in specie. The State Bank consisted of a president and board of directors at Indianapolis, who were a supervising body, but who had no capital under their control and transacted none of the details of the business. All the details were performed by the branches of the State Bank, originally ten, but increased in number from time to time. The branches were managed by the private shareholders exclusively. The stock subscriptions were made by each branch separately, the capital of each being $160,000, of which the State took $80,000 and private persons $80,000. The earnings and dividends of each branch belonged to their own shareholders exclusively, but each branch was liable for the debts of every other branch. They were independent of each other in the matter of assets, but were united as to liabilities. This was the admirable keystone of the arch. The president and four directors of the bank (the parent institution) were chosen by the State legislature to hold office for five years, and one director of the same was elected by each branch. The kind of business to be done was defined in the law. It was the usual banking business, including the power to issue circulating notes. The only limit on the amount of circulating notes was embraced in a provision that the debts due to or from any branch (except deposits) should not be more than double the capital of that branch. Theoretically, therefore, each or every branch might have notes |