haustive taxation of individual or corporate resources. dence exists of a general well-being in industry and trade. Every evi Looked at from the standpoint of true statesmanship, it would appear that the present is the most propitious hour in all our history, and as favorable as any period we may hope for in the future, to enter upon reasonable and judicious measures to eliminate all elements of financial weakness which experience has brought to light, and to perfect our now faulty system of currency. We need judicious, careful reform; we do not need revolutionary NATURAL BANK CURRENCY AND NATIONAL ADDRESS DELIVERED BY WILLIAM B. DEAN, OF ST. PAUL, MEMBER OF THE INDIAN- THE distinction your committee of invitation has conferred upon me may possibly be attributed to my connection with the work of the Monetary Commission of the Indianapolis Convention. May I speak, for a few minutes, of this convention? It was composed of delegates from the commercial bodies of the principal cities in twenty-eight states and territories, representing in its composition the vigorous and intelligent men in whose hands are the commercial activities of our country. For years the business of the nation had been ground between the upper and nether millstone of the gold and silver question. The possible election of Mr. Bryan was regarded as involving the most tremendous and terrible consequences. With silver the standard of value and gold becoming a commodity of merchandise, it was believed that such a financial convulsion would shock the country, in the readjustment that must occur, that ruin and desolation would pervade all its business affairs. The men who assembled at Indianapolis determined that, if it were possible, an end should be put to all doubt as to the standard of value, by such legislation in Congress as would settle the ques tion so far as it could be done by legislative act. The convention ordered the appointment of a Monetary Commission of eleven members, in the event of Congress itself neglecting to appoint one, and this commission was instructed to prepare a plan, the fundamental basis of which should be, first, that the present gold standard should be maintained; second, that steps should be taken to insure the ultimate retirement of all classes of United States notes by a gradual and steady process, and that there should be a separation of the revenue and note-issue departments of the treasury; third, that a banking system should be provided which should furnish credit facilities, and especially with a view of securing such a distribution of the loanable capital of the country as will tend to equalize the rates of interest in all parts thereof. It was my good fortune to enjoy the honorable distinction of association in this important duty with such men as ex-Senator Edmunds, ex-Secretary of the Treasury Fairchild, Professor Laughlin, of the University of Chicago, Mr. Stuyvesant Fish; the president of the Illinois Central Railroad, and other gentlemen of conspicuous prominence in the localities from which they were chosen. The meetings of the commission were held in the city of Washington, and, after weeks of the most serious consideration of the questions submitted to them, their report was made to a second meeting of the convention, held about a year later in Indianapolis, which was attended by even a larger number of delegates, and of the same sterling character as the first. The report of the commission was unanimously adopted and commended in the strongest possible terms. An extended report, a volume of five hundred pages, prepared at its direction by Professor Laughlin, of the University of Chicago, embodies the reasons which influenced the commission in reaching its conclusions. As this report is now being used by twenty-five or thirty colleges, among which is Yale College, as a textbook, the value of the services of the Monetary Commission and the correctness of the conclusions presented in its report may be estimated. If I may speak of the work of the members of the commission-and I desire to do so in a manner as wholly impersonal as possible-I can say that the country was never served by any of its citizens who were prompted by higher and more patriotic motives. The only conclusion sought was one that would best promote and maintain the highest standard of financial truth and honesty. What were its recommendations? That the existing gold standard should be maintained with the free coinage of gold; no more silver dollars to be coined; the separation of the monetary and fiscal operations of the Treasury; the redemption and cancellation of all government notes, and the payment of all government obligations in gold, including the exchange of gold for silver dollars, and vice versa; prohibiting the issue of any notes in denominations of less than ten dollars, excepting silver certificates. The authority for national banks to establish branches was recommended, and the organization of national banks of $25,000 capital; the gradual change from the present system of issuing bank-notes by government bonds to issues depending for security upon a guaranty fund, contributed by all banks issuing notes, together with the general assets of the banks and the stockholders' liability. The commission, in its report, made other recommendations of minor importance; yet, all suggesting, as it was believed, an improvement on existing conditions. Several of the recommendations were adopted by Congress and became law under the act of March, 1900. It is to be regretted that Congress failed to adopt the recommendation for the exchange of silver dollars for gold, to place the gold standard beyond question so far as that could be done by legislative act. I do not hesitate to declare, without fear of successful contradiction by anyone aware of the facts, that this legislation, imperfect as it may be in some highly desirable respects, would probably not yet have been obtained had it not been for the unceasing exertions of some of the gentlemen who took the most active part in pushing the work of the Indianapolis convention. In thus recalling to your attention the work of the Monetary Commission, the excellence of its recommendations must commend themselves to your consideration. If any gentleman of the Bankers' Association should be inclined to take issue with any of the conclusions of the commission, it would probably be on the subject which you have invited me to present to you upon this occasion. But upon that may I not claim your favorable presumption, plead ing the careful and studious attention which the commission devoted to the study of the question, and its patriotic desire to submit a banking plan conceived to be for the greatest good, not of bankers only, but of the interests of the whole country? While we are accustomed to look up to bankers as the doctors of finance, from whom is derived our instruction in all that is soundest and best in banking and all matters pertaining to money, still experience has taught us that even with bankers errors in judgment are sometimes found. In a series of questions sent out by the Monetary Commission to about a thousand bankers and others, asking for suggestions on the subjects named, such as the continued coinage of the silver dollars and the retirement of the greenbacks, it was astonishing to find a large number who, in their replies, favored the policy of the government continuing to buy silver and to coin silver dollars, and a larger number, probably, who were opposed to retiring the greenbacks; and yet, to all sound thinkers on these two propositions, it does not seem possible that any difference of opinion, especially among bankers, could possibly exist. The silver dollars with their 50 per cent. fiat, and the greenbacks with their 100 per cent. fiat, have given rise to the most pernicious heresies with which our country has ever been afflicted. The greenback has been glorified as the blood-stained savior of the Union; yet it defrauded the soldier of a large part of his hardearned pay, added more than a third to the enormous debt with which the Civil War burdened the country-and, worst of all, remained to teach the nation a false notion concerning money, which, in 1893, might have wrecked the Treasury itself. I believe that a great advance has been made in the financial education of the people within the past few years. Questions that were debatable not long since are now considered settled and beyond the realm of discussion; but believing that much remains to be said on the topic assigned me, I venture to present some thoughts for your consideration. The title your secretary was pleased to give my subject was, "Asset Currency and National Bank Currency." May I call my subject "Natural Bank Currency and National Bank Currency"? I choose this title, not because of its alliteration, but rather because it more accurately expresses what I shall seek to maintain, that a natural bank currency is not less, but more, a national currency than that issued by the banks under the present law. The present system of issuing bank-notes was founded primarily in order to make a forced market for United States bonds. The law was derived largely from the free banking system of the states of New York, Ohio, and Michigan, as they existed before 1860. The necessities of the general government at the time of the enactment of the law suggested the use of United States bonds as a basis for the banks to issue currency which would be as safe as government bonds, and at the same time enlarge the demand for the bonds which the government so sorely needed to sell. In order to make the monopoly for the government complete, a 10 per cent. tax was laid upon the issues of state banks, which caused immediate retirement of their notes, and left the field for circulating notes entirely to the new national banks. It is a remarkable commentary on the system of banks issuing a bond-secured circulation that, when the national bank currency act was proposed, a committee of the bank officers of New York City reported that "it was plain that the act would foster a system of 'wild-cat' banking," showing how vividly the impression remained of the bond-secured currency that had been issued a few years before, under the laws of the states of Illinois, Michigan, Wisconsin, and Minnesota, and which had met disastrous results. To say that the national banking act has many admirable features to commend it, is quite superfluous. Having the national banks in all the states under a uniform law, with issues uniform in appearance, with reports and examinations of the most searching kind, are advantages and safeguards that should never be dispensed with under any banking law or system. But admirable as are many of the provisions of the act, experience shows that in its ability to furnish a banking currency for the country, sufficient for trying emergencies of a commercial panic, it has been a failure. In the year 1866 soon after the act had been generally accepted by the banks all over the country, their notes in circulation amounted to $281,479,000; the deposits, at the same time, in the banks amounted to $598,077,000. In 1882 the circulation had increased to $358,742,000, an increase of about 27 per cent., being the highest amount the national banks have ever issued; the deposits at the same time had |