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again take his place—a sturdy and industrious citizen in time of peace and a patriotic and safe defender of American interests in the day of conflict.
The ancient provision of our law denying American registry to ships built abroad and owned by Americans appears in the light of present conditions not only to be a failure for good at every point, but to be nearer a relic of barbarism than anything that exists under the permission of a statute of the United States. I earnestly recommend its prompt repeal.
During the last month the gold reserved in the Treasury for the purpose of redeeming the notes of the Government circulating as money in the hands of the people became so reduced and its further depletion in the near future seemed so certain that in the exercise of proper care for the public welfare it became necessary to replenish this reserve and thus maintain popular faith in the ability and determination of the Government to meet as agreed its pecuniary obligations.
It would have been well if in this emergency authority had existed to issue the bonds of the Government bearing a low rate of interest and maturing within a short period; but the Congress having failed to confer such authority, resort was necessarily had to the resumption act of 1875, and pursuant to its provisions bonds were issued drawing interest at the rate of 5 per cent per annum and maturing ten years after their issue, that being the shortest time authorized by the act. I am glad to say, however, that on the sale of these bonds the premium received operated to reduce the rate of interest to be paid by the Government to less than 3 per cent.
Nothing could be worse or further removed from sensible finance than the relations existing between the currency the Government has issued, the gold held for its redemption, and the means which must be resorted to for the purpose of replenishing such redemption fund when impaired. Even if the claims upon this fund were confined to the obligations originally intended and if the redemption of these obligations meant their cancellation, the fund would be very small. But these obligations when received and redeemed in gold are not canceled, but are reissued and may do duty many times by way of drawing gold from the Treasury. Thus we have an endless chain in operation constantly depleting the Treasury's gold and never near a final rest. As if this was not bad enough, we have, by a statutory declaration that it is the policy of the Government to maintain the parity between gold and silver, aided the force and momentum of this exhausting process and added largely to the currency obligations claiming this peculiar gold redemption. Our small gold reserve is thus subject to drain from every side. The demands that increase our danger also increase the necessity of protecting this reserve against depletion, and it is most unsatisfactory to know that the protection afforded is only a temporary palliation,
It is perfectly and palpably plain that the only way under present conditions by which this reserve when dangerously depleted can be replenished is through the issue and sale of the bonds of the Government for gold, and yet Congress has not only thus far declined to authorize the issue of bonds best suited to such a purpose, but there seems a disposition in some quarters to deny both the necessity and power for the issue of bonds at all.
I can not for a moment believe that any of our citizens are deliberately willing that their Government should default in its pecuniary obligations or that its financial operations should be reduced to a silver basis. At any rate, I should not feel that my duty was done if I omitted any effort I could make to avert such a calamity. As long, therefore, as no provision is made for the final redemption or the putting aside of the currency obligation now used to repeatedly and constantly draw from the Government its gold, and as long as no better authority for bond issues is allowed than at present exists, such authority will be utilized whenever and as often as it becomes necessary to maintain a sufficient gold reserve, and in abundant time to save the credit of our country and make good the financial declarations of our Government.
Questions relating to our banks and currency are closely connected with the subject just referred to, and they also present some unsatisfactory features. Prominent among them are the lack of elasticity in our currency circulation and its frequent concentration in financial centers when it is most needed in other parts of the country.
The absolute divorcement of the Government from the business of banking is the ideal relationship of the Government to the circulation of the currency of the country.
This condition can not be immediately reached, but as a step in that direction and as a means of securing a more elastic currency and obviating other objections to the present arrangement of bank circulation the Secretary of the Treasury presents in his report a scheme modifying present banking laws and providing for the issue of circulating notes by State banks free from taxation under certain limitations.
The Secretary explains his plan so plainly and its advantages are developed by him with such remarkable clearness that any effort on my part to present argument in its support would be superfluous. I shall therefore content myself with an unqualified indorsement of the Secretary's proposed changes in the law and a brief and imperfect statement of their prominent features.
It is proposed to repeal all laws providing for the deposit of United States bonds as security for 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 guaranty fund, in United States legal-tender notes, including Treasury notes of 1890, 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 its circulation a proportional part of its guaranty fund shall be returned to it; to permit the Secretary 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 circulation and to repeal the provisions of the present law imposing limitations and restrictions upon banks desiring to reduce or increase their circulation, thus permitting such increase or reduction within the limit of 75 per cent of capital to be quickly made as emergencies arise.
In addition to the guaranty 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 i per cent, upon the average circulation of each bank until the fund amounts to 5 per cent of the total circulation outstanding. When a bank fails its guaranty fund is to be paid into this safety fund and its notes are to be redeemed in the first instance from such safety fund thus augmented, any impairment of such fund caused thereby to be made good from the immediately available cash assets of said bank, and if these should be insufficient such impairment to be made good by pro rata assessment among the other banks, their contributions constituting a first lien upon the assets of the failed bank in favor of the contributing banks. As a further security it is contemplated that the existing provision fixing the individual liability of stockholders is to be retained and the bank's indebtedness on account of its circulating notes is to be made a first lien on all its assets.
For the purpose of meeting the expense of printing notes, official supervision, cancellation, and other like charges there shall be imposed a tax of say one-half of i per cent per annum upon the average amount of notes in circulation.
It is further provided that there shall be no national-bank notes issued of a less denomination than $10; that each national bank, except in case of a failed bank, shall redeem or retire its notes in the first 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 State 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 banks claiming such exemption that they have not had outstanding their circulating 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 ownership of stock; that the liability of said banks upon their circulating notes constitutes under their State law a first lien upon their assets; that such banks have kept and maintained a guaranty fund in United States legaltender 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 quite likely that this scheme may be usefully amended in some of its details, but I am satisfied 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 legislation affecting the people of the United States rests upon their representatives in the Congress, and assuring them that, whether in accordance with recommendations I have made or not, I shall be glad to cooperate in perfecting any legislation that tends to the prosperity and welfare of our country.
EXECUTIVE MANSION, December 6, 1894. To the Senate of the United States:
In compliance with the resolution of the Senate of the 24th of July, 1894, directing the Secretary of State to furnish copies of all papers, correspondence, diplomatic or otherwise, on file in the State Department in connection with the arrest and imprisonment at Arequipa, Peru, of Victor H. McCord, I transmit herewith the correspondence indicated.
Washington, December 10, 1894. To the Congress of the United States:
I transmit herewith a communication from the Secretary of State, inclosing the report, with accompanying papers, of the commission of the United States for the Columbian Historical Exposition in Madrid in 1892 and 1893, constituted in virtue of the act of Congress approved May 13, 1892.
EXECUTIVE MANSION, December 10, 1894. To the Senate and House of Representatives:
I transmit herewith the report on the Chicago strike of June and July, 1894, forwarded to me by the Strike Commission appointed July 26, 1894, under the provisions of section 6 of chapter 1063 of the laws of the United States, passed October 1, 1888.
The testimony taken by the commission and the suggestions and recommendations made to it accompany the report in the form of appendixes.
Washington, December 11, 1894. To the Senate of the United States:
In response to the resolution of the Senate dated December 6, 1894, requesting that copies of correspondence in regard to the claim of Antonio Maximo Mora against the Government of Spain exchanged since my last message to the Senate on the same subject, dated June 20, 1894,* be communicated to it, if not incompatible with the public interests, I transmit herewith the report of the Secretary of State on the matter, with accompanying copies of correspondence.
EXECUTIVE MANSION, December 11, 1894. To the Senate of the United States:
I have received a copy of the following resolution of the Senate, passed on 3d instant:
Resolved, that the President be requested, if in his judgment it be not incompatible with the public interest, to communicate to the Senate any information he may have received in regard to alleged cruelties committed upon Armenians in Turkey, and especially whether any such cruelties have been committed upon citizens who have declared their intention to become naturalized in this country or upon persons because of their being Christians,
And further, to inform the Senate whether any expostulations have been addressed by this Government to the Government of Turkey in regard to such matters or any proposals made by or to this Government to act in concert with other Christian powers regarding the same.
In response to said resolution I beg leave to inform the Senate that I have no information concerning cruelties committed upon Armenians in Turkey or upon persons because of their being Christians, except such information as has been derived from newspapers and statements emanating from the Turkish Government denying such cruelties and two telegraphic reports from our minister at Constantinople.
One of these reports, dated November 28, 1894, is in answer to an inquiry by the State Department touching reports in the press alleging the killing of Armenians, and is as follows:
Reports in American papers of Turkish atrocities at Sassoun are sensational and exaggerated. The killing was in a conflict between armed Armenians and Turkish soldiers. The grand vizier says it was necessary to suppress insurrection, and that about fifty Turks were killed; between three and four hundred Armenian guns were picked up after the fight, and reports that about that number of Armenians were killed. I give credit to his statement.
The other dispatch referred to is dated December 2, 1894, and is as follows:
Information from British ambassador indicates far more loss of lives in Armenia, attended with atrocities, than stated in my telegram of 28th.
* See p. 5910.