Debate of Nov. 16. 1893.Question: "Resolved, That under proper conditions the ten per cent. tax on state notes should be repealed.
Brief for the Affirmative.C. M. READ and J. F. TWOMBLY.
Best general references: M. D. Harter, A Plan for a Permanent Bank System, Forum, vol. XII, p. 186; C. F. Dunbar, The Bank Note Question, Quart. Jour. Econ., vol. VII, p. 55.
I. The tax was a temporary war measure, passed to float the U. S. bonds. U. S. Treas. Report, 1862.
II. The present currency system is bad, and should be abolished. (a) Inadequate in volume. (1) Rapid growth of population and trade. (2) No inducement to national banks to issue notes. Quart. Jour. Econ., vol. 1, p. 414. (b) Inelastic. (1) No provision for expansion in financial crises. (2) No provision for small centres. C. F. Dunbar, Quart. Jour. Econ., 1892, p. 63. (c) Dangerous. (1) The proportion of gold to certificates, greenbacks, and treasury notes is too small, and growing smaller. Taussig, Silver Situation, p. 54. (2) Further in-crease of government issues would make matters worse.
III. Issue of state bank notes is desirable. (a) Before the war many state banks issued sound notes. (b) State bank-notes could be made safe. (1) The government would accept for taxes only notes sufficiently secured. Harter, Forum, vol. XII. (2) Inflation is preventable by a tax on circulation above a fixed maximum.
IV. The system proposed is practicable. (a) Adequate to the present demand for increased currency. (b) Being elastic, would meet needs. (1) In financial crises. (2) In small centres. (c) Would satisfy the reasonable demands for the South and West. (d) Easily put into practice and permanent. (e) Supported by important financial organs. Commercial and Financial Chronicle, May 14, 1892. Journal of Banking, October, 1892.
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