The New Orleans bulletin. [volume] (New Orleans [La.]) 1874-1876, 1874-06-28
THE NEW CURRENCY LAW.

1t Is important not to misunderstood Its pro
visions
First, as to the reserve the bill not only
provides that no reserve need be kept at tn,
the bank against circulation, but that the
per cent reserve which it requires to be KEEP
at the Treasury shall be counted as part Of the
reserve against deposits. Thus, if bank ha.
5000 in circulation, and 100000 in de
posits the late law required that it shoulC
keep on hand a reseserve equal to ID per cent
OF its circulation and deposits, if a country
bank, or $50. 600, and equal to 25 per cent, il
city bank, or $4,000 The new law re-
quires that, having 100000 circulation, il
shall keep 5000 at the Treasury, which shall
be counted as part of its reserve against de-
posits, which shall be as before, Is per cent
for country and 20 per cent for city banks SC
that, in the case supposed, the bank need
keep only 5000 at the Treasury and $4,000
on hand, if a country bank, and only $4,000 at
the Treasury and $50, 900 on hand, if a city
bank Moreover. the most dangerous pro
vision of the old law remains in force-that
| 'three-tfths of said reserve ''may consist
| of balances due to an association available for
! the redemption of its circulating notes from
associations approved by the Comptroller OF
the Currency, organized under this act, in
what are now known as the redemption cities.
1t was under this clause that banks were per-
mitted to keep three-ffths Of their reserve on
deposit at interest in New York, for the
use of stock spectators, though knowing
that it was there being loaned on call
for stock gambling We do not see that the
new bill modifies this provision in any re-
spect Hence, Of the Sl5, 0OO reserve now re-
quired to be kept by country banks against a
deposit OF 500, three-fifths or $4,000,
may thus be deposited on interest with New
York banks, while another part, equal to per
cent Of circulation, may be on deposit at the
| treasury and must be kept there. In the case
supposed, the circulation being $1,000 the
bank would be required to keep on hand I'M
der the new law exactly one thousand dollars for
the satisfaction of depositors entitled to call
for 100000, A city bank, with the same liza
bilities, would be required to keep on hand
only 5000. We do not know that in any CIV
ilized community banks We're ever organized
before, under an act making even the most
distant pretense Of protecting the public,
which were thus permitted by law to hold on
hand only $1,000 to meet obligations Of
500, 200.
Indeed, the insignificant reserve required
will in any future panic or disturbance be the
only resource required for satisfaction of bill
holders as well as depositors. Under the old
law, bill-holders never sought the redemption
of their notes to any extent, and the
reserve of fifteen OF twenty-five per cent in
circulation and deposits both was in effect
wholly available for the demands of depositors
only. Thus, in the case supposed, the bank
was required to hold reserve of $50, 600, if a
country bank or $50, 600, if city bank, and
to keep two-tifths of each sum, S12, 900 or $2O,-
900, in its own vaults. All this amount was
applicable as reserve for the security of de-
positors alone. But now the same bank is re-
nuraI RI Eaan in ire va1Ilfc S1CNM IL cOunfrv
bank, and $4,000 if city bank and, the prob
ability Of banks failing in any financial dis
turbance being thus UNNECESSARILY increased,
bill-hOlders also will rush at first alarm to get
legal tenders for their bills. Thus the insig
nitcant margin must answer for double de-
mands.
1t is true that the law merely permits bank
to loan its funds to the extent named. But it
cannot be said that the law contemplates that
they will always hold larger reserve, since it
does not require larger. Any honest bank
,cW hold larger reserve, law or no law: any
one that did not would deserve not seconds
confidence from anybody; but if that is clearly
true, what shall We say of the law which ex-
plicitly permits any bank to do that which
any business man would consider shamefully
reckless and absolutely dishonest?
In one other respect the bill is more sensible
than we have supposed from Geographic dis
patches; it does not provide for withdrawal
from Eastern banks any faster than Western
banks may be organized to claim circulation,
and permits withdrawal OF only $50, 600, 900
during the coming year. STILL it provides that
a reqrisition for currency from any Eastern
bank must be complied with in thirty days,
and thus compels all the banks in States
having more than their proportion Of circula-
ton to keep on hand or loaned on short time
Ia -
for q year the requisitiOn which may come at
portion Of sos, 100000. The uncertainty will
have somewhat the same effect Us the imme-
date withdrawal Of those sums from active
use.
This bill does not seem to us as wise a one
as Congress might have devised after six
months Of incubation. It's immediate effect
must be to provide unlimited money for spec
ulation, and especially for stock gambling, for
the events Of last September prove that there
are banks in New York which will loan all that
the law allows and far more The great ma
jority of banking institutions, however, upon
which the mercantile and manufacturing COM
munity chiefly relies, will be found too pru
dent, too conservative, too honest, in fact, to
take advantage Of the privileges which the
law gives at the peril of their creditors. The
sAue oNeI-tTaeInS OVeI-pIOducUon anu over
loading of markets, which have made it i'm
possible for the banks to loan, in any safe and
legitimate way, even as much as the old law
allowed by nearly seventy millions, will oper-
ate still to curtail loans. Speculation will be
stimulated it is good time to buy fancy
stocks But we are not sure that legitimate
business will reap much benefit, and the whole
banking system will be rendered much weaker
and more insecure for any future emergency
81. LOuis Democrat
TRAFFIC IN BIRDS. Scarcely day passes but
some bird-trader comes up from New Orleans,
and passing along the coast, buys the birds
caught by children and colored people. We
have often wondered why the society for the
prevention, etc now doing big business in
New Orleans not stop cruelty to birds.
Well, in West Baton Rouge no more bird
trading is to be allowed. The police jury OF
that parish has passed an ordinance prohibit
ing the catching Of birds for expectation and
sale under severe penalties -HdhnrWe (St
Charles PARISH Herald