The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1874-04-16
THURSDAY, APRIL 10, 1874.
THE CONTRACTION VERSUS
EXPANSION.
The Effect Of the senate BIll.-An I'm.
mediate Contraction and then q
Gradual Expansion. 80

mediate Contraction and then
Gradual Expansion. 80
WARRINGTON, April 13.-There hS
been considerable excitement among boil
the leading friends and chief opponents
OF the Senate Currency bill to-day OVsi
calculations made by Controller Knox 10
regard TO liz operation, and communicate
cd by him In response to private inquiries
as 10 its real effect upon the currency
These calculations show that with the
Scott amendment, requiring three-qlAr-
tiers of the bank reserves 10 be kept at
home, the bill will really cause an i'm
mediate contraction upon its passage, TO
an amount nearly equal 10 the increase Of
bank currency authorized by 1t. II also
sppesrs that while contraction must take
place OF once, through the locking up oil
an additional amount Of the reserves,
the Issue OF new currency, will
be very gradual. These calculations
have surprised both the friends and op'
ponents Of irritation. The CXpsnsionisls
were totally misled as 10 the effect Of the
Scott amendment; and its friends arc al.
most equally surprised as they seem not
to have aimed al producing any such cen.
traction. As the Controller states the
case, the Senate bill, now pending in the
House, authorizes an increase Of the Ma
tional bank currency oil s4O.OOO,OOO, but
requires one quarter Of the amount Of the
reserves of the banks Of the redemption
cities 10 be held in New York city, in.
stead Of one half Of the amount, as under
the existing law; and in case Of country
banks, one quarter instead Of three liIlhs,
as under the existing law. The bill will
largely increase the amount Of cash re-
serve TO be held BY banks, as will be seen
by the following letter to Gen. Garfield;
OFFICE CONTROLLER OF CURRENCY, |
WASHINGTON, April II, 1874.
SR:-In accordance with your verbal
request, l inclOsG herewith statemGnls
showing the amount OF legal tender re.
serves held by National Banks on Feb.
2s, April rs, June -, Sept ~, and Dec,
20, 1873, Also, the amount to be held
under the Senate bill, now pending in the
House, providing for increasing the Ma.
tiOnal Bank circulation 10 $500 900, 600,
from which ii will be seen that under the
pending bill, II II had been in force at
those dales, au additional amount Of
legaltcuder reserve would have been re.
quired TO be held by the banks, as Iol-
lows: Feb 2S, 1878, $43, 03OO0S; April
%, 1887, COS; June Is. ga $685.
Sept u, $44, 734, 70B; Dec. 20, $40, 98l 1857.
The amount Of legal tender reserve &C
tually held at National Banks at each oil
these dates was in eXceis OF the amount
now required by law. The amount re.
quired 10 be held, under the pending
bill, in excess Of the amount &C,
tuallY held at those dates would
have been as follow: Feb. %, $25, 0l5,-
$50, April IS, geo. 535 033; June 10, S.
237S33i Sept, 12, $2S,035, 400. The
AlIOult vi lCBA lcuucI IebeINe ueIu W
National banks, Dec. GO, 1873, was $45,.
170,7S7 in excess Of the amount required
by the existing law, and $4,2lS, 420 in ex'
cess Of the amount which would have
been required by the pending bill had ii
been then in force. This large increase
in the cash means Of the banks may be
easily explained by comparing the state
mems at that date with the statements on
Sept. 10 previous, showing reduction in
the loans Of banks Of SOL ,599,454.
Very respectfully,
JOTN J. Knox, Controller.
Tho Hon j. a. Garfield, House Of Repre-
StHtdtiptS.
or the bank statements furnished by
the Controller, and which accompany the
Vbove letter, that of Sept. IL. few days
before the panic, is as follows: