Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1874-07-11
PROVISIONS OF THE CURRENCY R11r


gress and was signed by the President
is thus explained by Senator Morton:
1t takes away the monopoly feature Of
the National banking system and makes
banking free. 1t abolishes reserves on
circulation, entirely setting free the legal
tender notes that are now held in wants
on that account. 1t provides that each
bank shall keep in the United States
Treasury sum equal to five per cent. Of
its circulation to be held and used for the
redemption of such circulation, which
sum, however, shall be counted as a mart
Of the reserves still required to be kent
upon deposits by the banks. The re-.
serve on deposits is left precisely as it now
stands under the laws, less five per cent
which is required to be kept in the Treas
ury of the United States for the purpose
stated. The abolition of the reserves on
circulation will set free and put into cir.
culation about 100000 now kent
locked up in the banks. The fifth section
provides that any National bank NAV
reduce or withdraw it's circulation by y
deposit of legal tender notes in the
Treasury in sums of not less than 50 900.
and take up its bonds on deposit with the
Treasurer for the security of such notes
but the amount of bonds on deposit for
circulation shall not by this operation he
reduced below $50, 900. by section the
entire amount Of United States notes
outstanding shall not exceed S3S2.OOO..
600, which shall be retired and reduced
only in the manner provided in the bill.
This ends the idea of the S44, OOO. 900
reserve, and takes from the Secretary the
power which he has hitherto assumed to
possess Of contracting the circulation
through the surplus revenue, down to
100000. This bill provides that
within thirty days after 81 100000 shall
be issued to National Banks, the Secretary
shall retire an amount of United States
notes equal to three.eighths of the bank
notes so issued, which shall bein reduction
of the maximum of $685., 600, 900, and
such reduction shall continue until the
maximum of United Safes notes shall be
$500 900 900, and the notes SO retired
shall be Cancelled and carried to the &C
count of the Sinking Fund, provided in
the act of 1862, and the interest thereon,
computed at five per cent, shall be added
annually to the Sinking Fund but if
the surplus revenue be not sufficient for
this purpose, the Secretary is authorized
to issue and sell a sufficient amount of
the United States bonds to cover the
notes SO Cancelled. The bill, as it passed
the Senate, provided for reduction of
twenty-five per cent. of United States
notes, but, as a compromise, it has been
placed at thirty-scven and Onc-half per
cent, which is just dividing the difference
equally between the original report OF
the Finance Committee and the bill as it
passed the Senate. This still permits
reasonable expansion of the currency.
For every S37 800 of United States notes
Cancelled, $780, 900 of bank notes must he
put into circulation, which increases the
whole volume of currency S62,5 500.
When the legal tcndars have been re-
duced by this bill to $500 ,000,0 the
bank note circulation will have been i'll
creased about 2lS,000,000 and the az
grcgate volume of currency will have
been increased about Sl37 100000. In
the bill as it passed the Senate, it was
provided that ON the LIST Of July, 1878,
the holders Of United States notes might
convert them into four and half per
cent. bond The Finance Committee, in
the bill reported by them, fixed the time
for the beginning of the conversion on the
LIST Of January, 1877. AS compromise
we have fixed, in this bill, on January
l, 1878, three and half years from now,
and at that time it authorizes the hold
ers of the United States notes to convert
them into either one of the three bonds
authorized by the act of 1870, viz, four,
four and half, and five per cent. bonds.
The theory of this bill is that n five per
cent. bond will then be at par in COIN, and
that United States notes, being conrcr'l-
BILE into them, will also he at par; that
meantime United States notes will gradu-
ally appreciate from their present discount
to par, and that this appreciation will De
gentle and slow, not exceeding three and
q halt per cent. per annum, so that specie
payments may be brought about without
oppression to the debtor class or derange-
ment of the business of the country.
The bill then provides that the United
States notes received i'll exchange Tor
bonds shall be reissucd by the Secretary,
either in exchange for coin at par, or with
the consent of the holder in the redemp-
ton of bonds then redeemable at par, or
in the purchase of bonds at not less than
par, or to meet the current payments Tor
the public service, and when used to meet
current payments, an equal amount OF
gold in the Treasury shall be applied to
redeem tive-twenty bonds. 1t is made
imperative thai these notes shall he rels-
sued for one and all of the four purposes
mentioned, if not for the first three, then
they are to be paid out for the current
expenses of the Government, which vii,
make gold surplus in the Treasury, and
an equal amount of gold, received from
whatever source, must then be employed
in the redemption of the tive-twenty
bonds. Should the legal tender notes be