New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-09-02
WASHINGTON.
BANK NOTE REDEMPTION.

BANK NOTE REDEMPTION.
TUE RENOVATION OF THE NATIONAL BANK CUR
RENCY IN DANGER OF INTERRUPTION FROM THE
EXHAUSTION OF TIE LEGAI-TENDER FUND-1HE
pERpETUITY OF THE SYSTEM IN DANGER-MoRE
GRERNBACKs WANTED
{rRoH A REGULAR CORRESPONDENT OF THE rRiBUNE'I
WASHINGTON, Sept. l.-COngressman MerIlams
scheme of redeeming SS5OOOOOoO OF National bank
circulation by means of S170OO0OO of greenbacks
has been tried for Two months, and the results can
to some extent be summed up. Under the third sec
lion of the Currency ac of the last session. which
rroyided for the redemption of National bank notes
ll,y the Treasurer the banks compelled to de-
posit with him an amount in greenbacks equal TO
o Der cent of their circulation, which being done,
created redemption fund of about Sl7.OOO,OCO as
basis for the business. Treasurer Spinner early in
July by authority assumed to be conferred upon
Aim by the act, organized the present redemption
agency appointed about hundred clerks, signing
their commissions himself. fixed the rate OF COM
pensation and pays salaries and other expenses
from the redemption fund of the banks, without
reference to Secretary Bristow or the Accounting
Officer of the Department. the amount of such ex-
pendture to be made good by each bank III tne pro-
portion to the number of its notes redeemed Treas
nrer Simmer now finds that Jonah has swallowed
the whale again. for the greenbacks gathered so IN
dustriously from the two thousand banks OF the
country have vanished, transmitted by the alchemy
of two months business into about an equal amount
of ragged and dirty bank notes. some in the Treas
urv vaults some in Controller KnOxs safes, some on
the way bills of the express company, and the rest
In the tlls and boxes of the new Redemption Agency
The plain fact is that the greenback fund has dwln
died 10 almost nothing by the process of being always
depleted and never repenished and the day is not
far distant when redemption must cease by reason
III NJ the prepnbaekS unless they are
renewed i'm some other way than that Contemplated
in the law The difficulty is that the aggregate de-
posits of the banks kept in general redemption
fund and the bank notes received each day are
RENTED for in greenbacks drawn from that fund.- as
soon as the amount Of bank notes is ascertained
BY this process DAYS and weeks elapSe before the
notes so redeemed are assorted so that demand can
be made upon each bank for greenbacks equal to the
amount of ITS notes redeemed This has been
going on So long that the Treasurer finds himself
virtually without ereenbacks to redeem with, and
with no power to make call for greenbacks that
NAV not be answered with bank notes, as the banks
nave that option under a decision of the Treasurer
This of Itself renders the perpetuty of the system
dubious.
1t may seem an infraction of the law, and perhaps
st is technically to allow the banks TO their
redemption fund by deposit of bank notes instead of
sreenbacks, but measure OF economy In the
interest of the banks it is sensible. For suppose
there have been redeemed fifty thousand dollars IN
notes of any bank of course, the deposit of green
backs to the credit of that bank has been diminished
by that amount; and suppose the Treasurer calls
upon the bank for fifty thousand dollars to make
the deposit good again. The bank has the green
backs it also has plenty of bank notes; if it is COM
pelled to send Creenbacks it may, by same express
send also an equal amount of bank notes for redemp
fiOn, for which the Treasurer would be compelled
TO send back perhaps the identical greenbacks re-
ceyed that day from the same bank.
Notwithstanding the low ebb of the fund, the
Treasurer hopes to keep up the present sickly
semblance of redemption, by calling upon the banks
as fast as he can assert their redeemed notes, to
make good the amount of greenbacks they are
Obliged to keep in his hands as a redemption fund.
AS their responses, however, may be made in bank
notes, regret is expressed that ten per cent re-
demption fund was not provided by Congress
instead of five per cent. Think of the secu-
rity extended to a confding public by, say, Mon
Iana bank which has its reserve in Washington, in
bank notes equal to five per cent of Its circulation.
How much service could that reserve accomplish i'll
stopping a "run"f