New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-01-20
MORE PAPER MONEY.

The first effect OF the Caucus lnfiatlOn Dill,
recently signed by the President, is seen in
the applications to the Controller of the Cur
rency for about three million dollars of addi-
ti0nal bank note circulation. In these dull
| times an investment in Government bonds
| and bank notes is seen TO be about as profit
able a one az can be made with due regard
| TO safety. 1t would be rash to make any pre-
dictions, but there certainly appears to be
quite as strong a disposition to expand the
bank note circulation as to contract it. In
five days the Controller OF the Currency has
received applications for the organization OF
! eighteen banks. with a capital of S2,65O,OOO,
of which all but two arc i'll the New-England
States, New York, New-Jcrsey, and Pennsyl-
vana. Five other banks have applied for an
increase of $4,000 in their capital stock, and
the net result will undoubtedly be the speedy
addition of three million dollars to the out
standing bank notes.
1t is more difficult to form an opinion as to
the extent to which bank notes will be with
drawn from circulation. No doubt it will be
convenient for some of the banks to with
draw the whole or part of their issues. The
directors may be hard money men and may
reducing the volume of the currency. In
special cases there may be special reasons, of
which an outsider may have no knowledge
But the grand controlling reason for the with
drawal of circulation will be the circumstance
that the banks need the proceeds Of their
bonds. bank must now have on deposit
bonds to the currency value of $4,000 in Or
der to obtain S85,5O0 of ready cash in the shape
of its own notes. Before the redemption bu-
reau was created the sum issued to the bank
was 100000 but portion of this had to be
kept by the banks as reserve. The invest
m mt of capital in bank circulation has hith-
erto turned out safe and profitable financial
operation. The United States promptly pay
interest on their bonds, and the only diff
Guilty is in safely dispOsng of the notes.
In some cases these have net been
iudiciously lent. They may have been
advanced to cotton planters and real estate
spectators, or on the security of town bonds
and railroad mortgages, or in discounting ac-
commodation paper. In that event the bank
finds itself in stMitened circumstances For
these troubles, If not of too serious nature,
the act of June, 1874, extends means of relief.
The bank has only to raise sum of $S5,500 in
greenbacks, transmit the same to Washingto
for the withdra wal of its notes, get back its
bonds, sell them for $4,000, and it has OBJ
tanned command of a much larger sum in cash
than it enjoyed before, though indeed at
sacrifice of a very profitable and secure invest
ment. This is no fancy picture. The Mer-
chants Bank of Chicago, now winding up,
after having met with large losses. was one of
the first to deposit money in this way and
retire its bonds. The Cook County National
Bank, the closing of which is reported to-day,
ia in the same category. The Bank of the
State of Missouri of st. Louis las deposited
no less than $1,64s.s0O for this purpose, being
the greatest sum left for the retirement of cir
culation by any single bank. We know nothing
OF the circumstances of this particular bank be-
yond the facts which are indicated by its state
ment of Sept. IL. 1873, but that statement seems
to us clearly to account for the desire of the
bank to increase the ready money at its COM
mand. It's liabilities at that date embraced
S92O.659 to individual depositors, $4,000 to
banks and bankers, $3S0,14O for notes and
bills rediscounted, and 81 096,4A IN bills pay
able. Against these it held $275,O0O in legal
tender notes, $47540S to its credit with re-
deeming agents. and $4,000 in fractional cur
rency and bills of other National banks. 1t
also had on deposit at Washington 81 1872, 900
in bonds to secure circulation and 100000 to
secure Government deposits and $4,7OO,OOO in
loans. We say nothing for or against the
credit of this bank, because we know nothing
of the, character of its securities The magni-
tude Of the rediscounts and bills payable ia.
however. very palpable, and it was manifestly
advantageous to tho bank TO sacrifice its cir