The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1875-12-11
THE KELLY 3.65 SCHEME.

There has been more nonsensiQal gable by
the inila,ionists, with less comprehension Of
the subject, over the Kelly 3.G5 bond scheme
than over any other one of their delusive pro
jects. Comptroller Knox, in his recent
report to Congress, after having carefully and
intelligently studied the subject, tells US how
it will probably work:
ut has been proposed to withdraw the Ma.
tlonal Bank notes from circulation, and TO au-
thorze an additional issue of $500, 100000 of
'greenbacks, the latter to be interchan geable,
in sums OF $50, for Treasury notes bearing in.
terest at rate Of 365 per cent. per annum, or
one per cent. per day on each 800, and to re-
peal all acts tending 10 resumption of pay
ment in specie. The 'greenbackS received
by the Treasury, in exchange for the 1855
notes, are to be used for the purchase Of six
per cent. tivetwenty bonds for the purpose of
saving interest to the government. The act
of February "a, 1915, rs has been seen, author
ized the issue of Treasury notes of the demon.
ination of 500, bearing interest at the rate of
one cent and one-half a cent per day. to be
computed at the rate of one cent and one nall
a cent per day. and it also authorized the Is.
sue of small Treasury notes, which were ex.
changeable IN sums of 800 for certificates of
cent, but Secretary Dallas says 1t was soon
ascertained that the small Treasury notes,
fundabe at an interest Of seven per cent y,
though of convenient demon nation for com
mon use, would be converted into stock almost
as soon as issued The experience of 1915
will be repeated with the issue of additional
'greenbacks interchangeable for 3.65 notes.
| These Understanding notes are not at pres
ent of a standard sufficiently high for fund
ing purposes, the law now being in force au-
thorizlng the issue of four ana hatf and al.
so four per cent. bonds, and are therefore In
this respect unlike the notes which were is
sued in 1915, but the principle of interchange
ability will cause the Misunderstanding
notes to be exchanged tor them almost as soon
as issued The misunderstanding certificates
of deposit, now held by the banks, and
amounting to 50,S9O,000, will al once be con.
vertcd into 'greenbacks' and these, together
with the Sl50,000000 of cash reserve, also
held by the different banks and bankers of
the country, will be speedily exchanged for
$3.50 notes. These latter notes will be used by
every Clearing House IN the country for the
payment OF balances, and large proportion
of the circulation will then consist of the new
llnconvertiblc interost.bearing notes, SO that
the whole authorized issue of these bonds will
soon be in demand. If the amount of the in.
rest-bearng notes be limited TO $4G0, 000,-
600, and reserve of twenty-five per cent in
| legsl-tender notes be held in the Treasury, the
amount of toe latter which may be invested
/ in United States six per cent bonds will be
| $300U00,000. This SUN will purchase $3.50, 4
600 Of six per cent bonds, assuming that
The average premium Is not greater than al
prcscnt-twen,y per cent The amount of
interest saved upon the $3.50 C00,0JU Of 52G
bonds retired will be $l5,UO0, 0"0 while the
! interest paid by the government on the a4OQ-
0S 900 OF 800 notes outstanding will be Sl4,
100000, the new saving TO the government tie
| ing 100000. But through this process the
present tax on bank circulation, amounting
! to S3s50000 will be lost; SO that, instead OF
saving 10000 the government will, by this
experiment, be actually the loser of 81 $50.
| 600. II, however, the issue Of 3.65 notes shall
be Increased 10 an amount equal TO that of
the legal tender and National Bank notes
combined, the loss in interest 10 the govern.
mcnt would be somewhat less than before
stated, but equal 10 at least S2,j0JO 600.
! ut therefore seems evident that the subs,i-
tuition Of the proposed cXpCdient in place OF
A system which has been in successful "per-
1 alton for tho past thirteen years will result, in
Ia los, 90 the government instead or "A gain
1.-THE national banks, as has beee seen, are dis
lposcd 10 retire their circulation, and il is
lprohable that durir. The next ye'Ts very
large proportion ofI will D. yoiussrilY sur
/ rendered; but ii tho proposition now under
consideration should ac adopted mSny of the
banks wculd 90 into liquidation, and their
loans, TO very great extent, be called in tor
the purpose OF distributing their prescr, cap
Y ital and surplus among theIr stockholders
who would. without doubt. generally organ.
b ize under state systems aad as private hauk-
Iers. BY this course large proportion ofthe
10, state tax, now amounting Ia an average OF
; about two per cent upon capital, would be
] saved TO the banks a. a result OF = conversion
lof their capital or deposits into interest bear
' ling notes. which, Ike other Issues of the gov
eminent, would be subject To taxation Meth
er By national or state authority
\ Perforated notices for vorsted work, al Osmsr