The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1878-06-21
STATE BANK CIRCULATION.
some Suggestions Made by n Correspond
ent to the New York Times.

To the Editor Of the New York Times:
In q recent editorial the Times seems to adj
voGate the repeal of the present prohibitory
tax on the issue OF circulating notes by State
banks. No doubt such repeal would be
popular In some quarters, but it Is, at least,
an open question whether all desirable ends
to be secured by such a repeal cannot be OBJ
tanned by some other plan, which will not
open the door to the dangers involved In the
permission to any and all State banks to issue
notes for circulation as currency without any
restriction on the part of the United States
government.
Whatever plan may be adopted it is, of
course, important to provide that the cur
rency issue shall be promptly redeemed on
demand In coin or its equivalent; that 1t shall
possess such degree Of elasticity that bust
ness demands at certain seasons may be met,
and yet that the currency issued on such
special requirements may be retired without
too much disturbance of business relations,
finally. that the claims of locality may be so
far met that the West and South may not be
able to say that they have not been favored
so far as they have any legitimate claims for
consideration
referred to, it would seem that the national
banking law might be repealed, except as
hereinafter provided for, viz:
No more national banks to be chartered,
with the single exception hereinafter referred
to, and every facility to be offered to existing
situations. The law providing for national
banks to be so modified that national bank
notes shall be deprived Of their legaltender
quality and be only receivable Tor debts to
government or individuals, as Old-fashioned
bank notes used to be, that Is, when no OBJ
lection was made to receiving them as cash.
A provision TO be inserted in the law as re-
manning In force that all banks or banking In
situations, corporate or individual, authorized
| by the laws of any State or Territory, with a
capital Of 100000 Tor perhaps $5O,00Ol, shall
| have the privilege OF issuing circulating notes
on the same terms hs prescribed for national
banks, viz: the deposit of government bonds
which shall be ample security for the redemp-
| ton of the issues 81 authorized.
| All the present laws relating to reserve to
be abrogated, and that question to be rele-
gated to the States or Territories where the
banks, whether national or local, are situated,
national bank of REDEEM ptiOn, which
should serve all the purposes aimed at in the
past by the Suffolk Bank OF Boston and the
| Metropolitan Bank of New York. to be char.
tered, located in the city of New York, with
branches or redemption agencies at such
| points as would seem to keep the currency Of
the country at par everywhere, say Chicago
| New Orleans and San Francisco. All the
banks issuing notes circulating as currency
| to be required to redeem them at par at said
bank, as we'll as Mt their own counters. The
stock of such redemption bank to be held by
the several banks of the country by which
currency is issued, 1t being provided that nc
such bank shall hold less than $500 of its
stock, nor more than one-teuth the
amount of its capital stock. Thus
owned and controlled by the banks of the
country, no fear could be entertained that
such an institution could become an instru.
ment of oppression by imposing too onerous
terms for redemption. The Treasury De
partment is not the proper place for the re.
demption Of the currency, which is purely
business operation, and should not be i'm
posed upon any department of the govern
ment.
Such, in brief, is a plan which, properly
elaborated and carried into operation, woulC
rency system Of the country, while the evils
and Inconvenience of the OLD State bank pIar
are avoided. Is it not worth trial? W.