The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1882-11-30
Bank Ciruu.atiO

Washington, 20. = Comptroller
Knox states that propositions for
the issue of circulation without the
fullest security, cannot be too care
fully considered. The security O
the national bank note, under the
present system, is perfect. In twenty
years not single bank note failed
to be redeemed at its face value.
Aanks organized under the general
law, located so often at great
distances from commercial centres,
render security for circulation OF
uniform and positive value, an
absolute necessity.
Eighty-SeYen national banks failed
since the organization of the system
with an aggregate capital of over
$19,000,000. Forty-four would have
paid in full their circulation, if the
limit of so per cent. of the
capital had been issued. besides
small dividends to depositors.
The remaining forty. three, it
is estimated, would have paid IS
per cent. on the circulation and
nothing to d6pesitors, entailing a
loss to bill holders of over $1,000
600. Half of this number would not
have paid over fifty per cent. to bill
holders. The comptroller argues.
therefore, against any general
banking law without some such Sc
curity as that at present in vogue, if
the public debt is to be paid hereafter
as rapidly as during the past three
years, all of the interest bearing
bonds will soon be surrendered and
cancelled, and there is danger that
the bank circulation will be SO rap
idly retired as to cause a contrac-
ton of the currency, which will
affect the price Of cOmmo-
dities and create embarrassmentS
in business, but there is now
no such pressing necessity for q
speedy payment of the public debt,
as there is for a reduction of album
dant revenue. 1t is believed that
Congress will soon provide for so
large reduction of the amount of
bonds will remain for security of
bank circulation, if the whole public
debt were reduced to uniform rate
of three per cent. The present high
premium upon bonds would almost
entirely disappear and the volume
of circulation would respond more
readily to the demands Of business.
The temptation to sell such bonds
for the purpose of receiving prem
ium would no longer remain.
If it shall be the policy of
government to accumulate revenue
instead Of largely reducing it, thus
rendering it necessary to continue
a rapid reduction OF the debt, even
if it is to be purchased at a price
fixed by holders. 1t is of the great
est Importance that the basis upon
which bank currency is issued
should be enlarged so as to include
some other form of security
besides government credit. Upon
the subject of restricting loans, the
report says: The attention Of Con-
gress had previously been called to
sec ion 1920 of the Revised Statutes
which places restrictions upon loans,
and to the difficulty OF enforcing its
provisions in cities where large
amounts of produce are received
and stored. 1t is represented
as impossible for banks to transact
this class of business If restricted to
loans for an amount not exceeding
in any instance, one tenth of their
capital, if the limitations does not
apply to loans upon produce in
transit, where drafts are drawn OF
existing value, but if the produce il
to be stored instead of being ship,
ped. large loans cannot be
be made, except in violation of the
law. 1t is evident the law should
be amended as TO exclude from the
limitation mentioned, legitimate
| loans upon produce or warehouse
! receipts, and some other classes O
collateral security, as well as loans
upon United States bonds. He alsC
repeats his recommendation tina