The Dallas daily herald. [volume] (Dallas, Tex.) 1873-1887, 1882-12-02
FINANCIAL AND COTTON
FINANCIAL

rur Chicago Times says the Second National
,.hof PEORIA Illinois, is in dilemma A
es amount Of its bonds deposited TO secure
s,snation have been called. and 10 keep up the
IN snount of its note issues il must buy per
~ - and nav high premium for them Its
vVsy,er will expire next January, and II finds
slsif ,onironted with the question whether it
IN continue its existence under the national
w. and buy high priced bonds, or re-organize
.ss priyate bank Probably this bank is oaly
sssnf many which have the same question 10
.a,w.r some of the banks will find the same
'intion of the question in section OF toe act Of
hsI2th of last July That section provides that
nsnts having capital of s50, 900 or less shall not
Ma reouired to keep on deposit to secure cifcula-
"a an amount of bonds exceeding one-fourth the
an ,nnt of their capital stock. Thus bank
e-rlnr capital Of just $4,000 need not keep
=" aeposit bonds TO an amount exceeding $4,000
lsimilar provision affecting banks with larger
csntal will settle the question for them. There
!. therefore, no strong probability that banks
MI surrender their national charters, or abstain
nm extending them as they expire, simply be-
Gauss they are required To deposit certain
smount of bonds to secure circulation.
There is, however, probability that many Of
,bem will reduce their circulation as they renew
E,ir charters, and il becomes question affect
iny lhs public rather than the banks whether
.onelh,ng should not be done TO make ii an oh.
isct for the banks to keep up the volume of the
L ..
Bonls at per cent may be issued in ex-
,hange for per cents nj the rate of
M Of the former for 100 OF the latter.
This suggestion has been made by Comp
tollar KNOX, AMI congress could not do better
nan adopt it, with the proviso that the 3s
sAonld be snbjact to call tho last dated and
nambered firsl, ~ the pleasure of the govern
nent. Under this arrangement the treasury
W,ulJ not have t. pay high premium FOR bonds
.ter 1895, as it will have to do us matters now
sand and the amount ultimately paid on &C.
c0unt of the debt would te 70 greater than it
Win be ii the As arc allowed to run 10 maturity.
Blt as has betn suggested the exchange at the
nte of NJ 10 100 would probobly be an unpopu-
hrmeasure, because ii woulu increase the prir-
eIpsl of the debt in thai proportion II is not at
All ikplv therefore that congress will adopt
ibis method of inducing the banks to Keep up
their circulation
been suggested ia Ihese columns, would be to
authorize the comptroller to issue circulation TO
the amount of 90 per cent of the par value OF
the bonds deposited when the market value Of
the same is less than 10 but not less than l00
aud to the amount of 81 per cent of their market
value when such value Is ITO or more. Thus, If
Ae market value of the bonds deposited was
10, the bank would he entitled to receive notes
10 the amount of sos 500 for every 100000 par
value, of bonds, and II the market value was 100
itwould be entitled 10 receive flt2OOO in notes
per $40 1000 Of bonds, par value instead OF 800
OQO only, as under existing law This woud
leave an ample margin for security, as the banks
would be required TO increase their deposits in
case of decline in the market value Of bonds to
tAe amount necessary to keep good the margin.
The Times has yet TO hear of serious objeItiCn
10 this measure
Another suggestion is that the national taxes
on capital aud deposits be repealed. This is
what the cashier of the Peoria bank thinks
would be the right thing to do And so 1t
would be without regard to the question of cir.
tulati0n. Such taxes ought not TO be imposed
at all, aud least OF all when the treasury Is re-
ceiyng annually at least 500, 100000 more reve-
hue than ought to be collected, But this meas
ure has no necessary connection with the quos-
ton Of circulation. 1t should be adopted with
out any regard whatever TO that question.
Still another suggestion is that the plan OF
basing circulation on national bonds should be
wholly abandoned 1t must be abandoned
eventually, and at no very distant day,
either, II we 20 on paying OIL the dcbt
Is we have been doing hithert'.
Its an unsclentifc plan at best and cannot be
permanent except in country which has large
permanent. debt. Mr. Coo suggests that circula-
ton should be based only on capital. and that
the assets of bank in case of failure should he
applied first of all to the redemption of Its circu-
latng notes. He would limit circulation TO II
certain proportion of paid-up capital stock, and
provide safeguards against overisSues by con-
unuing the national system and making al is
sues through the comprollers office at Wash
ington, al a. present This plan, In substance,
,fayored by Mr.. A, s Hewitt Something like
Unjust be adopted sooner or later, and there are
excellent reasons why its adoption should not
beput off, II is not worth while TO tinker sys.
ten which can hardly survive twenty years at
most aud which must be less and less sstls'ac-
tory in lis practical workings from year to year.
DALLAS EXCHANGE AND SILVER