The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1886-07-29
A Financial Peril.

st. Louis Globe Democrat: In the fiscal year
just ended over $4,000 600 in 3-per-cent bonds
held by the Treasury to secure national bank
circulation were Withdrawn and redeemed in
consequence of bond calls, and the circulation
of the national banks reduced to S32 553, 900
from that cause. Bank circulation, however,
did not fail off to that extent in the fiscal year.
Some new banks entered the national system
in the year. and few of the banks which were
compelled to surrender the 3-per-cent bonds
or retain them while not drawing any interest,
purchased other bonds in order TO secure their
circulation. The bonds now purchased for
that purpose the IS being subject to call at any
time-are the and IL per cents and the cur
rency IS. There is premium of over twenty
five cents on the is, of over eleven cents on the
4 LIS, and of twenty-six cents on the 6s. The
small amount of profit in national banking
does not. except in rare instances, warrant the
purchase of any of these high priced bonds,
and without Government bonds no circulation
is issued to banks.
There remain of the 3-per-cent bonds only a
little over S144,000000 still outstanding Nearly
Sos, 900 of these are held basis for bank
circulation. Sinking fund requirements alone
will necessitate the redemption of this Sl44,
600, 900 in the next three years. or by the end of
June, 1885, This will compel a reduction of
bank circulation in that period of about s96,000,
900 from this cause.
The new circulation issued counterbalances,
to some extent, the requirement of circulation
rendered necessary by bond calls. The vol
ume of circulation, however, was lessened to
the extent of about ST. 100000 In the year. The
following shows the circulation outstanding
June 80 of the year named
1881 1856 Oi2 675 1881 1888 499, 1888
1885, 356, 073 2Sl 1886 ....,r oOS69l,b5l
Circulation reached its highest point in 1882,
since which time the reduction of its volume
has been steady and rapid. 1t will be still
more rapid in the next few years until it will
be all abolished, unless some new basis for it
aside from Government bonds is devised. The
s., as we have said, will be redeemed by June
80, 1889, to meet sinking fund requirements.
The next bonds to become payable are the
$780, 900 ~ per cents which mature in 1891,
leaving the 7a7,0O0,0O0 per cents. which
mature in 1908. 1t is altogether probable, how
ever, that all these bonds will be called and
cancelled and the entire basis of national bank
circulation swept away long before the latter
year arrives by the Governments purchase of
the bonds in the open market before their
maturity, if the surplus continues as large as
it has been for the past six years. The sinking
fund alone would absorb this amount before
1908.
This is problem with which our statesmen
will at once be called upon to grapple. The
best banking system which the country has
ever had, and one of the most perfect which
man has ever devised in any country, will be-
come extinct in about twenty or twenty-five
years, unless some other basis for circulation
than Government bonds is provided. It'll true
the nation is coming standard dollars at the
rate now of $3l.000.000 year, SO that the coun-
try is in no danger of being deprived of cir
culating medium. But the people, it is scarcely
necessary to say, will never willingly accept
this substitute for national bank bills.
SAVED III. N. Peed, of Jasper, Mo-,
had 120 acres of corn adjoining wheat
field which had been devasted by chinch
bugs. He plowed trench around the
the corn field, and for fourteen days hauled
log through the trench, and thus saved
the corn. The bugs thronged into the
trench by millions, but they never got out.
The log did the business.