The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1888-03-14
FROM THE CAPITAL.
Fairchild OH Redemption Of
National Bank Notes.
AN INTERESTING EPIsTLE.
The Sherman Bill Directs that the
Secretary invest so Per Cent
of the National Fund.-.
Washington VIKINGS.

WASHINGTON, March 13.-Secretary
Fairchild, to-day, sent letter to the
Senate finance committee in regard to
the Sherman bill fer the Investment of
bonds for the redemption of national
bank notes. He said the bill directs the
Secre ary CT the Treasury to invest so
per cent. OF the fund held by the Treas
urer fer the redemption of the notes Of
national banks which have reduced
their circulation by the purchase il the
market of United States interest bear
ing bonds. The bill is mandatory. and
could require the investment to be
made Immediately upon its assaae.
Ths Secretary is further directed to
said boDds as i'll his juds ment
shall be necessary to led EN-
bank notes as they are presented for
redemption. when the urinvested por-
ton of said fund falls Glow 20 per cent.
of the whole. The bill further declares
that its purpose is to main tain i'll the
Treasury for such redemption not less
than 20 per cent. and not more than 80
per cent. of the money deposited. The
Secretary discusses the que stions raised
by the DILL and says: After matur,
consideration. 1t does not stem
to b. we'll, thus forcibly and
suddenly to expand the circulating
m uIum when the expansion IN
evitatly must be followed in a short
time, and perhaps, suddenly, by an al
most equal contraction?" This would,
in the SecretarJ's judemens, promote
only q speculation, not healthtul to
business, On the whole, it would ap
pear better that the time
when this contraction takes place
should be determined by the
voluntary action of the banks, as
is now the case. The increased circu
lation authorized by this bill would
procably not exceed 81 100000. There
would not be q great profit in circula
ton at the present price of bonds, even
if this additional circulation were
authorized, and any attempt by the
banks to purchase many bonds
would soon advance their price beyond
O point where the circulation could be
probably issued upon them. This
certainly would be the case if the forced
governmental purchase required ~ the
earlier provisions of this bill was stimuli
taneous with the bank purchases. How
ever, the 10 per centum increase would
be to that extent of benefit to the banks
and not harmful to the public, except
as il might compel the government to
pay more for the bonds purchased, the
purchase of which is directed by this
bill, than otherwise would be the case.
If the average annual decrease of the
national bank circulation should con-
tinue TO equal that of the past five
years. the whole circulation will be re-
tired by the end of the fiscal year 1894.
1t is not impossible. however, that this
rate of decrease will continue, unless
government purchases drive the price
of bonds 30 high that it will be FIR the
interests of banks to sell and retire from
the system. Even if the circulation
shall continue in the past ratio OF re
tirement. There is 40 reason to fear
that its place will not be supplied by
other forms of circulating medium, as
rapidly as in the past The Secretary
says IN his judgment, the purchase of
bends with the surplus revenue is only
an immediate relief from the evils
caused by the accumulation in the
treasury, but this relief will be only
temporary. The repeal of laws which
levy excessive taxation and cause the
accumulation of a harmful surplus, is
the only adequate remedy.