The midland journal. (Rising Sun, Md.) 1885-1947, 1890-10-17
Friday, Oct. IL, 1890.
National Banks on a Coin Basis.

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an end if not before, certainly with the
payment of the debt. 1t has proved per-
nicious system from the beginning.
While the theory is mainained-whlch,
however, we do rot subscribe 10 but as
long as the theory is maintai ned by fnan-
ciers who hold control of Congress, that the
precious metals alone constitute money
real money-ne plus ultra money-on ac-
count oftheir commercial value, principally,
all other forms of money referring back to
them as its security for existence, coin must
constitute the basis on which a system Of
banking is built. The coin basis theory
underlaid the system on which the old
State banks rested. One dollar in coin kept
in the vaults OF the bank fer three dollars
in bills issued by the bank was considered
safe. This when strictly adhered to
generally proved sound, the ordinary de-
mands of business never requiring the specie
reserve to become entirely exhausted, and
in times of financial panics which the wild
cat banks often created, banks which were
known to maintain their specie reserves of
one to three, generally escaped the runs"
on them which the panics occasioned.
A National system of banking with a
specie basis, or coin reserve could never
become liable TO panics among the note
holders, the notes all being issued by the
government, payable in coin on demand.
The government now holds of idle coin,
stacked up in the subtreasury vaults five
hundred and tpenty tons Of gold, and over nine
thousand TONS Of silrer, which will rapidly
accumulate under the action of the new
silver law. These tons of precious metals
lie In the vaults from year to year. When
new Treasurer takes possession gang of
roustabouts is hired TO shift the bags Of
money from one side of the vaults TO the
other, while tally clerks check off the num-
Der and weight of the sacks. The industry
and business Of the country are virtually
paying interest on this idle money, in as
much as it should be in use, and the whole
business is worse than folly. This idle coin,
if made the basis of National system of
banking, could be put into circulation while
serving as reserve fund for redemption Of
notes, but as matter of fact the notes would
never be presented in any appreciable
quantity for redemption. If the govern
ment change its banking basis from govern
ment binds to specie, requiring each
National Bank to hold specie reserve IN
its own vaults, in place of deposit ofbonds
with the Treasurer, fixing the minimum to
be so held in reserve by the banks, that
specie to be drawn from the vaults of the
government on presentation of coin Ger
tificates, if not otherwise obtained. the
present National Banking law could be
continued with but comparatively little
alteration, the dangerous and Objectionable
features having been eliminated from it in
the bond basis with its train of evils, and
the government left free to issue currency
independent of orders from banks which
has completely tied its hands By shifting
the millions of coin which lie useless in the
located in every city, town and village
throughout the entire country, the banks
could safely put it into circulation among
their customers without endangering their
specie reserves in the least. Coin, like
small notes, is used for pr ying labor and con.
Quoting the retail business The specie of
bank never travels far from it, this is espec-
tally true of country banks). 1t is checked out
in the morning, paid to wage earners and
used TO make small purchases, finds its way
into the retail trade, and back into the bauk
before 3 o'clock and altho' the bank might
use almost its entire specie reserve daily,
it would find its way back into the banks
vaults at the close of business hours. The
thousands of tons ofspecie now lying idle
in the Treasury vaults should be doing ac-
tive duty as money-circulating medium
In all parts Of the country, where the
greater part of il would remain, while other
millions would be coined yearly by the
United States minis to furnish new banks
with coin basis 10 supply the ever iucreas-
ing business Of the country with the neces-
sary money to conduct it.
Distributed over the country among
National Banks, the coin would be as COM
pletely under the eye OF the Treasurer as it
is sacked up in the vaults of the govern
ment. The Bank Examiners statement
would show the amount of coin in the coun-
try and exactly where it was, and in place
of lying idle in the Treasury vaults, while
its representative notes were performing all
the functions of money, the bills and coin
would be working side by side, thus largely
increasing the amount of money in the
channels OF business at the trade extremeties.
With 100000 ounces of silver flowing
into the Treasury monthly the unused metal
will increase to an unwieldly gorge. Max
ing money and not using il is mere child's
play for great government to engage in.
If the reliable old State banks which had
established credit by conducting their
business on business principles, could float
three dollars of their currency on specie
basis of one dollar, the United States GOV
eminent, with the Natl ,nal Bank notes and
old legal tenders Withdrawn from circula-
ton, could safely issue three dollars in cur
rency for every dollar coined, till the