Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1890-01-08
SAFETY FOR CIRCULATION.
a Proposed Provision For National
Hants-h I!iil Drawn NY John
Inv Il En,N

The following BILL drawn by John Jay
Knox, president of The National bank OF
Republic, New York, is 10 bo submitted To
Congress
4 RW % fro,idc for a Permanent National
BE 1t enacted, &C.. That from and after tho
passage Of this act every national bank now
organized, or which shall hereafter bo or
ganized, shall be authorized To issue circu-
lating notes as now provided by law in
amounts not exceeding % per cent. OF the
capital stock of each bank.
SEC. .. That not less than 20 per cent. of
the circulating notes authorized To be is
sued by each bank under this act shall be
secured by United States bonds, at the rate
of 100 per cent. upon the par value of such
bonds, provided that ut the option OF each
bank one-half of such circulation 70 per
cent. may be secured 10y n deposit with the
treasurer of the United States, under such
regulations as may be prescribed 10y the
secretary of the treasury, of gold
coin and bullion or silver bullion at tho
current market price Of such bullion at
the time of deposit Whenever the mar
ket or cash value of bullion and of United
States bonds deposited with the treasurer
is reduced below the amount of circulation
issued for the same, the controller Of the
currency may demand and receive tho
amount of such depreciation in other bull
lion or in gold or silver coin, To be deposit
eu WIN inc treasurer, as long AZ Sucil de-
preston shall continue; or the amount of
the circulating notes OF such bank may be
reduced by charging the excess of circula-
ton 10 the redemption fund provided by
section of the act OF June 20,-lS7i.
SEC J. That an account TO be designated
as 1.-THE national bank safety fund" is
hereby authorized To be opened on the
books of the treasurer of the United States
by reducing the amount of United States
notes now outstanding 81 500 900, and by
reducing the national bank redemption
flnd 81 500, 900 aud croditing the amount
of S3,0000OO to the account of the said
"national bank safety fund" Tothis fund
shall be added the duty of one-half of per
cent. each half year upon the average
amount of national bank notes in circula-
ton, as provided in section 5,2lI of the re-
vised statutes of the United States.
SEC. 1. That ifany national bank afler
the passage of this act shall become insol-
vent, and any of the circulating notes of
such bank shall romain unpaid atter the
assets and the individual liability of the
shareholders of such insolvent bank shall
have been exhausted, such circulating
notes shall be redeemed aud cancelled and
destroyed as now provided by law, ana
the amount of such notes shall from time
TO time be charged to the national bank
safety fund" as provided in this act.
MIR. Knox was called upon by New
York Times reporter, to whom he gave the
following extended explanation OF his pro-
posed amendment OF the banking laws:
The measure is practical combination of
the safety fund and free banking provisions
as they have existed in the laws of this
state, and which were admirable provi-
sions in their way; but the safety fund in
the state of New York was failure, and
Tor this reason: Ii provided for tax
upon the capital for the purpose of securing
not only the circulation bat all of the debts
of the bank.
"Soon amer the system was established
there came a financial crisis, and there
were, for those days, "A large number of
failures. They did not involve moro than
s3,OOO,00O of losses in the aggregate, ! be
lleye, but for that time that was a larre
amount. Many ofthe country banks failed,
and they were bad failures, aud the paw
inent OF depositOrs exhausted the safety
iund. III the laws had provided for a
safety iund for the security of the circula-
uoh alone, every dollar of the circulation
would have been paid. But the safety
fund system of this state never recovered
from the blow, and the free banking system
OF the state followed ii In ISIS.
Now, in this proposition ] don't pro-
vide safety fund TO secure all Of the circu-
iallon. l propose 10 deposit with the
treasurer absolute security for 20 per cen
OF the circulation, and the remaining 30 nor
cent. is 10 be secured by the safety fund
amer the assets and individual liability
have been exhausted
"The national banks to-day have an
aggregate capital of JGl2,00O,0O0 Tho total
aggregate ofinsolVent banks for the past "a
years has involved but So, coo GOO or ahout
per cent. The highest amount of circu.
lation for these Is years has been 1862, ,0OO,-