Wichita eagle., 1890-02-02
NATIONAL BANKS AND BUSINESS
DEPRESSION
PEABODY, Kan, Jan. 80, 1890.

PEABODY, Kan, Jan. go 1890.
To the Editor OF the Eagle.
Dear Sir: In your paper of 29th inst
you refer to the amount of money con-
trolled by the banks of New York city,
and particularly to the Insignificant
amount in circulation. Now, does not
this to a certain extent solve the question
of the general depression of the monetary
affairs of the country? For instance, say
of these banks by virtue of the bonds de-
posted by them have the right to issue
S20, 1000, 900 in national bank notes and only
issue Sf0O0,000 do not they by this means
keep out of the general circulation OF the
currency the Sl6,00d,000? And does not
the secretary OF the treasury count all
notes issued to these banks as part of the
circulating currency of the country? Aud
If this same state of affairs exists in the
other money centerS of the country is
there not IA vast sum thus withheld from
circulation that is counted by the secre-
tarv OF the treasury in his estimates of the
actual amount III circulation? And does
not the Withholding of these unsigned
notes add much to the causes that bring
the present depressed condition upon us?
And would ii not be advisable for the
secretary of the treasury to deduct all
such unsigned notes from the total volume
of currency as reported in actual circula-
tiou2 | would be pleased to have the
EaGLE IGea upon IAe dDONe puOuSneu.
Very respectfully, j. II. c.
Our querist seems . have fallen into
the common error of supposing that the
full amount of notes that a national
bank is entitled to upon the bonds de-
posted with the secretary of the treas
ury are invariably issued by the depart
ment to such bank, and that any por-
tion of such may be held by the bank
from circulation unsigned. Such is not
the case as we understand it. To start
with, bank can only obtain IS per cent
of the face value of the bonds deposited,
the Is per cent being reserved to secure
the circulation and renew mutilated
notes. The So per cent is issued to the
bank as called for or required and the
notes are signed and put into circulation
and not held back unsigned
The large amount of money held by
the banks in the money centers does
unQuestionably have very much to do
with the scarcity OF money in actual cir
culation, but 1t is not unsigned notes,
nor are the banks alone responsible for it.
The actual circulation of the banks men,
toned represents but a small proportion
Of the money they hold, the larger por-
ton being deposits and much of it be-
longing TO spectators.
As for the leaving out Of his estimates
of actual circulation by the secretary of
the treasury the amounts of unsigned
notes, granting that there were even
considerable amount of such notes in
cluded therein, we fail TO see what effect
it would have upon the business of the
country, for to include it would not in
crease. nor 10 omit it decrease the VOL
ume of currency in actual circulation,
Our notion is that the present de-
pressed condition of the country, in its
monetary, commercial and industrial
interests is more directly and largely the
result of the speculative mania that has,
pervaded the country for several years