The pioneer express. [volume] (Pembina, Dakota [N.D.]) 1883-1928, 1890-01-17
TIE q BASIS.
A Bill to Provide for a Perma.
nent Nationsl Bank Cir.
culatio4 Prepared.
Another Omnibus Bill, Includ.
ing Idaho, Wyoming, New
Mexico and Arizona.

New Yosk, speeial-Jo'hn Jay KNOX,
public Of this city, has prepared bill
which will be introduced in congress with
in the next few days. the principle object of
which is to provide for the use of silver
bullion as II busis for national bank circula-
ton. The text of the hill is MS follows:
bill to provide for permanent national
bank circulation. BE II enacted, etc., That from
and after the passage Of this act every national
bank, nov orennized or which shall hereafter he
ing notes ny now provided By law. in amounts
not exceeding Is isr cent OF the capital stock
OF each bank.
Sec g That not less than 20 per cent Of the
circulating notes authorized TO be issued by
each bunk under this act shall he secured by
ed that ut the option Of each bank one:half Of
such circulation 81 79 per cont may bs secured ,
States s Under such @ regulations as may be pre-.
ss's' 's ros s so bullion shf 'ess
sSss ss of seh s0p Ssa ss at III Tie s s
Whenever the market or cash value Of bullion
and OF United States bonds deposited with the
lution issued for the same the controller of the
currency may demand and receive the amount
OF such depreciation In other bullion, or In gold
as long as such depreciation shall continue, or
the amount of the hecirculatingnotes OF such bank
may bc reduced by charging the excess of circu
ah n5n o 9 s s aet reeiBSn ei q. % s7 provided by
Sec. 8. That an account to be designated as
..thc National bank safety fund. is hereby au-
thnrizei to be % Gpsnsd on the books OF thy trens,
amount Of United states notes now outst and
ing 81 5000 and by r,d.cins the National
bank r'iemlt9n fund % 81 100000 and cred'ing d, IL,
said National bank safety fund" TO this fund
shall he added the duty Of onehnf of per
centum each half year upon the average amount
OF national bank notes In circulation, as pro-
videl in section 5214 OF the Revised Statutes of
the United States.
See. 4. That if any national bunk, after the
any of the circulating notef OF surh bank shall
remain ull,aid after the assets and the indvid-
ual liabilities OF the shareholders OF such in
solvent bank shall have been exhausted, such
ing notes shall bcredeemcd and Cancelled,
rs now provided by law, and the amount OF such
notes shall from time to time be charged to the
this uct.
THE BILL EXPLAINED.
In explanation Of the provisions of the
proposed legislation Mr.. Knox says that the
bill provides for the issue OF bank circula-
ton in amounts not exceeding IS per cent
ofthe capital of each bank. Seventy per
cent of this circulation is to he absolutely
secured by the deposit of United States
bonds at rnr, or of silver bullion Mt the mar
kct price. The other ~ per cent is not to he
secured by deposit by cacli but to he
fully secured by safety fund on deposit
with the treasurer. This safety fund is to be
opened by crctiting to the fund Sl,5O0.GW
OF lost or unrcdccmed national bank notes,
and the same amount of lost or unrc-
deemed United States notes. The fund will
be further increased each year by adding to
1t the scni-annual tax Of ! of per cent
upon circulation. 1t is estimated that the
lost and unre,lccmed national bank notes
amount to Mt least per cent during every
twenty years, hut only onc-liaIf of the
to the credit OF this fund. These lost notes
do not belong TO the banks that issued
them, neither do they belong to the gOvcrn-
ment. They belong to those persons who
were the last owners oi the notes and can
not, of course, be restored to the owners. No
other use can SO properly be made OF them,
as to appropriate the amount for creating q
safety fund for the redemption of insolvent
national bank notes that may not other
wise he provided Tor. 1t is not necessary,
however, that this appropriation should be
used for creating the safety fund If serious
objections are nude to Use. The tax on
circulation, which amounted during the
creating and maintaining sufficient fund
for the absolute redemption of 30 per cent
OF all the issues of all the national hanks
The controller, in his report for lSsi, fonnd
by investigation that il 500 OF circulation
had been issued during the first twenty
years of the national banking system upon
so of security the total loss from the
NOTES OF INsoLvENT BANKS
could lave hcen pnid from the assets of the
banks. These losses arc very small. The
controllers report for 1883 shows that
during the last twenty-five years the total
circulation of insoivcnt banks amounted
to but $l5 100000; and 20 per cent of this
will he but 81, $4,000 for twenty-five years
The amount of insolvcnt bank notes each
cent of which would be $lSO,OW annually.
The tax on circulation during the past year
was 81, ,4lO, ,;l, or little less than eight times
the amount of safety fund required. Ifthe
amount Of circulation is increased to 500, :
Oo0, 900 the tax to be added TO the safety
fund will be $2,OQO,O0O. If $500, 600 600 it
will be $3,UD0OO, 30 that the amount to be
paid to the safety fund annually from the
tax on circulation Is without doubt nbund-
antly sufficient 10 provide for ~ per cent of
all the notes OF tllcinsolvcnt national banks
of the country. The profit on circulation
under this proposition would not be
many, if not all, Of the smaller National
banks which depend upon an issue of circll-
lation for their profits to induce them to
deposit silver bullion with the treasurer of
the tnitcd States and take out circulation.
Mr.. Knox estimates that at the end of the
next twenty years, or at the date Of the pay
1nent OF the per cent bonds in 1907, q
safety fund would have accumulated OF at
least S25,OD0,ODO, SO that from that
time onward a sufficient amount Of
national bank circulation would
remain permanently in existence well Sc
cured by gold or silver bullion, and snlli-
GENTLY profitable to make the circulation
large enough, in connection with the pres
cnt amount Of United States notes, to re-
spond to the demand of the business of the
country. 1t will also give the banks in the
West, ms well as the East, who have conf
dcncc in the future value of silver, an OPP
portunity to invest in that metal and lie
believes that such investments would be
made for the next three years equal at least
IN Al.,,u A