The Iola register. [volume] (Iola, Allen County, Kansas) 1875-1902, 1890-01-31
THE WAY OUT-No. 5.
Part Three.
PROPOSITION CoNTIN UED.

Kansas Farmer.
CThls weeks installment of the Kansas Far
7asr's ''way OUT is Of such extreme ienstn
and contains so much extraneous matter that
we shall not tax the patience of our readers ey
reproducing 1t in full. The following sum
airy contains the meat OF the arucie.-hp'
REGISTER
1t was estimated in the last article
that $500, 900, 600 would be needed to
put the proposed scheme In operation.
How shall this amount of money be
obtained2 First: Issue new treasury
notes to take the place Of those retired
by the National Banks from 1882 to
1855, amounting to s227 ,0OO, 600. Second:
Repeal that section of the resumption
law which requires 500, 0OO, 900 in gold
coin TO be retained in the treasury as
a redemption fund. Third: Increase
the circulation by coming silver. free,
SO that one years coinage would
amount to SIS, 600, 900. Adding. to all
these sums the surplus now in the
banks and treasury and we have $780,
OoO. 900, the sum required. 1t may be
necessary to raise more money from
time to time, but this will be enough
to start on.
Then there are two classes of borrow.
ers and two classes Of security. One
person wants money for a few days
only or for few months at most, and
he offers personal security, while an
other person wants money long time
one year to ten years, and he offers
real estate security. To accommodate
these two classes of borrowers with
this varying means of security, 1t is
most convenient to establish two sorts
of loan houses-banks for short.time
loans, and loan agencies for the long
time loans. In this proposed scheme
that long established usage is respect
ed. The labor and the risk of lending
money are greater in short loans on
personal security than on longtime
loans on real estate security, and for
that reason the charges may properly
be correspondingly higher.
Let US consider the short.time lend
ing first. Make national banks gov.
eminent agencies for this purpose. and
amend the banking law SO as to let
lawful money of the country-gold and
silver coin, Treasury notes, coin and
bullion certificates, and gold and silver
bullion, take the place of bonds now
required as security for circulation. AS
to proportion of circulation to deposit
let the law stand az 1t is, but author
izipg banks of small capital for small
places-circulation as low as $50, 600.
The per cent. tax on circulation 10
be abolished and national bank notes
to be non-taxable the same as lawful
money. Banks may proceed as now,
except that in lending money or in
discounting notes the cost to the Dor
rover or seller shall not exceed the
rate of one-fourth Ct l per cent. of
the sum borrowed for one month or
for thirty days, five-twelfths of l per
cent. for two months or sixty days, ons-
half of per cent. for three months or
ninety days, and no such transaction
shall cover longer period than three
months.
BY using lawful money instead of
bonds as deposit to secure bill holders,
the power of the banks to affect the
volume of money in circulation will
be destroyed, because, when they wish
to retire notes, their deposit is issued
as fast as the notes come In, thus the
same amount is kept out regularly af-
ter the bank receives its circulating
notes. The object of this part of the
scheme Is to supply money on personal
security for shol t,just as it is done now
only at rates which borrowers can
easily pay-all paying alike. for similar
accommodation, and which will pay
the bank a reasonable compensation
for labor and risk. 1t is believed that
by relieving all money and all notes
for money from taxation, the rates
herein will be high enough for the
banker and low enough for the bor-
rower-equal to rate of 2 per cent.
to 5 per cent. q year, and very little
lost in taxes.
This will afford an opportunity for
farmers, mechanics and manufacturers
to store their products in warehouses
during close times, and borrow money
on the warehouse receipts. or to
negotiate the receipts by endorsement
the same as promissory notes and bills
of exchange. Associations may thus
combine and borrow money to bridge
over period of low prices, or to carry
a weak member through a crisis.
Counties and townships building pub
lie warehouses under State laws may
afford their citizens means of borrow
ing money on certificates of deposit
showing kind of property deposited.
with grade and value. Grain, cotton
and manufactured articles may thus
be used, under proper restriction, to
assist the producing classes in helping
themselves. Indeed, there is no good
reason why, in trying times, such
certificates should not be received in
payment of taxes and other local pub
lie dues.
For this paIt of The work no ad-
diiional money will be required. Fresh
issues are needed for lending on long