Los Angeles daily herald., 1890-01-07
SILVER BULLION
AS a Basis for National
Bank Circulation.
MR.. JOHN JAY KNOX'S BILL.
Text Of the Measure, Supplemented
with the Authors Argument
in Its Support.

Associated Press Dispatches to the HEEAlD.)
NEW York, January 6.-John jaw
Knox has prepared bill which will be
introduced in Congress soon, the princi-
pal object of which is to provide for the
use of silver bullion as a basis for na-
tional bank circulation. The bill pro.
vides that after the passage of the act
every national bank shall be authorized
to issue circulating notes in an amount
not exceeding rs per cent. This circula-
ton shall be secured by United States
bonds, or at the option of each bank one
half of said rs per cent. may be secured
by deposit with the Treasurer, under
regulations to be prescribed by the Sec.
retary of the Treasury, of gold coin or
bullion or silver bullion at the current
market price. Whenever the market or
| bonds deposited is reduced below the
| amount of circulation issued, the Comp
troller of Currency may demand and re-
ceive the amount of such depreciation
in other bullion, or in gold and silver
coin, to be deposited with the Treasurer
as long as such depreciation shall con-
tinue. Or the amount of circulating
notes of such bank may be reduced by
charging the excess of circulation to the
redemption fund. An account to be
designated ''The National Bank Safety
| Fund.-" is authorized to be opened on
the Treasurer's books by reducing the
amount of United States notes now out.
standing 81 500, 900, and by reducing the
national bank redemption fund the same
amount, and crediting three million dol
lars to the safety fund.-. To said fund
shall be added a duty of one-half OF one
per cent, each half year, upon the aver
age amount of national bank notes in
circulation.
I If any national bank becomes in
isolvent, and any of the circulating notes
| remain unpaid after the assets and indi-
vidual liability of the shareholders are ex-
hausted, such circulating notes shall be-
redeemed, cancelled and destroyed and
the amount charged to the safety fund.
Mr.. Knox, in explaining the provisions
of the bill, said it is estimated that lost
and unredeemed national bank notes
amount to at least one per cent. during
every twenty years but only one half the
| amount estimated to be lost ia to be
placed to the credit of the safety fund to
cover the thirty per cent. of the circula-
tion not secured by bonds or bullion. It
is not necessary, however, that this ap-
preparation should be used for the safety
fund if serious objections are made, as
the tax on the circulation. which amount
ed in 1889 to 81, ,4l0,331, is abundant for
creating and maintaining sufficientfund
Tor the absolute redemption of thirty per
cent. of all the issues of all the national
| banks.
The Comptroller's report for 1899
shows that during the last twenty. five
years the total circulation of insolvent
bank notes. each year, on an average,
was 100000, 80 per cent. OF which
would be $180,0O0 The tax on the cir
culation last year was nearly eight times
the amount OF the safety fund required.
If the circulation is increased, the tax
will be correspondingly increased, SO
that the amount to be added annually to
the safety fund from it is, without doubt,
abundantly sufficient to provide for 80
per cent. of all the insolvent banks of the
country.
The profit on the circulation under this
proposition would not be large, but would
be sufficient to induce many, ii not all,
| LILO budil0T udJlOuhl Uduk5 LO deposit
silver bullion and take out circulation.
Mr.. Knox estimates that at the end
OF the next twenty years, or at the date
OF payment of the four per cent bonds in
1902, safety fund would have accumu-
lated of at least $25. 900 900, 80 that from
that time onward sufficient amount of
n ational bank circulation would remain
permanently in existence, we'll secured
by gold, and silver bullion, and suffi-
ciently profitable, to make the present
amount of United States notes to respond
to the demand of the business of the
country. 1t would also give banks in
the West as we'll as East, who have con-
fidence in the future value of silver, an
opportunity to invest in that metal, and
he believes such investments would be
made for the next three years equal at
least to $40, 600, 900 annually, and thus
relieve the Treasury from excessive pur-
chases.