New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1890-01-07
JOHN JAY KNOWS BILL.
CONGRESS WILL HEAR II IN A FEW DAYS
SILVER BULLION AS BASIS FOR NATIONAL
BANK CIRCULATION.

SILVER BULLION AS A BASIS FOR NATIONAL
BANK CIRCULATION.
John Jay Knox, president Of the National Bank Of
the Republic, Of this city. has prepared bill which
will be introduced in Congress within the next few
days, principal object of which IS to provide for the
use Of silver bullion basis for National bank circu.
laton. The text Of the bill IS as follows:
A bill to provide for a permanent National bank
circulation.
OF this act every National bank now organized or
which shall hereafter be organized shall be authorized
TO circulating notes as now provided By law in
amounts not exceeding - per centun Of tic capital
stock Of each bank.
culatng notes authorized to be issued by each Tank
under this shall be secured by United states bonds
at the rate If 100 per cent upon the par value Of suoh
bonds provided that at the option OF each bank one
half Of such circulation Of 20 per cent may be secud
by a deposit with the Treasurer OF the United states
under such regulations as may ue prescribed By tie
Secretary Of the Treasury, OF gol1 com or luon or
silver bullion, at the current marheo Pce oil sneh
bullion at the time Of deposit, whenever
Tie market or cash vaIoe ,,s OF doo oiaos
and Of ynsd Ss below SSd the SSS8S 4
circulation issued for the same the Controller OF the
Currency may demand and receive the amount Oh ,
10 be deposited with the Treasurer, AS long as Sueh
depreciation shall continue; or the amount Oh uio
charging the excess II circulation % the redemption
fund. provided by Section OF the Act oil June ~
Sec. 3. That an account to be designated as
nThe National Bank Safety FUND.- is hereby authorizes
to be opened on the books OF the Treasurer OF inc
United States, by reducing the amount Of United states
notes outstanding Si,j0oG00 and by reducing no
National Bank Redemption Fund Sl,5OOOOO and cred
ting the amount of 100000 to the said National
Bank safety Fund To this fund shall be added the
duty % One-haf Of | per cent each halfyear upon
the average amount Of National bank notes in crcula
ton, provided in section 5,2if Of the Revised
statutes OF the United states.
Sec L. That il any National bank after the passage
Of this act shall become ns0lyent. and any OF The
circulating notes Of such bank shall remain unpaid
after the assets and the individual liability Of the
shareholders Of such insovent bank shan have been
exhausted, such circulating notes shall be redeemed
and cancelled and destroyed now provided by law.
and the amount Of said notes shall from time to time
vded in this act
In explanation Of the provisions Of the proposed lc;
islatiOn, Mr. Knox says The bill provides for the
Issue " bank circulation In amount not exceeding IS
per cent OF the capital Of each bank. seventy per
cent of this circulation Is TO be absolutely secured by
the deposit Of United States bonds at par Of silver
bullion at the market price. The other
80 per cent Is not to be secured by a
deposit Of each bank but i, to be fully secured by
safety fund on deposit with the Treasurer. ms
safety fund is to opened by creditns to the iund
81 500 900 Of lost unrcdcemed National bank notts
and the same aIIount OK lOst or unTedceMed United
states notes The fund VIII DC further ug'ei9ed e1'h
hallycar b. adding TO II me seHi'-aAilAi 'lA u
at is estimated that the lost and unredeemed
National bank notes amount 70 AT least per cent
during every twenty years, but only One-hal 81 INC
amount estimated 10 be lost IS to be placed to tic
10 the banks that issued them, neither DO uiIy
belong 70 the Government. They belong u those
persons who the last Owuers OF thc notes ana
cannot, OF course, be restored - the owners.
80 other can 80 properly be made oil u,c.l
f1rd fIr Ihe redemption OF in-oveut National bank
notes that may not otherwise Doe p'oNuel l'I' - -
not necessary however. that this apllopaloh sIioui
be used ior creating safety fund It serious ".!et
lions made To its use ,,
the year l--9 to 9l4IO,33, Is abundant Tor creating
and maintaining sufficient luna Tor inc 1us,I NO
redemption Of 80 per cent OF al the issues oil al c
The controller in his report for 1898 found By in.
vestiyati0n that 500 OF circulation had been Issued
during the first twenty years Of the National banNnS
Systcn. upon so Of security the total loss from
from the assets Of the banks These losses are very
small The Controller report Tor - flows ,Hae
Of insovent banks amounted 10 but Sl5.Oo1OOo AID
30 per cent Of tn, amount would be but si,5O0OoO
The amount Of n~olycnt bank notes each wear on
the average wa 100000: 80 per cent OF WHICH
ton during the past year was sl4lo33l,
or little less than eight limo, tie amount
Of circulation Increased to the tax to 10
added to the safety fund will he 72QoQOlO II $500
be added to the safety fund annually from tae tax on
provide for so per of all the notes OF the IN
solvent National banks Of the country.
The profit on circulation under ms propq2sl,uon
many. If not all OF the smaller National banks which
depend upon an issue OF circulation c her protts to
Of the tinted states and take out circulation
Mr.. Knox estimates that az the end Of the neY,
twenty wears. AT the date 81 the payment ~ tie
four per cent bonds. I'm 1907. safety fund "oHd have
accumulated of az least - ooOool - that from that
time onward a sufficient amount Of National bank cir
cula;ion would remain permanently in existence. vel
secured by gold or silver bullion. and efficiently pr NJ
able to make tho circulation lar-e enough iu c'nn-c
ton with the present amount u United ~tat"s
notes 10 respond the demand ~ the
business ~ the country woud also give the banks
in the West a. we'll tine East vhO have confidence
i'm the future value of silver an opportunity 10 invest
in that metal. and he believes thar such Investments
would made for the next three years equal ~ least
10 go 600 annually and thus relieve the Treasury
from excessive purchases.