The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1890-01-07
SILVER AS A BASIS.
Knox's Plan to Use the Sur
plus Bullion.
NATIONAL BANK CIRCULATION.
Ingenious Financiering Device 20 Issue
Circulating Notes Secured by
Gold or silver.

NKw Yosx. Jan. John Jay Knox has
prepared bill which VIII be introduced IN
congress soon. the principal object of which
IS 10 provide for the use OF silver bullion as
a basis for National bank circulation. The
bin provides that after the
Passage OF the act every Ma
tional bank shall be authorized
TO issue circulating notes in an amount not
exceeding rs per cent of the banks capital
stock. Not less than 20 per cent. OF this
circulation shall Be secured BY United
States bonds; or at the option OF
each bank ane-half of said 20 per
cent may be secured by deposit
with the treasurer, under regulations
to be prescribed by the secretary of the
treasury, OF gold coin or bullion. or silver
bullion at the current market price. When
ever the market or cash value of bullion
and United States bonds deposited Is re-
duced below the amount of circulation
issued, the comptroller of currency
may demand and receive the amount OF
such depreciation ia either bullion or in
gold or silver coin to be deposited With the
treasurer as long as such depreciation
shall continue: or the amount Of the cireu-
Iating notes Of such bank may be reduced
by charging excess Of circulation TO the re-
demptaon fund.
An account, to be designated the Ma
tional bank safety fund, is authorized to
be opened on the treasurers books, by re-
ducing the amount OF United States notes
now outstanding ($l5. 000. oo0l. and by trans
ferrins the national bank redemption
fund TO the same amount. amounting to
$500. 200, TO safety fund. To said fund
shall he added duty OF one-haf Of one
per cert. each half year upon the average
amount OF national bank notes in circula-
ton
The croft on circulation under this propo-
sition would not be large but il would be
sufficient to induce many. ii not all. OF the
smaller national banks to deposit silver
bullion and take circulation.
Knox estimates that at the end OF the
next twenty years, or at the date Of pay
ment of the present bonds in 1917, the
safety fund would have accumula-
ted at least $22.oo0oo0, so from
that time onward sufficient
amount OF national bank circulation would
remain permanently in existence, well Sc
cured by gold or silver bullion and sufd-
cientiy profitable 10 make the present United
States notes respond TO the demand OF the
business of the country.
1t would also give banks in the West as
well az the East who have confidence in
the future value of silver IN opportunity
to invest in that metal and he believed
such investments could be made for the
next three years equal atleast to SO. COO
annually, and thss relieve the treasury
from excessive purchases.
If any national bank becomes insolvent
and any of the circulating notes remain
unpaid after the assets and individual
liability of shareholders Is exhausted such
circulating notes shall be redeemed. can
celei and destroyed and the amount
charged 10 the safety fund.
Mr.. Knox. in explaining the provisions
of the isslI, said il il estimated the last and
unredeemed national bank notes amount ,
to at least per cent during every twenty
years hut only one-hAlf of the amount estf-
mated to be lost Is TO be placed to the
credit Of the safety fund 20 cover 30 per
cent OF circulation not secured by bonds or
bullion
1t il not necessary that this appropria-
ton should be used for the safety fund If
there are any serious objections. rs the tax
on circulation. which amounted in 1850
to 81, 40 $50, is abundant for creating and
maintaining sufficient funds for the
absoluse redemption Of 10 per cent
Of ell issues of all national
banks. The comptroller's report for 1850
shows that during the last twenty-five
years the total circulation OF insoIyens bank
notes each year on an average was $780,
Oe9, 80 per. cent of which would be $50,
900. The tax on circulation last year was
nearly eight times the amount of
the fand required II circulation
is increased the tar viii be correspondingly
increased 50 that the amount to be added
annually to the safety fund from 1t Ia
without doubt abundanty sufficient to
provida 30 per cent. OF all the insolyens
banks If the country.