Rock Island daily Argus. (Rock Island, Ill.) 1886-1893, 1890-01-07
SILVER SECURITY.
Banker Knox's Scheme for the
National Banks.
CIRCULATION BASED ON BULLION.

Novel Use for Lost and Unredeemed Notes
Illinois Farmers Get n Bill Before the
Senate-Proposed Amendments for the
Interstate Law-The Status of Cuba
Incites Call to Write ResoIution-The
Tariff acknowledgements mt Work.
WASHINGTON CITY, Jan John Jay
Knox, president of the National Bank of the
Republic, New York, has prepared bill
which will be introduced in congress within
the next few days to provide for the use of
silver bullion as basis for national bank
circulation. A telegram from New York
says that Mr.. Knox said yesterday in ex-
PLANTATION of his bill: "The bill provides for
the issue of bank circulation in amount not
exceeding IS per cent. of the capital of each
bank. Seventy per cent. of the circulation
Is TO be secured by the deposit of United
States bonds at par, or of silver bullion at
the market price. The remaining 30 per
cent. is to be secured by a safety fund on de-
posit with the treasurer. This safety fund
Is TO be opened by crediting TO the fund
81, 900 of lost or unredeemed national
bank notes and the same amount of lost or
unredeemed United States notes. The fund
Is to be further increased by the semi
annual tax of half of per cent upon cir
culation
Lost and Unredecmed Notes.
IL is estimated that the lost and unre-
deemed national bank notes amount 20 at
least per cent every twelve years. These
lost notes do not belong TO the banks that is
sued them, nor 10 the government, but to
their last owners, and cannot of course be
restored TO them. No other use can so prop
erly be made OF them as to appropriate the
amount for creating safety fund for the
redemption of iDsolvent national bank notes
that may not otherwise be provided for The
appropriation, however, would not be nee
essary IL serious objections are made to it.
The Tax on Circulation.
"The tax on circulation which amounted
auring 1889 TO 81, 4l0, 33l, is abundant for
treating and maintaining fund for the re-
| demptiOn of 30 per cent. of all the issues of
all the national banks. The comptroller in
his report for 1883 found that II 500 of cir
| culation had been issued during the first
| twenty years Of the national banking system
| upon $40 of security, the total loss from the
notes of insolvent banks could have been
paid from the assets of the banks. His re-
port for 1889 shows that during the last
1
solvent banks amounts TO but SIS, 600, 900.
Thirty per cent. of this amount would be but
=, 500, 900 for twenty-five years The amount
of insolvent bank notes each year on the
average was 500, 900, 30 per cent of which
would be $4,000.
Profits Plenty Big Enough.
Last years tax on circulation was nearly
eight times the amount of safety fund re
| quired. II the amount of circulation is in.
creased to $500 600, 600, the tax will be -, 600
600. The profit on circulation under this
proportion would not be large, but it would
be sufficient TO induce many if not all of the
smaller national banks, which depend upon
an issue of circulation for their profits, &c
| deposit silver bullion with the treasurer OF
the United States and take out circulation
Mr.. Knox estimates that at the end of the
| next twenty years, or at the date of the pay
ment of the 4 per cent bonds in 1907, a safety
| fund would have accumulated of at least
25,OOO,O 600. This would give banks which
have confidence in the future value of silver
an opportunity to invest in that metal