The DeSmet leader. (DeSmet, Kingsbury Co., Dakota [S.D.]) 1883-1891, 1890-08-02
NOTES IN CIRCULATION.
a Letter Regarding tho 5ili Affect
ing National Bank Circulation.

Mr.. Sherman has laid before the
senate a letter from the comptroller
OF the currency in regard to the bill
affecting national bank circulation re-
Gently reported to the senate. The
comptroller says:
1T will bc observed that there were
on the 17th Of May last 3,43S ma
tional banking associations in opera
ton i'll the United States, having a
total capital Of S635, ,O55, 276, These
associations had q total circulation
OF S125, ,T91 $40 secured by pledge OF
United Stated bonds amounting to
S143, 100000 at their face value.
The circulation stated does not in
clude $50, ,519,5S5 in process OF re.
tirement and represented by an equal
amount OF lawful money on deposit
in the treasury of the United States.
1t also appears that the minimum
amount of bonds required to be de
posted by these banks under cx-
isting law is $0S,9OO, 400, upon
which they would be entitled to main.
tain a circulation Of $50, ,010,4l4. 1t
would therefore be possible for these
banks to Withdraw bonds to the
amount of S44, 800, 40 and surrender
$50, 781 526 of their circulating notes
under existing laws. The bonds on
deposit in excess OF legal requirement. s
are, AZ a rule, the property OF the old,
er banks located in the Eastern and
q tnI xtrhn on o. al
interest are relatively low. Banks re-
Gently organized have, as a rule, the
minimum deposit OF bonds, and thsis
in general sense true Of all banks
located in states and tPrrt Ories where
interest rates are relatively high. The
first section of the bill Senate 3,942),
reported from the committee on
finance on the 5th inst, with amend.
ments, provides that national banking
associations may be organized and op'
Grated with anominaldeposit ofbOnds
to secure circulation. This provision
standing alone would he favor
ably received 10y the banks. 1t would
however, tend to a contraction of the
bank note circulation, unless accom-.
panied hV the second section, which
entities said associations to receive
circulating notes equal in amount to
the par of the bonds pledged for Their
redemption. The operation OF the bill
as whole would, in my opinion, bt
salutary. 1t would enable new banks
TO organize without forcing them tC
appear in the bond market III compe
tition with the secretary of the treas
ury. This would result in an advan
tage to both the government and th'
banks. Many banks located in tn,
newer states where the interest rate
are high would no doubt reduce th'
present amount of the bonds now helC
to secure their circulation and this
would result i'm benefit to the banks
and also to the people whom they
| serve, az it would increase locally tin
amount of funds available for loans
by putting in circulation the sumt
now locked up in bond premiums.
In conclusion, the comptroller sayi
that congress seems to have determIn
ed that the further issue of bank note
is not desirable, and III that event TIN
burden Of maintaining circulation, h
thinks, should be removed from thes'
associations, so that they may NOR
| faithfully and satisfactorily serve TIN
| people az banks of discount and de
post, in which sphere they have new
er been adversely criticised by any
portion OF the people.