Wheeling register. [volume] (Wheeling, W. Va.) 1878-1935, 1890-01-08

NEW YORK, January John Jay
Knox, President Of the National Blpk OF
the Republic, of this city, has prepared a
bill which will be introduced in Congress
within the next few days, principal OBJ
iect of which il to provide for the use Of
silver bullion as baeis for National Bank
circulation. TIE text of the bill ia ss fol-
lows:
To provide for permanent National Bank
circulation.
Be it enacted, etc, That from and after
the passage Of this sct every National
Bank, now organized or which snail here
after be organized, shall be authorized to
issue circulating notes rs now provided by
law, In amounts not exceeding IS per
cent. Of the capital stock Of each bank.
Section g That not less than 20 per
cent. OF the circulating notes authorized
TO be Issued by esch bank under this act
shall be secured by United States bonds
at the rate If 100 per cent bonds, provi-
ded that the option OF each bank one half
of such circulation-Of 20 per cent.-msy
be secured by a deposit with the Treas
urer of the Uuited States under such reRu-
ations rs may be prescribed by the See
rotary OF the Treasury, of gold coin or
bullion or silver bullion at the current
market price of fuch bullion at
the the time of deposit. When
ever the market or cash value OF sucb bull
lion OF United States bonds deposited with
the Treasurer is reduced below tbe amount
OF circulation issued for the same, the
Comp ptroller Of the Currency may demand
and receive the amount of such deprecia-
ton in other bullion, or in gold Ut silver
coin to be deposited with the Treasurer, RS
long as such depreciation shsll continue.
or the amount OF the circulating notes OF
such bank may be reduced by charging the
excess of circulation 10 the redemption
fund, provided by section 3 OF the &C: Of
June 90, 1874.
Section 3.-That On account to be desis-
mated ss The National Bank Safety
Fond" is hereby authoriz ID to be opened
ON the books OF the Treasurer Of the Unit-
ed States by reducing tie amOunt OF Unit
ed States rotes now outstanding 81 500,-
600. and BY reducing the National Bank
Redemption Fund 81, 500. 900, and credit
ing the amount Of So, 3,0O0 900 to the sc
count of the said National Bank Safety
Furd." To this fund shall be added the
duty of one-hslf Of psrcehtum each halt
year upon the average amount OF National
Bank notes in circulation, as provided in
section 5,214 Of the Revised Statutes Of
the United Statee
Section A. That If sny National Bank
after the passage of this set eball become |
insolvent, and eby Of the circulating notes
of such bank shall remain unpaid after
the assets and the individual liability of
the shareholders of such insolvent bank |
shall have been exhausted, such circulating
notes shall be redeemed and cancelled and |
destroy ed as now provided By Law, and the |
amount of such notes shall from time 10
time be charged to the National Bank |
Safety Fund, +" as provic ed in this act.
Iu explanation of the provisions Of the
proposed legislation, NJ Knox Says: The
bill provides for the issue of bank circula- |
ton in amount not exceeding 20 per cent
of the capital of each bank. Seventy per
cent of this circulation is TO be absolutely |
secured by the deposit of Uuited States
bonds at par, or OF silver bullion at the
market price The other 80 per cent is
not to be secured by deposit of each
bank, but is TO be ful y secured by safety
fund on deposit with the Treasurer. This
safety fund ia to be opened by crediting to
the fund 81 500, 600 of lost or unredeemed |
National Bank notes ard the same amount
OF lost OF unredoemed Uaited States notes |
The fund will be fnrther increased each !
half year by adding to it the semi-annual
tax of ] OF per cent upon circulation.
It is estimated that the lost and unre-
deemed National Bank notes amount to at
less. one per cent. during every twenty
yesrs, but only one-balf of the amount eg
timated to be lost is to be placed 10 the
credit of this fund. These lost notes do
not belorg TO the banks that iesued them,
neither do they belong 10 the Government |
They belong TO those persons who we're the
last owners Of the notes, AID con not, Of
course, be restored to the owners. No
other uee can so properly be made OF them
as to appropriate The amount for creating
a safety fund for the redemption of insolv- |
ent National Bank notes that may not
otherwise he provided for. 1t is rot nec-
essary, however, that this appropriation
shall be used for creating the safety fund
if serious objections are made TO its use.
The tax on circulation, which amounted |
during the year 1889 TO 81, 4l0 331, is
abundant for creating and maintaining q
sufficient fund for the sbsolote redemption |
OF 80 par cent. OF sll the Issues of all the
National Bank.
The Comptroller, in his report for 1888, |
found by investigation that if 500 of cir
cuistion had been issued during the first
twenty years of the National Banking sys-
TEN u3on $40 Of security the totGl loss
from ineolvent banks could have been p sid
fcon the sssets Of the banks. These losses
are very small. The Comp.r9ller's report
for 1889 shows that during the last tSen
ty-fiye years the total circulation OF in
solvent banks amounted to bat SIS 0OO,-
900, and 80 per cent. OF this amount would
he but 81 500, 600 for twenty. five years.
The amount Of insolveni hank notes each
year on the syersge was 100000, 80 per
cent. of which would be $780, annu-
ally. The tex on circulation during the
past year was 81, 410, ,33l, or littls less
than eight times the amount of safety fund
required. Ii the amount of circulation is
increased TO 5000, 600, 900, tie tax 20 be
added 10 the safety fuod will be s., 000,-
900. $500, 600, 600, it will be So 600, 900,
20 that the amount 10 be added to safety
fund annually from the tax on circulation
is without doubt abundantly sufficient 10
provide for 80 per cent. Of all The notes OF
the insolvert National Banks of the coun
try.
The profit on circulation under this pro-
oosition vould not be large hut il would |
be sufficient to induce many, il not sll, Of
the smaller National Banks which depend
upon Issue of circulation for their profits,
TO deposit silver bullion with the Treasurer
of the United S.ates and take out circuls-
tion.
Mr. Knox estimates that at the end Of
the next twenty years, or st the end of
the payment OF the four per cent. bonds
in 1907, safety fund would have accu-
INFLATED of q; least $25, 5,000,O 900, so
that from that time onward q suf
ficient amount Of National Bank cir
culation would remain permanently in
existence we'll secured by gold or silver
bullion, and sufficiently profitable to
make the circulation large enough in
competition with the present amount Of
United States notes TO respond to tina de-
msnd of the business of the country; il
would also give the banks in the West as
as we'll as the East, who have confidence
in the future value OF silver an opportuni.
ty to invest in that metal, and be believes
that such Investments would be made for
the next three years, EQUAL, at lesst, to
$40, 900. 900 annually, and thus relieve the