Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-11-12
1T TAKES THE CAKE.
PLAN PROPOSED BY JOHN JAY
KNOX FOR BANKING.
\ Safety Fund Which Would Guarantee
Against Loss on National Bank Cir
oulation-Gold and Silver.
How Bankers Talk.

New ORLEANS, la, Nov. 11.-At the
afternoon session of the bankers conven-
ton the committee on schools OF finance
and economy reported in favor of agitating
the subject and sending commissioner 10
Europe TO study the banking system there.
The topic of discussion to-day was the
banking system aud the currency of the
future
Mr.. George S. Coe of New York opened
the discussion and read a paper on IAN In
side View of the Financial Situation. =
He said that the conflict between
the advocates OF white and colored
metal seems now to be an irrepressible one.
The only practical solution is the reunion
of those ancient but temporarily discovered
elements.
Mr.. John Jay Knox continued the discus
sion on another line. Following are the
material portions of his speech:
About two years ago | had the honor
to present TO the committee on
banking and currency of the house of rep
resentatives plan for 4 permanent ma
tional banking circulation. | wish 70 present
in a somewhat modified form this PROPOSE
ton. l believe that the circulation We have
had in this country from 1863 until late
period is the best currency prob;
ably for great and prosperous
country like this. 1t is not ard was not an
ideal currency. 1t is fast passing out of
sight, us is well known by Senator Gibson.
The congress of the United States is neither
willing that the national bank currency
Shall be of sufficient profit to allow its is
sue, nor on the other hand will
the congress of the United States
pass the necessary legislation TO
authorize national banks to retire it. We
have, however, uuuer the operation of this
law, which is Improbable since loj3,
or since the time when the maximum
amount reached $50, 900, 900, retired about
S230, 100000 Of this currency Voluntarily
The elements of perfect currency
of this or any other country are: First.
safety; second, elasticity; third, cOnverti-
bliIty; fourth, uniformity. The greatest
and most important of these is safety
The proposition which l had the honor to
present to congress was in brief terms
the following: That banks organized
in this country should be allowed to issue
circulating notes upon - per cent of their
capital. a bank of 100000 CAPT
tai should have the right 10 issue
circulation to the amount Of $500, 900.
Half of that circulation, SlJ0,0OO, would
he secured by gold OF silver coin or bullion,
or, if you please, By the public debt,
or so long as + per cents shall
exist, until 1907, by government bonds.
ton would be secured by a safety
fund. OF course if the circulation
was issued on gold or silver coin or bullion
alone, there would be no profit OF that cir
culation, but upon the other half of the ciAs
culatIon there would be 4 profit, as it
would be secured by I. safety fund. The
principle of i safety fund rests
upon the wcll-estabiished fact that
At least three-fourths of the
banks are managed with ability aud under
no circumstances are they likely 10 be-
come insolvent We have experience to
guide US in this matter. During
Il quarter of a century 1870 national banks
have failed having an aggregate circulation
of 100000. Under this system one half
that amount would have been secured
by a safety fund. This safety
fund would be formed by contributions of
all the banks of the country of / per cent
upon the amount of circulation is,
sued, the same amount that is now
contributed to the government of the United
States upon circulation We would
have the loss of sl5,OOo,OOo in
twenty-five years, an annual loss
5000. 600 One-half secured by a safety fund
Of $780, 900, and the other half by coin or
bullion. The income, provided that $780,
OU0,O00 Of circulation was issued, would be,
So, O00. coo year. The loss would be $780,
600, or the loss of only oue-tenth
OF the amount of income, taking the
experience Of the last twenty-five
years as correct data. II the
loss should be five times greater or ten times
greater than the experience of the last
be still enough in the safety
fund to cover all possible requirements. If
the safety fund should by any possibility
be exhausted, unsecured solvent
notes would be entitled to preference
in payment from the assets of the bank and
liabilities of the stockholders.
While the total of insolvent national
bank notes during the last twenty
five years has been SD, 1000 coo,
the amount derived from assets and indi-
vidLal liabilities of insolvent banks has.
been more than Sl6,00O,000. This is
of the bonds, so that such in
solvent notes, if the banking system is
conducted as safely in the future
as in the past, would be Sc
cure without safety fund.
But without safety fund the amount
which would be taken to pay these notes
would be taken from a fund which properly
belongs to the depositors of the banks
| Applause.
The convention adjourned until to-mor-
row. There are about 200 members present,
large delegation from the South
and West