The Yellowstone journal. [volume] (Miles City, Mont.) 1893-1901, 1893-08-07
Monday. August !. 1889.

REFERRING editorially to the desired
change IN the banking law. which will
permit national banks to issue currency
to the full amount Of l.. =. bonds de,
INysited To secure circulation. the Mime
apolls Tribune touches upon a matter
hat is not general. understood but
which is made quite clear 10y its expla.
nation. The reference is as follows:
This demand for AN amendment of
the national banking laws is based ON
n fact that national bank notes have
decreased in volume from s4c9.0OU.NU in
1879, to sl7s.oOO.OOO at the present time.
The cause Of this shrinkage is apparent.
The terms for the issue Of notes were
ION dear. 1t cost So much To issue. that
the issue was generally at a loss. Dur
ing the past yea or SO the premium on
I per cent bonds has been upwards Of 10
per cent. Being allowed to issue notes
Ia the extent of only 40 per cent of the
face Of the bonds. a national bank was
'''il'iiNt ~ Y 'i.I' III Ill ltI
the privilege of issuing 10 cents worth
of notes. and then pay the national bank
tax in the bargain. The 1 per cent in.
terest on the bonds. added To the inter
est realized 10y the banks ON their issues
fell far short If the 20 cents variation
between the cost of the appreciated
bonds and the value of the notes issued
thereon. y a consequence. banks could
not afford t. issue except under peculiar
circumstances. The result has been "A
shrinkageof s210.o Op.oo0inour currency"
Proceeding further, the Tribune pro
ceeds Ia show the immediate benefits
that would follow an amendment Of the
banking law in this respect:
The recent stress for money has re-
duced the premium on some of the
bonds 10 such figure that the banks dur
ing the past month have been issuing
again IN small quantity. The s5.Oo0.OGO
thus added Ia our currcnc, during the
month of July has been a b"on To the
crop moving districts.
In order Ia reap any material bene-
tit from the extension If the national
bank currency. the government must al.
low the banks 10 issue ii larger per cent
Ut bank notes on their security. The
premium N the | and u per cent bonds
IL still from +, to II cents. II the gov
eminent allows the banks Ia issue To the
full face of the bonds. it will still have a
security from ; 10 II per cent more than
ample. For the issue Of Sl1s.Ooo.UM of
notes the banks have deposited sl.si..
WAl.ONb in government bonds To amend
the banking law 81 a. ~ permit an is
sue Of notes Ia the full face Of the bonds
will al II stroke give the country SIS
100000 Of new and crisp sound currency
al a much needed time. Indeed. IA
much larger issue would be certain To
follow. for the banks would be encour
aged Ia purchase additional bonds for
the extension of their note issues. 1t is
probable that within ~ DAYS after the
passage of the amendment by congress
there would be placed IN the hands Of
the people for the movement Of the in
coming crop something like s3O.OOO.OO Nm
IA s40,OOO.MU.
The sudden appearance of s3O.OOO.OOO
Of new bank notes at the crop moving
aenters would be Il general inspiration.
II would be a special boon to the north
~est. 1t would square thousands of az
counts. let loos.. locked IN canital set
the wheels Of industry and trade in mo,
tson. relieve granaries and elevators, dis
tribute old stocks of goods among con
SINNERS and resurrect trade with new
stocks, make business for railroads. mills
and banks, and finally. by inaugurating
commercial confidence. bring into circu-
Lation the millions of earnings that are
now boarded 10y reason Of popular dis
trust.