The Sauk Centre herald. (Sauk Centre, Stearns County, Minn.) 1886-current, 1893-07-20

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kpNE Way


"The national bank act certainly
sanii e-ginciltied - provide for notes
beng issued up to the par value OF United
States bonds, and another amendment
would also be wise to provide for an
issue of notes against the surplus capital
of the national banks to the extent of
rs per cent thereof. These two changes
IN the law would make an increase in
national currency amounting to about
$50, 100000. and would provide the
nation with enough new money for its
needs, and it would be the best and most
legitimate kind besides. The New York
banks now hold surplus over capital
OF 100000. The national banks OF
other cities and elsewhere have probably
$100, 900, 900 in addition.
The backing in cash or its equivalent
to the notes issued against them would
make them the strongest and most legit-
innate character of money in circulation.
No stronger kind of money could be de-
vlsed. The surplus against which the
ISSUE of these notes would be made
!. would be under the national bank ex
aminers. The constant increase in the.
surplus Of the banks would also give an
elastic character to such money, which
IS very desirable feature"
1t is astonishing that man occupy
ing position so prominent in financial
circles as that of Henry Clews should be
so far from the mark as he is in the letter
above quoted from the daily press Of.
Wednesday. The facts are, as shown
by the official statement of the comp
troller OF the currency dated June 10Th
last, that on the 4th of May the COM
bined capital of all the national banks
was $6ss, 600, 900, and their total sur
plus $353, 900, 0OO--more than twice as
much as Mr.. Clews credits them with.
The total national bank circulation at
that date was only $151 ,OOO, O0O-less
than twenty-five percent of their capital,
and only fifteen per cent. of their CON-
bined capital and surplus. Now, if the
government would issue to the banks
the full amount OF bank notes for the
bonds deposited for their security, in
stead of retaining ten per cent, the i'm
mediate effect would be to set attoat
over 100000 additional currency,
distributed throughout the country
as evenly as the necessities would require,
for it is to be presumed that banks are
located where they are most needed.
And if, in addition to this trifing in
crease, the government would compel
national banks to take out currency to
the full amount of their capital stock,
instead of leaving it optional with
them to take only twenty-five per cent,
an option which nearly all of them exer-
else, the currency would be increased by
$537 100000, or more than an addi-
tional eight dollars per capita for the
entire population-ani increase too large
to be projected upon the country at one
time-perhaps more than would be
required foryears.
One OF the objections raised to the
repeal of the Sherman act is that the
purchasing clause of the act puts into
circulation over So, 100000 of currency
per month-coin certificates with which
the silver is purchased-and the gradual
expansion of business demands such an
increase. And this objection seems to
be well taken. To repeal this act with
out some provision for gradual increase
OF currency other than unprotected treas
ury notes would doubtless be felt to the
detriment OF business of every kind
throughout the country. Several plans
have been .suggested-Mr. Clews's is one
of them. But he is wide of the mark he
aims at. 1t will not be necessary to take
the surplus of national banks into con-
sheraton at all-it would not be wise
to do so, for this surplus is for quite
another purpose, although in fact more
stable in practice than in theory by
reason of the wise and conservative man
ner in which it has been guarded against
invasion.
1t is right and proper that the govern
ment should turn to the national banks,
creatures of its creation, for the relief de-
manded when the Sherman act is
repealed, as it doubtless will be. Let it
compel these banks to expand their cur
rency within their capital limits, and
until such limit is reached, if necessary,
by taking out at stated periods certain
per cent. of the amount of difference be-
tween their present circulation and the
full amount of their capital stock. And
in order that the currency may be fexi-
bic, as Mr.. Clews suggests is desirable,
vest the pc yer of making call for a
greater or less amount at given time,
as the exigencies of the case may de-
mand.
The national banks will not approve
of law of this character, for they do
not desire to increase their currency
issue. There is no profit to them in it,
and it is ia source of continual annoyance
to them to maintain a currency at all, as |
is shown by the fact that for several |
years they have been surrendering it
cuttingit down to the minimum allowed |
by their charters. A two per cent. bond |
as basis for currency upon which they |
have to pay tax OF one per cent, and |
all the expense connected with the detail |
work of looking after it. makes it an UNI
desirable adjunct to their banking bust
ness. But the government in equity has
the right to demand of them the surren-
der of little convenience to the general |
welfare. Without doubt the banks to-
day would prefer. as basis OF circula-
ton, a bond without interest concurrent
with their charters, providing the gov
eminent would assume the expenses of
issuing and re-issuing their currency,
to the present two per cent. bond; and
the. government could as well afford to
print and distribute national bank notes
as any of the various treasury issues.
Under some provision of this character,
with plenty of absolutely safe national