Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1893-06-21

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who has given IT. currency question ssy
ssudy. buf for sake It putting = few plain
facss before ssch Of your readers - have
net givsn, ard could not be expected 70 give,
the matter much attention, big the eour-
II these days When 20 many people are
demanding more money. and claiming that
an increase In the circulating medium viii
and commerce. restore conAdenre
and re-vivify our tagging in
dustxies, Il il veil that We consider the
means suggested TO. bring about that result
and the character Of the currency TO Be
supplied.
assume for the purpoas of this discus
sion (slthough il Is much debated quea-
fionj thsf m increase in the circulating
medium would prove advantageous; JTD-
rieied, hoeersr, quality be not sacrificed to
quantity. Hos then shall Il be furnished.
There are today ten different kinds Of
money 10 circulation, in this country
scarcely any tvo Of which are of the same
quality or subject TO the same law a. To re-
demption.
them in detail; the important issues are
xJtot klsfI. the LfftJuiAtCh baSt0 VII thc
coinage thereof, United States notes, COM
monty called greenbacks, and nstional bank
notes.
II 10 not my purpose. in this article, TO
enter into discussion Of the merits and de-
merits Of all these varieties Of money. !
merely stor. in passing, to express my I'M
, compromising and emphatic opposition 70
| the unlimited coinage Of silver, with its
p, Auctuating value, and the issue Of certii
Gates based on such coinage. cannot re-
, gard as wise, or ~ excussbie. the use OF
silver as circulating medium upon any
! other than fixed international basis. Of
greater e.,seera than the lack NJ MONEY Is
The lax Of cOad3eRce and confidence "a
rtes inrefsety aud in compound rdtio.as ths
| r0tnne Of uBstd5te currency iacfrdses.
| come, then, TO the confederation OF the
question which desire to present. to wit
the national bank notes.
Excepting, of course. gold and gold
certificates and the greenbacks. (Which
latter were issued only under pressure of
great Civil War and whose farther use or
issue is not in accord with settled principles
Of finance / believe the national bank bills
10 he the best circulating medium this
country has ever had. They combine
convenience and elasticity with absolute and
unquestioned security, and their issue costs
aeither the government nor 1.-The people
one dollar of expense
Why not, then, expunge from the bank
act some Of its, under existing
conditions, unwlse and unjust
restrictions and encourage the
issue of moresbills. 1t is fact that today
nearly all the banks are holding the mini
mum of bonds required by law and hence
issuing very limited amount of circula-
ton; indeed many of them issue none at all
Why is thiss Simply because there is prac-
lically no profit in so DONG for these rea-
sons The law provides that upon a de-
post of government bonds with the treas.
urer Of the United States, TO be held by him
in trust as security for the bills) u bank
may issue bills, that is, its own notes, to an
amount equalhng 30 per cent. of the
par value Of the bonds 50 deposited.
But, in order to redeem the mutilated bills,
it is provided that they may be presented
to the treasurer for that purpose, and AZ a
redemption fund, I've retains per cent. OF
the amount issued, equal to i-2 per cent
of the par of the bonds; so that the bank
really issues but s. i-2 per cent.
Upon this circulation the government
imposes tax of I2 of per cent. semi
annually making trifle better than per
cent. annually there is the expense of as
sorting and redeeming mutilated bills a.
well az engraving plates for new bills, ex-
press charges, agents fees. etc, ALI of which
the bank must pay and which combine, a.
have said, to reduce the profit to almost
nothing Banks have been misunderstood
and misjudged. They have been called shy
locks and usurers. They have been accused
of reaping double profit at the expense of
the people. Let us see.
Taking, for example the per cent. bonds
at par as basis FOR circulation and charg-
ing against the profit account the average
expense the net profit per year per 800, 900
amounts to the enormous sum of 1911 .52
over same amount loaned at per cent.
In other words the banks would get S31 80
per year for the labor Of signing. and caring
and accounting for Sl00,060 in bills. Sure
~ that il not robber-like. With bonds bear
ing per cent. interest there is larger
profit, but still not enough to make it any
object for the banks to issue circulation, the
premium on such bonds nearly eating up
the additional income. In states where the
rate of interest would average higher than
I; per cent. it would be done only at con-
siderable loss. | submit that If banks can
issue but So i-2 per cent. of the par of
bonds worth in the open
market, premium of 10.
IL, Is. 20. or no matter how much, per
cent or par, with the low rate which that
implies) and then have to pay tax of one
per cent. on that issue, together with all the
other expenses and all the care and labor
it involves, it cannot be expected that they
will issue great amount.
Since 1874 while the capital Of national
banks has increased from about 500 millions
then to about 700 millions now, the circu
lation has steadily derrcased until, from near
$50 millions then. it has become reduced to
about l12 millions now. Taking from this
amount the 90 millions, more or less, which
the treasury has absorbed into its cash
from the fund deposited to retire circula-
ton, there are left, in round numbers,
about $50 millions actually in circulation.
The banks of this State with over IL mil
than l-2 millions.
Now. upon II basis of 700 millions CAPT
tai. under the present law the banks can
issue $50 millions, less the ) per cent. re-
,empton fund, net of sos l-2 millions
instead Of which they haze issued only
about liz Millions deficit, mark you,
from what it might be of nearly 400 millions
of dollars.
am of the opinion that the trainers of
the law never meant that the banks should
actually be allowed to employ but IS l-2
per cent. of their bonds, but rather the full
30 per cent yet that 10 the effect of the
law. So paipable an injustice as this
should he corrected, by an act enabling
,hem to issue 80 per cent. exclusive of the
redemption fund, euen if nothing better il
done.
In my humble Judgment, however, that
would be stopping far short Of the needs of
the times, and Of what. in reason and in
fairness to all concerned, ought to be done.
Ii seems to me that the reasonable, the
fair, the business-like thing to do, is to
amend the law, so as 10 dffotc the banks 10
to issue his to The fun amount Of par of
their bonds; for who ants better security
for his money than an equal amount IN
United States bonds?
Adopt this course, remove the war tax on
circulation, and the banks of the country
will speedily issue up to the full amount of
their bonds. Allow them, for the sake
of the common good, to get rea-
| sonable compensation for their services
and in place of LIZ millions they
will put 100 millions of very life blood
into the channels of trade, the stringency
in the market will be relieved and men of
wealth and of energy will not be forced to
the wall. ~ of late, because Of their ina
bility to borrow to meet present demands.
cannot conceive of any valid objection to
| this proposition. know of no other
wise way to increase our supply of money