The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1893-08-23
AN ELASTIC CURRENCY.

1t is noteworthy that the introduction
by Mr.. voorhees, of a bill to permit ma
tional banks to issue notes up to the
face value of their bonds, instead of
90 per cent, as at present, has at once
called forth the taunts of the republican
press and the populist press, on ac-
count of Mr.. Voorhees, former position
of hostility to the favoritism shown to
national banks. That is a thing that
Mr.. Voorhees, can very we'll endure, be-
cause at the present time the one great
problem Of the government is how to
afford speedy. safe and adequate relief
for the financial stringency. and every
well-informed person knows that nation
al banking is not the profitable business
that it once was. Owing to the de-
creased rate of interest and the heavy
premium on bonds, no national bank
has found desirable profit in it's cir
culaton, and in consequence nearly all
the national banks in the country have
reduced their circulation to the minimum
amount under the law. On Sept. 80, 1892,
the total amount of circulation to
which national banks were entitled, if
they had seen fit to issue it, was $617.-
915.714. The actual amount in use by
them was only s147, 191 ,593. The mini
mum amount. which they are obliged by
law to keep in circulation, was s96.357,-
49, There was, therefore, in circulation
only $50, S33, sos more of national bank
notes than the law required, and $780,,
724.121 less than they might have issued.
1t is evident from this that the issue of
notes has not been profitable.
The proposal to issue the remaining
10 per cent. is advantageous because it
induces banks to issue more money and
is no expense to the government or to the
people. 1t is commonly said that this
would permit an immediate expansion
of $17.0O0,00O, which is true, as this is
one-ninth of the existing circulation, but
it will do much more than that. If the
issue of circulation is thus made profita-
BILE the banks will increase their issue
above the minimum, and possibly go to
the maximum. If they should the ex-
pansion would be $549, 1856. 1893. 1t ought
to be evident to anyone that a possible
expansion Of this kind would of itself
be sufficient to prevent any stringency
that would seriously affect the national
banks. as they are now being affected,
because they would at once relieve it
by the issue of more currency, if they
have or can secure the bonds.
This is one weak point in the bill, and
this is where it can be easily strength
ened by the amendment suggested by
Mr.. Cockrell ito give to the masses of
the people the same rights as are con-
ferred on the national banks" and
which we presume is Tom Johnson's
plan of permitting any holder of bonds
TO deposit them and take out currency
to their face value the interest on the
bonds ceasing during deposit. If nation
al banks alone are permitted to increase
the circulation on bonds they will prob
ably use it for their own advantage,
and may refuse to issue until the strin-
gency forces other holders of bonds to
sell them at a discount. 1t is a we'll
known fact that during the present
stringency the eastern savings banks
were forced to sell u. S. bonds at re-
duced prices in order to obtain currency,
and that national banks bought up
those bonds and issued currency on
them. 1t would be an uncalled-for piece
of favoritism to national banks to per-
NIT them to issue up to the face value
of their bonds unless other bondhold-
ers are given this limited privilege OF
doing the same thing and it would also
tend to defeat the desirable expansive
qualities of the currency, because ma
tional banks will not be apt to hold
bonds in anticipation of financial crises.
We think, therefore, that Mr.. Voorhees,
would be wise if he accepted this amend
ment.
1t is worth considering that we need,
for the immediate future. an elastic cur
rency now more than at any time in
the past. We think 1t probable that the
Sherman law will be repealed by con-
gress, and that this will aid in relieving
the financial stringency temporarily, but
no permanent relief will be found for
the existing decentralization of business
all over the world until the world re-
stores silver to its former position. Until
that is done this country will OF neces-
sity have to join in the great interna-
tional game of gold-grabbing. and dur
ing that amusement there will continue
the s1me disturbances that have. con-
vulsed the world since the demonetiza-
ton of silver began in 1871. The one
great duty of congress is to put our
government in a position to maintain
herself on a gold basis rntil the world
sees it's folly. Cut off the useless ex-
penditure of sS5.OOO.OOO per annum for
silver bullion Dut the country's reve-