The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-12-08

kept in circulation, withdrawal of $685.,
100000 of United States notes Is effected
temporarily, but as there are S290.000,0o0
of these altogether outstanding there
would still remain outstanding about
SIS, 900, 600 to harass the treasury by
presentation for redemption in gold Ii
the S75O, eco 600 is not kept in circulation
the amount of legal tender secured by re-
demption of circulation would be added to
the large sum not funded. Again II the
legal tenders deposited by the banks Is to
be used for the redemption OF these notes
on presentation there would be no dill
Guilty in procuring any amount OF them by
presenting bank notes.
$50 much for the practical working of
the Secretary's plan, and now we take a
look at the plan of Comptroller Eekel5.
As he gives few figures on which TO base
compila tiop, but simply outlines the prin-
cples of the plan. only a hypothetical
Illustration of its practical workings can
be made. Taking a bank with 100000
capital, as in the other case. the Comp
troller's plan appears to require that bank
10 deposit with tine treasury $4,000 in
United States notes or legal tenders (tor
Immediately receive $780, 600 in bank notes
for the current REDEEM pliOn of bank notes of
this class, upon the failure or liquidation
of the bank. This feature, however, is
neither expansion nor contraction of the
currency, simply tile exchange of one
kind of currency for another, just as good,
but for the purpose and with the effect of
entirely relieving the Government of the
burden and cost of current redemption
during the existence of the bank receiving
and issuing the same. Under this branch
of the Comptroller's plan with the present
capital of national banks-viZ: $668, 000.-
000-$334, 000,0 600 of legal tenders would
immed ately be retired and with
drawn from the possibility of being
redeemed in gold by the General Govern
ment, while banking capital of $1,000
000 600 would serve as the basis for retir-
ing the entire issue both of United States
and Sherman act notes, amounting to-
gether to about $685. 100000. while under
the Secretary's plan a capital of $1.000,-
000 600 would effect withdrawal accord
ing 10 his own estimate of only 1926, co.,
coo. Should the bank notes issued against
legal tenders be made available for lawful
now the legal tenders. this would operate
to withhold them from redemption by the
banks.
Passing to the other feature OF Mr..
Eckels' plan it is found that bank with
500, 600 capital could also issue as much as
1000 of safety fund notes, constituting
a first loan upon its assets and upon its
liability of its shareholders. and redeem
able upon the failure of the bank promptly
out of safety fund' created by light
tax upon all the banks issuing this kind of
circulation. 1t is upon this class of notes
that the banks should make profit which
would be clear one over and above the
light expenses for cost of redemption
and taxation for the safety fund and for
the cost of operating the Comptroler's
bureau 1t is on this class Of currency
also that the element of elasticity would
be found, for the bank could issue either
none at all or as much as 80 per cent of its
capital. OF the national bank capital, 80
per cent would be 1884. 600, 900, or a sum
S162. 100000 greater than the total of the
present national bank circulation, viz,
SIP. 600 coo, while capital of 81, O00, O00 600
would provide for $500,OOO 900 of this
odAoLJ Auuu ouLn COACsuUO,OOO
greater than the present bank issue.
So within the limits of $780,
0O00 900 would be the expansion
or contraction of this currency. and this
limit could easily be extended in future if
necessary by reducing the percen tage of
legal tender currency to be supported by
the banks and extending the limit for
safety fund currency beyond so per cent
Of capital.
THE legal tender currency out of the
way by Mr. Eckels' plan of substitution of
bank notes, the practical result would be
that all the paper currency would be re-
deemable only in gold or silver coin. for
there would exist only bank notes, gold
certificates and silver certificates"