The Iola register. [volume] (Iola, Allen County, Kansas) 1875-1902, 1894-12-14
ABOUT THE CURRENCY.
What "a Prominent senator" Has to Say
About Currency Reform.

What "a Prominent senator Has to Say
About Currency Reform.
WASHINGTON. Dec. s.-Mr. Carlisle's
plan of currency reform is attracting
great attention in and out of congress,
and while his plan is favorably COM
mented on by many prominent men,
bers of both houses, there are others
whose opinions are of value who argue
that the plan proposed by Comptroller
Eckels, in his annual report, has su-
perior merit, and when thoroughly I'M
derstood will meet with general ap-
proval. a prominent senator who is
recognized authority on all financial
questions explained his views on the
two plans. He said:
Mr.. Carlisle's plan for currency reform,
when applied to practice. will produce the fol-
lowing results: Taking for the purpose OF
the example Of q bank having slOo-
600 capital, such bank would be entitled to
issue notes up to the limit OF $4,000 Go per
cent of the capitaD. but before doing so must
deposit legal tender" notes to the amount OF
81. SOD go per cent. of circulation)
This in effect would be equivalent to net
issue Of $500 in circulation by the bank, or
s75, 900 received in notes from the government.
Upon this $4,000 Of currency the bank would
earn its profit, provided it could keep them in
circulation. after deducting costs OF redemp-
tion tax for safety fund and tax for admins
tration of comptroller's bureau.
As a plan for relieving the general govern
ment from the burden and charge Of redeeming
United States notes it would, according to the
secretary's estimate, result in securing the
temporary deposit of S225, 900 of these notes
with the government if all the national and
state banks now in existence should take out
circulation to the full amount proposed. Letus
see how this result would be arrived at The
present capital of all national banks now in
existence is about s66s coo. II to this Is
added 1892 600 600 as the capital of state banks
awaiting themselves of the privilege, total
capital of 81 900 O00.0 900 would be had as the
basis upon which to issue currency. Assuming
that all the banks possessing this capital is
sued currency up to the full limit OF 20 per
cent, we will have an issue Of bank currency
to the amount OF s75O.OOOOO. Against this le-
gal tenders to the amount of 30 per cent OF cir
culation must be deposited, or 225.OOoOO.
What will be the effect of this upon the vol
ume of money in circulation:
Add bank notes issued, S750.OO0,OO0; less ma
tional bank currency retired. s112.0cO.OOO; legal
tenders deposited and withdrawn from crcu-
laton, S226 100000; total, 1897 100000; net in
crease in circulation, s353,oOo,o0o.
kept in circulation, a withdrawal of 81
100000 of United States notes is effected
temporarily. but as there are S9S,OOO,O)O OF
these altogether outstanding, there would
still remain outstanding the major por-
ton OF the mass, or about s23,009.0O0, to
harrass the treasury b. presentation Tor
redemption in gold. IL the $50 100000 is not
kept in circulation, the amount of legal tenders
returned by redemption Of circulation would be
Al. 4 los. anf
if tie legal tenders deposited by the banks are
to be used for redemption of those notes on
presentation. there would be no difficulty in
procuring any amount of them by presenting
bank notes.
So much for the working of the secre-
tary'S plan. and now We take look at
the plan proposed by Comptroller Eckels.
As he gives few figures on which to base a
compilation. but simply lines the principles OF
his plans only hypnotic illustration of its
practical working can be attempted. Taking a
bank with 100000 capital. as in the other case,
the cOmptrOller'S plan appears TO require that
the bank deposit with the treasury $4,000 in
United States or legal tenders flor cancella-
tom. in exchange for which 1t Will Immediate
~ receive $4,000 in bank notes. for the current
redemption of which only il shall be liable dur
ing its lifetime, the government assuming re-
sponsibility for ultimate redemption of the bank
notes Of this class only upon the failure or
liquidation of the bank. In this feature. there
fore. there is neither expansion nor contraction
of the currency. simply the exchange of one
kind of currency for another just as good. but
Tor 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
wiz s66S 900. O00) s334O0).000 of legal tenders
would Immediately be retired and Withdrawn
from the possibility of being redeemed in gold
by the general government, while banking
capital of SI7. OOo 100000 would serve as
the basis for retiring the entire issue both
of United States notes and Sherman
act notes amounting together to about
sos. 100000 While under the secretary's plan a
capital OF 81 10000 would effect Il withdrawal
according to his own estimate Of only S225 Co.,
900. Should the bank notes issued against 'le-
gal tenders be made available for lawful
money reserve against deposits, as are now the
legal tenders. this would operate to withhold
them from redemption by the banks.
Passing. to the other feature of Mr.. EckelS
recommendation it is found that a bank with
SlOO.OO0 capital could also issue as much as $50
900 of safety fund notes. constituting first
loan upon its assets and upon the liability of
it's shareholders. and redeemable upon the fail
ure of the bank promptly out OF safety
fund" created by a light tax upon all the banks
issuing this kind OF circulation. 1t is upon this
class of notes that the bank should make a
profit, which would be n clear one over and
above the light expenses for cost Of redemption
and taxation for the safety fund and for cost of
operating the comptroller's bureau.
1t is on this class of currency also that the
element OF elasticity would be found, for
each bank could issue either none at all or as
much as so per cent of its capital. OF the pres
emit national bank capital 50 per cent. would be
1884 600 900. or a sum s162 10000 greater than
the total OF present national bank circula-
ton, viz: si72,OO0,00O, while capital of
81 900 10000 would provide for $780,
100000 of this safety fund" circula-
ton, sum S32s, 100000 greater than
the present bank issue. So within the limits OF
$500, 900, 900 would be the expansion or contrac-
tion OF this currency. and this limit could easily
be extended in future il necessary by reducing
the percentage of legal tender" currency to be
supported by the banks and extending the
limit for safety funds" 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 bank notes
redeemable only in gold or silver coin. for there
would exist only bank notes, gold certificates
and silver certificates.
Homes for Disabled Soldiers.
WASHINGTON, Dec. S.-The annual re-
port of the board of managers of the
national home for disabled volunteer
soldiers was sent to the house of repre-
sentatives yesterday. 1t treats of the