Omaha daily bee., 1894-04-16
ANOTHER BANKING SCHEME

A new banking scheme, somewhat uninue
as to it's principal features. has been nro.
posed by a Connecticut representative. 1t is
modelled on the present national bank act
and preserves all the administrative features
OF the law now regulating national banks,
the notably distinctive feature being the
provision that every bank organized under
this system shall be designated as Inter
state to distinguish it from state and
national banks. A bank may deposit with
the treasurer of the United States, as Sc
curity for circulation, any interest-bearine
ponds issued under due authority of law by
the United States or any state of the United
States, or by any county or by any muni-
ctpal corporation within any such state. the
character of the bonds to be passed upon
by the comptroller Of the currency. The
circulating notes are not to be guaranteed
by the United States, but the treasurer holds
the bonds as collateral security and NAV
sell them for what they will bring if the
bank goes into liquidation. Moreover, the
notes constitute a first and permanent lien
upon all the assets of the bank. They must
be redeemed in legal tender United States
coin upon presentation and the banks must
keep a reserve of 20 per cent of deposits in
lawful money of the United States. A CEN
trial redemption agency is established in
the Office of the comptroller of the currency
and the banks are required to keep there 5
per cent of their outstanding circulation
for the redemption of notes which may drift
too far from the locality where the bank
is established, to be presented for redemp-
ton at its own counters. This redemptio
fund must be kept in coin. There is no
provision for a safety fund, each bank being
left to maintain it's notes at par by prompt
redemption in coin and by the securities
in the custody of the treasurer of the United
States. No distinction is made in the money
OF redemption between gold and silver legal
tender coin, but there is a separate section
of the bill authorizing the establishment
of gold banks, which deposit bonds payable.
principal and interest, in gold and make
their notes redeemable exclusively in gold.
Provision is also made for the transition of
existing banks. both state and national, into
the new system.
The author of this measure takes the view
that as the interstate bank note is made
only by the bank which issued
the note, the bills would be frequently re-
turned to the bank of issue, and while the
thrown around the solvency of the
bill are sufficient to give it a national circu-
lation the tendency to return to the bank of
issue would be so strong that it would sup
ply a local currency, now so much in demand
in the south and west, and would also supply
an element of elasticity in the currency,
which is wanting under the national bank
system. There are some good features in this
bill and not the least of its merits is that it
would have the effect to take the government
OF the banking business by removing the
guarantee of the circulation, the
lnly function Of the government in connec-
ion with the system being as custodian of
securities to protect the circulation, while the
comptroller of the currency would have a
of the power of supervision which he
exercises over national banks. The es-
iential point Of the scheme is that banks
hall supply all the paper money required for
business purposes, and it is suggested that
IN this account II will be likely to meet the
trenuous opposition Of those who are in f4yor
f national money" meaning paper money
ssued by the United States upon the faith
nd credit Of the government, but this oupo-
ition would hardly be very strong. A de-
nand that is generally acquiesced In is for a