The Austin weekly statesman. (Austin, Tex.) 1883-1898, 1894-11-29

would have repaid the cost of the No v
tional banks to the general governmn nd
and also that a tax of one-fourth of
per cent would have redeemed the NJ
of all failed national banks: in fane @S
tax of two-fifths of 1 per cent wo,,s
have been ample to meet both the coUt
of that system and the redemption of 10.
notes of failed national banks. e
"(Signed) JAMES H. ECKELS
Comptroller
If an annual tax of two-fifths of / no,
cent would suffice to defray all expepso
and redeem every note of every foiloS
bank for the past 81 years, a per cent
guarantee fund is certainly ample to nrol
feet the government against loss in guar.
anteeing the redemption of notes under
the proposed law. But as further av;
dence, let me read the following lefta,
from Comptroller Eckels:
Sept. 81, 1894
"In further answer to your letter of
Sept. 13, you are respectfully adyisod
that the loss to the general government
on account Of circulation of failed M.
tional banks up to Jan. 1, 1894, had there
been no bond deposit, would have been Z
81, 1925 OF this amount $685., PAT rem.
resents the loss by banks whose trusts
are still open and may pay further div
idends, thus reducing the amount last
named. The tables showing the full
amount of dividends paid by all failed
national banks are not yet completed, but
an examination of the accounts of each
trust develops the fact that there would
have been no loss on circulation other
than above indicated. This statement an
plies to all failures down to JAN l.
1894.
(SigneO JAMES II. ECKELS,
Comptroller"
Under present laws the government is
bound to redeem all notes of all failed
banks, and is given prior lien upon the
assets of the failed banks to reimburse
such payment. With this law in force.
and without bonds to secure circulation,
the government would during this 81
years have lost not exceeding 81, 139, 253.
An annual tax of three-hundredths of l
per cent upon circulation would have
covered this loss. Surely per cent
guarantee fund will make the notes pro-
posed in this plan perfectly secure.
The experience of 81 years of cur ma
tons history, years replete with many
periods of depression, yet withal charac-
terized by marvellous growth in popula-
ton and unprecedented commercial and
financial development, certainly consti-
tutes safe criterion upon which to base
of other nations as well as our own dem
Onstrates the safety, the wisdom, the ne
cessity of a currency based upon the prin-
ciples embodied in the proposed plan.
Under present laws state banks may be
converted into national banks by conform
ing to the requirements of the National
Bank Act, in any state of the Union,
and, per contra, any national bank may
change to the state system. 1t is of no
consequence from what authority bank
receives it's charter. 1t is of the first
Importance under what bylaws and stat
ute laws it conducts its business. And in
respect to the proposed circulation, there
can be no objection to Il state bank
receiving circulation, providing as con-
dition precedent, they are required to
submit to examinations by the comptrOl-
Ter of the currency, make the five reports
required, annually, by him Of national
banks, keep the same reserves, have the
double liability of stockholders, submit
to all supervisory regulations, and con
form to all requirements SO as to place
the circulation issued to state banks
exactly on par, with respect to safe
guards and security, with circulation is
sued to national banks. 1t were better
for them to change into the national
system, say you. | think so, but
can see no objection to their receiving cir
cuatiOn, providing that circulation be
made national, and possesses all the safe
guards of national bank currency. The
dual supervision could do no harm, and
might be productive of good results.
The value of n currency depends upon
the area, or extent of commercial ter
ritory in which it will be accepted in
satisfaction of debt. COntine its power
to single state and you depreciate its
value. The danger that single state
may exploit unsafe currency will compel
the scrutiny of all, and will police our
with money changers and handi-
cap individuals and commerce with Il
wholly unnecessary embarrassment. 1t
is not enough that a bill be good within
the state and sure of redemption; 1t
must be current throughout the nation.
The business of banking consists in
swapping a well-known credit for less
known credit. If the well-known credit
be check or draft, it is used for spe-
cial purpose and within business circles;
If the well-known credit be in form and
semblance of money, United States citl-
zen is entitled to have it good, as money,
throughout the United States.
History and experience point the WIS
dom of Il national currency under ma
tional control; neither reason nor eX-
perience, nor convenience nor public
good would justify the creation of local
currency. Let us examine the ap-
There were $346,6S1,016 of green
backs and $151, 609,276 of treasury
notes (Sherman law and 500, 564, HOS
of national bank notes in circulation and
in the treasury on Oct. 1; total $780,
S54, al. The national banks have in
round numbers $700000,000 capital.
Hence, under the proposed law, allowing
circulation equal to 80 per cent of CAPT.
tai, the banks could and undoubtedly
would, take out $350,000,000 of circula-
lation, an increase of $150,000,OOO over
the present amount. The incorporated
state banks have $250,000,000 capital,
and should they, by conversion to the ma
tional system or otherwise, take out
circulation, it would add S125,OOO,O00
more. Certainly sufficient for immediate
wants, and being elastic, there is no
danger of plethora, as it would flow back
to the bank of issue whenever redundant.
Should congress provide at any time
for the retirement of the greenbacks or
treasury notes. contraction may be pre-
vented by increasing the percentage OF
bank note circulation. All eXper-
fence and all statistics prove
currency issue equal to par of unim-
paired capital is absolutely safe.
BY means of extensive correspondence
with every considerable place in the
country, l obtained statistics which Justl-
fly the estimate, that during the cur
rency famine of 1893 there was issued,.,
Too, 10, hn