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

age outstanding circulation, as prONlue'
for under the existing law.
Sec, >. The redemption OF the notes o
all banks, solvent or insolvent, to be mad
as provided for by the existing law.
Sec. 6. Create guarantee fund
through the deposit by each bank of pc
centum upon the amount of circulation re
ceiyed the first year. Thereafter impos
a tax of one half of / pc
Icentum upon the average amour
of outstanding circulation, TN
same to be paid into this fund until l
shall equal per centum OF the entire CIR
icuiatiOn outstanding, when the COLLECTION
of such tax shall be suspended, to be re
Isumed whenever the comptroller of the
currency shall deem it necessary.
The notes of insolvent banks shall be
redeemed by the treasurer of the United
States out of the guaranteed fund, II II
shall b sufficient, and if not sufficient, then
out of any money in the treasury, the
same to be reimbursed to the treasury out
of the guarantee fund" when replenish-
ed, either from the assets of the failed
banks or from the tax aforesaid.
National banking associations organ
lied after this plan shall have gone into
operation may receive circulation from
the comptroller of the currency upon pay
ing into the guarantee fund" a sum
| bearing the ratio to the circulation APP
piled for and allowed that the "guaran-
| tee fund" bears to the total circulation
outstanding, and to be subject to the tax
of one-half of l per centum per annum,
as called for by the treasurer of the
| United States for the creation and main
| tenance of this fund.
No association or individual shall have
any claim upon any part of the money IN
said guarantee fund" except for the re-
Il Of ha .ip of
insolvent national banking association.
ANY surplus or residue of said 'guaran-
tee fund.- which may be hereafter ascer-
tanned or determined by law shall inure
to the benefit of the United States.
Sec 7. The government shall have
prior lien upon the assets of each failed
bank and upon the liability of sharehold-
ers for the purpose of restoring the
amount withdrawn from the guarantee
fund" for the redemption of its circula-
ton, not to exceed, however, the amount
ton after deducting the sum to it's credit
in the redemption fund" (section 4 al
ready in the hands of the treasurer of
the United States.
Sec. g. Circulation can be retired by
q bank at any time upon depositing with
the treasurer of the United States lawful
money in amount equal to the sum de-
sired to be withdrawn, and Immediately
upon such deposit the tax indicated i'll
sections 2, and 6 shall cease upon the
circulation so retired.
Sec. 9. In the event of the winding up
of the business of bank by reason of in
or otherwise, the treasurer of
the United States, with the concurrence
of the comptroller of the currency, may, |
on the application of the directors, or of |
the liquidator receiver, assignee or other |
proper official, and, upon being satisfied
that proper arrangements have been |
made for the payment of the notes of the |
bank and any tax due thereon, pay over |
TO such directors, liquidatOr, receiver as
signee or other proper official, the amount |
to the credit of the bank in the ''redemp- |
ton fund" indicated in section t.
We do not offer this plan as a COM
pleted amendment to the present law,
but simply as the outline of desirable
legislation embOdying the underlying
principles necessary, in our Judgment,
for the creation of a safe and elastic cur
'ency. 1t is not our intention to disturb
he existing modest bank circulation if
t shall be deemed to be to the best inter
est of the government and the banks to
continue the same for the present.
Our currency must be supplied by the
banks, not by the government. The lat
err notes only the condition of trade by
he rise or fall of its revenue receipts. Ihe
banks are the arteries of commerce, feel
ng instantly the changes of commercial |
lctivity and intimately acquainted with
is volume and requirements. The muf-
led sound of loading cotton in the South, |
he gathering rill of the grain bin in the
Vest, the grinding noise of the steam |
shovel in Mesaba, are almost instantly |
converted into dollars at the financial CEN
ers of our country. Hence, our currency |
must be elastic, stretching out over the
broad eXpanse of business activity, able
o supply its fullest wants, and contracting |
lgain as the strain of commercial vitality |
1t requires no demonstration or
argument to prove that a flexible cur
'ency, responsive to the demands of COM
nerce, can never be obtained so long as
he institution issuing the same is re-
luired in advance to invest as much money
n more in securities to be deposited as
he circulation, which it is allowed to issue
upon the same, amounts to. 10 be elastic
It must be based upon credit, and the insti-
tuition issuing the same must have for It's
sponsor the necessary government regu-
ations, supervision and examinations.
By allowing the banks to issue circula-
ton to the extent of so per cent of their
Daid-up, unimpaired capital, ample pro-
vision is made for the very fullest re-
1uirements of trade. The history of the
state banks of our country furnishes con-
vincing evidence Of the correctness of our
position.
The first bank of the United States,
which, as we'll as the second, was allowed
to issue circulating notes equal to the
amount of its capital, had in 1909 upon
$10,000,000 capital, 81 100000 circulation
or A. per cent; in 1911 upon the same cap
ital 50, 037 900, or 80 1-3 per cent. The
second bank of the United States, in 1885,
with capital of $35,000,000, had out
circulation amounting to $lI,-
1875, 900, or 40 IL per cent.
In the Writings of Albert Gallatin, vol.
III, page 312, we find, speaking for the
year 1880, the following interesting fact:
"Among more than 300 banks
the statements we have given show that
the average amount of notes issued by the
state banks does not, taken together, eX-
coed II per cent of their capital"
The report made to congress by the sec
rotary of the treasury relative to the con-
dition of all the banks upon January l.
1859 shows that the aggregate bank cap
ital upon that date amounted to S4O3,-
0S6,00, with total circulation of S193, 416,-
21S, being exactly As per cent of the CAPT
tai. 1t is instructive to note from the
same report that Massachusetts had SOL
$4,000 bank capital with $50, $3.50, 900
circulation, or % 80 per cent, and Louis
lana S24. 215.000 capital. with $9,094,O0O
a., lnXx