The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1894-12-08


deducting costs for redemption tax for
safety fund and tax for administers
ton of comptroller'S bureau.
LAS a plan for relieving the general
government from the burden and
charge Of redeeming United States
notes, it would, according to the secre-
tary's estimate, result in securing the
temporary deposit of S22, 600 coo of these
notes with the government if the ma
tional and state banks now in exist
ence should take out circulation to the
full amount proposed
Let US see how this result could
be arrived at At present the capital
of all national banks in existence is
about S6S8, 100000. If to this is added
sS52 ,oOO,O00 as the capital of state
banks availing themselves Of the priv
ilege, a total capital of 81, 200, oOo, 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 $780,
100000. Against this, legal tenders to
the amount of 80 per cent of circula-
ton must be deposited, or S225, 600, GOO.
What will be the effect of this upon
the volume of money in circulation?
Add bank notes issues $3.50 900, 900
less national bank currency retired
S172, 100000 legal tenders deposited and
withdrawn from circulation, $225, 00o,-
900; total, 397,OOO,O 600.
Net increase in circulation $685.
100000.
Assuming that this increase could
be kept in circulation, a withdrawal of
1925, 900 900 Of United States notes is
effected temporarily, but as there are
sos, 100000 of these altogether outstand-
ing, there would still remain outstand-
ing a, major portion OF the mass, or
about S23 ,000,0 600 to harrass the treas
ury by presentation for redemption in
gold. If the $3.50, 900 is not kept in
circulation the amount of legal tender
secured by redemption of circulation
would be added to the large sum not
funded. Again, if the legal tenders de-
posted by the banks is to be used for
redemption of those notes on presen-
tation there would be no difficulty in
procuring any amount of them by pre-
senting bank notes.
so much for the practical working
Of the secretary's plan, and we now
take a look at the plan proposed by
Comptroller Eckels.
EckeIs' Plan.
AS he gives few figures on which to
base compilation, but simply outlines
the principles of his plans, only a, ny
pothetical illustration Of its practical
workings can be made.
Taking a bank with 100000 capital
as In the other case the comptroler's
plan appears to require that bank de-
post with the treasury $4,000 in
United States notes or legal tenders
it will Immediately receive $751; in
bank notes for the current redemption
of the bank notes of this class, upon
the failure of liquidation of the bank.
This feature, therefore, is neither
expansion nor contraction of the cur
rency, simply the 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 burden and cost of cur
rent redemption during the existence
of the bank receiving and issuing the
same. Under this branch of the comp
troller's plan with the present capital
of national banks (viz: s66S, 900, 000),
1884, 000, 900 of legal tenders would i'm
mediately be retired and withdrawn
from the possibility of being redeem
ed in gold by the general government,
while a banking capital Of $1,000, 600 900
would serve as the basis for retiring
the entire issue both of United States
notes and Sherman act notes, amount
ing together to about $9S 600, 900. While
under the secretary's plan a capital of
81, 0oO, 900 would effect a withdrawal &C
cording to his own estimate of only
1925. 600, should now the bank notes is
sued against legal tenders he 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 CT Mr..
Eckels' plan, it is found that q bank
with 100000 capital could also issue
as much as $4,000 of safety fund notes,
constituting a first loan upon it's as
sets and upon its liability of its share
holders, and redeenlable upon the fail
ure of the bank promptly out of q
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 a clear one over
of redemption and taxation for the
safety fund and for cost of operating
the comptroller's bureau.
''It is on this class of currency, also,
that the element of elasticity would
be found for which the bank could is
sue either none at all or as much as so
per cent. of its capital.
"Of the national bank capital so per
cent would be 1894. 100000 or a sum
S162, 900, 900 greater than the total of
present national bank circulation, viz:
SIT. 900, 900 while a capital of $1,000, 000,-
900 would provide for $500,00O,O00 of
this safety fund circulation sum
s32S, 600, 900 greater than the present
bank issue. So within the limits of
$500, 600 would be the expansion or
contraction of this currency, and this
limit could easily be extended in the
future, if necessary, by reducing the
per centage of legal tenders currency
to be supported by the banks and ex-
tending the limit for safety funds
currency beyond so per cent Of capital.
1.-The legal tender currency out of
the way, by Mr.. Eckels' plan of substi-
tuition of bank notes. the practical re-
suit would be that all the paper cur
rency would be redeemable only in
gold or silver coin, for there would ex-
list only bank notes. gold certificates
and silver certificates
Constantly growing for forty years.
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