The herald., 1894-12-08
REFORM OF CURRENCY
Secretary Carlisle's Plan
Discussed.
The Scheme Attracting Wide
Attention.
Some Say Comptroller Eckels' Plan
ls the Best.
The Two Contrsstsd by . Prominsnt
Aembsr Of the ssnats-Bsnksr
81. John Form ulatss .
Propesition.

By the Associated Press.
WASHINGTON, Dec. 7.--Mr. Carlisle Q
plan Of currency reform is naturally at
tracing great attention in and out Of
congress. Mr.. Carlisle. 1t IL expected,
will appear before the house COMMITTEES
on banking and currency to answer any
questions that may be asked in further
explanation Of his proposition, and to
assist in the preparation of bill cover
ing bis views On the subject, which will
soon be introduced BY Chairman
Springer. While Mr.. Carlisle's plan is
favorably commented upon by many
prominent members of both houses
there are others whose opinions are Of
value who argue that the plan proposed
by Comptroller Eckels in his annual re-
port has superior merit and when thor.
oughly understood will meet with gen.
eral approval. A prominent senator.
who 10 recognized % an authority on
financial matters, explained to repre-
sentative OF the Associated Press bis
views on the two plans. He said:
''Mr. Carlisle's plan for currency re-
form, when applied to practice, will
produce the following result: Taking
for the purpose OF illustration the exam
pie Of bank having 100000 capital,
snch bank would be entitled to Issue
notes up to the limit OF $4,000 (75 per
cent Of its capital). but before doing 90
must deposit legal tender notes TO the
amount OF $22, 500 $50 per cent Of its cir
culation). This in effect would be
equivalent to net issue Of $52. 800 in
circulation by the bauk, or $75,OUO re-
ceived in notes from the government,
minus $22 500 in notes deposited with
the government.
upon this $52.500 Of currency tho
bank would earn its profits. provided it
could keep them in circulation, after
deducting costs for redemption, tax for
the safety fund and tax for the ad-
ministration Of the comptroller's bu-
reau.
"As plan for relieving the general
government from the burden and charge
for redseming United States notes il
would, according to the secretsry's esti-
mate, result In securing the temporary
deposit of $22. .000, 900 OF these notes with
the government il the national and
state banks now in existence should
take out circulation to the full amount
proposed.
Let rs see how this result could be
arrived at. At present the capital OF ill
the national banks in existence is about
1858. 600, 900. II to this is added 1892,
OOO. 600 as the capital OF the state banks
availing themselves Of the privilege. q
total capital OF 1000. 600. 900 would be
had as the basis upon which to issue
currency. Assuming that all the banks
unoaonsino thia napttol i.anaA
up to the full limit of 76 per cent, We
will have an issue of currency to the
amount OF s75,O0O.0O0. Against this
legal tenders to the amount OF 80 pey
cent OF circulation must be deposited, or
$225. 900. 900.
''What will be the effect Of this upon
the volume OF money in circulation p
add bank note issues, $3.50, 600, 900,
less national bank currency retired,
$172, 900, 900; legal tenders deposited
and Withdrawn from circulation, $685.
000,000, total 1877 ,000 900; net increase
in circulation, $363, 900, 900.
Assuming that this increase could
be kept In circulation, . withdrawal of
$225, ,0UO, 900 OF United States notes 10
effected temporarily, but as there are
$98 600. 900 Of these altogether outstand-
ing, there would still remain outstsnd.
ing msj portion OF the mass or about
$23, ,000, ,OU0 to harrass the treasury by
presentation for redemption in gold. II
the $3.50. .0O0. 900 is not kept in circula-
tion. the amount of legal tender secured
by redemption Of circulation would be
added to the large sum not funded.
Again ii the legal tenders deposited by
the banks are to DO used for redemption
Of these notes on pressntation, there
would be no difficulty in procuring any
amount Of them BY presenting bank
notes.
80 much for the practical working
Of the .secretary's plan, and now we
take look at the plan proposed by
Comptroller Eckels. Az he gives no
figures on which to base . calculation,
but simply outlines the principles OF
the plan. only . hypothetical illustra-
tion OF tho practical workings can be
made.
Taking a bank with 100000 capital,
as in the other case, the comptroller's
plan appears to require that that bank
depolit with tbs treasury $50. 600 in
United States notes or legal tenders (for
cancellation). in exchange for which it
will Immediately receive $55, 900 in bank
notes for the current redemption of the
bank notes OF this class. upon the fail
ure or liquidation Of the bank.
This feature. therefore, 10 neither
expansion nor contraction Of tho 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
the burden and cost of current redemp-
tion during the existence of the bank
receiving and issuing the same. Under
this branch Of the comptrollsr's plan,
with the present capital of national
banks. viz, 1858. .000. 900, 1884. .00O, 600 OF
legal tenders would Immediately be re-
tired and Withdrawn from the possibil-
ity OF being redeemed in gold BY
the general governments. while a
banking capital OF 81 900 900. 900
would serve 40 the basia for
retiring the entire iseue both Of United
States and Sherman act notes, amount-
ing together to about sos. .OOO, 600. While
under the secretary's plan capital Of