The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1895-10-16
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A Currency Scheme

Z
Ex-Governor Merriam. of Minnesota,
read a paper entitled 1.-The Currency
for the Twentieth Century" in which
he outlined a currency scheme. His
suggestion was: "That, say 40 per cent
/ of the capital of a national bank be
| invested in United States notes and the
circulation be issued against the same.
| the bills remaining in the hands of
| the treasurer, and currency 70 an
amount equal to the remaining 60 per
cent of the capital stock to be delivered
to the bank for issuance when desired.
/ Before the unsecured currency is for
warded. however. each bank should
pay to the treasurer a sum equal to d
/ per cent of its capital stock, as a bank
circulation safety fund upon which
money the government should allow in
/ terest at the rate of per cent per an
mum. The government, in case the
assets of insolvent banks be insufficient
to reimburse it for the circulating
notes of defaultinS institutions, may
! assess each bank in the system, pro
rata to an amount sufficient to fully
! indemnify it for any losses incurred,
but in any one year, no institution shall
/ be assessed more than l per cent of its
average circulation for the previous
year. Inasmuch as there are likely to
be at least four thousand banks or
ganized under any national law. the
treasurer might act as redeeming agent
for all of the banks, and each bank
should at all times keep with the
treasurer 5 per cent of its capital stock
as a redemption fund. which fund
should be in gold coin and held in trust
for the specific purpose intended. AZ
fast as notes are redeemed, the bank
should at once remit a sum that would
repair any deficiency made by the re-
& i I, rl,Ef
InaSmuch as the banks would make
a profit out of the circulation not
secured by United States notes or
Sherman notes, it is right that all Of
the banks should pay tax upon the
unsecured notes to the government, for
the privilege accorded them. This tax
should be made sufficiently large to pay
all the expenses of the office of the
comptroller. including the printing of
bank notes. engraving, etc, to pay the
United States for the charters granted,
and some revenue, which should aid
in defraying general expense, and to
make the currency elastic.
Demand For Money.
Every bank desiring to become ha-
tional should pay tax of per cent
per annum upon the amounts Of its
average circulation. It can at once
De seen Jn2C whenever anu wherever
the demands for money are sufficiently
active to enable banks to lend their
funds al prices that will net them over
2 per cent, there will be an incentive
to put out the currency, but when it is
worth less than that amount, as it has
been in New York and Boston for
some months, the unsigned bills would
remain in the vaults. The government
would receive several millions of dol
L., i
in paying it's bills, as return for the
privilege granted the banks. In adj
ditiOn. the interest on one hundred
millions of gold now maintained in
idleness would be saved, and the gold
put into active use instead of being
out of the channels of trade. there be-
ing no further use for a gold reserve"
and the bulk Of the 'greenbacks" and
Sherman notes would be absorbed as
a basis for currency or as a reserve
against deposits in the banks That
all parts of the country might have the
advantage of the national system.
the banks should be permitted to or
ganize with capital of S25 .000 or even
less, thus encouraging state banks to
abandon their present charters Banks
desiring to organize under this plan
should be examined by an agent of the
comptroller. and permitted to begin
business only uDon a certificate Of
the examiner, duly certifying that the
capital stock has been paid in, in ac-
tual cash"