Audubon Republican. [volume] (Audubon, Iowa) 1894-1925, 1895-01-17
AN IOWA CURRENCY SCHEME.

DuuuQuC UtuhcIo nave buUUulttcu 20
Senator Allison and to congressman
Henderson and Babcock plan to i'm
prove the present national bank cur
rency. 1t is based on the assumption
that the main objection to the present
national bank circulation is it's lack of
elasticity, and its chief purpose is to
cure this defect, while improving the
system also in other particulars. The
author is Judson X. DemiLg, cashier
of the Second National bank of Du-
buque, and the plan is rs follows:
81. Repeal all such portions of the
national bank act as conflict with this
plan.
"2. Require each association, now
organized or hereafter to be organized
under the national bank act. to deposit
with the treasurer OF the United States
United States bonds to the full amount
at par, of the paid in capital stock of
the association; said bonds to he issued
by the government for that purpose;
to be irredeemable, OF payable in fifty
years, or at remote period; to draw
2per cent interest, payable in gold, and
to be held by the treasurer Of the
United States to secure any outstand-
ing notes of the association issued un-
der section three of this plan.
%. Permit any association organ
lied under the national bank act to
issue at any time, at its option, under
the regulation of the comptroller of the
currency, its circulating notes to the
full amount of its capital stock paid in,
to be secured by the deposit of bonds,
as provided in section two of this plan,
and also to be a first lien upon all of
the assets of the association.
a. Impose tax of 2 per cent per
annum upon the average circulation
of each association, payable seminar
nually.
. Permitany association organized
under the national bank act to retire
at any time any portion of it's cir
culating notes, under the regulation of
the comptroller of the currency, upon
the deposit with the treasurer of the
United States of gold coin equal in
amount to the circulation to be retired.
"The practical operation of the cir
culatlng medium under this plan will,
be that, during times of stringency, a
bank may, by paying a tax of per cent,
increase its outstanding notes to the
full amount of its bonds deposited in
the custody Of the treasurer of the
United States, and during time of
relaxation may convert its surplus and
idle funds into gold to be turned into
the treasury for the retirement of a
, portion or all of its circulation.
"The public will still have currency
based upon government security, with
which It's familiar through an expert.
ence of over thirty years. Values will
not be shaken or business disturbed, as
would inevitably follow an experiment
tai system.
1.-THE government, from the sale of
their bonds, may retire its legal tender
notes, and thus be relieved of this men.
. ace to its gold reserve; or it may retire
treasury notes of 1890, or maturing
loans. During monetary stringency
the government will be called upon to
issue for banks circulating notes pro-
tected by bond deposit and so limited
in volume as to prevent the danger of
imitation, while the additional lien up
on the anks' assets furnishes further
protection in the event of a deprecia-
ton of Its bonds below par. At the
same time the 2 per cent tax upon the
circulation, while furnishing substan-
tial revenue, enabling the government
to share in the big profits which attain
at such times, checks unnecessary in
tiation and induces banks to retire cir
culation as soon as the necessity for it
is past. This retirement being accom-
plished only by deposits of gold, tends
to return to the treasury at an early
day the gold which goes into hiding
| p"hANo1 VA 10 lOI
eign investors by the sale of securities
1.-THE banks obtain upon the bonds
deposited with the treasurer rate of
interest equal to that usually paid on
balances carried with reserve agents
and other correspondents, so that the
retirement of circulating notes is equiv
alent in point of earnings, to deposit
ing idle funds in reserve cities for the
purpose of obtaining2 per cent on
daily balances, while the issuing of
notes, as the demand for money arises,
with a 2 per cent tax to offset the in
terest on bonds, is equivalent to the
withdrawal of 2 per cent balances.
This prevents the segregation of idle
funds in large money centers during a
deriod of plethora. and avoids the fic-
ton which arises from the redeposit
from bank to bank of given sum.