The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1896-07-21
MAY BE TURNED INTO GOLD.

To the Editor of the Globe.
Kindly inform your readers. of which the
writer is one, II National Bank Notes. are
legal tender for all debts, or, in other
words, IL | owe a party say $500 or any
other amount, If l can COMPEL such party
10 take national bank bills in payment for
the same or not. l also note the oddities
declare for our present financial system. and
tell us in the same breath that one of our
dollars is. and must be, the equal of another
Is this the case? If so, where and how can
we get the gold for national bank bills? An
early reply in your paper will oblige, yours
truly Wisconsin. -
BY the acts creating the national
banking system and authorizing the
issue of national bank notes, 1t was
provided that these notes should not be
legal tender, but should be received at
par in payment of dues to the United
States. except duties on imports. and
for payments by the United States ex-
cept interest on the public debt. and
for the redemption Of national curren-
cy. They were also made receivable
by any national bank at par for debts
owing to 1t. The security for the re-
demption Of these notes consists Of the
United States bonds deposited withsthe
United States treasurer to assure ulti-
mate redemption Every national bank
that issues circulating notes must first
buy in the market and deposit in the
treasury bonds of the United States.
1t can issue notes only to the extent of
80 per cert. of the face value of these
bonds Inasmuch as all such bonds are
at premium. and as at least 10 per
cent of their face value is not COW
cred by any notes outstanding, it is
obvious that the security is perfect.
The law further obliges each bank to
redeem it's own notes at it's counter on
demand in lawful money" that is to
say, in any legal tender money of the
United States. In addition to this. a
bank may designate another national
bank in any reserve city as It's redemp-
ton agent.
So the course by which national bank
notes, although not legal tender, may
at any time be converted into gold, If
so desired, is simple. The holder Of a.
national bank note can present 1t at
the bank which issued it ard that bank
Is compelled by law to give him mex
change some kind Of legal tender
money; gold, silver or greenbacks. If
it Is inconvenient for him to go to that
bank he can have his notes pre-
scented to and redeemed by it's redemp-
ton agent in New York city. He has
now legal tender money in his posses
sion; and that, when presented at the
United States treasury or sub-treas-
ury, must be exchangeable at par with
gold while the resumption. act Is main
tanned
So, behind this form of money, as
behind all others in the United States
agent, the gold dollar. AS long as
there Is no question Of solvency, and as
long as everybody knows that the gold
car be had for the asking, nobody
wants it. The very smallest amount Of
the yellow metal will serve to float all
the other forms Of currency. It is only
when possibility OF refusal to redeem
Is suggested, or when the proposition
is advanced that redemption may be
made in something else than gold, that
the public temper changes and every
body begins to want it. Then come
the calling in Of all kinds of loans, the
refusal of accommodations and the
sharp contraction of both currency and
credit that produce financial embar-
rassment and industrial distress.