The morning news. [volume] (Savannah, Ga.) 1887-1900, 1896-12-20
EUROPEAN FINANCES.
PRINCIPAL FEATUREs or THE CUR
RENCY SYSTEM or OLD WORLD.

Ranking in Great BFttntn-lhe Dtf-
ference Between The Note Issues In
England and scOtIand-How the
Bank of France Checks a Run on
Gold by Demanding II Premium.
The Currency of Germany, Austro-
Hungary and Russia.
From the Baltimore Sun.
Washlngton.-In view Of then eeessity
congress is under of reforming The curren-
cy by canceling the dangerous greenback
and Sherman notes ana providing for the
issue in their stead Of wen-secured state
or national bank notes under an efficient
system of federal supervision, it is of in
terest to pass in review briefly the curren-
cy systems of other countries. with view
( TO seeing how the most successful nations
have solved the problem that confronts us.
! For purposes of comparison it will be
well to sketch the system" of the United
States, which embraces nine kinds of
money" We have in use: Gold, $780,
0000; silver. $685., 100000; treasury promi-
ses to pay, tgreenbaeks,) s346. 100000; Sher-
man treasury notes, Sl45. 10000; national
bank notes. s235,OO0OO0. OF the gold some
S18O, Ooo, 900 is in the gold reserve of the fed
eral treasury to secure the redemption of
greenbacks. The rest of the gold is in
circulation, except about $40,OO0,OoO repre-
scented by gold certificates which are in cir
culation. OF the silver about $135. 000, 900,
including 81, 100000 Of fractional currency,
is in circulation while $50 coo, 900 silver dol
lars are in the treasury, some 1851, 000,000 of
which are represented by silver certificates
now in circulation. The greenbacks are
part of the uncons titutional paper curren-
cy issued during the civil war as forced
loan, and, being virtually redeemable in
gold, and constitute THE endless chain"
which excites alarm in times of stress by
depicting the gold reserve. The Sherman
notes are of substantially the same char
acter and involve the same danger.
The national bank notes are issued by
local banks under federal charter upon
the security of government bonds deposit
ed with the treasurer being issued to the
limit of 80 per cent. of the par value of
the bonds. The notes are further secured
by deposit of per cent. of the amount
in circulation and by the liability of
shareholders to the amount of their stock,
in addition to the amount invested there
in. A reserve of lawful money equal to
from 10 to 20 pei. cent. of deposits, is re-
quired. In many of the states the state
banks have the right to issue notes, but
the 10 per cent, federal tax on their notes.
A grievance of the agricultural states
is found in this prohibition of note issues
in localities where national banks. as at
present regulated do not issue notes, find
ing 1t Improbable. A serious fault of the
national bank system is that under 1t note
issues are not sufficiently 'elastic"-Io
not expand when the demand for money
increases and contract when the demand
dlmlnlshes. 1T is not a permanent sys-
tenn because, as now organized note IS
sues must cease when the bonds on which
they are based are redeemed or become
very high-priced.
The currency of Great Britain and Ire
land consists of gold, $i50, 900, 600; fractional
silver, $l12, 100000; bank notes, about $685.
0OO00. The Bank of England is a private
institution. The circulation of its notes
is secured in the main by metallic re-
| serves. 1t is permitted to issue $50 600 600
OF notes on the security of government OBJ
legations, but all over that must be secur-
ed, dollar for dollar, with gold. Notes are
not smaller than SIS They are legal ten
der in England, except in payments by
the bank and its branches, so long as the
bank can redeem it's notes in gold. They
are not legal tender In Scotland or Ire
land. The circulation of Bank of England
| notes in October last was $125 1893, 1870 It's
reserve was $62 900; it held besides $iO9-
| 100000 in gold. Private banks and Joint
| stock banks are in England authorized to
| issue, respectively, not over $500, 900 and
| Sl0,OOOO0O in notes. Scotch banks may is
| sue $4,000, 900, Irish banks $32, 100000. When
| the Bank of England wishes to issue more
notes 1t must put up gold for an equal
amount Elasticity is wanting. In times
| of great panic, as in 1866 elasticity is Sc
cured by the government permitting the
bank to issue notes against government
| bonds as security.
| ii
ter. The bank currency is based on com
mercial paper. The foundation is the gem
eral assets of the bank rather than anv
| special securities. The credit currency il
restricted so as to be kept in proportion to
| the backing of commercial paper and coin.
| There are ten banks which are permitted
| 10 issue notes. each having many branches
so that every corner of Scotland has unlim-
tied banking facilities. by their system of
| giving cash credits to persons of character
in active business they have immensely
quickened the development of the country.
In 1895 their capital was $46.5O0,0OO: re-
serve. SIS coo, 600; deposits $470 600 900: notes
in circulation, $S5,O00,0OO; advances, loans,
| etc, $3l5,000,000. In December, 1895, the
| uncovered notes issued against bonds
| aggre gated IS, 200, against coin and bull
ion, s29,000.000. Irelands currency system
resembles that of Scotland. Six banks are
permitted to issue notes In December,
/
ed by bonds and $1,000, 600 secured by an
euqal amount of coin and bullion. The
Scotch and Irish banks usually keen out
uncovered" notes to only half the amount
authorized by law, and thus secure a mar
gin of elasticity.
The Canadian system, on which the
Baltimore PLAN is modelled, is regarded
as one OF the best in existence and Sc
cures competitive banking facilities in
every village of the Dominion, with unlim-
tied funds at very low rates of interest
everywhere. There are thirty-eight banks
with no restriction as to branch banks.
One bank has fifty branches, another
thirty, and so on. The branch feature Is
most valuable, as it gives rise to compe-
ution for custom. Elasticity is another
valuable feature, the note issue expanding
and contracting about 20 per cent. yearly.
according to the demands of business.
Notes may be issued up to the paid-up
capital. No notes are under S. No re-
serve is prescribed. Notes are a first
charge against all assets of the issuing
bank, and the shareholders are liable to
the amount Of the stock subscriptions. No
deposit OF bonds is required Each bank