The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-12-08

I
templated would require NUMBER OF
| amendments to the present national Datlk
act. These amendments should be naue
only upon such conservative lines as would
while granting the necessary ala 10 the
business world in facilitating exchanges, IN
l,owise weaken the system, or lessen the
stability of the notes to be issued. The
complaint uttered against the national Dank
act as ii now stands is not directed toward
the method of bank organization or the
absolute safety guaranteed to the note
holder. 1t is directed towards those re-
strictions it embodies, which result IN IL
failure 10 accomplish the ruiz DehehI II
ought to carry. The requirement or the law
now makes it impossible TO organize pahk
with capital of less than $50.O OOO no mat
ter how small the place in which IT is 10 De
located. or how restricted the volume OF
business there to be transacted. Because
of that. with the added expense or TAXA
ton. both national and local. many cIl- coln-
munities are deprived of the aid of banks
Of issue and burdened with onerous rates
of exchange and interest charges.
THE NATIONAL BANK SCHEME.
In order to obviate to as great an ex-
tent as possible those objections and make
the act more harmonious with proper busi-
ness conditions, / recommend that 1t be
amended in the following particulars:
First-Permit national banks to be organ
lied with a minimum capital of $4,000 in
any place having a population of 1000 in
habitants or less.
circulating notes secured by deposit of
bonds to one-half of 1 per cent. per an
mum.
Tiird-Permit banks now organized or
hereafter organized to issue circulating
notes to the par value of the refunding
bonds hereinbefore suggested, when deposit
ted by them with the treasurer of the
banks as shall avail themselves of the op-
nortuntty to deposit as security with the
treasury of the United States .greenbacks,
frna aClIrx nfA or Gil
total amount of $200. 100000 against which
there shall at once be issued to them by the
controller of the currency national bank
notes to an equal amount. it being further
provided that from time to time, at his con-
Venience the secretary of the treasury shall
substitute for the greenbacks. treasury
secure circulation, bonds of the same class
and character as the refunding bonds first
named to the amount of 100000 900, such
bonds to be chargeable to said banks and
by them accounted for at such price not
less than parl as the market quotations
During the period of time intervening be-
tween the deposit OF greenbacks, treasury
notes and silver certificates and the substi-
tuition of the bonds by the secretary of the
treasury the circulating notes specifically
issued therefor shall be exempt from taxa
ton. Upon such substitution of bonds the
funds released thereby shall at once be
transferred by the secretary of the treas
ury to the issue and redemption division.
Fourth-After said banks have deposited
such bonds. greenbacks, treasury notes or
silver certificates to the amount of so per
cent. of their capital they shall be permitted
to issue bank notes in addition to the so per
cent. thus provided, to the extent of 25 per
cent. of such deposit, which said 25 per cent.
may be secured by any direct pledge of Sc
bank
Fifth-Extend the guaranty of payment by
the government to all circulating notes of
the bank whether issued against deposited
security or against assets.
Sixth-To secure the government against
n fC IN nY14N fax
of per cent. per annum on unsecured cir
culation shall be levied to create safety
fund, which fund shall be invested by the
secretary of the treasury and the controller
of the currency in government bonds. In
addition to such funds the government shall
be further protected by having first lien
upon all assets in case of failure of the is
suing bank.
SeVenth-An notes shall be redeemed in
the city of New York at the subtreasury,
and at such other subtreaSuries as may be
designated by the controller of the currency
treasury. The control of such redemption
shall be under the direction of the con-
troller. of the currency and made from a re-
vided and maintained by the e' banks. ks Oe pro-
Eighth-Restrict the issue of national bank
notes to the denomination of $40 and up
ward.
SUGGESTIONS NOT RADICAL.
An examination of the plan herein pro-
posed will show that the amendments sug-
gested are not of distinctly radical char
acter. 1t is believed that banks organized
under the national bank act, with these
amendments, would give upon a thoroughly
safe basis a desirable credit currency lead
ing ultimately to further freedom of issue
as the result of time and experience A
careful investigation of the commercial
conditions of the country at different pc
riods of the year shows how essential to
those sections depending upon the prompt
moving of the staple crops of cotton, wheat
and corn is bank note issue which enables
the local bank to supply its customers with
in the shortest period of time and at the
lowest cost. In illustration of this point
attention is called to the extent to which
the crop-producing sections of the country
are now dependent as borrowers of money
upon other sections.
The national banks located in the South
ern states have an aggregate capital of $685.
$4,000. On Oct. 6, 1896, they had borrowed
largely from banks in the East. to assist
IN handling the cotton crop ,$13, ,54S 900. On
March following these loans had been re-
duced to $2,516,2O0. They succeeded in bor-
rowing for a part Of their needs but COM
mercial necessities required more. With
proper banking facilities the necessity of
such borrowing now existing would be re-
duced to q minimum.
l am confident that under an act allowing
greater liberality of issue, and less bur-
densome rates of taxation, those banks
would find it to their interest to issue, in
stead of SIS, 900, the amount which they
have at present outstanding a sum equal
to the full amount of their capital, and in
addition, in the season of crop activity an
additional unsecured volume of circulation
approXimating 25 per cent. of their capital
From data gathered from the records of
the office of the controller of the currency
1t is found that during the existence of the
national banking system 800 associations
having a combined capital of $50, ,000, 900, have
been placed in the hands of receivers. OF
the number of those in this list whose af-
fairs are fully closed only eighteen having
q capital of 81 10000, would have failed to
pay in liquidation an amount sufficient to
fully provide for their circulating notes
had such notes been outstanding to the full
limit as herein contemplated at the time
of their failures, respectively. The deficien-
cy would have required to cover 1t con-
tributiOn from the guaranty fund oF but
$194 1929. Had the whole number of 800 failed
associations maintained in current use an
amount of note issues equal to % per cent.
of their capital, as herein proposed, the 2
per cent. tax on such circulation would
have produced the sum of 81, ,454 AS avail
able to meet the deficit of $1a4 S24 shown
to have resulted from the failure of the
eighteen banks which failed to yield from
have been necessary TO provide for all their
own outstanding credit currency.
TO BREAK THE ENDLESS CHAIN"
am not unmindful of the convictions pre-
conceptions and prejudices so widely preva-
lent among the people in much that relates
to our currency and banking system. II
will at once appear to many that the pro
posal herein made to place in conditional
retirement the sum of 5000, 900, 900 in our le-
BARTENDER (greenback) issues is dscrim-