The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1897-10-30

uA4l4rcQ anu Sky fulilioIS Ouc All 1SVt
into the new 2 per cent bonds. and an
equal amount Of new circulation, thus
retiring the present national bank cur
rency outstanding against these bonds
1T seems reasonably certain that the
funding OF our debt as above, and the
establishment Of a uniform circulation
equally safe with, and better and more
attractive than the national bank cur
rency, and the consequent increase %
public confidence, would not only release
the present gold reserve, but would re-
lease the entire stock OF gold into &C
tive circulation.
The national per cen: bonds issued
a. par as above, would remain at par
because they would never leave the ira
sury where they would earn the same
interest, less only the circulation.
that they would earn II w,0dEn oy
surrender OF an equal amount Of loan
able currency
Tlere seems a manifest advantage in
relieving the banks from the response
'biiity OF issuing their promises TO pay
for the interstate circulation To the
extent that they are now holders o. the
present dangerous notes they would OBJ
tain an equal amount OF iosnable circu-
lation, against which they would not be
compelled 10 lock up a single dollar OF
gold or assets for redemption fund or
reserve, and they would get in addition
the interest on an equal amour: OF
bonds. Their entire assets would thus
be available for protection OF their de-
posters, which seems much more equit-
able than to give The banks the right
20 issue circulation which is made
prior len on al assets. leaving the de-
positor al a serious Disadvantages De-
positors are not interested in the banks
currency issues. and they might natur-
ally object TO depositing their surplus
funds in bank upon whose assets the
holders OF its circulation notes would
have superior claim.
the proposed plan gives every holder
OF the present demand notes equal rights
end opportunities in the exchange; it
avoids the very proper objection to CIV
ing exclusive privileges to national
banks-or to any b<nks-as against
trust companies or individuals.
with entire justice 70 the individual
holder o: the notes. the debt can be
funded by this plan cheaper than by
any plan heretofore proposed, and the
entire transaction be closed in a few
months; whereas, other plans cannot
avoid long period Of transition. during
which We should be in as much. If not
more, danger than we have been in the
recent past.
I'm discussing tnis plan with some OF
fria 10
ed that currency that is not redeem
able on demand is fiat currency; that
it is 'greenbackssm.' and that a circu-
lation 10 be acceptable must be some
body's promise TO pay and be redeemabie
in gold on demand. which objection
seems to me TO SAVIOR more OF tradition
than OF reason.
I'VE have all been accustomed to think
only OF a circulation consisting either
OF the governments promise to pay pre-
tected by a percentage of idle gold. or OF
a bankers promise 10 pay based upon
his capital and assets
The former is illogical, dangerous
and unjustifiabie. II has cost us mil
lions upon millions directly, and many
other millions indirectly through the
paralysis OF the entire business OF the
country.
the bankers promise to pay. as
form 90 everyday circulation for our
domestic uses. is equally unjustifiab BILE
whether based upon government, bonds.
IN which case the promise OF the bank
er is entirely unnecessary, or az an
emergency supplementary circulation
based upon the bankers assets as mas
been sometimes suggested
I'm prosperous times such a circula-
tion. in fact almost any circulation.
would answer. and if the supplementary
circulation based on the bankers assets
was only for the emergencies OF peri
odic crop movements and other prosper
ops conditions, 1t might be ;Olera5le.
with such a domestic currency. how
ever, periodic panics would De unavoid-
able, and at such times such circulation
would be found a source OF weakness
and danger instead of strength and
Afety.
the principle and most profitable
province Of the banker is 70 receive on
daily deposits the funds OF those who
nave confidence in his integrity. abili-
" and financial strength, and to loan
10 others for legitimate business such
proportion OF their funds as thee xperi-
ence of years has demonstrated 20 be
safe. The capital and sudplus of the
bank is the margin Of safety practically
pledged TO the depositor. 20 which
should be added is an important factor
the personal character Of TIE bank. The
depositor who trusts the banker with
the life blood Of his own business. and
gives the banker the profit from loaning
80 per cent u 20 per cent os MS de-
posts. Is entitled to a first len upon al
the bankers assets, capital and surplus
IF % This entirely legitimate and safe
relation. the banker. for the sake Of
some additional profit. issues MS Ne-
mand notes against some percentage Of
his ca pital or assets, Ae thereby impsl
the security % MS depositors and endan-
gers mis- own safety.
In times OF dis;rust or panic the
banker would nave 10 meet not only the
rapid withdraw wal Of deposits. acce.er-
atei by mis- own necessary curtailment
OF Accommodations - his customers. but
the embarrassment OF redemption OF dis
UNI Ao-fs' 4et14444S SIM "a nc III I'll
ment - his loans an& consequent effect
upon his deposits. and compelling
realization upon his owa assets under
very untavOrab BE conditions In such an
emergency the attempt - issue add
tional demand no,es up % ana against
a percentage q capi.ai OF assets. would
be suicidal II would simply increase
the distrrst - ire depos5.orz ana n0te
holders and stimulate the run upon the
bank.