Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1898-01-06

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the Treasury IS authorized 10 sell bonds
whenever the reserves need replenishment.
In this way or from surplus reve-
nue.. the demand obligations chat Isl
United States notes and Treasury notes
of 1880 can be gradually removed
and the cost TO the country can be re-
duced: while this process will also giNd
the inestimable advantage of ceasing 70
use demand debts as money, OF simplify
ing our currency. and Of adding 70 comb
dence in the certainty Of our standard.
BY the plan of the commission, govern
menr paper Is withdrawn In the first iiNo
years only so fast as the banking currency
expands so that contraction cannot possi-
bly, take place; II United states notes are
cancelled, their place Will be taken by the
gold paid out for them. or by the expah-
sion Of bank notes, under the new system
proposed and in the following five years
all the remaining United States notes aF6
TO be retired
"The demand obligations Of the United
States were put forth solely because theLe
were no funds in the Treasury 10 redeem
them The notes were only evidence tnar
propertr had been received and used up
for services or supplies or public Dulldlnss
mo longer available assets. The govern
ment by the nature Of the operation oio
not retain, as the notes went out, any
property Immediately convertible INTO corn
with which 20 redeem it's demand issues
They were not money based on pope
Nv: they were only a debt. On the otneF
hand. a bank note is never Issued Vraqa,
of course. excluded except for a conSideI
ration in negotiable property OF equsl ~
greater value. The bank note comes IoIlh
as the sequel OF a business transacuon,
and is based on the active property or me
country which is passing between Piy
ducers and consumers. ms properly -
always negotiable, and always esquai "
the duty of meeting the note latplIity.
Rank notes are as sound as the business
transactions of the country. lhe cur
rencv of the country, mOfeoNef'
should Increase as the transac'lois % .,.o
country increase; hence the rigid un-
changing issues of the government halNe
them an inelastic part OF the circuiatiO,i,
while by the very process or their lssnt
bank notes alone can be AUTOMATICALLY au-
iusted to the changing TRANSACTIONS OF lha
business community.
SCARCITY OF BONDS.
an view OF the scarcity Of United
States bonds. they cannot long be regard
ed as a basis for circulation. Moreover,
anv bond security Of o higher character
yields a low rate OF interest ana IN a time
Of strngency, when borrowers need iy ;l.h
and the market rate Of interest Is hisn,
there is no inducement 70 buy these Doids
TO increase circulation. Hence, under tle
present system, when notes woulu DC nioSu
needed. il is least profitable 70 issue lnerl.
While providing for partial use or bonus
for securing notes Us per cent. or inc
canitaD the commission proposed thtt
notes hevond this should be issued on an
instead of q part Of the resources OF a
hank and after ten years that no spec,at
bond security should be required. Banks
NAV issue notes up TO 90 per cent. OF lhelr
capitaI without restraint; ior ISSUES DC
yond 90 per cent. and up 10 % per CO...
they nav a tax of 2 per cent, Tor thVS9
be,-ond N per cent and up To 100 per cent.
they nav a tax Of per cent THESE notes
would be a prior lien upon an TIE IL
sources Of the bank, and in ADDITION, upvii
the stockholders liability. MoreOVei, al
H. 80 ID u
Of their circulation as a permanent su1-
antee fund. For daily redempuons DdlnS
should keep q per cent. reuehipuoh 'e ~
in the hands of the Compuoiler OF 10
estahlished i'm places OF 1000 inhabitan's'
and branches OF banks are also perni',Sn.
,It is apparent that the security 70 the
notehoIder under the proposed piah
greater than usually suppVSou' - "a
Should be issued by all national Dalhs ~
The amount of 81 per cent. OF their present
canital the security In the FORM OF 'otai
assets (omitting consideration Oh s10SH
holders liability or guarantee lutp"y -
,,ore than e 10 ST. In the $40 banks OUT
-. tht resar-ve cities. the protection
would be Sc 10 TO 81 OF notes. Ahe hIeo,,osss
number of failures Of banks occurs sui,l ~
1893: and yet the notes OF thosS N
hanks which did not realize az least
,,s,r cent Of their capital out OF their re-
sources formed only Is or pei Cent "a
the proposed circulation. HAD W Der Sens.
OF the capital OF all nauohsn ' o@nNtS IT,
tssned in notes upon tho proposed pltii'
since The beginning Of the national pahA-
ING system in 1863. an assessment upvn
the banks annually OF only l-f0 0f ! ~
cent would have been necessary, MO'e
over Instead OF tax on circulation, .
tax OF is OF I per cent. on capital am
surplus is proposed 10 cover the expenss
81 the system. Such plan IN gene,a'
would furnish a safe. elastic, uihiothl.
and expanding currency based on nAe"
and certain standard.