The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-10-19

States. Here is a table showing the per
capita circulation in certain States for the
year 1896:
Rhode Island OBSERVATION-DISCLOSURES. $S7i.00
MASSACHUSETTS, ..................... 81 %
Sonnecltut $1,000. .........'........... ~ ~
New YORK ACKNOWLEDGEMENTS. 2g5OO
lr6lana .............. ..............-..... 5av0
NEBRASKA .............. ................... 800
South Dakota ACKNOWLEDGEMENTS. 22.00
Kansas ..-........ ..-.................-.... y "
Alabama .................. ................ T.37
GeorSld .............. ..,................. lVuJ
mississippi ....-..... .............-..... 1O.01
Why have the four Eastern States named
such large circulation. per capita, as COM
pared with those of the West and especially
of the South? Simply because they are
older and have accumulated more wealth to
put into inert Investments. The people of
| the West and South have had their capts1
invested in productive industries; they could
not afford to invest in government bonds
bearing low rates of interest, while those OF
the last could find no other employment
for their money. The government bonds.
being held, principally, in the eastern Sec
ton of the country. when they were made
the basis or bank notes, naturally secured
monopoly of the issue. The loanable credits
of the East greatly augmented and
the people were enabled to organize all
kinds Of financial corporations for the pur-
pose of further draining the West and
South of their surplus productions. The
| West and South being unable to utilize their
productive investments as a basis for bank
| circulation, were compelled to pay tribute
| for the same to the people of the East. For
| example, the people of Indiana have paid
| to foreign insurance companies in twenty
| years, over and above what they received
4 back in way of taxes and losses, $43. 900 90
Allowing one-half of this immense sum for
com missions and other local expenses it
| will be seen that cur State has been drained
| Of al least 81 900, 900 dollars year by foreign
| insurance alone. This vast sum we could
easily have kept at home if we had had a
system of currency that would have enabled
| N hq
| compelled them to pay tribute to other sec
| tons for the same.
No one Will question the fact that the peO-
| pie or Indiana have produced more wealth
| than many of the Eastern States since the
| war of the rebellion, and that if we had not
been compelled to pay out so much for the
use OF credit capital we would have had a
| sufficient per capita of circulation to have
| organized our own insurance companies, as
well as many other financial institutions.
The saving to our people by being able to
supply, themselves with a currency would
be millions of dollars annually. The item of
| insurance is but one of a large number. Our
state county and municipal bonds have
been sold abroad, and the annual drain of
interest on public and private Indebtedness.
| If It could be accurately estimated. would
| startle us. Those who have purchased our
| securities, often at a premium, did so be-
| cause of their confidence in our resources
| and ability, If our resources are ample TO
sustain our credit abroad, why are they not
ample to sustain it at home? The people
| OF the West and South will never be able
to wholly free themselves of their burdens
we can stop the drain that is constantly
drawing away from us most of our surplus
pr tshiish ms can only be done by the
rency, based upon our own resources and
capital.
The primary objects of the proposed
measures are to so modify our laws that
the currency of the country will be based
upon the assets of the banks (the active
capital), instead of the inert, or dead, capt.
tai of the country. 1t certainly ought to be
patent to everyone that the capital that is
carrying ON the productive Industries of the
country, giving employment to labor and
creating markets for the products of the
same, is the capital that should be given
the volume of currency be equitably dis
triDuted over the country. Each and every
locality can supply it's own wants. If
said that some sections are poor, it -fay be
answered that such sections need less, and,
therefore. all will be equally able to supply
All concede that no system Of currency
VIII suffice that is not perfectly safe and
sounG Do the supposed measures provide
every bank Shall deposit with the treasury
per cent. of its circulation, which goes to
form guarantee fund for the redemption
of the notes of failed banks. The guarantee
fund Is to have lien on the assets of the
80 hsrF end In case the assets do not
fully indemnify the fund the controller of
ll4e currency Is empowered to assess the de-
nciency upon all the banks, in nroportion
to their national currency notes outstand-
ing, not to exceed per cent per annum
The report of the controller of the cur
rency Tor 1881 shows that up to that year,
from the organization of the national bank
but 164 banks, with circulation of $16,209 :
l0o had failed. The average annual eircu-
1891. was $2S2 sol, $50 1t thus appears that
the entire circulation of all the banks fall
ing for the entire period, was but frac-
ton over per cent of the total amount OF
currency in circulation. The guarantee
fund required at the beginnIng It will wi be be
notes of failed banks for a period of TWEEN
ty-fve years, without taking into account
the lien of the fund upon the assets of the
failed banks. or the authority of the con-
troller to assess all the banks, annually,
per cent. of their circulation for its main
more than ample in Canada.
In conclusion, let US make a brief COM
| parison of the present with the proposed
system. ard see what benefit the latter
would be TO the West We will suppose
that it is desired to establish bank with
800 600 capital. Under the present system
100000 would purchase about $4,000 OF
bonds. Upon that amount of bonds the
government would issue TO the bank ISL co
of currency, of which 5 per cent. would
have to be left on deposit as a redemption
fund. which would leave about ST. 600 The
incorporators (supposing they did not orig
inally own any government bonds) would
have sent out of the community. for the
brought back only 81 900. The communitS
would have S23 coo less money in circulation
J than before the bank was established.
Under the proposed reform the 100000 oil
capital would be retained in the community
and the incorporators would have the right
by paying a tax on the amount over 50 pei
cent. to issue currency notes equal to the
paid-up and unimpaired capital The vol
ume Of circulation In the community, under
the proposed measures would be 800 600 II
paid-up capital and bank notes In the same
sum. less the per cent paid into the guar
antee fund-a total OF slq5 COO 1t will b,
seen that. under. the proposed reform tn,
! West and South would be able TO more thar
double their circulation. which would no
only reduce the rate of interest TO borrow
ers. hit would afford an elastic volume o
money.
| cussion of the details OF either of the pro
posed measures. or TO be strictly accurat
q | as 70 their operations my only purpose be
! inR TO briefly call attention to their object
I | and demonstrate their soundness and prac
: | ticability w. d. BYl--N.