The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1899-11-29
ELASTIC BANK CURRENCY.
SUGGESTIONS IN the REPORT OF
COMPTROLLER DAWES.
PernAitted to Issue 10 the Full
Amount OF Bonds Deposited, the
Last 10 Per Cent. Heavily Taxed.

the currency. for the year ended October
81, 1893. has been prepared for transmission
to congress.
With respect to the condition OF national
banks during the year, as showed by the
five reports required from the banks. the
comptroller says:
The number OF banks In operation on Sep
TENDER Z, 1883, was 3,5aS. with paid In
capital Of $6l6 rs. SO The individual de-
posits on that date amounted to 81. 10, u.s.
go q. and the aggregate resources To A,6o'.-
{ returns with those made on September
%. lSS. indicate an increase during the
year in individual deposits of s4ls. III. 500;
amounts due from other banks and bankers.
$lo ssl .S9S %; in specie, Sli sI rs H. and In
aggregate resources. $646. S44 oSS.5 On Sep.
tembsr the net deposit liabilities OF the
national banks OF the country aggregated
s.. 90, 463. diSsS on which a reserve OF $S90-
SOS $3.50. or S.3s per cent. was held. The
composition OF this reserve was as follows:
Specie, ssss,oT .ass So; legal tenders and Unit
ed States certificates OF deposit for legal
tenders. $l27. 74.eSl: due from reserve
agents $l4. 12s. ssol4: redemption fund with
the treasurer OF the United States. 49,
lls 1858
ments in banking laws as directed by sec
ton 1888 OF the revised statutes the comp
troller before making his chief and new
recommendation for a bond-secured elastic
circulation, repeats his recommendation of
one year ago for a law providing for an
unsecured emergency circulation TO lesson
the destructive power Of financial panics,
and taxed SO heavily that under normal
conditions 1t must be retired and can
neither provide profits for the banks nor
serve as a basis for the expansion Of COM
merctal credits He emphasizes the neces-
sity of such a circulation, designed, like
clearinghouse certificates. simply as a
remedy for rare emergency, and not as
an instrument of current business repeat
ing the words OF his former recommends
ton to-wit:
Fer the purpose OF allowing elasticity to
bank note issues to protect the banks and
the community In times OF panic small
amount or uncovered notes in addition to
the secured notes should be authorized by
law under the following limitations: They
should be subjected TO so heavy a tax that
they could not be issued In normal times
for the purpose OF profit, but would be
available in times of emergency. The tax
should be so large upon the solvent issu-
ing banks as to provide fund which, in
connection with the pro rata share of the
assets or an insolvent bank, would be suf-
ffcient to redeem the notes In full, without
necessitating any preference of note hold
ers over depositors OF any insolvent issuing
bank. The tax should be so large as 10
force this currency into retirement as soon
as the emergency passes. Such currency
OF the too rapid liquidation OF credits
which are collapsing under financial
panic, but could not be profitably used as
basis OF business speculation and infia-
ton.
In introducing his new recommendation
the comptroller then says that II such a
law be not passed. a marked degree OF
elasticity Is possible Of attainment In con-
nection with our present system of bond
secured national bank notes and should be
provided for by law. whether the former
law is passed or not.
The comptroller believes that in accord
ance with the presidents recommendation.
national banks should be allowed TO issue
circulation to the par of the United States
bonds deposited by them for circulation.
and that in connection with the law au-
thorizing this, provision can be made for
a secured emergency circulation.
The object OF allowing the banks to take
out circulation 10 the par OF the bonds Is
10 induce them TO furnish for the use of
the public a larger amount OF circulation
than Is in existence at present The pres
ent rate Of profit 10 be derived by the
banks from their circulation Is not suffi-
cient to justify them in issuing a larger
amount, but any method OF increasing the
profits on circulation Will result in an in
crease.
1t is true that the authorization of an
issue OF currency 10 the par of the deposit
-
tax. is one method of inducing q larger
circulation. hut II is not the only method.
BY "A modification OF the present rate OF
taxation on hanf notes, coupled with the
authorization OF issues to the par of the
bonds. the same inducements can be of
fered for larger circulation and yet pro-
vision be made for secured emergency
circulation.
The comptroller. therefore, would recon-
mend legislation authorizing the issuance
OF national bank note circulation 10 the par
Of the deposited United States bonds. and
that the additional 10 per cent. circulation
thus allowed tho banks be subjected TO a
tax at the rate of or PER cent. per an
mum for the time used. which will tend
to prevent It's L restricted Use under nor
NAL conditions and 20 save IL for use al
those periods OF :4e year when crops are
To he moved. and IN those periods Of panic
when II is mcsf valuable both 70 the banks
ard the business public az means OF as
sls;tng the general liquidation OF credits.
! with the object OF securing an Increase in
the present hank note circulation, he would
recommend The reduction or adjustment
Of the present tax Of per cent. per year
on the circulation 20 90 per cent az the
deposited bords---the amount Of the reduc-
ton In the tax on currency to be collected
from the necessary Per cent. IT tax on the
capital and surplus OF national banks II
requisite 20 the pualic revenues To allow
the banks 10 issue up 20 the par of the
bonds unsuh tecscd 20 additional tax on
the 10 per cent. extra circulation. viii re-
sult n their irums diately taking out their
additional circulation for the purpose OF
pradt business credits Will BE extended
ana adjusted To correspond with saeh in
crease u the currency, and practically the
same ineja sticity viii characterize our
hank note issues then as row. With tho
eAvcpt of a panic We would have no add
t4as,al rE4eans of Iessening the necessity Of
a call upon the business community 10 fur
rsxh Is she repayment Of loans prac-
really the bulk q the deposits drawn by
frightened depo<isofs.
TIE comptroller believes tAa' the ieyyins
OF tax * ore-xixth 81 ! per cent. upon
circulation ~ - per cent. OF the sar OF the
bonds and allowing he banks 20 Issue cur
yency "a the par q the bonds by paying
tax a, the rate Of or 3 Per cent Per an
,yufn on rhs excess Up 20 the PAR when out
standing will result in the deslrsd in
crease i7 oar general bank note issues
ana provide a marked degree OF elasticity
IL, our circulation
In this connection me comptroller SAYS
~ can ret properly discuss ire question
- taxafiun cs banks. "a related 70 sAs pub
l,- revenues further iban - say that tae
/ ,r9t.,Sfgicu &C a TAX upon the capital and
Surplus q the banks 70 o<ss1 any resQe-
tsa9 IN The tax ca currency viii remove
suy objection n his recOrnn9 en3atton on
tne grounds that s. lessons the share Of
the puh.Ic burden ~Aicn the banks should
prov%riy hear