Evening star. [volume] (Washington, D.C.) 1854-1972, 1899-11-28

| reached by lessening or shifting to the
franchise of banks the present / per cent
tax on circulation to so per cent of the par
OF the government bonds securing it. A
tax of or 3 per cent should then be levied
on the excess of circu alton over 90 per
cent of the bonds. which viii make of such
excess circulation a secured emergency cir
culation only 70 be used when it becomes
a pubic necessity, and not a means of
profit by the banks under normal condi-
lions.
THE general increase in bank circulation
desired being possible of attainment
through the lowering of the tax on the 30
per cent circulation, this additional tax on
the 10 per cent excess circula ton to the
par of the bonds will not materially inter
fere with such general increase. and Will
only operate to create an emergency circu-
lation of great value.
Third. As he use of rediscounts and
bills payable on the part of the western
and southern banks at certain seasons of
the year is regarded as eVidenCing the need
of an elastic circulation, and as bearing
upon the question of the measure of relief
which may be expected from the bOnd-Se
cured emergency circulation here recon-
mended, the controller viii state that with
out any general increase in bank-note cir
culation as a result of new legislation. the
possible emergency circulation of $50 600
600 Immediately available. based on bonds
securing the present circulation, amounts
to more than the combined bills payable
and rediSc cunts of all the national banks of
the United States outstanding at any time
within the last three years.
IF the controllers estimate of a possible
bond-secured emergency circulation of $40
No,G~ be correct. this amount is about
double the average combined bills payable
and rediscounts of the entire national sys-
TEN outstanding within that period.
Foreign Examples.
AS the elastic and uncovered issues of
the joint stock banks of England Scotland
and Ireland, comprising all the uncovered
bank notes there issued, may be cited as
illustrating the advantages of an elastic
circulation, the controller would also call
attention TO the fact that these entire is
sues are but small amount more than the
$40 00o,C00 bond-secured emergency circula-
zion which would be Immediately available
on existing bond deposits in the United
States under the legislation recommended
And with an increase in general bank note
circulation, resulting from modified laws
we would probably have bond-secured
emergency circulation in this country
larger than the emergency circulation of
The joint stock banks of England Scotland
and Ireland, (which is secured only by the
general assets of the banks without prefer
ence over other creditors.
Fourth. Even if special uncovered
emergency circulation be provided to be
used only in case of panics the plan here
suggested of changing the taxation and
issues of secured bank notes will affor,, an
elastic circulation of value in times of
money stringency not approaching tue Sc
verify OF a panic.
With or without the legislation for the
special uncovered emergency circulation
the bond-secured emergency circulation
Will be of great public use.
Fifth. If provision be made for an un-
covered emergency circulation for use in
times of panic, subject to a tax so large as
to be repressiYe at all other times the 10
per cent bond-secured emergency circula-
ton herein recommended might be taxed
az the rate OF per cent per annum for the
time issued instead of at the rate of 3 ner
cent, thus allowing its freer use undar
Continued on Fifteenth Page.)