Amador ledger., 1900-08-31
THE AMENDED BANKING LAW

The new currency law enacted by a
Republican congress and signed by q
Republican president and put into oper-
alton in March of this year makes some
important notifications of the national
banking law as it was. Among these
changes are the following:
Banks may now issue their notes as
currency to the face value of the bonds
deposited as security for such currency
instead of to only 80 per cent of the par
value as heretofore, provided that the
market value of such bonds does not
fall below the face value. In other
words the government now accepts it's
own bonds as good security to the full,
face value of the bonds unless they fall
below par. which is highly improbable.
And why should it not? Can there be
any question as to the value of the Sc
curity, and it is only for the purpose of
securing the notes that the bonds are
deposited with the government.
In case the new 2 per cent bonds are
deposited as security for the notes the
tax on circulation is reduced from one
per cent per annum to one-half of one
per cent per annum. This was done to
facilitate the refundinG feature of the
law and which has already saved the
government eight millions of dollars.
To give needed banking facilities to
the smaller towns of the country ma
tional banks having only $25, 1000 in
capital may be established in towns hav-
ing not more than 5000 population, and
in towns having more than 5000 people
and less than 5000, banks having
capitalization of $4,000 may be estab-
lished. To show the answering need
for this provision it may be stated that
more than so per cent of the new banks
formed since the passage of this meas.
ure have been capitalized at $50, 1000 or
less and are in places having popula-
tion of 5000 or under.
Banks may now surrender part or
all of their note circulation at any time
and take it out again at any time in
stead of waiting six months between
surrender and reissue as under the old
law. This is to enable them to with
draw their currency when not needed
and take it out again when needed as in
the event of a financial stringency.
The national bank notes are not a
legal tender and no one has to accept
them unless be wishes to, but us they
are secured aSdndantly the people are
given safe currency and more fexi-
Bile currency than the government could
otherwise supply.
In opposition to this measure it is
claimed by Mr.. Bryan ana his per-
sonal property party that this feature
of the currency is "step forward in
the Republican policy which aims to
discredit the sovereign right of the ma
tional government to issue all money
whether coin or paper.
And this claim is made with bravado
in face of the fact that the new cur
rency law gives to the greenbacks per-
manent place in our monetary system,
with redemption and reissue, and that
it also provides for the issue of nearly
600 millions in silver to be kept at
parity with gold by force of sovereign
legal tender provision and receipt for
public dues. The utter falsity of the
charge is proven by the measure itself.
The charge is also made that the pur-
pose of the Republican party is to "be-
stow upon national banks the power to
issue and control the volume of paper
money for their own benefit"
The falsity of this charge will be evi-
dent upon rejecting that congress has
surrendered none of its prerogatives to
the national banks, but may alter or
amend this law at any session, limiting
the volume of national bank circula-
ton or otherwise abridging in any way
the currency privileges accorded the
banks.
Another charge equally false is that
a permanent national bank currency
must have permanent bonded debt of
the nation to secure it. AS the bonded
debt of the nation amounts to 81, ,023,-
476,S $3.50, there is no immediate likelihood
of its being wiped out, but when the
proper time comes it will be entirely
practicable to substitute state or mu-
nicipal or railroad bonds for govern
ment bonds to be deposited as security
for bank circulation.
1t is believed by financiers that it
will be possible for banks, in good times
and with a good demand for money, to
make a profit of one per cent per an
mum OH their note circulation, whereas
heretofore their profit has not exceeded
three-fourths of one per cent. This is
not regarded as an excessive recom-
ps9se for furnishing n n.aa the people with an
tributed where it is most needed to
meet the requirements of an expanding
trade.