The times. [volume] (Richmond, Va.) 1890-1903, 1901-12-11
Mo CAGES CURRENCY PLAN.

Mr.. CAGES CURRENCY PLAN.
Tho nlan If Secretary Gage for iNcreas-
{,<, tho circulating medium seems TO nave
Non op;te fayorably received IN 1inancsa'
circles. Mr. Gage proposes to ame'lo We
national banking act, so as TO proNioe'
That any national banking associatio.i
which, shall deposit 30 per cent. Oh It's cap
ttal in the form OF United states pohus
Mt their par value, and 70 per cent "
its capital in United States ieSal-,eiioe,
notes with the Treasurer of the oniteu
states as security therefor, shall be en-
titled to Issue its circulating notes TO an
amount equal to its palo-ln ana ciit.n
raired capital. In addition TO the oeposit
of security so required. banks pernitIsu
to issue notes as above shall pay se1hi-
annually to the Treasurer OF the bHiteu
states in trust an amount equal TO one
eighth OF per cent on their capital
stocks. respectively. such payments TO
constitute a guaranty fund for the pro
lection of the noto of any bank which py
reason of insolvency shall become I'M
able 10 pay its notes on demand.
when bank thus privileged shall be-
come insclveEt the Treasurer OF the
United States, as trustee for the note
holder, slall sell the bonds held as Sc
curity and credit the amount so realized
20 q special fund for the redemption Of
the notes of such insolvent bank. He
shall also credit to such an account ali
amount equal to the United States legal
tender notes originally deposited by said
bank as security. He shall further trans
fer from the general guaranty tuna TO
the credit of the special redemption luna
of such insolvent bank an amount, in ad-
Gition to the amount realized from the
bonds and leeal-tender notes, sufficient
to coua! the total of the outstanding cir
culating notes of such insolvent bank, and
this fund so constituted shall be applied
10 the payment OF such outstanding
notes. For the amour. thus taken from
the guaranty fund the Treasurer OF III"
United States, as trustee, shall be en-
powered and required to assert claim
against the receiver of the insolvent bank
and sha!! be entitled to receive dividends
tr the same proportion as the general
creditors Of such bank. Dividends SO re-
ceiVed by him shall be restored to the
credit OF the guaranty fund"
1t IS Mr.. Cages opinion as a banker OF
long experience that this plan would give
the country an abundance of currency
and that the trust fund thus provided
would be ample to make the currency SO
issued entirely safe. In order to satisfy
himself on this point he SAYS that he
mas made a careful analysis of the history
vi nauoha! banks for the last thirty-siX
years de tells us that Hypothetical
tax OF is of 1 per cent. was charged
against all the national banks from their
organization to date, and the amount SO
I eccruing was passed to the credit of the
imaginary guaranty fund
.,,l:
have actually failed, it was assumed thar
had these banks enjoyed the privileges
above proposed they would at the time
OF their failure have had outstanding the
full amount of notes allowed The guar
anty fund was then charged with the
difference between the value of the Sc
curities held by the Treasurer of the
United States in trust and the face
amount of their outstanding notes. At
terward the guaranty fund was credited
with the amount which would have been
realized by the Treasurer had he received
the same percentage in dividends upon
his claim for the guaranty fund as tho
final liquidation of the banks showed was
paid to depositors.
The result Of this shows that all note
holders would have realized the face
value OF s:;ch notes without any delay:
that the guaranty fund, instead of beirc
exhausted, would lave steadily grown.
end that on the first of January of the
present year there would have been al,
unused surplus to the credit OF the guar
nn:y fund OF s2i,42i,9 $50.
This IS certainly an interesting exhibi.
and seems to be about the best substi-
tute that has been offered Cor free bank.
ing. 1t is one point gained that the
Secretary of the Treasury has convinced
himself. # not indeed his party associates
that the present currency system is crude
and utterly lacking in elasticity and thai
some radical changes are necessary
There is little doubt that the plan which
Mr.. Gage proposes would be a marked
Improvement on the existing system.