The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-12-19
AN EMERGENCY CURRENCY.


of the House committee on currency will
present to the full committee provides that
banks may issue notes equal to % per cent.
of their unimpaired capital without depos-
iting bonds to secure their redemption.
These notes are to be lien upon the assets
or the banks issuing them, and an addi-
tional security is a semi-annual tax of one
fourth of 1 per cent. on all such outstand-
ing notes and deposit of per cent of
the amount of bonds issued to any bank
This proposition is TO take the place of the
Fowler currency bill. with its branch banks,
its retirement of the greenbacks by SEEM
ingly complicated method and it's early re-
tirament of all the circulation of national
banks based upon the security of United
States bonds and replacing it with an asset
currency.
The reasons for the enactment of some
such law seem valid. The national banks
withdrawing their circulation
based upon deposit of bonds because the
premium thereon is so high that they would
have them at their control, which would not
be the case SO long as any of the notes of
the bank were outstanding. At best there
is no profit in bank circulation based upon
bonds. The volume of United States bonds
outstanding cannot be increased and as
the date of their redemption comes nearer
some provision must be made for paper
currency reasonable in gold The bill
which Senator Fairbanks presented on
of bonds to be issued for the construction
of the Panama canal may be used by ma
tional banks security for their circua-
ton. is inspired by the prevailing conviction
that the basis of bank circulation is now
too narrow for the business needs of the
country and is gradually becoming mar
rover.
1t will be said that the notes which will
be issued under this bill, should it be en-
acted, will be asset currency. Such a claim
is true only in name and not in effect.
First, the tax on the circulation may be
regarded as sufficient for the redemption
of all notes of any bank which may fail.
This is not an assumption, since the pres
elt tax oil the circulation of national banks
from their first organization to the present
time has exceeded the amount of the out
standing notes of failed banks by several
million dollars. AS national bank failures
are rarer now than years ago, when the
tax OH circulation exceeded from year to
year the circulation of failed banks, it is
fair to assume that the tax on the emer-
gency currency will afford a sufficient
amount to redeem the bills of such banks as
may fail after issuing the emergency cir
| culation.
The rigid provisions of the bill for the
redemption of such notes are designed to
keep this class of bank circulation from
being scattered throughout the country.
! Such notes, which must be of the denomi-
nations of SIC and multiples, must be re-
/ deemed with gold by the banks issuing
them when required. and also at banks in
three redemption cities-the country evil
IDENTIFY being divided into three districts
| for the purpose of redemption. AS none of
| the emergency notes of hanks outside the
district can be paid out by bank in the
district the circulation of such notes will
be confined very largely to the district in
which the bank is located. To illustrate.
| Indianapolis being in the Chicago redemp-
ton district, an Indianapolis bank is for
hidden to pay out the emergency notes of
| n bank in the district of which New York
| is the redemption city. If an indianapolis
| bank has the notes of banks in another
| district it must send them to the redemp-
| ton city or to the bank issuing them. This
system of redemption in its general fea-
lures resembles the Suffolk bank plan for
| redeeming the notes of the banks in New
England corresponding with it, and which
| was practical before the adoption of the
/ national banking system.
There is reason to believe that the pro-
| visions of the bill under consideration will
give that elasticity to our currency system
/ which the business world agrees that IL
lacks. since banks can avail themselves Of
the emergency circulation i'm a few days
and can easily retire such circulation when
it is not needed. 1t seems a very sensible
solution of the long-discussed problem of a
| aaxihla curr.rc y