The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-01-31
Increase in Volume of National Bank
Notes Presented to the Treas
ury for Redemption.
NAVAL OFFICERS TO RETIRE
SAMPSON AND CROMWELL WILL
SOON REACH AGE LIMIT.
Captains Cooper and WadIeigh to
BE Promoted to the Grade of Rear
Admiral on Feb. %.
;pecial to the indianapolis Journal.

Special TO the Indianapolis Journal.
WASHINGTON, Jan. 3O.-The refunding
law, which was intended TO furnish for
many years an adequate bank note cur
rency, is not meeting the entire eXpecta-
tions of its authors. This result is due TO
the high price of the per cent. bonds
which have been ranging for some months
from 1OS to 100. Banks that bought them
at par find greater profit in selling them at
current rates than In using them as a basis
for note issues. Secretary Gage has shown
in his last annual report that at the present
price of bonds the profits from bank note
currency are considerably less than 1 per
cent. per annum. Under these circum-
stances it will be seen that by selling the
bonds 100 and lending to their customers
the amount represented by them the banks
are anticipating for nine years the profits
that would accrue under present conditions.
There has been strong tendency of late
to retire national bank notes and nothing
but the legal restriction that limits retire
ments to $3000,O00 month has prevented
even greater retirements since October,
when. the purpose to retire currency in
large amounts first attracted the attention
of the treasury officials. The quota of
$500 900 for February has already been
filled and the applications for Withdrawals
for March have reached 8, 900. During
the five months ending Feb. 28th, next, ma
tionaI bank circulation based upon bonds
Will show a decrease OF $lO,0OO,0OO and this
decrease is expected to continue indefinitely.
On the first day of October, last, the vol
ume of bank currency based on bonds was
1925, 000,0 600. From present indications it will
fall to $3l6,OOO,OOO IN March and the same
rate of decline will carry II on June 80 to
1901, 900 900. This would represent loss
of $50 900, 600 of bond secured notes within
nine months. Nor is any increase of notes
expected after that date. inasmuch as the
policy OF the Treasury Department in us
ing the surplus TO reduce the national debt
initiates the price of the bonds and en-
courages the banks to sell them.
II is interesting to note in this connection
the great Increase in volume of bank notes
that are now received at the Treasury De-
partment for current redemption. The re-
demptionS Tor the year just ended were S0o,-
100000 in excess of redemptiOns for 1900,
which were. in round numbers $75, 600 600.
as against S129 coo for 1901. This increase
was partly the result OF national bank note
expansion under the gold standard law of
two years ago, but not entirely so. 1t shows
that banks do not regard bank notes as
money but as promises TO pay money,
and they cannot be counted part of
the reserve, they are exchanged at the
treasury for legal tenders This shows
that even a bond secured currency, which
is the most inelastic of all forms of cur
rency, can be given certain degree OF
/ elasticity, and it shows further how much
/ more elasticity there would be in a credit
currency, subject to daily redemptions, as
! in Canada and other countries where a
scientific banking system exists.
Senator Fairbanks is very much inter-
ested in his bill providing for an appropria-
tion of $7,OOO,OO0 for the erection of an ex-
ecutive. state and justice building which
! is greatly needed. He had heard there was
! objection to the bill because the President
/ desired the construction of a building sole
! ~ for the use of the President and exec
/ utive clerks. Senator Fairbanks called
/ President Roosevelt this morning and had
/ an hours talk with him regarding the
/ matter. The President told him he very
much favored his bill and thought it an
excellent idea to have the building arranged
! so as TO accommodate the three depart
ments. The committee Will talk the matter
/ over tomorrow.
! Representative Steele has recommended
A. c. Bearss for reappointment as post
master at Peru. He formerly was chief
clerk Of the Indianapolis pOstOffice.
! XXX
Representative Watson to-day had ap-
pointed on the pension board for Franklin
! county: DR.. John f. Linegar and DR.. Irwin
] Roberts, Republicans, and DR.. Z. L. Pat
! terson. Democrat. The latter two are new
members