The San Francisco call., 1903-12-03
sHAFRoTH's FINANCE BILL.
NK R. SHAFROTH of Colorado has introduced and
Nl had referred to the Committee on Banking and
4 Currency bill to authorize the issuance of

NKR. SHAFROTH of Colorado has introduced and
I'M had referred to the Committee Banking and
Currency bill to authorize the issuance of
rency redeemable in bonds of the United States 1t
authorizes the Secretary Treasury upon the
tation of bonds of the United States in
ceedng million dollars month, to issue in lieu
thereof bonds be known currency bonds in denom
nations of ten twenty, fifty, hundred, five hundred
and thousand dollars, payable thirty years after
date in the currency stipulated in the surrendered bond
and bearing interest at per cent per
These currency bonds to be issued in equal
the market value of the bonds surrendered-that
say the includes the par value and the premium
the DID, The holder of the currency bond upon de-
posting the the treasury shall have issued to him
currency certificate of like denomination certifying that
secured by such bond and made receivable for all
and dues to the Government and legal tender for
all private debts except when otherwise stipulated in the
contract.
The plan has original features It. in effect,
the order of conversion adopted in the of
the greenbacks upon the resumption of specie pay
The greenback issue converted into bonds by
the process Of selling bonds for the cash redeem the
currency The Shafroth bill proposes now reverse
that process by converting the bonds into greenbacks
again But by legal tender of 1862 the greenbacks
rested the credit of the Government and their value
depended its power redeem them. The national
bank law nterposed and caused the conversion of the
bonds which redeemed the greenhacks into national bank
currency the of per of their par
This conversion could be effected only according
terms and conditions of the national banking law safe
guarding incorporation of credit and kind of Sc
curity The Shafroh bil effect extends this privilege
of converting bonds into currency any holder of
ing of United States bonds. 1t may be done by
banking corporation, by individual by partnership.
1t will be observed that the bill would result in i'm
medatey converting the principal and the premium
bonds currency For instance the registered
premium of 49, that holder of that issue for
$500 would receive currency bond for $I33, per
interest per annum for thirty years, convertible
$I33 currency At the end of thirty years the
new bond would be redeemed by the Government in the
same currency in which the original bond was payable.
AS all of bonds payable in gold, the founda-
ton of the currency would be gold, of course
The plan deserves the study of nanciers and will re-
ccive it. IT, possible entire bonded debt were
converted the per the whole interest
would be lowered The national banks do issue the
full amount of currency warranted by their capital be-
cause the high premium on their bonds makes it more
law they would principal and premium into
rency
But suppose the bill should work to convert the whole
outstanding bond issue into currency the immediate ef-
feet would be imitation of the currency by nearly one
billion dollars. That seems to be the point which the
scheme dizzy But its novelty its assimilation
of the principles of the national banking law and its
sal of the order of emission and redemption of the
backs make it worthy of consideration.