The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1904-05-19

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helped by legislation next winter
But what Will We do eventually with
| the silver certificates? We have put
them out at par and must maintain them
at par. Suppose the revenue laws are
changed again and the revenue falls
short and an adverse balance of trade
comes again, at the same time, how long
will the $50. 900 600 of gold maintain the
Greenoacks 1916, 6sl .Ol6. %
Treasury Notes .--..-.......... 1882, oc
| Silver Dollars .. SOS, SIS, SS3. Oh
*9os, SD. 4os. %
All to be kept at par. ali to be re-
! deemed with the s15O.0co. 900 gold and the
revenue as it comes in. Some of it
must go below par in the operation or
we must sell bonds TO get gold to keep
it up. This condition of our currency
is not satisfactory. 1t is a risk always
menacing business while II remains.
The National Bank Notes.
Then there are the national bank notes.
s437. $50 573.00 at the last report, resting
on bonds for security 5.3l3 national
banks have issued them. The capital Of
these banks is s774,4l9,3 $3.50. They could
issue notes TO the amount of this capital
If they would deposit the bonds. Why
do they not do this? The total note in
crease during the last year was Si5,92S,
$500. 1t is generally admitted that the
circulating medium of the country has
not increased in proportion to the eX-
pansion of bank capital and deposits
and the development of commerce and
increase of transactions in which money
or credits are required. The limitations
of the National Bank Act are such that
a high rate of interest is necessary TO
enable capital to remain in this form.
Capital IS not a subject of any country
and goes. wherever it can do best. Just
now We are exporting gold, not only TO
pay for the Panama canal, but because
the open rate market for money in lead
ing European cities is from l TO IL per
cent higher than in New York. This
means $4,000 or more on each million
of dollars and in one week lately about
$500. 600 900 was shipped for this purpose.
1t is easy for our financiers to shift
enormous balances from one side of the
ocean TO the other.
One american institution sometimes
has balances of $50, 600 O00 over there. The
banking and currency problems Of our
country and our times cannot be con-
sidered alone without considering the
other nations and the business of the
world. Our money is a small part of
these problems Credit is the great in
strument OF business. both for men and
for nations. The debts OF nations and
payments of interest installments on
them are related to business in every
country The rates that nations offer or
that they must pay are tobe considered
when capital is considering whether to
go into railroad building or manufactur-
ing or banking or into commerce.
But 1 need not try to discuss interna-
tional commerce today.
| am interested in our currency-the
tool OF every industry-the implement
which every man uses. II ought to be
as far from every burden and tax as
possible
National Banking System.
Our national banking system is won
derfui system. 5,313 national banks with
aggregate capital of s7744l9,Sl5.00. Bonds |
deposited for circulation notes issued. |
s437 ,oS0 $500 Their deposits for the year |
ending June 30. 1903, were So 500 CO. |
Loans and discounts S3.415, 0l5, 75l.0o; clear |
ing exchanges, Sl14, Cos, S37, $500.
/ want to state concerning the last /
figurees that thy were taken from the /
statistical reports in the treasury depart
ment and / am unable to say whether /
that is a clearing house balance Of all |
the banks in the country, or simply the
national banks alone l am inclined to
think it is the latter.
In all respects except the note issuing
functions il has been a success In this
respect the growth of the country has
been beyond it. The conditions OF bust
ness. the price of bonds necessary for
security for its notes, have limited its
power to provide currency. The green
packs. treasury notes and silver certi-
icates have barred their way.
We made it difficult for them by lin
ting their power to retire circulation to
g .0Ouoo0 a month for the whole nation.
md then prohibited them from taking
,ut circulation again for six months. We
nut two rates of taxation on their circu-
alton: one-half of one per cent on cir
,uIation based on two per cent bonds,
md one per cent on circulation based on
,ther bonds The result of this is that
# the total amount of two per cent
ponds. s52S 70S, 050-an of it but SEPT, 15o-
ire held by the government. either for
circulation or deposits. That is, 20 per
.ent of the two per cent bonds are held
" the government. SO that the margin
or further issue OF notes has come 10
,e very restricted We require them 10
nut UP FIVE per cent redemption fund
II money. on which they get no interest.
-. loo fr.1rlf 70
erve in their vaults for the circulation
or which they have already put UP bonds
n the treasury. We leave them subject
o local taxation. We have imposed an
hese burdens on them and somebody
aust pay the burden. Speaking from the
utside of the counter, as a borrower
aust pay enough interest 70 cover the
isappearing premium on the bonds;
,ust nav nv share Of the circulation
AK: l must pay my share OF interest for
he redemption fund ana for the reserve
hat lies Idle. and for the time the cir
ulation itself is not loaned All this
efore the bank begins TO get what is {
ain TO them. The conditions which We Z
ave forced on them make the premium
n the two per cent bonds SO high that 6
l community where money can be 7
,aned It eight per cent there Is no pro- Z
in taking out circulation IN COM {
lunity where money can be loaned ~ r
X per cent the whole prodt on $4,000 g
epcslt is only about $500.
We have made It 50 that all the ma :
onal bank notes standing out today rer-
,sent not investment but only q bond c
population
The profit does not justify the risk q r
.llins prices FOR bonds. II interest rates q
Sc in the place where the bank IS the c
md investmen: becomes a loss. ,