The weekly chieftain. [volume] (Vinita, Craig County, Okla.) 1905-1913, 1910-04-29
TIL EPUBLIG DEBT
AND THE CIRCULATION

Washington April 3d. TT The rela-
ton between the public debt and the
circulation Of the national banks is
brought out In graphic manner in
some of the charts prepared by Or
A. Piatt Andrew, special assistant to
the National Monetary Commission,
which have just been made public
The chart which plots the relation of
circulation shows the greatest diver
genoe between banking capital and
circulation in 1892, when capital was
about $685., 100000 and circulation had
fallen below $15OOOO,OOO Prior to
1882 the progress Of capital and cir
culation had shown only slight de-
partures from parallel lines, capital
funds at that time exceeding circula-
tion by about s2OO,OOO,OOO. Then came
the gradual widening Of the distance
between the two items until 1898,
wnen the effort to stave off the panic
caused a gradual increase in circula-
ton, inspite of the decline of the cap
ital and surplus funds of the banks
during the following two or three
years. BY 1899 the difference be-
tween the two items had been reduced
to about s4OO,0OO,OOO With the re-
funding law of 1900, which introduced
the 2 per cent bonds, came an in
crease in issues which much more
than doubled the circulation between
1898 and 1908 aud narrowed the diff
ference between circulation and cap
ital to about S3OO000000.
The relation between the outstand-
ing public debt and the circulation
has to be traced in connection with
charges in the character of the debt
as we'll as IN the amount. AS late as
1875. when the resumption act was
passed, the bank-note circulation was
not fifth part Of the debt. The de
crease of the debt down to 1888 by
nearly S5O0,O00,0OO did not at once
cense a contraction Of the circulation
but Che influence Of the decrease IN
she debt was shown after that date
by decline in the circulation from
about $3.50, 100000 In 1883 to $4,000,
600 In 1891 After the latter date cir
a culation showed some disposition tC
follow the increase Of the debt due
TO the panic Of 1898 and the war will
Spain. This increase in circulation
was slow and gradual, but It was no
obviously checked by the reduction
of the debt after 1899 The reason
for this must be sought in the specia
advantages to the banks afforded b!
the 2 per cent bonds issued under tn
refunding law Of 1900 which, accord
ing to the charts, left the banks b.
1907 the custody Of more than two
thirds of the bonded debt, where, a
recently as 1899, they had held les
than one-quarter
This chart bears close relation t
that of the deposits of public none
In the banks, which were also securet
by United States bonds down to tn
year 1902, when different classes o
securities were accepted by Secre
tary Shaw The diagram showing tn
net balance in the treasury and tn
proportion in the custody of tho bank
is a series Of mountain peaks and dc
pressions, in which the sky line Of tn
deposits follows roughly, though at
considerable distance. the line Of tn
highest altitude of the treasury ba
ance Deposits with the banks, eS
cept during the refunding operation
Of 1879, we're not an important fac
tor until 1888, and declined durln
the treasury penury Of 1898. only 4
assume much higher elevations wit
the accumulation Of a surplus and tn
pressure Of a tight money market IL
1898 and the following years.
One Of the significant facts brough
out in the chart showing the principa
items OF resources and liabilities o
the national banks Is the manner Il
which total deposits have gained owe
individual deposits The differenc
consists in deposits by banks In othe
institutions, representing in some rs
speets a duplication of credit Tn
difference between the two Items
total deposits and individual deposit
which was less than s20O,00O,0O0 fl
1878, stlll stood at only about $3.50
100000 after the panic Of 1898 Tn
difference was greater during period
Of expansion in 1883 and 1892, but
was not until after 1896 that the line
Of separation began TO draw wild
apart IN the summer OF 1899 tota
deposits. which stood above $3,50O
00U000 showed an excess above In
dividual deposits of O round bilioi