Democratic Sentinel, Volume 8, Number 45, Rensselaer, Jasper County, 5 December 1884 — OUR MONEY. [ARTICLE]

OUR MONEY.

Extracts from the Annnal Report of the Controller of the Currency. Statistics of the Business Performed by the National Banks*—Becommendations. Bonds and Their Payment as They Become Due—lnteresting Information. The annnal report of the Comptroller of th» ® h ° w * during the year ended Nov. 1, 1884, 191 banks have been organized, with an aggregate capital of Circulating notes have been issued to these new association*, amounting to $3,866,230. These banks allocated by geographical divisions as foUows; Eastern States 10 banks, with a capital of SBIO - 000; Middle States 25, capital $312,250; Southern States 30, capital $2,991,100; Western States ion capital $8 905,880; Pacific States 5, capital $380.°°°t Territories 19, capital $1,143,000. Since theestablishment of the national banking system* leb. 25, 1863, there have been organized 3,261 national banka. The total number in existence Nov. 1. 1884, was 2,67 l—the largest number in operation at any one time. Eleven national banks, with an aggregate capital of $1,285,000* have failed and been placed in the hands of receivers during the year. The different items of resources and liabilities* as tabulated, indicate that the business of thenational banks daring the last eleven years has. generally Increased. The items of United States bonds and circulation thereon decreased duringthe last two years. The aggregate liabilities of national banks to depositors and correspondents were reduced during the year upward of $94,000 000. This reduction of liabilities and thogeneral reduction of loans by banks, which amounted to over $63,000,000 during the year* the Comptroller says was doubtless occasioned by the financial troubles of Hay and general depression of business. During the same period national banks increased their cash resources* by about $21,000,000 specie and $11,000,000 legal tenders and United States certificates of deposit for the same.

The total number of banks still in operation, organized under the act of June 3, 1864, and the provisions of the Revised Statutes, in periods of succession, which will terminate unless hereafter renewed during the years previous to 1900, is 1,488, with a capital of $321,461,145. and a circulation of $194,745^05. The banks held Nov. 1, 1884, $166,604,400 3 per cent, bonds, payable at the pleasure of the Government, of which $9,586,21-0 have been called for payment, interest ceasing Nov. 1, 1864. If these bonds are not replaced by others bearing interest, there will be an Immediate reduction in circulation of 90 per cent of their amount. Nov. 1 there were $194,190,600 3 percent. bonds payable at the pleasure of the Government These bonds will prbbably bepaid within the next two veara. even if considerable changes are made In the tariff; and: from 1887 to 1891, when $260,000,000 of 416 per cents mature, there will be no bonds which the Government can call in for redemption. N<v doubt the accumulation of surplus revenue, if it continues to accrue At the present rate duringthe four years between 1887 and 1891, togetherwith the revenues of 1892, will be more than, sufficient to pay off the 4fe per cents, and from. 1892 until 1907 it will be impossible for the Government to use any-of its su-plus revenues for the payment of its bonds, except at .the option/ of tbeir holders. It is apparent that the Government cannot accumulate and hold its surplus revenues, even during the short period from 1887 to 1892, without great disturbances tothe business interests of the country, add much less can it do so during the longer period from--1892 to 1907.

It appears, therefore, that the foregoing considerations should be given due weight in any plan for funding the 4 per cent, bonds in 1307, and the Controller therefore Buggeststhat the principal difficulties of the situation, may. perhaps, be obviated as well as a reduction of Interest effeoted by funding these bondsinto others which shall mature in proportionate amounts at certain fixed intervals. Thus the $738,000,000 4 per cents might be funded into an equal amount of 3 or 2>6 j er cent, bonds, onefifth of which, or $147,600,n00, to mature at intervals of five years, the first installment due July 1, 1897, and the remaining Installments of $147,600,000 each of the Ist of July Hi the last, year each succeeding period of five years, viz.; 1902, 1907, 1912, and 1017. The average maturity of these five classes of bonds would be* the same as that of the present 4 per cents—viz.: July 1,1907. Whatever course may be deemed expedient by Congress in regard to the funding or futurepayment of the publio debt, the Controller to of opinion that it is pen ectly safe and will afford great benefit to the publio to permit an issueby the national banks of circulation to the ex*tent of 100 per cent—par value—of bonds deposited, instead of 90 per oent. Even admitting that bonds representing the public debt, when funded at lower rates might at times in, the future be belew par in the market, the Government would, if forced to redeem the notes of insolvent national banks, always have a right to cancel bonds on deposit securing the same, and thus extinguish an amount of its debt equal, dollar for dollar, to ihe notes redeemed. It tofurther submitted that the profit on circulation may be increased to a point which will inducebanks to keep np their circulation to the maximum, and stop contraction of their circulation, which to now occurring, by repelaina the law taxing such circulation at the rate of one-half of 1 per cent., semi-annually/ The expenses of keeping up the national banking system by the. Government are at present paid in part from the. proceeds of this tax and in part by assessment on banks. If this tax be abolished all these ex- » penses should bo paid by the last named method. In concluding this subject the Comptroller wishes to have it distinctly understood that he is not in favor of any measure which will causeinflation. He to of opinion that the present aggregate paper circulation, made up of legaltender and national-bank notes and gold and: silver certificates, to ample for all the needs of business. He believes, however, that a sudden, contraction of national-bank circulation, which without appropriate legislation is Imminent, wilt seriously embarrass the business of the country,/ and that if this contraction to permitted to go. on it may result in the entire discontinuance of the issue of notes by national banks. TheComptroller believes that this form of ourrency, which can be increased or diminished in accordance with natuial laws which control business* should be continued in preference to any other now permitted by law. In regard to the circulation based on silver* the Controllef says the peoplo of the United States now hold paper circulation based upon, silver dollars in amount equal to more than onethird the national-bank circulation. If it 1» for the best interests of the United Statesto issue circulation based upon silver, the Controller ”, Believes circulation should be issued upon coiiribr bullion which contains a sufficient, number of grains of silver to have intrinsic value equakin the markets of the world to its nominal value. Some writers have suggested that the circulating medium might be based upon, bullion, both gold and silver, and the Controller to of opinion that under oertain restrictions and regulation A it would be far more correct in principle tor issue silver certificates based upon, the deposit of bullion, to be valned in exact proportion of silver to gold, tnan to continue the Issue of certificates under the present law. If this were done, silver bars might be stamped at their market value and held lit the Treasury for the redemption of certificates whio i would call an amount of silver equal in value to their nominator face value expressed in gold. The bullion represented by certificates should be periodically valued at its market prioe in gold* and a certain proportionate amount of silver so held might perhaps be coined to provide means* for the redemption of certificates, If redemption was required for business purposes. The Controller believes that the use of allv. r as money in this manner; and Its periodical valuation would have more influence In appreciating the marketvalue of silver among the nations of the world rency based upon silver should not, however, be unlimlted, and the present laws making thepurchase and coinage of a fixed amount oljilver bullion mandatory are very pertil lons In their effect, as the unlimited and continued issuance of full legal-tender silver coin, and certificates based thereon, of Intrinsic value less than their face, has already caused the hoarding of gold* andLarlli eventually drive it from the channqjs of trade, thereby causing a practical suspension of gold payments. There are many Indicationsof this, notably the uneasiness in fiaaaf;iil,.ctr,oles in Jude and July last, causedby the reserve of -geld in the Treasury f all n* so nfcar to a point at which under the law the issuance of gold certificates ceases. It will also be observed that during the present year national banks SSI j&Ep&atKsftns sum of $19,615,350. The Comptroller concludes hto report with a discussion of the subjeet of 01 ¥* A medical export thinks that the large-/ Increase in rheumatism in New England is the result of the disuse of eider. In cider-drinking countries there is very littlerheumatism. ,