SOUND CURRENCY.

PUBLISHED BY THE SOUND CURRENCY COMMITTEE OF THE REFORM CLUB.

Publication Office, No. 52 William St., New York City.

Vol. II., No. 4.

NEW YORK, JANUARY 15, 1895.

Price, 5 Cents.

Each number contains a special discussion of some Sound Currency question.

LATIN UNION. (FRANCE, BELGIUM, SWITZERLAND, ITALY AND GREECE)
SPAIN

SCANDINAVIAN UNION. (SWEDEN, NORWAY AND DENMARK)

THE NETHERLANDS

RUSSIA

PORTUGAL.

54

55

56

TURKEY...

65

SITUATION PRINCIPAL BANKS OF ISSUE, SEPTEMBER 30, 1894........ 68

THE WORLD'S CURRENCIES.*

UNITED STATES.

Gold. The unit is the dollar, weighing 25.8 grains, 0.900 fine (23.22 grains pure gold). The multiples coined are the quarter eagle ($2.50), half eagle (85), eagle ($10) and double eagle ($20). All are unlimited legal tender. Gold bullion is converted into coin at the mints free of charge except for the alloy contained therein. Silver. The unit is the dollar of 412.5 grains, 0.900 fine (371.25 grains pure silver) a ratio of 15.9884 to 1 of gold. Silver dollars are unlimited legal tender, and are coined in limited quantities only for Government account from purchased silver bullion. Purchases suspended since Nov. 1, 1893. The subsidiary silver coins are the dime (10 cents), quarter dollar (25 cents), half dollar (50 cents)-weighing respectively 22, 64 and 12 grams †, 0.900 fine, being somewhat less in weight proportionately than the standard silver dollar. Subsidiary silver coins are legal tender to the amount of ten dollars.

It is the declared policy of the Government to maintain the parity in value of the coins of the two metals.

United States Notes, or “greenbacks," of which a fixed amount $346,681,016, remains outstanding-the remnant of the forced paper currency of the late Civil War. These notes are legal tender for all debts, public and private, except duties on imports and interest on the public debt. Since 1879 they have been redeemable in "coin" (gold); and when redeemed are reissued.

United States Treasury Notes of 1890.-$155,000,000 issued in payments for silver bullion under the so-called Sherman Silver Purchase Act of 1890, legal tender for all debts except where otherwise expressly stipulated in the contract, and receivable for all public dues. Redeemable in gold or silver coin at the discretion of the Secretary of the Treasury. The practice is to redeem them in gold or silver at the option of the holder-generally gold.

Gold Certificates, in denominations of not less than $20, are issued by the Secretary of the Treasury upon deposit of gold coin, to be held in the Treasury for the payment of the same on demand. Though not legal tender, they are receivable for customs, taxes and all public dues.

Silver Certificates, issued against standard silver dollars deposited in the treasury. They are receivable for all public dues, but are not otherwise legal tender, and are issued in denominations of $1, $5 and $10, as well as the higher denominations.

Currency Certificates, issued in denominations of not less than $5,000 upon the deposit by national banks of United States legal tender notes.

National Bank Notes, issued by banks under Federal charter upon the deposit with the Treasurer of United States bonds, which are to be held as security for the ultimate redemption of the notes. Issue limited to 90 per cent. of the par value of the bonds deposited. The notes are redeemed at a central redemption agency in the Treasury at Washington, where each bank is compelled to maintain a cash deposit of 5 per cent. of its outstanding circulation. No notes of less denomination than $5 are permitted. The shareholders in the issuing banks are individually liable for all debts of the bank to the amount of their stock. National bank notes are legal tender in all payments to any national bank in the system, for all public dues except duties on imports, and in all payments by the United States except interest on the public debt and in redemption of the national currency.

In October, 1894, there were 3,755 National banks in existence, with an aggregate capital of $668,861,847.

Banks incorporated in many of the States possess the right to issue circulating notes, but are practically prohibited from so doing by the 10 per cent. Federal tax upon circulation other than that of national banks.

The official statement of the total amount of each kind of currency in circulation Jan. 1, 1895, is as follows:

STATEMENT SHOWING THE AMOUNTS OF GOLD AND SILVER COINS AND CERTIFICATES, UNITED STATES NOTES AND NATIONAL BANK NOTES IN CIRCULATION JANUARY 1, 1895.

For the information contained in the following pages we are especially indebted to the reports of the Hon. Robert E. Preston, Director of the United States Mint, who has kindly allowed the use of advance proofs of his forthcoming report; to The Imperial Institute Year Book, 1891, for the minor British Colonies; and to Norman's The World's Metal Monetary Systems.

+1 gram equals 15.43236 grains.

(N. B.-The estimated circulation of gold is based upon an estimate of the amount in the country in 1879, together with statistics of coinage, imports and exports since that time.)

GREAT BRITAIN AND COLONIES.

GREAT BRITAIN.

Up to 1798, England had the double standard, with the legal ratio of gold to silver of 1 to 15.21. But as, beginning with 1785, the ratio in France was 1 to 15.5, gold coin began to leave England and silver to to take its place. To prevent this substitution of silver for gold, the English Parliament, in 1798, prohibited the coinage of the white metal. This measure, which was at first intended to be only provisional, soon became definitive, and practically England has had the gold standard since 1798. It became legally, a gold monometallic country, however, only by virtue of the law of June 22, 1816.

Gold. The monetary unit-the (sovereign or) pound sterling-is a gold coin weighing 7.988 grams, fineness 0.916%; fine gold contained 7.322 grams, or 113.001 grains ($4.8665). The legal coins of Great Britain are the sovereign, half-sovereign, two-sovereign, and five-sovereign pieces. The gold coins in actual circulation, however, consist only of sovereigns and half-sovereigns.

Individuals have a right, under the law, to deposit gold at the royal mint for coinage and to receive therefor £3 17s. 10d. per ounce of standard gold, but, as a matter of fact, only the Bank of England sends bars to the mint. By the bank act of 1844 that institution is required to receive all the gold brought to it by the public, and pay therefor immediately, at the rate of £3 17s. 9d. per standard ounce. The difference of 11⁄2d. compensates the bank for the loss of interest between the day it deposits the gold at the mint and the day it receives it again in the form of coin, and leaves it besides a small brokerage for its services. Individuals are aware that if they carried the gold to the mint themselves their losses in interest and other expenses would exceed 14d., and prefer to sell it directly to the bank.

Silver.-The silver coins of Great Britain are of the following denominations, weight, etc.:

Silver is legal tender only to the amount of £2 ($9.732). coinage between gold and silver is 1 to 14.28781.

The legal ratio in

Silver is coined only for Government account. Bank Notes.-The Bank of England, founded in 1694, by Montague, obtained its present charter by the bank act of 1844, generally called the Peel act, which regulated the issue of bank notes and prohibited all banks not then banks of issue, to issue notes. The Bank of England is divided into two separate departments, the issue department and the banking department, each independent of the other. By the act of 1844, the amount of £14,000,000 notes might be issued against the public funds and securities in the keeping of the issue department. When one of the banks of issue, other than the Bank of England, goes out of existence or surrenders its right of issue, two-thirds of the amount of its circulation authorized by the act of 1844 go to the Bank of England and add to the number of notes it is authorized to issue on securities representing its capital. Over and above this issue on securities the notes must be guaranteed by a metallic reserve of coin and bullion.

One-fifth of the reserve may be in silver; but in practice no use is made of this power, and its issues are made only against gold. The metallic reserve of the issue department is the one that secures the circulation of notes. It is entirely distinct from the reserve of the banking department. At the present time the bank issues notes against £11,015,100; permanent debt of the State to the bank anterior to 1844, plus £5,334,900 on other securities, i. e., immobilized public funds—a total of £16,450,000. Beyond this amount the bank issues notes only against gold coin and bullion. No notes of less denomination than £5 are allowed. The notes of the Bank of England are legal tender in England except in payments by the bank or its branches. They also circulate in Scotland and Ireland, but are not legal tender there.

Besides the Bank of England there are seventy private banks and thirty-seven joint stock banks, authorized to issue £2,678,109 and £2,015,760, respectively, of uncovered notes. The members of banking companies issuing notes are subject to unlimited liability so far as concerns the notes; though as to other obligations, their liability is, with few exceptions, limited.

In Scotland the issue of bank notes is regulated by the act of Parliament of July 21, 1845, based on the same principles as the charter of the Bank of England contained in the act of 1844. The Scotch banks-ten in number, but with numerous branches-may issue, over and above their coin and bullion, notes to the amount of £2,676,350. Notes as small as £1 are permitted. The liability of shareholders in respect to the note issue is unlimited.

Ireland has six banks authorized to issue uncovered notes to the amount of £6,354,494. As in Scotland, notes as small as £1 may be issued, and the liability of the shareholders for notes is unlimited.

The following is a statement of the amount of bank notes outstanding at the close of 1893:

*Of this total issue £25,869,000 was in circulation and £13,296,000 in the banking department of the Bank of England.

Estimated Stock of Money in Great Britain.-Gold, $450,000,000; silver (subsidiary). $112,000,000; uncovered notes, $113,400,000, being composed of bank notes, $264,900,000, less metallic reserves $151,500,000.

CANADA.

Gold.-Canada has no gold coinage of her own. The gold coins of the U. S. pass current and are legal tender at par, and the sovereign of the United Kingdom at the fixed valuation of $4.866. There is very little gold in actual circulation. The Minister of Finance holds at present (Jan. 1, 1895,) about $10,000,000 as a reserve against the outstanding Dominion notes. The amount in the banks, chartered, private and savings, is estimated to be about $10,000,000 more.

Silver. The silver coinage dates from 1870; previous to which the small silver pieces in circulation were mainly those of the United States. The coins are entirely subsidiary in character, of denominations of 5c., 10c., 25c. and 50c., and are legal tender to the amount of ten dollars. The total coinage since the establishment of the mint in 1870 to July, 1893, was $6,300,000.

Dominion Notes may be issued by the Minister of Finance to the extent of $25,000,000, redeemable on demand in gold, being secured by a reserve of which at least 15% of the total issue shall be gold, and at least 25% gold and Dominion securities guaranteed by the Imperial Government, the remaining 75% being covered by ordinary Dominion securities held by the Minister of Finance. The issue of notes may be increased above the $25,000,000 limit by the issue of additional notes upon the deposit of gold to the full extent of the issue. These notes are legal tender, and are issued in denominations of 25c., $1, $2 and $4, as well as the usual higher denominations. The aggregate issue is now $22,000,000, over $15,000,000 of which are held by the banks as reserves.

Bank Notes, issued only by the chartered banks, now thirty-eight in number. These are mainly large institutions, each of which operates many branches, the large banks having from thirty to forty separate offices. The total number of offices is at present about 460. No special security in the way of deposit of bonds is required; but the notes in case of insolvency are a first charge upon all the assets of the bank, including the double liability of the stockholders. Each bank is also obliged since 1890 to keep on deposit with the Finance Department a sum of money equal to 5% of average circulation; from this fund the notes of any failed bank will be redeemed, with interest, in case the receiver is unable to redeem them within two months. The limit of note issues is the aggregate paid up capital of the bank, but owing to the constant daily redemption to which the notes are subject, the aggregate rarely exceeds 60% of the authorized limit. Notes for $5 are the smallest permitted.

An important feature is the elasticity of the system, the customary autumnal expansion and subsequent contraction being in recent years about 20%. The aggregate circulation Nov. 1, 1894, was $34,516,651.