This table shows that the 4 per cent bonds of 1907 bonds average to sell at prices to the purchaser in 1889.. Average to pay at prices sold for during 1887, 1888, and 1889, three From 1883 to 1892, the eight years previous to the panic of 1893..do.... Note circulation of national banks on June 30, 1890. And this decrease in bank-note circulation was before the increase in National-bank note circulation one year later, January 30, 1891, was National-bank note circulation on February 5, 1896, because of ruined 212,023, 386 APPENDIX E. The profit or loss on circulation under the existing law and also under Under the proposed bill, including both classes of notes, they would be.... 1.867 (Or twice as much.) Under the proposed bill... 3.867 (Or one hundred and twenty-one times as much.) To take out currency where it is most needed the actual loss to banks on cir- 1.389 The gain under the proposed bill on all currency taken out is seen APPENDIX F. The total banking funds in national banks in 1892 were about.... $2,800, 000, 000 2,200, 000, 000 800, 000, 000 Paying the same dividends on bank stock as now, the total sum received by banks on the same loans and discounts under the Walker bill, if all were made at 4 per cent, could be reduced by 0.928 per cent, on $800,000,000 by the sum, per annum, of $7,424,000 in the whole country. Keep the rate of discount the same as now and their dividends on their capital stock would be increased by. On their capital stock, surplus, and undivided profits by Per cent. 1.08 .72 The banks could then reduce the rate of interest in 4 per cent localities by.. .0033 on the total loans and discounts, and pay the same dividends on their capital stock as now. In 6 per cent localities it would increase profits on circulation by 2.34 per cent on $800,000,000, or by a total sum in the whole country of $18,720,000, and larger dividends on $686,600,000 of capital stock of 2.72 per cent, or larger dividends on $1,027,100,000, including capital stock, surplus, and undivided profits of 1.82 per cent, or reduce the rates of interest by 0.851 per cent on the total loans and discounts of $2,200,000,000. In 8 per cent localities by 3.77 per cent on $800,000,000, or by a total sum of $30,160,000, or larger dividends on $686,600,000 capital stock of 4.39 per cent, or larger dividends on $1,027,100,000 capital stock, surplus, and undivided profits of 2.93 per cent, or reduce the rates of interest by 1.37 per cent on total loans and discounts of $2,200,000,000. In 10 per cent localities by 6.26 per cent on $800,000,000, or by a total sum of $50,080,000, or larger dividends on $686,600,000 capital stock of 7.29 per cent, or on $1,027,100,000 capital stock, surplus, and undivided profits of 4.87 per cent, or reduce the rates of interest by 2.27 per cent on total loans and discounts of $2,200,000,000. All these figures are made upon the basis of banks having out the $800,000,000 circulation under both bills. The rates of interest on farm mortgages are always largely influenced by interest rates on bank loans and discounts and they would also be proportionately reduced. With reserve agents, $243,000,000; the total then held of $570,000,000. These figures are found on page 160, Report of the Comptroller of the Currency for 1892. All the cash reserve above that "required by law" may be in greenbacks of other banks. IN 4 PER CENT LOCALITIES. Under the existing law the profit on $800,000,000 circulation is 0.942 per cent $7,536,000, Under the Walker bill the profit on $800,000,000 circulation is 1.867 per cent-$14,936,000. Of course, dividing the $7,536,000 by 4 (the per cent), will show how many dollars of the currency, or 23.12 per cent if unused, or $23.12 in each $100, would destroy all profit to the bank under existing law on the whole $800,000,000, or if there was out of circulation $188,400,000. When 23.12 per cent of the currency is unused under the Walker bill, profit still received on the amount then out in circulation would be, on the whole $800,000,000, 0.928 per cent-$7,424,000. IN 6 PER CENT LOCALITIES. Profit at 6 per cent under the existing law on $800,000,000 circulation, 0.526 per cent, $4,208,000. Profit at 6 per cent under the Walker bill on $800,000,000 circulation, 2.867 per cent, $22,936,000. All profit under the existing law is destroyed in the non-use of $70,133,333, or 0.876 per cent of the circulation, or $8.70 in each $100. When 0.876 per cent of the currency is unused under the Walker bill, profit received on the amount then in circulation on the whole $800,000,000, will be 2.34 per cent, $18,720,000. IN 8 PER CENT LOCALITIES. Profit at 8 per cent under the existing law on $800,000,000 circulation, .096 per cent, $768,000. Profit at 8 per cent under the Walker bill on the amount out on $800,000,000 circulation is 3.867 per cent, $30,936,000. All the profit under the existing law vanishes in the nonuse of $9,600,000. When 01.2 per cent of the currency is unused, or $1.20 in each $100, under the Walker bill the profit received on the amount in circulation will be on the whole $800,000,000 3.835 per cent, $30,680,000. IN 10 PER CENT LOCALITIES. In localities where interest is 10 per cent it is an actual loss to a bank taking out circulation under the existing law of 1.389 per cent on $800,000,000; or of $11,112,000 the total loss would be $3,704,000. And while it is impossible for people to use bank currency in such places the profits on every dollar they could keep out under the Walker bill would be as much as before shown, or on $800,000,000 circulation 4.867 per cent, $38,936,000. APPENDIX G. [Figures made by Hon. D. N. Morgan, Treasurer of the United States.] APPENDIX I. [Figures at the right indicate the legal rate where no rate is fixed in the obligation.] States in which the rate of interest allowed by contract is 6 per cent. Illinois Alabama. Georgia Indiana Iowa... Louisiana State in which the rate of interest allowed by contract is 7 per cent. States in which the rate of interest allowed by contract is 8 per cent. States in which the rate of interest allowed by contract is 10 per cent. States in which the rate of interest allowed by contract is 12 per cent. New Mexico...... North Dakota.. Per cent. 6 7 Oklahoma.... State in which the rate of interest allowed by contract is 18 per cent. *New York has by a recent law legalized any rate of interest on call loans of $5,000 or upward on collateral security. tNot to exceed 10 per cent. No usury, but over 6 per cent can not be collected by law. APPENDIX H. Remembering no bank can take out reserve notes in excess of one-half the total sum of its capital, surplus, and undivided profits or in excess of its total reserve, any banker can figure out from the following table the advantage of going into the scheme proposed. The table shows the profit or loss in currency notes when all are loaned out, if taken out on the dates given and on bonds bought at their market price on that day; and also the profit and loss on such currency at a price at which such bonds would pay 24 per cent income. Two and one-half per cent is 3.62 per cent more income than United States bonds paid the purchaser at their price in normal conditions or at their average price for the eight years previous to the panic of 1893. Second. The table shows the sum of each $100,000 taken out under existing laws, which, if held out of circulation would destroy all profit on the whole $100,000 taken, and also what the profit to the bank would be on the whole $100,000 taken out under the Walker bill, $50,000 by purchaser and $50,000 issued to the bank against its assets, with the same sum held out of circulation. The deductions to be made for the expense of maintaining $100,000 currency notes under the Walker bill are: Expense, 0.25548 per cent, to be deducted from the local rate of interest shows the profit on the reserve notes in actual circulation. Halve this sum to ascertain the profit on the total of greenbacks and reserve notes. Treasury "Assessment for expense" sheets of December of each year show The cost of redemption on each $100,000 was— The cost of annual redemption will be fully $137.48 on $100,000, when currency is redeemed freely. It was very much hindered in the years given for want of clerks. If it costs only $45, as shown on page 160 of Comptroller's report of 1894, it is so much in favor of both systems. Figures given below assumed for calculations are in proportion to the actual condition of all national banks June 30, 1892. With one exception the figures are all made on the assumption that the whole $100,000 currency notes are in circulation. It is obvious that there can not be the same profit to bankers on circulation on any two consecutive days if bonds are above or below par. (See pages 44 to 55.) |