Ail 
 
 187% 
 
REMARKS 
 
 OF 
 
 JOHN JAY KNOX 
 
 COMPTROLLER OF THE CURRENCY, 
 
 BEFORE 
 
 THE COMMITTEE ON BANKING AND CURRENCY, 
 
 HOUSE OF REPRESENTATIVES, 
 
 SUBSTITUTE FOR A BILL TO RETIRE THE CIRCULATING-NOTES OF 
 THE NATIONAL BANKS, AND FOR OTHER PURPOSES. 
 
 PRINTED BY REQUEST OF THE COMMITTEE. 
 
 FEBRUARY II), 1878. 
 
 WASHINGTON: 
 
 GOVERNMENT PRINTING OFFICE. 
 
 1878 . 
 

 IS7 S/\ 
 
REMARKS OF MR. KNOX. 
 
 Committee on Banking and Currency, 
 
 HOUSE OF REPRESENTATIVES, 
 
 Tuesday Morning, February 10, 1878. 
 
 Mr Buckner. The Committee is now ready to listen to tlie Comp- 
 Lite of the Currency relative to the bill which proposes to retire the 
 Hrculating-notes of the national banks. 
 
 Mr. Knox. In accordance with a resolution of the Committee on 
 banking and Currency, and the request contained in your letter of the 
 jq 5 th instant, 1 now appear before the Committee to present my views 
 on “ the general merits and practical workings of a substitute for a bill 
 to retire the circulating-notes of the national banks, and for other pur¬ 
 poses.” * 
 
 [ Section 1 of the pending bill provides for an issue of Treasury notes 
 [equal in amount to the circulation of the national banks, which shall 
 be used in the redemption and retirement of such circulation. 
 
 The form of the notes is: “ The United States of America are indebted 
 
 to the bearer in the sum of-dollars;” and such notes are to be 
 
 issued of the denominations and in the general similitude of the United 
 ‘States notes commonly known as legal-tenders. They are not to be a 
 full legal-tender, but are to be “receivablein payment of all taxes, cus¬ 
 toms, excises, debts and demands of every kind due to the United 
 \ States, and of all claims and demands against the United States, except 
 for obligations made payable in coin or lawful money by existing laws; 
 and shall be received by the Secretary of the Treasury at par for the 
 four per centum bonds of the United States authorized to be issued by 
 the act entitled ‘ An act to authorize the refunding of the national debt,’ 
 approved July 14, 1870.” 
 
 In view of the decisions of the Supreme Court of the United States 
 in reference to the issue of legal-tender notes by the Government as a 
 war measure, it may be considered exceedingly doubtful whether the 
 issue, in time of peace, of such notes as are contemplated by the bill is 
 within the constitutional power of Congress. 
 
 Section 5136 of the Revised Statutes of the United States gives to 
 each national bank the power “to have succession for the period of 
 twenty years from its organization, unless it is sooner dissolved accord¬ 
 ing to the provisions of its articles of association, or by the act of its 
 
 For bill, see Appendix. 
 
4 
 
 shareholders owning two-tliirds of its stock, or unless its franchise | 
 becomes forfeited by some violation of law.” Under this clause the f 
 national banks now in operation have acquired vested rights, among j 
 which are those of existence and the right to demand and receive 1 
 circulating-notes on a deposit of United States bonds. If Congress 1 
 should provide, by the passage of the pending bill, for the withdrawal 
 of such rights, it is not improbable that the courts would be called I 
 upon to decide if such legislation is not unconstitutional and void. 
 
 Many other objections may be urged against the pending bill; but I 
 as I believe that the effect of its passage will be to abolish the national- j 
 banking system, to be followed by the repeal of section 3412 of the J 
 Revised Statutes, which imposes a “tax of ten per centum on the j 
 amount of notes of any person, or of any State bank or State- 1 
 banking association, used for circulation and paid out by them,” and ^ 
 the re-establishment of State banks, I shall confine my remarks, during j 
 the thirty minutes allowed me by your letter of invitation, to the ad¬ 
 vantages of the present system in comparison with that previously •: 
 existing, and to the amount of profit derived by the national banks | 
 from the issue of circulating-notes. 
 
 PREVIOUS BANKING SYSTEMS. 
 
 Previous to the organization of the national-banking system, in 18G3, 
 the paper currency of the country was issued by banks organized under 
 authority of the'several State legislatures. New York had a free-bank¬ 
 ing system similar to that of the present national banks. In nearly 
 all the other States banks were chattered by special act of the legisla¬ 
 ture. Many of these institutions had but a nominal capital, consisting 
 chiefly of notes given by the stockholders for the amount of their shares. . 
 
 In most of the States the shareholders of such banks were not made 
 personally liable; no security was required for circulation; no pro¬ 
 vision was made for the redemption of notes at any commercial centre, 
 and such banks were frequently organized by non-resident shareholders. 
 
 In many of the States no returns of the banks were made to State 
 authorities, and it was impossible to obtain even approximate statis¬ 
 tics of the resources and liabilities of the banks. 
 
 There were many organizations which were merely banks of circu¬ 
 lation—associations without capital, located at remote points and 
 owned by non-residents—and which were established, not for the pur¬ 
 pose of doing a banking business, but in order to convert State bonds 
 into currency and obtain the interest on the bonds. During the 
 administration of General Jackson the losses to the people and to the 
 
; Government from tlie failures of banks and from an unsecured currency 
 | Were frequent, and an .attempt was made to influence State legislatures 
 I to prohibit the issue of small notes, with the hope of introducing specie 
 iiito more general circulation and protecting the laboring classes from 
 Sequent losses. Government funds were not allowed to be deposited 
 jin banks which issued circulating-notes of a denomination less than 
 [ten dollars. Many measures of reform were proposed, yet but little 
 [was accomplished, for the reason that success depended upon the co- 
 [operative action of the legislatures of so many different States. 
 
 B Mr. Gallatin, as early as 1831, proposed to tax out of existence State 
 banks, and Mr. Woodbury, in 1836, urged upon the State legislatures 
 |the policy of requiring security for circulation, frequent examinations, 
 land many restrictions; and it was proposed by different writers that 
 - the States should require the circulation to be based upon Government 
 [ bonds. A national-banking system similar to the one now in opera¬ 
 tion was suggested, but was found impracticable for the reason that 
 " the public debt was not sufficiently large to constitute a basis for cir- 
 leulation, and the influence of the State banks already organized 
 was sufficiently powerful to obtain a renewal of their charters when¬ 
 ever they expired. 
 
 RHE ISSUE OF UNITED STATES NOTES DISAPPROVED BY HAMILTON, 
 DALLAS, GALLATIN AND CHASE. 
 
 I The proposition for the issue of circulating-notes by the Government 
 fcwas early discussed, but was not favored. 
 
 f Alexander Hamilton, Secretary of the Treasury, in his report of 
 [December 13, 1790, gives at length his reasons for the necessity of the 
 Organization of a Bank of the United States, and disapproves of the 
 proposition to issue United States notes. He says: 
 
 I 11 The emitting of paper money by the authority of Government is 
 wisely prohibited to the individual States by the National Constitu¬ 
 tion, and the spirit of that prohibition ought not to be disregarded by 
 the Government of the United States. Though paper emissions, under 
 a general authority, might have some advantages not applicable, and 
 be free from some disadvantages which are applicable to the like emis¬ 
 sions by the States separately, yet they are of a nature so liable to abuse, 
 and, it may even be affirmed, so certain of being abused , that the wisdom of 
 the Government unll be shoicn in never trusting itself with the use of so 
 seducing and dangerous an expedient. 
 
 u In times of tranquillity it might have no ill consequence; it might 
 even, perhaps, be managed in a way to be productive of good; but, in 
 great and trying emergencies, there is almost a moral certainty of its 
 becoming mischievous. The stamping of paper is an operation so much 
 easier than the laying of taxes, that a government in the practice of 
 
G 
 
 
 paper emissions would rarely fail, in any such emergency, to indulge I 
 itself too far in the employment of that resource, to avoid as much 
 as possible one less suspicious to present popularity. If it should not i 
 even be carried so far as to be rendered an absolute bubble, it would at ' 
 least be likely to be extended to a degree which would occasion an - 
 inflated and artificial state of things incompatible with the regular and > 
 prosperous course of the political economy. 
 
 “ Among other material differences between a paper currency, issued 
 by the mere authority of government, and one issued by a bank, 
 payable in coin, is this : that, in the first case, there is no standard to 
 which an appeal can be made, as to the quantity which will only satisfy, 1 
 or which will surcharge the circulation ; in the last, that standard re¬ 
 sults from the demand. If more should be issued than is necessary, it 
 will return upon the bank. Its emissions, as elsewhere intimated, 1 
 must always be in a compound ratio to the fund and the demandj 
 whence it is evident that there is a limitation in the nature of the thing; 
 while the discretion of the Government is the only measure of the extent 
 of the emissions by its own authority. This consideration further illus¬ 
 trates the danger of emissions of that sort, and the preference which is. 
 due to bank paper.” 
 
 An issue of $00,500,000 of Treasury notes was authorized between 
 June 30,1812, and February 24, 1815, of which amount $30,680,794 was 
 issued. A portion of these notes were of a denomination less than 
 $100; the remainder, which were of denominations of $100 and up¬ 
 ward, bore interest at the rate of “one cent and one-half a cent per 
 day” on every one hundred dollars of principal, each month being reck¬ 
 oned as thirty days. These notes were everywhere receivable in all 
 payments to the United States, but were depreciated from eight to ten 
 per cent, below bank-notes, which bore no interest but were redeema¬ 
 ble in specie. 
 
 Mr. Dallas, Secretary of the Treasury, on October 6, 1814, trans¬ 
 mitted a report to the Committee of Ways and Means upon this sub¬ 
 ject, in which he says: 
 
 “ The multiplication of State banks in the several States has so in¬ 
 creased the quantity of paper currency that it would be difficult to 
 calculate its amount, and still more difficult to ascertain its value. 
 Under favorable circumstances, and to a limited extent, an emission 
 of Treasury notes would probably afford relief; but Treasury notes 
 are an expensive and precarious substitute either for coin or bank¬ 
 notes, charged as they are with a growing interest, productive of no 
 countervailing profit or emolument, and exposed to every breath of 
 popular prejudice or alarm. The establishment of a national institu¬ 
 tion, operating upon credit, combined with capital, and regulated by 
 prudence and good faith, is, after all, the only efficient remedy for the 
 disordered condition of our circulating medium. The establishment 
 of a national bank will not only be useful in promoting the general 
 welfare, but it is necessary and proper for carrying into execution some 
 of the most important powers constitutionally vested in the Govern¬ 
 ment.” 
 
7 
 
 Mr. Gallatin, in 1831, refers to the proposed issue of Treasury notes 
 f as follows: 
 
 M. u The general objections to a paper issued by Government have 
 I already been stated at large, yet it must be admitted that there 
 m mav be times when every other consideration must yield to the supe- 
 1 rior necessity of saving or defending- the country. If there ever was a 
 | time or a cause which justified a resort to that measure, it was the war 
 * of the independence. It would be doing gross injustice to the authors 
 j of the Revolution and founders of that independence to confound them 
 »with those Governments which, from ambitious views, have, without 
 Wnecessity, inflicted that calamity on their subjects. 
 
 | “The old Congress, as the name purports, were only an assembly ot 
 I plenipotentiaries, delegated by the several colonies or States. The> 
 I could only recommend, and had not the power to lay, taxes, lhe 
 | country was comparatively poor; extraordinary exertions were neces- 
 I gary to resist the formidable powers of Great Britain. Those exertions 
 ft were made, and absorbed all the local resources; the paper monej 
 ft carried the United States through the most arduous and perilous stages 
 1 of the war, and, though operating as a most unequal tax, it cannot be 
 f denied that it saved the country. It is to be hoped that a similar state 
 1 of things will not again occur; but, at all events, the issue oj a Govern- 
 l ment paper ought to be kept in reserve for extraordinary exigencies” 
 
 l Other financial writers of that time took substantially the same view 
 
 | of the subject. 
 
 f Secretary Chase, in his report of 18G1, discussed the proposition to 
 ft substitute demand notes, payable in coin, in place of the notes of pri- 
 vate banking corporations, and also the proposition to issue national- 
 
 I bank notes, secured by the pledge of United States bonds, to replace 
 | the existing bank-notes authorized by the laws of the several States. 
 
 ■ The advantages claimed for the latter plan were, a currency of uniform 
 ■' security and value, protection from losses in discounts and exchanges, 
 ft increased facilities to the Government in obtaining loans, a diminution 
 p of the rate of interest or a participation by the people in the profits of 
 K circulation, an avoidance of the perils of a great money monopoly, and 
 i a distribution of the bonds of the nation to the leading monetary asso- 
 i ciations of the country, thus identifying their interests with those of 
 P the Government. 
 
 In December, 18G2, in his annual report, he again urged his objee- 1 
 | tions to the issue of United States notes. The principal objections ! 
 f were thus stated by him : ] 
 
 “(1.). The facility of excessive expansion when expenditures exceed| j 
 revenue. (2.) The danger of lavish and corrupt expenditure stimulated j 
 by facility of expansion. (3.) The danger of fraud in management and I 
 supervision. (4.) The impossibility of providing it in sufficient amounts j 
 for the wants of the people whenever expenditures are reduced to ! 
 equality with revenue or below it.” j 
 
8 
 
 In discussing the fourth objection, he says: 
 
 “ Whenever the country shall be restored to a healthy normal condi¬ 
 tion, and receipts exceed expenditures, the supply of United States 
 notes will be arrested, and must progressively diminish. Whatever de¬ 
 mand may be made for their redemption in coin must hasten this diminu¬ 
 tion, and there can be no reissue; for reissue, under the conditions, ne¬ 
 cessarily implies disbursement, and the revenue, upon the supposition 
 supplies more than is needed for that purpose. There is, then, no mode 
 in which a currency in United States notes can be permanently main¬ 
 tained, except by loans of them when not required for disbursement, on 
 deposits of coin or pledge of securities, or in some other way. This 
 would convert the Treasury into a Government bank, with all its 
 hazards and mischiefs. If these reasonings be sound, little room can 
 remain for doubt that the evils certain to arise from such a scheme of 
 currency, if adopted as a permanent system, greatly overbalance the 
 temporary though not inconsiderable advantages offered by it.” 
 
 STATE-BANK NOTES TAXED OUT OF EXISTENCE. 
 
 The system of State banks, with the right to issue currency, con¬ 
 tinued for two years after the organization of the national-banking 
 system. The capital of such banks in 1863 was four hundred and five 
 millions, and their circulation two hundred and thirty-eight millions; 
 but in 1865 an act was passed imposing a tax of 10 per cent, upon the 
 amount of notes of any person, or of any State bank, used for circula¬ 
 tion and paid out by any banking association after August 1, 1866, 
 The circulation of the State banks was thus taxed out of existence, 
 and their capital has since been largely transferred to the national¬ 
 banking system, the total capital of all the State banks and private 
 bankers being at the present time but two hundred and twenty-five 
 millions of dollars. 
 
 STRENGTH AND UTILITY OF THE NATIONAL BANKS. 
 
 The legislation authorizing the national-banking system was the 
 result of a great war, and it is not probable that such a system could 
 have been organized in time of peace. The success of the system 
 has been greatly beyond the anticipations of its advocates, and it 
 is generally acknowledged that it is the equal or superior of any system 
 heretofore devised. Its merits do not consist alone in the safety of its 
 circulating-notes. It is a free system, and is not open to the objection 
 of other banking systems, that it is a monopoly. Its restrictions are 
 numerous and burdensome, and its penalties severe. The profits to the 
 stockholders for the last five years have not been so great as in the 
 systems of State banking which preceded it, as may be seen from the 
 following table, which shows, by geographical divisions, the ratio of 
 
9 
 
 s' - dividends to capital and surplus for the years ending September 1, from 
 1' 1870 to 1877, inclusive: 
 
 v 
 
 ^• Geographical divisions. 
 
 New England States - 
 
 Kuiddle States . 
 
 Southern States. 
 
 Western States . 
 
 United States . 
 
 Ratio of dividends to capital and surplus. 
 
 1 1870. 
 
 1871. 
 
 1872. 
 
 1873. 
 
 1874. 
 
 1875. 
 
 • 1876. 
 
 ! 1877. 
 
 Aver¬ 
 
 age. 
 
 8.4 
 
 8. a j 
 
 8.1 
 
 8.2 
 
 7.7 i 
 
 7.6 
 
 6.7 
 
 i 6.0 
 
 7.6 
 
 8.1 
 
 7.9 
 
 7.9 
 
 7.9 j 
 
 
 7.6 
 
 7.7 
 
 6.6 
 
 7.7 
 
 10.7 
 
 10.1 
 
 9.5 
 
 8.8 ! 
 
 8.2 i 
 
 7. 7 
 
 7.6 
 
 1 7.1 
 
 8.7 
 
 8.5 
 
 8.9 
 
 9.3 
 
 9.0 
 
 8.0 
 
 8.6 
 
 8. 1 
 
 9. 6 
 
 8.8 
 
 8.4 
 
 8.3 ; 
 
 8. 3 
 
 8.3 i 
 
 7.9 
 
 7.8 
 
 7.5 
 
 ! 7.1 
 
 7.9 
 
 f The statistics which it furnishes to the public and to Congress are 
 m more complete and accurate than any that have ever been obtained in 
 ^ any country under any previous system, and all efforts to obtain simi- 
 k. lar statistics of the condition of the State institutions now in existence 
 I' have proved unavailing. 
 
 K Section 333 of the Revised Statutes requires the Comptroller to 
 » report annually to Congress the condition of banks organized under 
 P State laws, so far as such information can be obtained from oflicial 
 I sources; but in at least half of the States in the Union satisfactory in- 
 Kformatiou cannot be obtained, for the reason that the institutions men 
 P tioned are not required by State laws to make satisfactory reports to 
 any State officer. 
 
 I While the failures of State banks and savings banks have been 
 ! numerous and the resulting losses enormous, it is estimated that the 
 i total losses to creditors from the nearly 2,400 national banks organized ! 
 ^ during the last fifteen years have not exceeded six millions of dollars, 
 y an amount probably not equal to the losses which have fallen upon the ! 
 I creditors of savings banks and State banks during the past year alone. . 
 
 I The national banks have accumulated a surplus fund of more than one j 
 I hundred and twenty millions of dollars, under a provision of law which 
 ■^requires that one-tentli part of the net profits of every bank shall be ’ 
 ir semi-annually carried to its surplus fund, until the same shall amount ■ 
 | to 20 per cent, of its capital. The total surplus of the national banks * 
 f now equals more than 25 per cent, of their capital, and is a fund to )j 
 I which losses and bad debts are chargeable. This fund was chiefly j 
 | accumulated during the prosperous period which followed the tormina- f 
 1 tion of the late war, but during the last two years its amount has \ 
 | been decreased through losses by more than eleven millions of dollars 
 The gradual accumulation of the surplus fund is shown in the follow jjj 
 
10 
 
 mg table, which exhibits its amount and yearly increase from 1863 
 to the present time: 
 
 Date. 
 
 No. of 
 banks. 
 
 Amount of 
 surplus. 
 
 Semi-annual 1 
 
 Semi-annual 
 
 decrease. 
 
 July 1864 
 
 467 
 
 $1,129,910 
 
 
 
 Jan., 1865. 
 
 638 
 
 8,663,311 
 
 $7,533,401 
 
 
 July, 1865. 
 
 1294 
 
 31,303,566 
 
 22,640,255 
 
 
 Jan., 1866. 
 
 1582 
 
 43,000,371 
 
 11,696,805 
 
 
 July, 1866. 
 
 1634 
 
 50,151,992 
 
 7,151,621 
 
 
 Jan., 1867 . 
 
 1648 
 
 59,992, 875 
 
 9,840,883 
 
 
 July, 1867. 
 
 1636 
 
 63,232,811 
 
 3,239,936 
 
 
 Jan., 1868 . 
 
 1642 
 
 70,586,126 
 
 7,353,315 
 
 
 July, 1868. 
 
 1640 
 
 75,840,119 
 
 5,253,993 
 
 
 Jan., 1869. 
 
 1628 
 
 81,169,937 
 
 5,329,818 
 
 
 Jnne, 1869. 
 
 1619 ; 
 
 82,218,576 
 
 1,048, 639 
 
 
 Jan., 1870. 
 
 1615 
 
 90,174,281 
 
 7,955,705 
 
 
 June, 1870. 
 
 1612 
 
 91,689,834 
 
 1,515,553 
 
 
 Dec., 1870. 
 
 1648 
 
 94,705,740 
 
 3,015,906 
 
 
 June, 1871., 
 
 1723 
 
 98,322,204 
 
 3,616, 464 
 
 
 Dec., 1871. 
 
 1790 
 
 101,573,154 
 
 3,250,950 
 
 
 June, 1872. 
 
 1853 
 
 105,181,943 
 
 3,608,789 
 
 
 Dec., 1872. 
 
 1940 
 
 111,410,249 
 
 6,228,306 
 
 
 Jnne, 1873. 
 
 1968 
 
 116,847,455 
 
 5,437,206 
 
 
 Dec., 1873. 
 
 1976 
 
 120,961,268 
 
 4,113,813 
 
 
 June, 1874. 
 
 1983 
 
 126,239,308 
 
 5,278, 040 
 
 
 Dec., 1874. 
 
 2027 
 
 130, 4*5, 641 
 
 4,246, 333 
 
 
 June, 1875. 
 
 2076 
 
 133,169,095 
 
 2,683, 454 
 
 
 Dec.* 1875_ 
 
 2086 
 
 ! 133,085, 422 
 
 
 $83,673 
 
 June, 1876. 
 
 2091 
 
 | Kll, 897,197 
 
 
 1.188,225 
 
 Dec., 1876.... 
 
 2082 
 
 131,390,665 
 
 
 506,532 
 
 June, 1877 
 
 2078 
 
 124,714, (63 
 
 
 j 6,676,592 
 
 Dec., 1877... 
 
 2073 
 
 121,568,455 
 
 
 3,145,618 
 
 
 
 
 More than nineteen millions of dollars of losses have been charged 
 to surplus and to other earnings by the national banks during each of 
 the last two years, as may be seen by the following tables, showing, 
 by geographical divisions, the losses charged off by them during the 
 years named: 
 
 1876. 
 
 ■ Geographical divisions. 
 
 Six months ending 
 March 1, 1876. 
 
 Six months ending 
 September 1, 1876. 
 
 Total for 1876. 
 
 No. of 
 banks 
 
 Losses 
 charged off. 
 
 No. of 
 banks 
 
 Losses 
 charged off. 
 
 S T e\v England States. 
 
 Middle States. 
 
 Southern States. 
 
 Western States. 
 
 pacific States and Terri¬ 
 tories. 
 
 201 
 
 268 
 
 67 
 
 252 
 
 18 
 
 §1,485,531 51 
 3,553,128 79 
 308,861 50 
 1,000,912 52 
 
 152,735 50 
 
 282 
 
 344 
 
 90 
 
 302 
 
 16 
 
 §3,074,128 01 
 7,156,348 47 
 896,890 84 
 1,933,506 28 
 
 156,983 00 
 
 $4,559,659 52 
 10,709,477 26 
 1,205,752 34 
 2,934,418 80 
 
 309,718 50 
 
 , Totals . 
 
 806 
 
 6,501,169 82 
 
 1,034 
 
 13,217,856 60 
 
 19,719,026 42 
 
 r 
 

 11 
 
 1877. 
 
 T Geographical divisions. 
 
 Six months ending 
 March 1, 1877. 
 
 Six months ending 
 September 1, 1877. 
 
 Total for 1877. 
 
 No. of Losses 
 
 banks; charged off. 
 
 No. of 
 banks 
 
 Losses 
 charged off. 
 
 New England States. 
 
 289 $2,465,327 63 
 
 312 
 
 §4,825,040 56 
 
 §7,290,368 19 
 
 Middle States. 
 
 314 3,402,684 08 
 
 353 
 
 3,945,805 59 
 
 7,408,489 67 
 
 Southern States. 
 
 80 478,251 64 
 
 86 
 
 511,841 49 
 
 990,093 13 
 
 Western States. 
 
 Pacific States and Terri¬ 
 
 276 1,470,454 97 
 
 335 
 
 2,356.874 56 
 
 3,827,329 53 
 
 tories . 
 
 21 299, 242 24 
 
 22 
 
 118,065 23 
 
 417,307 47 
 
 Totals. 
 
 980 j 8,175,960 56 
 
 1,108 
 
 11,757,627 43 j 
 
 19,933,567 99 
 
 The ratio of earnings of the national banks to capital and surplus 
 for the year 187G was but G.S7 per cent., and for 1877 but 5.62. 
 
 If the present system should be discontinued, it is probable that the 
 existing surplus fund would be distributed among the shareholders, j 
 and it is very doubtful if, under any future system, so large a surplus 
 will ever again be accumulated for the safety of the creditors of the 
 b' banks. 
 
 PROFIT ON CIRCULATION. 
 
 The only reason advanced by the advocates of the repeal of the sys- 
 r tern is that money may by saved to the Government by authorizing it » 
 fc to issue the circulation now furnished by the national banks. The * 
 I greatest amount of national-bank notes outstanding at one time was j 
 p on December 1, 1871, when it reached $352,391,346. The amount nowj » 
 outstanding of banks in operation is about $300,000,000, showing a] jj 
 i' reduction of more than fifty millions within the last three years. If the jj 
 profit upon circulation v r ere as great as is generally supposed, it is not [j 
 i to be presumed that the banks would voluntarily surrender the source 
 - from which such great profit were derived. In my report for 1875 I 
 / gave a statement showing that the annual profit to the banks from this 
 R source did not at that time exceed ten millions of dollars, and that the 
 : average annual value of circulation to the national banks of the country 
 L was not more than 2} per cent, upon the capital invested. I have now 
 J prepared a similar statement, showing that the profit at the present 
 time does not much exceed that amount. 
 
 The table below exhibits the various classes and amounts of U. S 
 bonds held by the U. S. Treasurer to secure national-bank circulatioi 
 on February 15,1878, their currency value, according to the quotation 
 at the New York stock exchange on that date, the amount of circulatioi 
 
 
12 
 
 issuable thereon, and the amount of interest derived from them, both 
 in gold and currency value, gold being quoted on that date at '2\ per 
 cent, premium : 
 
 Class of bonds. 
 
 Far value. : 
 
 Circulation 
 
 issuable. 
 
 Gold inter-: 
 
 est value of 
 
 interest. 
 
 Sivoa nf 
 
 *79 109 500 $62 803 844 
 
 353.198.550 
 5,400 
 
 7,068,780 
 7, 015,140 
 1,723, 050 
 67,666,860 
 
 112.166.550 
 39,730,365 
 16,071,800 
 
 7, 022,700 
 
 $3,546,570 33,626,368 
 360 i 368 
 
 471,252 i 481,855 
 467,676 | 478,199 
 
 114,870 1 117,455 
 
 3,759,270 3,843,854 
 6,231,475 j 6,371,683 
 1,986,518 | 2,031,215 
 712,080 ; 728,102 
 
 . 468,180 
 
 Five-twenties of 1865.. 
 Five-twenties, (new).. 
 Five-twenties of 1867.. 
 Five-twenties of 1668.. 
 
 Ten-forties of 1864. 
 
 Fives of 1881. 
 
 Four and a lialfs of 1891 
 
 Fours of 1907. 
 
 Pacific Railroad bonds. 
 
 6 , 000 j ’ 6,’135 
 
 7,854,200 j 8,148,732 
 
 1 7,794,600 8,252,533 
 
 1,914,500 | 2,176,805 
 75,185,400 79,132,634 
 ! 124,629,500 130,237,828 
 44,144,850 ; 45,248,471 
 17,802,000 ; 18,002,272 
 7,803,000 j 9,363,600 
 
 
 Totals. 
 
 346,243,550 363,372,854 
 
 511,619,195 
 
 17,290,071 ;18,147,279 
 
 If there be deducted from the amount of capital required to purchase 
 the bonds for circulation, ($363,372,854,) the amount of premium which 
 they bore on February 15, 1878, ($17,129,304,) as well as the ten per 
 cent, margin for which no circulation is issued, ($34,624,355,) the 
 available means of the banks derived from circulation will be reduced 
 from $363,372,854 to $311,619,195. 
 
 The annual interest on the bonds in which the amount of capital 
 named ($363,372,854) is invested amounts to $17,290,071 in gold and 
 $468,180 in currency, the total currency value of the interest on Feb¬ 
 ruary 15, 1878, gold being quoted at the New York Stock Exchange 
 it 2J per cent, premium, being $18,147,279; but as the banks are re¬ 
 quired to pay annually into the Treasury of the United States one per 
 lent. upon their circulation, or $3,116,192 as a tax thereon, there is left 
 315,031,087 in currency, as the net amount of interest received by them 
 innually on their bonds. 
 
 Upon receiving circulation the banks are required by the act of June 
 i0, 1874, to place an amount equal to five per cent, thereof, or 
 •115,580,960, with the Treasurer of the United States as a redemption 
 und, leaving, of the $311,619,195 of circulation issuable upon their 
 ♦onds, $296,038,235 available for use—which amount, if loaned at 8 
 )er cent, per annum, (estimated as the average rate of interest through- 
 jut the country,) will produce an income of $23,683,059; and this in- 
 jOine added to the net interest received on then- bonds ($15,031,087) 
 ;ives $38,714,146 as the whole income derived by the national banks 
 ,'om their circulation and from the bonds deposited to secure it. 
 
 I If the capital necessary to purchase the bonds ($363,372,854) were 
 
13 
 
 | oaued at 8 per cent, annual interest, the annual income thereon would 
 bo $20 080 , 828 , and the difference between this sum and the whole m- 
 Ro m e of the banks from their bonds and circulation, ($<>n < 1 , >>) " ll< 1 
 
 is SO 814 817 or 2 X % per cent, on the capital invested, represents the 
 Krkeb^would receive over and above 
 Ktained from the loan of the same amount of capital at the rate of 
 interest named, provided that the whole amount ot circulation reemved 
 by the banks upon their bonds, less the redemption fund, could be kept 
 r loaned out by them continually throughout the year. 
 
 I, This is concisely shown as follows: 
 
 Interest on $296,038,235 of circulation loaned at 8 per $ 
 
 $23, 683, 059 
 
 l cent, per annum.* * -. in. 147, 279 
 
 i Currency value of interest on bonds. 
 
 Total.. 
 
 I; Less tax on circulation. 
 
 41, 830,333 
 3,116,192 
 
 Total income from capital employed ... .* - 11 14<> 
 
 The same capital loaned directly at 8 per cent, per annum ^ ^ g2g | 
 fe would earn. .L__I— 
 
 f Difference, representing profit on circulation. when the 
 , ’ .^ it, loaned continually tinoughout 
 
 whole amount issued is loaned continually tnrougnoui ^ 644 . 31 g| 
 the year. ’ ’ 
 
 I Two and sixty-five hundredths per cent, on the capital employed 
 ($363,372,854) is $9,829,381, which, as shown above, is about the value 
 I of circulation to the national banks if they could keep the whole 
 I amount of their issues loaned out all the time. 
 
 In the above calculation no deduction is made for the costs ot the re¬ 
 demption of the bank circulation, which lessens by so much the profits 
 on circulation. The cost of redemption for the fiscal year ending June 
 30, 1877, was $357,066 10; for the year ending June30,1876, $365,193 31; 
 r and for the year ending June 30, 1875, $290,965 37. 
 
 In localities where the annual rate of interest is 7 per cent., the \ a ue 
 : of circulation is about three per cent, per annum, and where the rate 
 is 10 per cent., the profit is about two per cent. 
 
 The large margin ($51,753,659) between the value of the bonds ownet} 
 by the banks and the circulation issuable thereon, would, in case of disj 
 aster, be available as a reserve for the payment ot the depositors oi 
 other creditors; and this is an additional argument in favor of issuing 
 f circulation under the restrictions of the law as now provided. 
 
 Another point that should be considered in estimating the value o 
 circulation is, that the banks held their bonds at a premium, which: 
 
14 
 
 though it has been greatly reduced in the past, still appears among 
 their assets for a large amount, and which will disappear when the 
 bonds shall be made payable in a medium which does not itself bear a 
 premium. The amount of premium appearing as an asset of the banks 
 on December 28,1877, the date of the last report of their condition, was 
 $8,834,639. 
 
 If all of the bonds of the banks necessary to secure their circulation 
 were converted into four per cent, bonds, the value of circulation, 
 taking the same amounts of bonds and circulation as are used above 
 would be shown as follows: 
 
 Interest on $296,038,235 of circulation, loaned at 8 per 
 
 cent, per annum. $23, 683, 058 
 
 Currency value of interest on bonds. 14,161,361 
 
 Total . 37,844,419 
 
 Less tax on circulation... 3,116,192 
 
 Total profit on capital employed.. 34, 728,227 
 
 The same capital loaned directly at 8 per cent, per annum 
 
 would earn... . 28, Oil, 103 
 
 , Difference, representing profit on circulation when the 
 
 wliple issue is kept loaned out. .. 6, 717,124 
 
 which is l-j 9 ff per cent, on the capital employed. 
 
 If the rate of interest were 7 per cent., the profit on circulation would 
 be 2-j-J^ per cent.; and if the rate were 10 per cent., the profit would 
 be l/^o per cent. 
 
 Another important consideration is, that the average rate of State 
 taxation, during the year 1876, was two per cent, upon the capital of 
 the national banks; and if they should go into liquidation, and the 
 .owners of the bonds should continue to hold them, the amount of State 
 taxation saved to them would nearly or quite equal the benefit they 
 now derive from circulation. 
 
 EFFECT OF THE PASSAGE OF THE BILL. 
 
 The pending bill proposes to abolish the system of national banks 
 after a successful trial of fifteen years, and to give to Congress the 
 ’right to issue the paper money of the country—such money not to be a 
 /full legal-tender nor a promise to pay, but a species of irredeemable 
 {currency not before issued since the organization of the Government, 
 fit will have the effect to keep the subject of the currency continually 
 ibefore the people, and propositions for the enlargement or diminution 
 of its volume will be likely to be introduced in each successive Con¬ 
 gress. The only way in which such a currency could be issued with 
 
any degree of safety would be by a limitation of its amount. That lim¬ 
 itation can be secured only by an amendment to the Constitution of the 
 United States, through the affirmative action of the legislatures of 
 three-fourths of the States of the Union; and while so great a diversity 
 of opinion upon this subject exists as at present, it is not at all probable 
 that a sufficient number of the States could be brought to agree upon 
 any amount which might be proposed as a limit. 
 
 - The effect of the repeal of the present system would probably be the 
 ^ re-establishment of the old State systems in operation previous to the 
 ^organization of the national banks. The New England, Middle, and 
 Southern States now possess more than three-fourths of the entire cap¬ 
 ital and circulation of the national banks. It is believed that, if the 
 question were squarely presented, the vote of the representatives in 
 Congress from the Eastern and Middle States would be found to be 
 almost unanimously opposed to the issue by the Government, exclu¬ 
 sively, of the paper currency of the country; and, while the representa¬ 
 tives of the Southern States do not generally favor the national system, 
 neither are they in favor of an exclusive issue of United States notes. 
 They prefer a system of State banks; and it is probable that, were the 
 national system abolished, a large portion of the representatives of the 
 New England, Middle, and Southern States would favor a return to 
 State banks, rather than an exclusive issue of Treasury notes. The 
 Eastern and Middle States have been habituated from the foundation 
 of the Government to State-bank issues, and have suffered compara¬ 
 tively little from such circulation. The national-banking system is 
 not popular with the South, for the reason that they have not at 
 present the capital with which to procure the necessary United States 
 bonds, and also because the rates of interest are so high in those States 
 that there is no profit upon national-bank issues. The Eastern and Mid¬ 
 dle States, as matters now stand, prefer the present system, and it is 
 altogether probable that the passage of such a bill as is now pending j 
 in this Committee, which in effect abolishes the national-banking sys ' 
 tern, would be soon followed by a repeal of section 3412 of the lievise< ! 
 Statutes, which imposes a tax of ten per cent, upon issues of State '■ 
 bank notes. j 
 
 ASSISTANCE OF NATIONAL BANKS IN FUNDING THE DEBT. \ 
 
 The New York free-banking act, which was the first act passed b; j 
 any State authorizing the issue of circulating-notes based upon bond 9 
 deposited as security therefor, furnished a market for the bonds of tha .( 
 State, and thereby increased their value. The national banks are tli f 
 
16 
 
 owners of $385,000,000 of United States bonds, while the circulation 
 issued to them is not much in excess of $300,000,000; and one of the 
 chief objects in the organization of the system was to supply a steady 
 market for, and facilitate the negotiation of, United States bonds, and 
 to increase the value of such bonds beyond other funds of equal credit 
 but not available for banking purposes. There is no doubt that these 
 expectations have been more than fulfilled, and that the credit of the 
 United States, and its ability to borrow money at low rates, have been 
 greatly increased by making its bonds a basis for currency. 
 
 Nearly one-fourth of the 4 per cent, loan recently negotiated by 
 the Government was subscribed for and is now held by the national 
 banks; and, from the date of their organization, their assistance in the 
 funding and the negotiation of the bonds of the Government has been 
 fully recognized. In October, JL8G5, nearly three-fourths of the whole 
 amount of bonds deposited by the national banks as security for circu¬ 
 lation bore interest at the rate of 0 per cent. Now, less than one- 
 fourth of the bonds so deposited are of the G per cent, class, while 
 more than $00,000,000 of them are of the 4 and 4£ per cent.; and there 
 , is but little doubt that, in the process of funding, the whole national- 
 ; bank circulation will soon be based upon bonds bearing a rate of inter- 
 . est not exceeding 4 per cent., giving to the banks a profit, under present 
 laws, of only about $0,000,000 annually upon their circulation. It ean- 
 i not be doubted that, under any system of State institutions that may 
 ; be hereafter authorized, the losses to the people from exchange would 
 , be much greater annually than the amount of interest paid by the 
 Government to the banks. 
 
 The profits of a well-conducted bank are not derived mainly from 
 circulation, but from the use of deposits; and national banks are not 
 ;at the present time organized so much on account of the profits upon 
 circulation, as for the reason that these institutions have established 
 a character which is of great value to them in the accumulation of de¬ 
 posits. 
 
 ■ When the public debt shall be consolidated into a security bearing 
 a low rate of interest, always salable on the market at a nearly uniform 
 ipriee, it will furnish a fund on which the surplus deposits of the banks 
 |pan at all times be placed, thus obviating the necessity for holding the 
 large proportion of cash reserves which are now maintained by the 
 banks. When that time shall arrive, the bank circulation of the country 
 jtnay be safely based exclusively upon a bond bearing a rate of interest 
 aot exceeding three per cent., so that the income derived by the banks 
 l(fom the Government will be reduced to a comparatively insignificant 
 irnoimt. 
 
IT 
 
 iso SAVING TO THE GOVERNMENT BY THE PASSAGE OF THE BILL. 
 
 Upon the repeal of the ten per cent, tax upon the circulation of State 
 banks, the several Eastern and Middle, and many of the Western 
 i States, would probably authorize the issue of currency based on United 
 [ States, or State bonds, similar to the Xew York State system of a few 
 [ years ago. The result would, therefore, be the disestablishment of our 
 I homogeneous system, which has been tried for a number of years and 
 | found to be excellent in most of its characteristics, and the substitu. 
 tion therefor of many other differing systems. 
 
 The chief objection urged to the national-banking system is that it 
 is an expensive one to the Government; but even this objection would 
 | not be removed by its repeal, for banks organized under State laws 
 would still deposit bonds of the United States or of the States, and 
 I receive interest upon them as well as upon the circulation to be issued 
 thereon; so that, after having destroyed the present system and 
 deranged the banking business of the country, it would be found that 
 legislation had been travelling around a circle, and, in effect, re-estab¬ 
 lished State institutions liable to the same objections which now exist 
 against the national banking system, but without many of the whole¬ 
 some restrictions which now pertain to the latter. 
 
 The experience of the last fifteen years has shown that the present 
 i is a safe and good system of banking. It should not, therefore, be re¬ 
 pealed ; but, if possible, it should be so improved as to become and 
 continue still more serviceable, both to the people and the Government, 
 than it now is. 
 
 The system is yet in its infancy, yet it cannot be denied that it is 
 vastly superior to any previously tried, and that it may be so moulded 
 as to become the best that it is possible to devise. If now superseded 
 by the re-establishment of the old State-banking systems, it is not at 
 all probable that it can ever hereafter, through Congressional action, 
 be restored. 
 
 conclusions. 
 
 The foregoing views may be summarized as follows: 
 
 1. It may be doubted if Congress has the power to issue Treasury 
 notes which shall be a legal-tender for all claims and demands against 
 the United States, or to take from the national banks the vested rights 
 which they have acquired under section 5130 of the Revised StatutesJ 
 
 2. The experience of the country, and the judgment and opinions of 
 Hamilton, Da lias, Gallatin and Chase, were against the exclusive issue 
 of Treasury notes. 
 
 2 k 
 
18 
 
 3. The profits which the national banks derive from the right of cir¬ 
 culation are much less than is generally supposed. 
 
 4. The passage of the bill will be followed by the repeal of section 
 3412 of the Revised Statutes, which imposes a tax on State-bank cir¬ 
 culation, and by the re-establishment of State banks. 
 
 5. The result will not be a saving to the Government, but will occa¬ 
 sion greatly-increased expense and loss to the people, and further de¬ 
 rangement of the business of the country. 
 
APPENDIX 
 
 The following is the bill of the Committee: 
 
 SUBSTITUTE FQR A BILL TO RETIRE THE CIRCULATING-NOTES OF THE 
 NATIONAL BANKS, AND FOR OTHER PURPOSES. 
 
 Be it enacted by the Senate and House of Representatives of the United 
 States of America in Congress assembled , That as soon as may be prac¬ 
 ticable, after the passage of this act, the Secretary of the Treasury shall 
 cause to be prepared an issue of Treasury notes equal in amount to the 
 
 circulation of the national banking associations on the-day of 
 
 -, anno Domini eighteen hundred and seventy-eight; which shall 
 
 be used in the redemption and retirement, in the way hereinafter pro¬ 
 vided, of the circulating-notes of the national banks; which Treasury 
 notes shall be in the following form: 
 
 “Washington, D. C.,-. 
 
 “The United States of America are indebted to the bearer in the sum 
 
 of-dollars;” and shall be signed by the Treasurer of the United 
 
 States, and countersigned by the Register of the Treasury, or their 
 signatures be thereto engraved; and shall contain such devices and 
 superscriptions as the Secretary of the Treasury shall direct; and the 
 denominations of such notes and the general similitude thereof shall 
 conform, as nearly as may be, to those of the United States notes com¬ 
 monly known as legal-tender notes. They shall be receivable in pay¬ 
 ment of all taxes, customs, excises, debts, and demands of every kind 
 due to the United States, and of all claims and demands against the 
 United States, except for obligations made payable in coin or lawful 
 money by existing laws; and shall be received by the Secretary of the 
 Treasury at par for the four per centum bonds of the United States 
 authorized to be issued by the act entitled “An act to authorize the 
 refunding of the national debt,” approved July fourteenth, eighteen 
 hundred and seventy. 
 
 Sec. 2. Immediately after the Treasury notes provided for in the 
 preceding section shall be ready for circulation, the Secretary of the 
 Treasury shall cause them to be forwarded to the assistant treasurers; 
 of the United States at New York, Boston, Philadelphia, Baltimore, 
 Cincinnati, Chicago, Saint Louis, and New Orleans, in amounts pro¬ 
 portioned to the receipts and disbursements of their several offices, with 
 regulations and instructions to the following tenor, to wit: 
 
 First. That the said assistant treasurers shall, immediately after the 
 receipt of such Treasury notes, cease to pay, in disbursement of the 
 public funds, upon any account whatever, the circulating-notes of the 
 national banks then in their several offices, or thereafter received into 
 them, but shall pay out, in the place and stead of such national-bank 
 notes, and in substitution therefor, the Treasury notes herein author¬ 
 ized, until the whole circulating-notes of the national banks shall have 
 been retired. And the assistant treasurers may at. any time issue such 
 Treasury notes in exchange for bank-notes upon the application of any 
 person or bank. 
 
20 
 
 Second. That the assistant treasurers shall, every thirty days after 
 the process of retiring the national-bank notes shall have been begun 
 as above directed, or oftener, if the Secretary of the Treasury shall so 
 require, transmit to the Treasurer of the United States, at Washington, 
 all the national-bank notes received by them up to the date of such 
 transmission ; which said notes shall be received by the Treasurer in 
 liquidation of the charges against the several assistant treasurers on 
 account of Treasury notes as herein provided. 
 
 SBC. 3. It shall be the duty of the Treasurer, as rapidly as the notes 
 of the national banks are received into his office from the assistant 
 treasurers, to cause them to be counted and assorted, and the notes of 
 each association carefully ascertained; and whenever those of any asso¬ 
 ciation shall be ascertained to the amount of live thousand dollars, or 
 any multiple of five thousand dollars, such association shall be notified 
 thereof, and shall be entitled to receive, upon demand and payment of 
 a like sum in legal-tender notes, or the Treasury notes authorized by 
 this act, or in drafts or certificates of deposit of the assistant treas- 
 . urers, or of such national banks as may be designated by the Secretary 
 of the Treasury for that purpose, its bonds on deposit with the Treas¬ 
 urer for security of circulation to the amount of its notes so ascertained 
 ; and notified, and to that extent shall be discharged from tax on its 
 1 circulation. And if any national bank shall fail or neglect, for a period 
 of sixty days after the notification above directed, to make payment in 
 redemption of its bonds in accordance therewith, then to that extent 
 ! interest on its bonds, bearing interest at the highest rate, shall cease 
 ; and be forfeited to the United States during the whole period such 
 failure or neglect shall continue; and any banking association desiring 
 so to do may withdraw all its bonds on payment into the Treasury of 
 legal tender notes or the notes authorized by this act to the amount of 
 , its circulating notes outstanding at the date of such payment. 
 
 Sec. 4. The Secretary of the Treasury is hereby required from time 
 ! to time, as payments are made by the national banks on the withdrawal 
 i of their bonds, or as Treasury notes may be received in exchange for 
 : four per centum bonds, as authorized in the first section of this act, to 
 expend the sum of such receipts either in Treasury notes or legal-tender 
 notes, as may be most expedient, in purchase of the six per centum 
 ■ bonds of tin* United States, redeemable at the pleasure of the Govern- 
 ) ment, or in the purchase of gold or silver coin with which to redeem 
 , and pay such bonds. 
 
 Sec. 5. Any national bank desiring to exchange its six per centum 
 ‘bonds for the Treasury notes authorized by this act, upon application 
 ■to the Treasurer of the United States, and upon payment into the 
 ; Treasury in accordance with such regulations as the Secretary shall 
 j establish, of legal-tender notes or Treasury notes equal to its outstand¬ 
 ing circulation at the date of such application, shall be entitled to 
 ^receive Treasury notes to the full market value of its six per centum 
 Ibonds on deposit with the Treasurer for security of circulation at the 
 Stime, and in addition thereto the amount of its accrued interest and 
 I premium at the market rate. 
 
 / . Sec. 0. And in the contingency of there being a deficiency of coin in 
 itlie Treasury at any time to meet the coin interest on any bonds of the 
 “United States, the Secretary of the Treasury is authorized to dispose 
 iiof bonds of either of the classes authorized by the said act of July 
 ^fourteenth, eighteen hundred and seventy, at not less than par, either 
 at home or abroad, in order to pay the said interest. 
 
21 
 
 [ Sec. 7. All banking associations organized under existing laws, 
 with power to issue circulating-notes, redeemable in gold coin, shall 
 make a monthly deposit in the Treasury of the United States, in gold 
 coin or their own circulating-notes, equal to five per centum of their 
 circulation outstanding at the date of the passage of this act; and 
 when an amount equal to the outstanding circulation of such gold 
 banks shall have been deposited with the Treasurer in gold coin, or in. 
 their own circulating-notes, the bonds of the United States held by the 
 Treasurer to secure the circulatingnotes of said gold banks shall be 
 reassigned and delivered to said banks; and thereafter the circulating- 
 notes of said banks shall be redeemed at the Treasury of the l Tiited 
 States. 
 
 Sec. 8 . No circulating-notes shall be issued to any national banking 
 association after the passage of this act; but nothing herein contained 
 shall be construed either to authorize or allow any contraction of the 
 currency by reason of its operation; and should any national bank, 
 after its passage, retire its circulation in pursuance of existing law, the 
 Secretary of the Treasury is hereby directed to issue, in the purchase 
 of six per centum bonds of tin* United States, the Treasury notes au¬ 
 thorized by this act, to the full amount of the circulation retired by 
 such association. And all the national-bank notes redeemed under the 
 several provisions of this act shall be canceled and destroyed, under 
 such rules and regulations as the Secretary of the Treasury shall pre¬ 
 scribe; and in the monthly statement of the condition of the public 
 debt made by the Secretary, he shall include an exhibit of the amount 
 of the Treasury notes herein provided for outstanding at the date 
 -of such statement, together with the amount of national-bank notes 
 which up to the same date have been redeemed and destroyed. 
 
 Sec. 9. The third section of the act entitled “An act for fixing 
 the amount of United States notes, providing for a redistribution 
 of national-bank currency, and for other purposes,” approved June 
 twentieth, eighteen hundred and seventy-four, requiring the national 
 banks to keep on deposit with the Treasurer of the United States at 
 Washington lawful money equal to five per centum of their circulation, 
 to be held and used for the redemption of such circulation, is hereby 
 repealed. 
 
 Sec. 10. All acts and parts of acts inconsistent with the provisions 
 of this act are hereby repealed. 
 
 T