A
PLAN OF REVISION
of the
United States Monetary System,
BY
MARSHALL R. GODINO,
CASHIER CASCO NATIONAL BANK,
PORTLAND, MAINE.
January, 1896.
(í-s-esr^
William M. Marks,
Printer,
Portland, Me.
currency Revision.
With the possible exception of the tariff, no ques¬
tion of public policy has attracted more general
attention during the past two or three years than
that of the Currency. It seems to he conceded by
all that a change in our monetary system is desirable
and necessary, hut the plans thus far advanced have
contemplated such radical changes that they have
been looked upon as of doubtful utility.
The imperfections in our currency system that
cause complaint and call for remedy are many.
They consist, principally, of the inelasticity of our
paper money and the difficulty the Government has
experienced with its gold reserve and its so-called
established policy regarding the parity of the two
money metals, gold and silver.
Without discussing the causes that have brought
so prominently into notice the lack of elasticity in
our note issues and the difficulty of maintaining the
4
CURRENCY REVISION.
gold reserve and the parity, the proposition of
revision here considered deals with such changes in
existing laws as would naturally he expected to result
in removing or improving the present unsatisfactory
and disturbed condition of financial affairs.
The object of this plan has been to attain practical
benefits through as few modifications as possible of
laws now in force. There is here no attempt to
formulate a theoretically perfect monetary system
regardless of prevailing conditions.
In order to fully understand the nature of the
proposed changes in their relation to those parts of
our present system which must be retained, the plan
is here explained as to its effect on all kinds of
United States currency, including our existing money
bases and the new features intended to improve the
whole. Through these changes, it is expected that
our future requirements can be fulfilled and our
difficulties of to-day overcome.
Unlimited coinage of gold should he continued
under present laws. Gold at the present time is
the most valuable form of money intrinsically, because
of its almost universal use as money throughout the
civilized world.
CURRENCY REVISION.
5
In countries where the gold standard of money is
exclusively in use, like England and Germany, gold
bullion or gold coins of any nation are readily con¬
verted into the legal-tender money of those countries
through their mints at comparatively no expense.
Where the gold and silver, or exclusively silver basis
of money exists, the market value and demand for
gold coins and bullion is such that they are the
equivalents of money, and easily exchanged for it
advantageously.
Thus gold becomes, by a sort of natural selection
and by reason of active market value everywhere,
the most valuable money metal. The fitness of this
selection is practically apparent when the matter of
convenience in handling large values in small bulks
is considered. Taking silver and gold coins at the
established ratio in this country of sixteen to one, a
ton of gold would pay as many debts, or purchase as
many commodities, as sixteen tons of silver. And if
the market value basis of the two metals be taken, it
would make the proportionate weights and bulks
about one to thirty-two.
In the settlement of international trade balances
by the transportation of metallic money from one
G
CUKKENCY REVISION.
country to another, the question of which kind has
the least weight and bulk to a given value is all
important as affecting the cost of the transaction.
Viewed from the standpoints of stability of value
and convenience in handling, gold must be conceded
to be a better money metal than silver.
That the parity of all forms of Tuited States money
may be maintained beyond question, thei'e should be
established in the United States Treasury a Redemp¬
tion Fund which should contain at all times not less
than 20% in gold and 15% in silver (both at their
market value) of the par value of all kinds of out¬
standing money in the United States of less intrinsic
value than United States gold money.
The amount of gold that would be required to
establish such a Redemption Fund would be about
«364,000,000. This estimate is based on the present
total of outstanding United States money of less
intrinsic value than United States gold money, and
includes the amount of gold in such Redemption
Fund, for which circulating notes should be issued
as hereafter explained. The correctness of these
figures will be seen by examining the following state-
CUlîREXCY EEVISION.
T
ment of the total currency except gold which has a
legal existence as money in this country ;—
United States Notes, $346,681,016.
United States Treasury Notes of 1890,
including silver dollars with which
some of them have been redeemed, 155,931,002.
Silver Dollars and Silver Certificates,
Act of 1878, 378,166,793.
National Bank Notes redeemable by
Government, 32,690,396.
Total of Monetary responsibility of the
Government, $913,469,207.
National Bank Notes redeemable by the
Banks, 178,815,801.
Total Money (exclusive of gold) out¬
standing, $1,092,285,008.
Redemption Fund in gold (25%
of above money and this Re¬
demption Fund), 364,095,003.
$1,456,380,011.
According to the abstract of reports made to the
Comptroller of the Currency showing the condition
of the national banks in the United States Sept. 28th,
1895, they held gold and gold certificates amounting
8
CURRENCY REVISION.
to about •'^163,000,000. This gold should he deposited
in the Redemption Fund, and, as an inducement to
the hanks to thus place their gold, legal tender notes
should he offered in exchange for it and a law passed
requiring that the present lawful money reserves
held hy them in their own vaults shall consist of
United States notes only.
I'nder these conditions, they would willingly part
with their gold and accept in its place the more con¬
venient form of money represented hy notes redeem¬
able on demand in gold whenever it was wanted for
any special purpose. The motive of self-interest
would he all-powerful in bringing about this result,
because notes would then count as reserve, and gold
would not. If a hank kept any gold on hand, it would
he at the cost of the interest which would he accruing
if it were in use. A very small item of cost of that
description would he sufficient to cause the hanks to
cease hoarding gold.
The only practical use for gold in this country
under normal conditions is in the payment of foreign
debts and in the small demand for manufacture into
works of art and usefulness. There can he no doubt
that the people would seriously object to its actual
CURRENCY REVISION.
9
use as currency, if it were ever so plentiful. They
would demand a paper representative of it for circu¬
lating purposes in the same way that they discriminate
against silver dollars in favor of their paper represen¬
tatives for every-day use.
With no more bond sales in this country for which
exclusively gold payments were required, the present
incentive to hoard gold would he gone. No further
possible profit from that source could be expected.
It is reasonably sure that the banks would furnish
this #163,000,000 towards the formation of the
Redemption Fund, and that the present Gold Reserve
will be shortly restored to the #100,000,000 mark.
There would remain to be raised under such circum¬
stances only about #100,000,000 more in gold to
establish the gold part of the Redemption Fund at
#864,000,000, or 2")% of outstanding currency
exclusive of gold money.
When confidence is restored, as it would be if an
adequate reserve fund was to be immediately estab¬
lished, there will be considerable gold find its way
into circulation from private hoardings. If this fur¬
ther source of gold for the Redemption Fund should
not supply the balance needed, it would only be
10
CURRENCY REVISION.
necessary to borrow §100,000,000 in gold abroad to
finish the founding of a Redemption Fund that would
command the confidence of the financial world.
The silver part of the Redemption Fund could be
easily provided. It could be readily supplied by
depositing in that fund the Government's holdings
of silver dollars and silver bullion, thus adding a
market value of security to outstanding United States
currency of over §250,000,000 more, or a total exceed¬
ing 40% of the liability. United States money, the
redemption of which was thus provided for, would
equal in goodness that of England, or any other
country.
After establishing this Redemption Fund, the Secre¬
tary of the Treasury should be authorized to redeem
in, or exchange for. United States gold or silver coins,
any kind of currency lawfully issued in the United
States, at the option of the holder thereof when pre¬
sented at the Treasury or any Sub-Treasury in sums
of not less than §50. At the present time, the dis¬
cretionary power legally rests in the Secretary as to
the kind of money that shall be used in the redemp¬
tion of United States' obligations. By changing the
law so that the choice is to be exercised by the holder
C0KKENCY REVISION.
11
of those obligations, confidence would be complete,
and continue so as long as the Redemption Fund was
maintained in excess of the fixed minimum above
mentioned.
No law now in force requires the Secretary to
exchange gold dollars for silver dollars, unless the
declaration that it is the established policy of the
F^nited States to maintain the parity of the two
metals may be considered to be mandatory in that
respect. It can in any event, be hardly considered
as conclusive and satisfactory where absolute certainty
is most important. An explicit declaration by reso¬
lution or law on this point is necessary. The actual
practice of the Treasury is not to exchange or redeem
silver dollars with gold.
The Secretary of the Treasury should be authorized
to borrow on United States bonds, whatever amount
of gold might be required to maintain the gold part
of the Redemption Fund at a minimum limit of 25% of
outstanding money other than gold money. It should
be required that the bonds sold for this purpose should
be sold in some foreign country, in order that addi¬
tional gold in the United States should result from
such sales.
12
CUEEENCY EEVISION.
As a precaution, guarding against the possibility of
the bonds sold abroad being re-sold immediately in
this country, and the object of the sale (to obtain
more gold) thus made of no avail, it would be wise
to provide by law that such bonds shall not be used
as a basis of circulation by national banks. The use
of these bonds might be safely permitted for circula¬
tion security when the Redemption Fund contained
an excess of 35% in gold of outstanding currency.
The proposed restriction, regarding the use of
Redemption Fund bonds at the time of their issue,
would prevent them from having a particular value
in addition to their investment value. This addi¬
tional value belongs to all issues of United States
bonds that are available to secure circulation. It
causes them to command a higher price than could
otherwise be obtained. If bonds sold abroad on an
investment basis can be sold again in this country at
an advance, because of the profit possible through
taking out circulation on them, they will undoubtedly
find their way back to the United States at once.
Payment would then be required in gold, and that
furnished from the Government's stock just obtained
through the issue of those same bonds. Such trans-
CURKENCY REVISION.
13
actions would be useless iii supplying the Redemption
Fund requirements, and that contingency should be
guarded against by the method here indicated of dis¬
qualifying Redemption Fund bonds for circulation
procuring purposes.
The gold received into the Redemption Fund
through the sale of bonds can be made useful in
reducing the cost of obtaining it, by issuing the mint^
age value equivalent of such gold in United States
notes, and authorizing the Secretary of the Treasury
to use them in buying United States interest bearing
bonds at the lowest possible price. With the bonds
thus purchased, establish a sinking fund to provide
for the ultimate payment of Redemption Fund bonds
issued. In this manner, the total amount of United
States bonds outstanding could be practically kept
from increasing; and the cost of maintaining the
Redemption Fund would be so reduced as to be easily
met from taxes received from banks on circulation
issued to them ; so that no expense would be entailed
on the Government, by reason of its issue and redemp¬
tion of all the currency in the United States.
The establishment and maintenance of the Redemp¬
tion Fund having been provided for, the next matter
14
CURRENCY REVISION.
for consideration would be a possible super-abundance
of gold in the Redemption Fund. It has been proved
by experience that large accumulations of unemployed
money lead to extravagant speculation, with subse¬
quent panic and losses. An excessively large surplus
of gold in the Redemption Fund could be reduced to
a considerable extent by authorizing the Secretary to
use the gold, in excess of 35% of outstanding cur¬
rency, in the purchase and cancellation of Redemp¬
tion Fund Bonds.
A great advantage in economy of issue and redemp¬
tion and in stability of value would be gained, if the
various kinds of paper money circulating in the
United States were unified by issuing in their place
United States legal tender notes redeemable in gold
or silver at the option of the holder. It is most
desirable, that no discrimination be possible in favor
of any particular kind of circulating notes having
special qualities. One form of paper money would
benefit the community, because no question could then
arise whether or not it was as good as some other
kind. The fact that it was redeemable on demand
by the Government in gold or silver, as desired, would
entitle it to the highest credit possible.
CXTRKENCY KEVISIOÎÎ. '''ÍS"
Under the proposed system, United Staiiês* íioíe» '
redeemed in gold or silver should be cancelled. This
would not in any way reduce the amount of United
States notes, or greenbacks, so-called, now outstand¬
ing; but it would prevent any additional notes being
issued that were not founded on an equal value of
gold, or on Government bonds, through issues to
national banks. The additional issues possible to
national banks would not only be based on Govern¬
ment bonds, but, through the operation of the proposed
Redemption Fund, they would be further secured by
at least 25 % of their amount in gold in that Redemp¬
tion Fund.
In view of these facts, no valid reason appears to
exist against issuing United States notes to national
banks to the extent of 90% of the market value of
Government bonds deposited by them to secure circu¬
lation. The Comptroller of the Currency can be the
judge of that market value ; and, in case of deprecia¬
tion in prices of Government bonds, be can oblige
the banks to reduce their circulation, or sell their
bonds, and reduce it with the proceeds.
An exclusive United States note circulation would
make it an easy matter for national banks to retire a
■1-e-
t t c c C < c
c « ecf
'pa.rt, or ail, of the notes issued to them, for the reason
that it would simply be necessary to send to the
Treasury for cancellation some of the only kind of
notes there were in circulation. The United States
legal-tender notes issued to national banks, instead of
the non-legal-tender bank notes now issued by them,
would he very advantageous ; as it would furnish
the banks, and through them the public, with a form
of money that could be used for all purposes.
The distinctive national bank note is quite limited
in its usefulness. It cannot be used in the payment
of Clearing House balances in the principal cities of
the country. To be sure, this restriction in its use is
a local regulation ; but custom in this respect is as
effective as law. The liability of an issuing bank to
be called upon for the redemption of their notes at
any time limits the notes' usefulness as a basis of
credit for loans and discounts to their customers.
The national hank 5% redemption fund on deposit
in the United States Treasury would be abolished
under the proposed system, it being superseded by
the Government Redemption Fund.
The tax on circulation issued to banks should be
fixed at a rate that would make the obtaining and
CUERBNCY REVISION.
17
retiring of circulation by them the effective means of
keeping the currency outstanding always equal to
the demands of trade. It should be a rate that would
be low enough to encourage legitimate use, and high
enough to make it profitable to the banks to retire it
rather than lend money at such an insignificant rate
as to lead to rash speculation. If it were made profit¬
able to banks to take out circulation when business
could afford to pay 2.1-2% per annum and upwards
for money, merchants and others could not complain
that money was too expensive to use.
On the other hand, were it made more profitable
for banks to retire circulation than to lend money at
2^ per annum or less, they could be depended upon
to effect a contraction of the currency in accordance
with the law of demand and supply as regards the
use of money at a fair rate of interest. A tax rate
that would satisfy these requirements should be about
2 % per annum. Five cents per day per one thousand
dollars, which is at a rate of 1.82 1-2% per annum,
would be an easily computed tax ; and would, undoubt^ -
edly, regulate the volume of currency to the needs of
commerce.
With the privilege accorded banks of receiving
18
CUßKENCY REVISION.
circulation to within 10% of the market value of
bonds deposited ; with no 5 % redemption fund to
maintain or frequent redemptions of their own notes
to make ; and with the circulation issued to them a
legal-tender, they could well afford to pay 1.82 1-2%
per annum for such circulation ; providing prompt
service was rendered by the Comptroller's office in
issuing and redeeming that circulation. By means
of a plan of this description, the pecuniary interests
of the banks would be enlisted to cause a close corres¬
pondence between the volume of currency and the
demand for it in business.
An emergency provision of law could be enacted
to protect the banks and the country from the evils
of panics, and obviate the necessity for Clearing House
Certificates, which are an inflation of the currency
without lawful authority. The Comptroller of the
Currency could be authorized to issue at times of
great monetary stringency caused by panic L'nited
States notes to national banks for the face value of
the promissory notes of such banks to a total limit
of 50% of the demand deposits owing by the banks
issuing the notes. The issue to any national bank,
applying for circulation under this provision of law.
CUKKENCY REVISION.
19
should be made subject to the approval of the Secre¬
tary of the Treasury and the Comptroller of the
Currency, which would be a safeguard against issuing
any circulation to a bank not financially strong.
Notes of banks deposited with the Government to
secure circulation in this manner should be made
a first claim on all the assets of the issuing bank,
including the personal liability of shareholders. The
intimate knowledge of the Treasury officials as to the
financial condition of each national bank would ren¬
der it easy to prevent any loss to the Government
through issuing this special emergency currency.
The banks receiving this circulation should be
taxed at the rate of 7.3% per annum on such circula¬
tion ; also be prohibited from increasing their liabilities
in any other manner above their total at the time of first
issuing those notes, and until they had all been paid.
The taxes received by the Government from
national banks on account of circulation should be
used to pay the costs of issuing and redeeming United
States notes and Redemption Fund bonds; to pay
interest on the Redemption Fund bonds outstanding,
and any balance remaining should be covered into
the Redemption Fund Sinking Fund. In this way.
20
CURRENCY REVISION.
the entire cost of maintaining the circulation of the
country and the Redemption Fund would be borne
by the hanks, and no expense whatever be incurred
by the Government.
A few figures will illustrate how the taxes received
from banks on circulation issued to them would be more
than sufficient for the payment of all costs attendant
on the issue and redemption of United States currency
under this plan. The taxes on about the present
outstanding bank circulation, or §200,000,000, at
1.82 1-2% per annum, would yield §3,650,000 yearly.
The cost of establishing the Redemption Fund,
supposing that §100,000,000 of bonds had to be
issued for that purpose, and they sold on a 3 % basis,
would be §3,000,000 annually; less the income from
§100,000,000 United States bonds bought for sink¬
ing fund purposes on possibly a 2. 3-4% basis, or
§2,750,000, which would leave the net cost of that
transaction only §250,000 per year. The difference,
between this cost item of §250,000 and the yearly
income of §3,650,000, would be an ample sum for
other expenses of the system; and for enlargement
of the Redemption Fund costs, should the necessity
therefor arise.
CURRENCY REVISION.
21
The existence and usefulness of the national bank¬
ing system, like other business enterprises, is depend¬
ent upon the profit in its transactions to its owners.
In late years, the profits have been greatly reduced
from former, standards, and in fact, have become so
small and unsatisfactory in many cases as to threaten
the continued existence of the system. Trust com¬
panies and State banks have been organized in large
numbers, because more favorable charters could be
obtained under State than National laws.
The national bank act has been changed very little
during the past thirty years, while banking methods
have required the exercise of new functions not con¬
templated by the old law. The privileges granted
banks under the national system should be so amended
as to meet the requirements of modern times, and
should equal those accorded by conservative State
governments to State institutions doing the same
business.
Among other things, the law should be changed to
provide that stockholders of national banks should
not be obliged to pay taxes on that part of their
capital and surplus invested in United States bonds.
They are obliged to do this now, and it is an injustice
22
CTJBEENCV REVISION.
that should be remedied. No other class of our
people are taxed on money thus invested.
A measure that it would be necessary to enact, in
order to revise the United States' monetary system
on the above described lines, would read about as
follows :—
AN ACT
To Provide for the Establishment and Maintenance of
A Redemption Fund for the Redemption of United
States Notes, and for other Purposes.
Be it enacted hy the Senate and House of Represen¬
tatives of the United States of America in Congress
assembled. That the Secretary of the Treasury be
and is hereby authorized and directed to establish and
maintain a Redemption Fund in the United States
Treasury, which shall consist of not less than twenty-
five per centum in gold at its coinage value, and
fifteen per centum in silver at its market value, of
all lawfully issued money outstanding in the United
States of less intrinsic, or market value, than United
States gold money.
And the Secretary of the Treasury is further
authorized to use in the establishment of the Redemp-
CtJRRElSrCY REVISIOlSr.
23
tion Fund all the gold coins and gold bullion now
in the Treasury, not held as a deposit for payment of
Gold Certificates in the possession of the public, but
including Gold Certificates in the Treasury which
belong to the United States; and to issue therefor
United States notes, which shall be used by the
Secretary in purchasing interest bearing United
States bonds to be set apart as a sinking fund for
the payment of United States Redemption Fund
Bonds as they mature.
To further provide for the establishment of the
Redemption Fund, the Secretary is authorized to
issue and sell abroad for gold such amount of United
States bonds as may be necessary for the purposes of
this act. And the bonds hereby authorized shall be
payable, with interest quarterly at the rate of three
per centum per annum, thirty years from their date
of issue in United States gold or silver coins at
the option of the holders thereof. The proceeds of
sales of these bonds shall be deposited in the Redemp¬
tion Fund, and an equal value of United States notes
issued for sinking fund purposes as hereinbefore pro¬
vided.
Sec. 2. The Secretary of the Treasury shall
24
currency revision.
cause to be redeemed in, or exchanged for, United
States gold or silver coins, any kind of currency law¬
fully issued in the United States at the option of
the holder of such currency when presented for that
purpose at the Treasury or any Suh-Treasury in
sums of not less than fifty dollars.
Sec. 3. It shall he the duty of the Secretary of
the Treasury, whenever and as often as the Redemp¬
tion Fund shall consist of less than twenty-five per
centum of gold at its coinage value of all outstand¬
ing currency lawfully issued in the United States
exclusive of gold money, to issue and sell abroad
for gold fifty million dollars of United States bonds,
payable thirty years after the date thereof, with
interest payable quarterly at the rate of three per
centum per annum, in United States gold or silver
dollars at the option of the holders thereof. The
proceeds of such sales of bonds shall be deposited in
the Redemption Fund as soon as possible after being
received.
Sec. 4. United States bonds issued and sold for
Redemption Fund purposes as herein provided shall
be designated United States Redemption Fund Bonds,
currency revision.
25
and such bonds shall not be available to national
banks as a pledge to secure circulation.
Sec. 5. The Secretary of the Treasury shall issue
an amount of United States notes equal to the United
States coinage value of the gold received as proceeds
of United States Redemption Fund Bonds sold. The
notes thus issued shall be used by the Secretary in
buying Ignited States interest bearing bonds, and
with such bonds establish a sinking fund to provide
for the payment of United States Redemption Fund
Bonds when they become due.
Sec. 6. Whenever the gold part of the Redemp¬
tion Fund shall exceed thirty-five per centum of the
total currency lawfully issued and outstanding in the
United States exclusive of gold money, the Secretary
of the Treasury shall use the excess of said thirty-
five per centum in purchasing United States Redemp¬
tion Fund Bonds. And bonds thus purchased shall
be cancelled and destroyed.
Sec. 7. The Secretary of the Treasury is author¬
ized and directed to unify all existing forms of paper
money lawfully outstanding in the United States, by
converting the same into United States notes redeem¬
able in gold or silver coins of the United States at
26
cukeenxy revision.
the option of the holder thereof. The conversion of
said outstanding paper money shall be made as fast
as it is presented at the United States Treasury for
that purpose, or for redemption. The Secretary is
further authorized and directed to issue United
States notes in exchange for gold at its coinage value,
and for United States silver dollars at their face
value. Gold and silver thus obtained shall be depos¬
ited in the Redemption Fund. The Secretary shall
also issue United States notes, through the Comptrol¬
ler of the Currency's office, to national banks entitled
to circulation under existing laws, instead of the dis¬
tinctive national bank notes now provided by law.
Sec. 8. United States notes redeemed in gold or
silver shall be cancelled and destroyed. United
States gold and silver dollars shall be interchangeable,
on demand, when presented at the Treasury or any
Sub-Treasury in sums of not less than fifty dollars.
Gold and silver dollars thus received in exchange
shall be deposited in the Redemption Fund.
Sec. 9. The Secretary of the Treasury is author¬
ized and directed to issue, through the Comptroller
of the Currency's office. United States notes to
national banks to the extent of ninety per centum
cükkency revision.
27
of the market value of United States bonds deposited
to secure circulation.
Sec. 10. There shall be levied and collected semi¬
annually by the Treasurer of the United States from
all national banks obtaining circulation as provided
by law, a tax at the rate of five cents per day per
thousand dollars of United States notes delivered to
them, during the time said notes remain outstanding
on their account.
United States notes issued to national banks may
be retired by them at any time by returning same to
the Treasury in sums of one thousand dollars or mul¬
tiples thereof. Notes thus retired shall be cancelled
and destroyed. The Secretary of the Treasury shall
furnish the Comptroller of the Curreney with a suffi¬
cient quantity of United States notes ready for
immediate delivery to equal the demand for same
from national banks entitled to receive them.
Sec. 11. The Seeretary of the Treasury is author¬
ized to issue, through the Comptroller of the
Currency's office. United States notes to national
banks, subject to the approval of the Secretary of the
Treasury and Comptroller of the currency, for the
face value of the promissory notes of said national
28
currency revision.
banks, upon the deposit of such promissory notes with
the Treasurer of the United States, in sums of one
thousand dollars or its multiples. And said promis¬
sory notes shall be made payable, on demand, to the
order of the Treasurer, with interest payable semi¬
annually at the rate of seven and three-tenths per
centum per annum. The promissory notes of said
national banks thus issued shall not exceed in their
total amount at any time fifty per centum of deposits,
payable on demand, due from the bank issuing said
notes. National banks issuing their notes as herein
provided are hereby prohibited from increasing their
liabilities in any other manner above their amount
at time of first issuing said notes, and during the time
any of such notes remain unpaid.
The promissory notes of national banks given to
the Treasurer to secure United States notes as herein
provided shall be a first claim on all the assets of
banks issuing them, including the personal liability
of stockholders of said banks.
Sec. 12. Taxes received from national banks on
circulation issued to them shall be used in paying
costs of issuing and redeeming United States notes
and United States Redemption Fund Bonds; in pay-
currency revision.
29
ing interest on United States Redemption Fund
bonds, and any balance of such taxes remaining after
making said payments shall be covered into the sink¬
ing fund herein provided for the final payment of
United States Redemption Fund bonds.
Sec. 13. All national banks shall keep in United
States notes exclusively, that part of their lawful
money reserve which existing law now requires shall
be kept in their own vaults.
Sec. 14. That part of every national bank's
capital stock and surplus, including undivided profits,
which is invested in United States bonds, whether
the same be pledged to secure circulation or not, shall
be exempt from taxation by State, municipal, or other
local authority.
Sec. 15. The provision of law requiring national
banks to keep five per centum of their outstanding
circulation, in lawful money with the United States
Treasurer as a redemption fund is hereby repealed.
Sec. 16. All laws or parts of laws in conflict
with the above are hereby repealed.