These certificates, scrip, or bills of the Circulating Stock, will be issued for circulation as currency, as our bank bills are now.
In law, this Circulating Stock will be in the nature of a lien on the Productive Stock. It will be entitled to no dividends. Its value will consist, first, in its title to be received in payment of all dues to the bank; second, in its title to be redeemed, either in specie on demand, or in specie, with interest from the time of demand, before any dividends can be made to the bankers; and, third, in its title, when not redeemed with specie, to be redeemed (in sums of one hundred dollars each) by a transfer of a corresponding amount of the capital itself; that is, of the Productive Stock.
The holders of the Circulating Stock are, therefore, sure, first, to be able to use it (if they have occasion to do so) in payment of their dues to the bank; second, to get, in exchange for it, either specie on demand, or specie, with interest from the time of demand; or, third, a share of the capital itself, the Productive Stock; a stock worth par of specie in the market, and as merchantable as a share of railroad stock, or government stock, or any other stock whatever is now.
Whenever Productive Stock shall have been transferred in redemption of Circulating Stock, it (the Productive Stock) may be itself redeemed, or bought back, at pleasure, by the bankers, on their paying its face in specie, with interest (or dividends) from the time of the transfer; and must be so bought back, before any dividends can be paid to the original bankers.
The fulfilment of all these obligations, on the part of the bank, is secured by the fact that the capital and all the resources of the bank are in the hands of trustees, who are legally bound—before making any dividends to the bankers—to redeem all paper in the manner mentioned; and also to buy back all Productive Stock that shall have been transferred in redemption of the circulation.
Such are the general principles of the system. The details are too numerous to be given here. They will be found in the "Articles of Association of a Mortgage Stock Banking Company," which the author has drawn up and copyrighted.