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X-56G MEMORANDUM. December 8 . 191?. Thor© are at present V,578 National banks. Of this number 7423 have circulation and there are outstanding and. in the hands of National Banks unissued at tho present tins (December 1, 1917) $717,052,065 of national bank notes. While the backs of national bank notes are identical, every national bank issuing notes has to maintain special plates; and on account of the great number of banks, and different denominations the Bureau of Engraving and Printing is obliged to maintain approx imately 1 . 1 ,0 0 0 plates for different banks - at least one set for each national bank availing itself of the circulatinn privilege. Although the Bureau of Engraving and Printing is reimbursed for this expense, it greatly hampers it in making rapid production of notes; and the expense of redemption is, of course, enhanced in equal proportion. X-5tO ..*■* 2 — It is very desirable at the present time to minimize in every feasible way the work of the Bureau of Engraving and Printing, this Bureau being very ssvorly overtaxed by the do- mends upon it for the printing of bonds, revenue stamps, war savings stamps, United States currency, Federal reserve notes, etc. Three methods have suggested thomselves as possible ways of attacking the problem - there are doubtless others: Firstt To adopt a standard national bank note with a blank space upon which the name of the bank, and the name of the president and cashier if necessary, may be printed a 3 a separate operation. This will probably % require special legislation. Second - To provide so that each national bank depositing bonds with the Comptroller of the Currency for circulation will deposit these bonds as now, but deposit them in trust for the Federal Re serve Bapk of its District, Instead of issuing national bank currency, the Comptroller will , issue Federal Reserve Bank currency of the .1-560 3 District, which currency will be sent direct to the applying bank* The bank receiving the current:j will bo relieved of all expense of maintaining plates and of redemption, because that expense will be borne by the Federal Reserve Bank, If for example, a Bank in Utah deposits $50,000 of bonds with the Comptroller of the Currency it will receive $50,000 of San Francisco Fed" oral Reserve Bank currency, subject to tho usual redemption fund requirements. The Federal Reserve Bank of San Francisco will redeem and replace unfit notos as thoy como in. The offoct upon tho Bureau of Engraving and Printing will bo that instead of 11,000 Nation al bank note plates, it will bo roquirod to main tain only 60 plato3 (12 sots) for Fodoral Roservo Bank currency. It is possiblo that this plan might bo worked out by moans of regulation by tho Comptrollor of the Curroncy without change in tho law. Third - Section 18 of the Fodoral Rosorvo Act providing for tho convsrsion of 2$ b-nds with circulation privilege into 3fa bonds, might bo modified so as to make it more effective. A 3$ short-timo conversion bond - say ton yoars - might bo issued with the privilege of circulation when the bonds aro hold by Fodoral Reserve Banks, but subject to a tax of, g*y, 2^560 - or even 4 - 7$ on circulation. National banks might sell their 2$ bonds to Federal Reserve Banks for the aforesaid conversion bonds, giv ing up their circulation at the same time, and Federal Reserve Banks would immediately there after buy back the bonds and issue circulation to the national banks covering the bonds. This would operate the same as plan 2, in respect to making 60 plates of Federal Reserve Bank notes take the place of 1 1 ,0 0 0 plates of national bank notes, and would also have the effect of redeeming and getting out of the way as quickoy as possible the 2$> bonds with conversion privilege, this hav ing teen one of the objects of the framers of the Federal Reserve Act.
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