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NELSON ALDRICH MISCELLANY PARIS,FRATICF, Ata.gust 2f), 1. rwriatv rm. VITIMMIr 'HON. DANIEL; NDWA:I a) 71• VIZEICIA? AND HON. J7ISSE -ItY.C, , SR7TO tral OF THE l'Afi'IO.t.TAL -.;ONETAf .Y. CO1tIII:313I0r, AND BLEON BRIVCAT.M, AD.INISTRATOR OP TIM CRIMIT LYOTP7A.r."4., In opening the int.t;rvtow, the subcommittee, asked t -lent of the Credit Lyonnais. quson Vreeland, on behalf of copy of the 1,1,e8t state- The Iial.on f.;x -riahed the mbars the tvlaconnLttoe with l*cir last statement (that for 71)ne JO) 190P), which in as folias: ASSRTS: I. Specie in bk.i.liks and other specie 2. Coliunercial paper and public seCurities (municipal) Pr. 16v,047,0'./0. 1,212,691,67.J0 ;$. Advances upon collateral 34V,709005b.9v 4. Overdrawn accounts 49t. 1 286,76:,.9l 5. Stocks and b onds kept for sale 6. Real estate 7. Everything else - stamps, rents paid in advanoe,stationer,supplies,etc. 61 745,242.0'.., j5,000,00.00 4b,439;390.27 i.`aft),769,67K.Ti LIABILITIS: on Income 1. Deposits of people . 2. Business accounts, government accounts, 4nd all account:3 24,91)0,484'.W) 3. Acceptances on coritle.rrcia1 4. londs f;ivon to time deposits 5. Fiver 10 51,64./9,576.86 liabilUy not included abov 79,489,502.35 125,000,000•0 7. Capital In 462,409.52 i,()VIC 1'0 c Reserve (;.iurplus) 64 75':',00'66Vt •41 250. ,0001000. 00 Yfic(I,-tC7-6 interview which fellowzi, the :uotiions LL.1-c all Vrecli&nd une the rosponues by Aron Brincard. 0. It; tM:i ich .4 .*.i.,,Ltf.I'll`.1"11 publishc;d A. R. Is tt juz, submitted to U.S YOU* rei4•1rement of law? A. No, it is a require- ment of our win bylaas. Q. How often does thc overnment rtquire ,ou to publish a sttement of the conellion of Q. ere? bank: A. Once year. Do ,etk publish these monthl, tistihtemnts in Lhc ao- A. Yes, but on our own ve„ onsibilita. Q. an ::c); lot uo h-ve, ftr tI t O use of our oomaission, one of , our last annual 8 tAc714:nts, i:ch au lo required by law' A. oer- tainlj. (Note: garon 3rincard furnished a co) ,,, of th,- steAtinu)Its referred to, as requested. This st,itement is in French, and was filed with other papers of the (em.isoion, to be translated). Is • A. onk At thi, Loner noctInsi ',1niQh Jo held 6Jvc,r, staiament. lu 1.6.4.41 1716. r.. utatwAent 2 . ub1ishf)d in At 7,yonn that the 014..reheidors„ and it la 41.. mazi, Woad J our 'Itlard DArectro have authorit:; thc:, fern of the nionthLi statanruit If thoy Our of Adninistration has ver;i dirvc ?art in the nanagemont of the bark. resollAion, however, sciaJudik iuved to- A. :41t3 u ver Yes. c4tivY!. It never takec withiat the conourrcr:cA of iAlkr 71maident. C. Thu firat item of Ulla, month1;y st„,tunont 1; 16V 1')00,:i0 francs in your bankkAnd in other Wiliks. ae:ainc deposits? As Is ha.t :our Gaish rewarve Yea, that is our 044,zh :03nrire . for savory might cz1.1.1 In it oasind t. t tllo sum wouli not oncAl take pit —r out of t ::T.4:41CC ff. rf-AnCe ullfrioivnt, we vi:11( mixt /ton and nomi It the la-k of And get ewth• Me iou keep of iranoe? portion of ,:;,tAiir caa, reserve in 1411k 10 ilmerkilv lay in tY,41 dek.' before thkl.t 1ft think will be noccouar:; for tho businosa of 1,ho fcfloin an account current at the lialk of Frnco, in which t;Ain sums t:h4t we do not .1mecl. 3id4L., ( 11 We keep cor- Ay far the !.reatest litantit in the fire, item is in our own btinks and agencies. 's. • "Oath in othor biatilks" - ffth:!orl r thckt deposited by J our bank it nowt,tt•td.c.i. .0e cUici h_o.o the crodit of u.v ucc,t1An,* ft;. Wats , Ott frx4n thera, but It 10 .:one.yr Which we keo • there to whilre ,or aft.n.d th.o. racrle;:,, 114 ,T .6 t. vdi tire the tntra- baZ a.at ion in yerforue.d. Wo1.11(1 akio from the 'ht.:Lk of Yroe necclanaril.,„ be in trileele% A. The 3ank of *,-'rztnae in oblit•:;00, a:tacit:), bw. (.:L.kti-to.se in gold or silver. note, 3, -:eO Y,1 d ti:e;-44nd the f t Iter, .1Lt. 1.n A. ‘tak of. r We Vk riu aza0Un t ,inatuaori notes. /41.:in one b ifr.uods orltivt.z t Theri.tn *Aeho We call tL th ts delivcra iXk no t 'N. 11(1 :3 C111 3 igna “. hill of ezerwe oald aknd the :Ian who on be, 13. lit tl rtrzin t and he Oiacounts r4Or0 in detLl public Beautifies zsentiomd in t.lie 3ccond 0;e. -t. A. inf. of fur in throv. rtionthas and ,cr,:*- first. ono take:4 it lo• ,Vrencb rants*? And ince, fradizlivere to cinether 411,4.ch .‘re tv b We Iv Oii Pi.a we do in civUlty," but wo do not. cunrider that :oott! for tho :out '41CCC t1 Wc found oursAarci.j. oa..9$::r or "paper of politertotir,U • ood paper. .00mikaroial p uper•" :have co:rz:ercild. p yr „ives no 1,11, .t.4 016 on, the note13. Nisistq ts t the, If .1o, *ilk; treasur, bunda. but thm thuse include Thoc. „km like , ew y revenue bw ,cia. Rave A. *t! 11 actually in ;.hia ver,i itiAn.: Yee; 4 1:‘ 4 ven;. f.1, repayithif 1..ro tporary 1)onde in in one or tw4; menthe. ICtao OW Yo.11.: revf,...)nutt ion of rehav,o treasiox:, t)onds of ?foreign re5,,rtr Les. What 1,oroportIon of the second it,c.ia co. ••.:erc:..41 A. • rt Le almost ,fut.l.relj ocvercial piLtcer. .Lt 10 always ver,› The k;roportior q. It ' polic:i of ,;..1..tr bank to 13',4..; iv net, I belie, tar. long-tor:2 oublic zacurILI,343 In .t.rge amovnts? tir that wri oar get. 'Mut 10 our is t.;:l buy A.1.1 thu corarKrrei business. Y J paper ly'cw!cc 'trial . At !Irenent Yr 1rôt iii34)0:.,i.1131.b1c. to -c,t cl)f:v tho:(!fee, IS rxd ouy tro43 ed to i.;.o oitte4da A. No; our bonflu. ii rIti n not, own nuch govoxuamt dt,bttl? fr*, * 1ro; Incauded In the .,00.,)10:..)0 finot; 0; all the bonciti, (Ite„ flf01 Q. wad time Qf fled? no A. Oats c14ea of 6eouritiwis bo a quick abet In r;o; on thm contrary, Ulf: rtr3t tfic, Acr:in of be obligfW to p;*y 1,‘, n 4ny liabilities are at nixht, and ve mint h::Ame a, ,w.a an Hticll '40 can day; theroforo s Tho .- 0"Jople here lre Imry !Iervoo41;) tImy mxwt',:no4 that 01-; when te't..> coU..c110 I t a rjhouic, : good "c!t nley dangct time co for them.. to zs11, In Eng/ co ft a n ex;ount of ukontl 111- ,15" bank haz p1tnt other bnu woiJ ell, and that qould thrw4 then on Ui nzat consols, bu .11.17o t4; th* t1-11.1,], 4.41.-.c oblige() c.„14.407 invt.lt vra k:;1/4,:keider thci.t 1a. n:ost system. qut there tbc ,alligc; do not tu tU IiUztZ ..-Aftlet •.o .4o11 l.hl311, boat to 1.4fltLA4:1(.! rot LzY-actoztm C. an? the Nngiith are vor.i 1iffer3r.:, fr.= crir pcoole. . : rn":1M A. Yes, but Our pcop10 arc vvr:, norvuu6 ond mouic not Istmnd that (sort Lir' thing. ifk etoexis and bonds vto You'd have to :soil If IsrP. }-1.61.yet V#1 We ‘441c tc 1hem to :)1t: .,4.1Lic of 1,'.1.6.11ce, but the night fall. - avo to ses Tho two 5 torus t. ot411, 4tireflt. 86.34.4060-frzatftreterlfeea.,......444LaL.akiwakk 1-Acit4ies-t-tr"Pratnes, A• too- midisr tiomorarrAitatiti t,...,4,1...44-414pentittett-es.4.1.14rts to no E . A a y:rP at Pro'noh 1joc . ib1keAn :ost of thi- Pronc"n rent? Ye a, ate.nd no t the banks. tow rAzoh. ”tinv tines two c;s' thrrm O7 At) bun i18 t•io u r 7,..;13.11.a71 (4.011;4.ra. ..r.c1 in "Aorcirico 7 Upon Cod. ..t.t:r.a. what is , taLiS stiado up of'? A. f;ov tr A bonds, ra4.1.road a to elf.:a, gold / / *AMP0, Tranavaal at,.) -. oi4# (t '. 1,:,.) ctt Ca We advariCa ..•aorao.,.; on irtre.a.•.,i Mort Of • ", C: th La irn t(td in this errwtont riu‘ orti,:t seaurit lc:a band on us in whereas the liank of arloo I ti—et inr able to ilfrirr,wv on 7.0ronab A 3 c:.; .•••11 ;:v.1,n or s','rench railroads. inn t itutior. to ;gill oh at tent ion to that th.t, ,n t Q. tho it railroad hol.:(1" • ev con t.; it dependu u..t.4u tht: ar cent. That is t.h e rlargln that is he ;lank of 'Wag • the The, betior t :41 ,ilvic11.4161 \Mat claa.. of pot)• -le borrot,i on th a% Q,. :cad A. his col ii4to nil• tilt: lona .4arg in La :....sked; but se Lbrive require at intket 40 imposed on The •.1kiart Wline with couti. thdividltai to ohon 4,1tc loan is 71adc. aW thi-;: better ov- londirtr. How .faUk dr: maxgain do ,:iou require on T.11 rt • to forty very Jekbrokonl Do indilri(1•00.18 A. .hto • 11.1rtne, on Vic riv;Ac oti loem to a mak brokers gnue rkily A. A great Onl the! aoverAL cf.an[7,(t. .4 oro4:ers riho halm f the stoc!.. u. .1(114:).1 etentdc:.0.t.c.:41 „: . • r, for the dolnAA's of all the rest.. for r: ,',.).;:;•.! • , A • bt,..10 an0 not beinr able to prky in oath, bornorfa none:i fr0m ote ;:ese brokirrri t ktne 0.advr,kale,tt r..tone rOizrr cones here and pia..ys) to this case vet lene t<s tlto bre- Ar t but the 'broker C.1.1 *'0•4 !lit) 1,he its "Ow,rdrftwn A004 unt0,0 Ytbc, fr1cts. Will !.:0:*; 000I000 /Inou hc.,..Try of givinc ,our customers :Li. crod- it on Hrtir books, to bc drawh AvNinat whenow..)r they with? . You dL not fit:14ra intnront ou thee accountas arc :ket1:43.1.1,, era.q - n armAnzt? • 741 / 4.:r innt:tnao l t trarle '-)Y1 francs; t.J1114.t i A. No, of 0014ree not. 74111 credit c,.f Md g e oltercst on :,11#. own ..1 1e act44.11, A .:ereat ;art of those ,ccountre, are iwainst colt tormi e. That kind of securities? bontth 1.3‘1.).1 r. • 14.• (.../Lte ISt to hir credit for hisi to draw :41.--..anrAt? ?nu, b-' !tott Il onl. uwe eXamti. A. ills. A. Only marketable etc azd .r4.: A 1.4.rge pruportien (If thio awl :•040111, f.?).1 colia.t.cretl? Nhut claam of peoplo borrow on th0.1. iten? A. A. Yes. 'ankers and bustnam Poorle. C'. fil.71,4rftetl.rerts- A, Cz rn the Cittio A" pew: to qr. Kilwev ircr, corit,,,. In the case of othr& 3Intro " b r '41 it1. mc'...1 we i„:1Ye credIL without e- re tieztiAnd Seaurit.:t) but to ;,!: . ople think Ire!j of xle do not • .41.(ait: crilcitt uncter auk, cIrcurza. stance's. Q. LI 5CQ 10')0 francs 1A14 limit to on tnolvicwal or firs on crodlt A lorehant in whom Iny4..:8tiratcL ,nd ,,11 t;tvc confictence comes to you, you :r •ut he its k:.clivew ,And remponsiblet . lene: hin on tl-ia &tom? 4, tip of ,):ad 0.vr. him A. You Yost if we thourht writi enough crtidi( wiLholA soevaiity, but if not we w . ulA deriand :merity. r7tLi‘. cl .;;15 of loana occurs only for a short Uam. during the b usinesr: seauon. illeory is that evqry merchant ought to have enll oik.ltal to go on by himself in norimte, but there four :Ionthe - *hen he Units un buts ue.fon ill flood mar* three o.z. apd then lw comes to ‘is and we lend hlm mOne,,y vnder thia item . What kinds of bankn arc tiv!se that oraI? A. Wald. biulks; for Inatkiace l banks in ';e0.1 Or- loans dlwing the cw,ton caisson. colmtry under this iton, but to It ia o1 lend tv on cuiliam Ile Co not lend to bilne in this c,reat TAark .'ranch merc_eints. or intorost to len() to Ii'ruLch biwks. We lend olon- ey to fornign bw.qui avd to Prendh nerohunta, but rove r to lel-ot,taltb or to 21-enoh banks. siis never lend is the businoun of thf f'redit vgaglo its ion. L'ezci . • A r. t`k 1 0' -..recixi by Issuing luni—term bond', of 40 or 60 joiLe .0, _nc fore they oar loan on real eat,i.te hr:04 13(1 'L,hc, do not balm to mQflY quiel,. . ilia fire, it of - le fosite poople liv- inr on income; these *re ds,osits of 4.sepi,t th, t‘, ono; ; on deposit. a long tarte kuld receive intiool, liv'on thou •k::cume and are not in bussineow. A. that *4 Lowrie ?etple the r.ionc,z,) , 3.n their (;v4-11 houairi, the; ) 414 draw agairtht . eviecica. Do jou pA6i Thr:146 •,,bit IL here kas..r0 t, tin aid,4ch tixt 44tzecyartt7 o rift der cent; but the The lower 'Li.! dep0sitri .1411 reiv. ro. t iutr4 nakct filacto t int 15 . : 791 t 'WC 11 .,, 1.it t, OflJ flL jai:qui, CO TI vit4 ,th 110 Atn haVe inter xt.y r t , A. r!.a, . hc. t-.!/ I. vs? but we ndac, on, cif Par A. at $:.51.d.s to ex) r truatticirtg Is tnter-st :411 on le ptty all the iittic 841 L f i. .1 ItiBint upon ou:r fe Cult, the rate 70,r,••• ver., E144 iu th:Ast we! dorivo profits. cred." inG more LII 1. rc t bout 0110 iAalc, onu h,JJ,1 ite otAnt drew intoreat irwifer cent A. :icls; interoac.s who .tre ,_,.ccustorted odirr, ining and '...4)4) arc activon1:,. en•ed in 'hunt/Inns. rjust wife,r8 It cdende 13f,owur,t) t.11,3se accottnta bui(inc..., to • LI.fl treti.zondtAla 014.36 of • of oiacount of the '4n1 of LTAnoe. •Then :.-tost of those r ':.vut 0/4, ratc Tarlea. A nerchiwnt with avero i i he ,Lcountss Izleicied in scow tt, or Lila 7,3/121k of Is-Trance anci ...a 00 on oucin depositor. FS t the fa • • Tb )" t.is ou ntoari by "governrailni, accovnts?* :Foretigovc 1:7 . o 01)011 13it En rtes s lc of 3.,•larii) than :AL. other 06- tabilahmont in 'Yranec to ;-,Ett :A. C CO 14Tit a• A. Om can draw it •out whene ye r I"mt.., LIn 1...rge,st dfi et :A.V. ,i-ofit..15 In one wi Or itnothur A.rwther rcrAthi3 wheremo front nosit privi.A.te ,Aceotints sn ;t C. Do 3.11:, of e_lio inde, ,,eridont lizeep accounte with .,okA? aanotint. The little A Very rank; hurdl.! dia1.1.1-...:3 ust '000 bar, 3 in thc: count.r.v se '41.4! *t.kr r 0.10111 every•tv'hore, Take .,:our t.,.acteerricat th incia lttti s vLiia.ii:oof,;:s:A; for a. bill of ;ode in n't:L..rLi-fi. d1 b al! t the, sale r here C. How to Row vitlad that check checi: if th•e. 'ba!).1'... ci it ret ?ft Uld a n one of t,hego check' th 300 ul charge him w1;.at writ rycalclu hi. . 1 7 01 CI A. be int1. r, rfrun the countr, A. Through our brunch in that towl;. '. SuQrse,.,ou )1:alto, a CV% rotary t.hri chock an had i'!4:) 0ff draw t Al he theam. A. in th:. We viho one,y and depovi,:, Ut robtr.bly OLlt:14sent In our neartist brr.:3101). 'osie of these b.:‘rs_ti votad keop , .!1Pircr we feel there 4 the :Least olianco of este.t.tlich & bro. 1.s' ict 6.0 btibincl . fteri d.rt.ovr by 41:9 zloro.:416rtt, tx r -Cw on ;.:.t.ra. cr 'Alp! Cott 1)1, O1Jti'S Co t I •••*. b„) (3. ,Afith our broanch A. Core.lerc MieXt to hiara .. 0:r 1. What .1.6 b has sold hi r ,.. r7N-.)e.s. If rrench midalufis‘cturor, heill iu .41-ii.‘t we c,1„:1 CeK:„:tercial paper. We t7.L•ve i.wo ports casei credit, which. cusi.umere draw out Kt onco, a:7dit. rd credit which the.,;,, draw 6.,-ainat,. Th.a: cn...storn tr, "AcceptAnces on Cormarcli.i.1 ?‘....pctr." ti'cc.);.i.4-.1reL!aabl .aper? . A. Yro, ro- .n.sy 4 the o4A4/11r., puople to if,o to th4., 1 i-LJA bri..441ch in ;',a1.:1? -11Item no.4 "lionds 114ven to ThztoratIrs; A-o.inst Ting: De- 'That sort or bonds L.re thew! /%. 14ne, fiY4 :eux cc;[tIfica.tets Lor ciopc•oit due in a nt.Ad y r cnnt Intrest. ndo Ciav 0;.Lt, at A -,onm •• no auch Interoc0,? , IMMO- let ..z5; A. Yez. 1.ttctt.; .• ;. f • !)i.t.tikvs th.1t .OU c• ‘,‘ A. toand lahola .t,(4 1 1. C ' r r4' joint cl,oc.1: bu.)1)c.:1 A. Stryttn. 'trot r-• v ‘k. ti,zt Qyer poratiors„ or Alth.t We call "i41'jily):1011115 Uhl!,t C) C147 Ott. taan., individuals tlUnt •* sjic LINt. ,o, ,;.11 3iei. C ty " 1:11,18 Ct4P`tilI co `sow f persors. V,Ie. minivan ht t. of capit.:).1 Morn inminimum, but at le.ar.t.on :17,...1.2- th or:!..11.;:i rec1.2(,'. by .Law to be Aotu.awitiy paid f 71-.0 t}ieL p up 4.11 thc: pende on 01-Cum8Lancou. 11.0'4 arc! S Co•raptoir CI, • h.c* 1)54:: b,1:6 of Pi.tri? ovr Azatitution Becorapta Tfow .:Lt(An, lax brYlchezs A. joln -1,ock 114n3co are there that have throe - tha Credit Tiyonnaiss the Comptoir A. d' racontptn, talai the Societe r:mnf,rald.We conuidor ,hat it vt. Istitter for i. he4.4-4,k t Li ca. J. al. paid in case '..11* falllAru it Ls vor tly:re t..)V offtee A....4 the •31;her cities the coigintr, ? • N . bicrd n • boom.v.se In thcumpAid crwiLtd. r ;L.-Teat bailks haTilla.' the 1b 1:4.̀.rterics zL4t Y• Ebr:Jincliod LI.Lirot4;13. o_. 1.11 T(cri thore -f reet1.1„, hiti .ind? Riat o 1t's2('; , 1.';4:1 43144) Joit. Yes. A. 1/1:4t. 1th the 116.bility of ztocAtholttere aett.u.0.1,, • CI. A. "that blatA,S 011.1 hit . joiA Ce A. tho c'rf.-kcor of 'Pre:snide& of , ..he 4w,ouncii. vf ,,-ou IlL:,..rct a Vice •:*C t) ressitit.t.) A. Witt tfO vice av txt FJ. • rh; the-d 1.;-„10.1ctiy pf.trit in the z-;.fruira Yea. In 0,b-'1*,'.k tior. thc; 'And. tvil.) Vlee 'ret:nt,$) !ourtci.1 of Aeraniutrution? Of ho' Maly nvambe re do th A A. Yee. co n *1. tit I? A. 0t r ,Y:sent •'elancil of Aduini:ltration ctonaint:'; ,/r to:yea/to nte:lbers t hut, wh, fteon. lithat i Li `.h f: r : of office O h& "rea dent? A. One ,;etito•. ,b4h ‘. 1.,.t he clout 1 names !line ActAtrintrc.ttesr, -11( A. 1.3y the tomeil. Th the Atirtirtiutratvre ouncil .,ne of the. sunivvis i'Ten.Aent. (re, elect.nd A. thc sharoholdeira: Li; I 1.410/14)21 the ;-ft Cr) ;Cr! at ttrn of the t!c/..niell of o'at:inicitr:).:rit>... That ie the ter, or office of *.h<!! •, .crabere of LY!,.. of Actiinistration? A. lokirc 3.13i re—i.).rd to or org4.14zation frtr..1 I caz; rret 1;.:1 of oamphlot nt (floto: The plamb..let. :gort-3 ,. ..reci to(.....,nt.,rat., i....: 1/4.ssiktion and 13:i1aws ().1.* :.ho t,3roti.t, Ivonnskia. It is ',Tench, and ftiet ,vith Lhe papers of thetvp3:.t.1.1(3:,...„, tk) bt. trttrul.A.ed). I NIP 140* H0,7;r Does t11(:!, 0;.• ntep6 to ot".7 A. The notary. (it rth of Ln • do not have in the United oort4nt govermlen!, arid 4t.:HM, at leant la '::tot -Ind of °frit:1W, ..ftlich :0';nt,„;e oaty • n on v. finazicil-411y• Ail of theso attArteid in a not,:y, 1 LoffiCe l kAnd he it responsi- bi' f tili of the, cz4f..uits,=4,1 being act144.1,v paid in. ovormaent '00t8 -,nent, • rune t '110 01 -1.41trther bar:4k baSciu :How lunç,does 111 quir t tention to 4,:.he 441itniu..l re t? •t.sta. eh Liter run; is it perpeiL.., ..4.? A. A. It Vi60. • re:shOi dere I it#,:y 7.1 is the t have , e.. 4.. 1- 4.1fty tot aharc, of eri0 utz A. 1.1.Ve hunered r. frar a on the ot0okacC ;..„nce. and they are worth 710%; twc1y tit tth ore wri: restrict:tar. (mder lAbfr or tanler iota° bylaws Oc! to (iirectetra or officorll of Cho bank? es to Irsh.:!:,, thcre in none; but, ;‘,a ax the but f A. SO fax it ter of fact s no dirocti) . of off.a.cor would cyor oL4, ft:re a loa.rt. They could nevor do. z,vin C. OV Adnini titrtt.t. the rounc U Ve aui t;.1.Cet.' 8 01 ..4014 ,ttra thf!e.:.,:tit(.0,ton . was ft3.-nded. nee "ornIsidant, has :.!,('4I in ninee 187V. The Other admit-A3tn,.. twri are !.4sually old 'nettthes of depart Tonta. Q. In rt ,cosits - do branehes? rr i °IL c::A.1- • A. of 'reamnt 'vr3ident 4as beeT: emplogyed here Q. oaah reutortmsi.ich J OU C ar ry Lo af U.:owl in ;your own ba7k or in ito 'Se oi.t.fr.,- it, _II ourn4;ivcs. -14- in Gash u 1.rttette to coary our repo bite d afars , Villa to . wt"Yanice. or in other bs the. In eight ,Atr cent. ,er cant in this atateraet,t7 You have got abo Ut ten That is too ?II lob. per ow tt only from six tv Sight Q,. Toet utt go back for a !lame., Th mono:. f'n t t re i4a. aptr and. : 10 f 1a :011 coivA get the 4:tanked)].e; rut cre.1...te7 isot.rt f VrOø? A.. 1.1., not and atti.re a :1'0 C't e4 r 4. at a,re thtrequ,ir omen t • lk t. of 34t A g00 A. ever; thin thc2 ono a coe ite.raofAnne t s public øecrt tea tarn t on (•:1 isn th ' could.to afl,y We in tend toerr onee!:d That tsi more than A. :f3ank of 3rmce taka vo t.cle paper ac tt. a2c r It law)t 174:: cotano rot to run. ye."' 1;..11,rue fr.ucta1 pteti ttth 'Oa re el oetirc t or, bt 1114:v do t.ce ver; ritter.. . rdcr to 174Taw tho monc.pj cit,)1 A. In c.n.Ldtnr ,%.1„1 or that i ten ;141 a ; ue rion pitor::, who want T 6t: .;.)e r con'tef thc second item w Iziet 1" A great cart of the thlrd itca avall.1.ble. . 1.7;uttediate1y. *rtver;ithina,- c.J•11:,• is called Pre.-,ort" conea e Ve „V; days. • Suppose 7t .ftnk of 'f'r ow!) in aboul,!_ 31.41pend would 14.1..7r.sti I blamed f(.1 r and th,r: oon t !me to 'Lw- ecin ..;ut.t.t.ifiod with 'tlle nxtes tlict 'oreuking kAlt of A. w - ropeall war ;71101d brou V usp en ngIii th aile t . of :. 711on *ar t the iNatuk o,Add nt% t be e Ilk cif ano -15- 'Olen the 'kink of .„:ud• )tcyt.eis terder. • Area they leirA .t.:nctor now'? No; but 1.1, .0 A. rreatl. ) ,srefer to havtl bailk notes bocause the:, know thtk, aru realizable, b1.a t&o. .4re not ltwal tendey. • In ease the. t.)ank nuspendine payment, they lar rW4;'n fo;• nO Inerci'd .,H,cr, and tllase note's would be legal L'Inder for 7,7kylm- a law a“thorlzing 11) Ir,twe4u10::. ;f ender. the' YlOtfin deoollitra? Tb:.anitt A. There wo),J1(, bO piki,,ents, and raking 0n ct : Plf)N.4. war with without tsuspendi;:r. Q. A. VhAt partion of V:01W long-„, The prOptIrton WO in at ar:7 given Q. Are not the overdrawn •-.41).1.1.c. coo,:.nta 44,yuble on ticia.11V ow.Irdrave La that pytt n;': , roportion zr.7:;Ow 11,1 1. uall,; - we give the right . '„bsGta ,re ()all lean*? ntonth or two. A. Yflp 41Wavas itude as to time to butinnst !yeo l:la in t 1. haw tho richt to ca:ti in °Jou, of raict., f:14ti.er " Let us tie 4. 0. .0!t4IIS *1 up the ,4 :tton of dt.col(nt big banks follow the qounk of -r:nce rate? ritts n r ction, s} tip aS a not. tw (,4,11, i' AliON1 ce - that .z(lUe0. hAve two din- c ,41.n.k of Franco, which in the officii4.1 one, ttnd then the mite4..1,teicl . o 17;f the '':ark of '`revlee. At th#1 present :-Icr.- 1(..t, o..r fielal nYt0! bnin noes the A. taccnint, rate I.;! (1 :or Gent; u. n'14;ut thrse der cctilt. %avic of 1,Taneo over loan below ita ,A:blitOled rate. No, it never &Ape. 4114 • 1,14,t,t, OL • f' chc. i used in „.:ol.,4.r - that i, by- 1.tc.,6f ;n ,noric;.*. or )h(74,1z4mnd. r our ho....sohole p Aiwilkie in r.111!:3a,it 11• A. e to C hund.re‹. f-r -lices in i‘A.at.: ,111 carry more yOu caxuio t. • iaron, for dr.,..4700(ta, dO yOU pay yQUY O. for Toot I hardi onoj with me. 0J:>ne, at proportion or *...110 lyctia.5 of 'i,':rance i C. Checks and anc.' rwti I untie • LQttk 1.'10)141a'-Y by to: on (Inc'ri4 .76'v.! , :03 no I.. of c ti:y. A. Al- I clo nut knot,. A. ,,041.,Liants .:iii r the. fix. xtru o A. checks? trad4MMT1 How about t na ariall t.:(!,11 t:.11 octor axle lawyer ,:krt0 nrefosoional :.an - wouid they draw and t Yv". cash? the mOney out and :)ay th.oir 4, now A. cortaAnl, A. about the pa:irolln Al Vaky in uentity. 4. Huw do ,J.1* ?ranee obliged b is tha Q. In rIonc:,. otni p . ay bzi.nicabie bU1 of othor banks? 1.-4w or b A. c(Astort Thev arz. not oblAgsd by 1.4.-e, but that itz, their business, and there wootaet i for tii xiistence Lf they did not. n.,;. reason The,, have the dower to ro- f1.13e, but. they ni”Art/ 44 do if the :);Att'Por in coced. what in te:: Or/ of Why ihe 141611k of '-*.l.a.nett .::)10111X ii•;4:10cin reaervo on htaidT Litteh Is it not ver) tan'orofit..ible? reaurin is that -..hc ...00ple do nut. woexat, c)Ctg, The: for it. deponit. An spi rercr tt.e have it In the of ?rano* anc got The ':.:Ank hao to .Lest.0 nota• fur 44.1.1 the p.clet on anount of cold arrives in Promo 41. store than 4.17in any othot Prance on i_Tid ci.ttr!py thtl notes in silver. O&u rLotOS iit The more pulnr be- Ourroney com%s poptar, th9 .:..:-hore the e:c10.z 4...;.:.:/ a in the 'Au.! of Q. it Tko ,your hoard 7:14:tned. auci in nnw the ouretm to dut 0.4gG the:. `..ept. .LbAs in the hanks. r10 Fle A. de .)ositore ' var, Y00. on of ropor t.../ on ,.of -our own - 11.11 -roportien. r , iire in tbot 609s! big bank ft., yLerLt1.s bo 'but ti r.oxt xe ait.de i a on ,,'our brLt.nc e A. 'Ea have never Vrt, n.'ashf the Union Oerter‘ac. ..scorapte 'rent to snaa.slis th Lt. void Tha ::(topic prefer no ,c14. Halm .-oo aver bad Orr bnt the Unlon c•onortilc. 4.! 4.4. rf$ rt a A *Jr:VI C.11°` Several titian, :kir-t..1.cu.i.e.r.,14 'ethen ther. wile smash hr' A. :14..ett3 yOU Olte ar had an,:,ruu ;AV Thirty yetll.; ;at horla Thin peopla aro housrtiln,:;. 08 i:::rtlel3e : 71-ri„ , usat2 to, but A. ince tho 4 a rIln since yo.h,13n the C'..m.Ak. ir di peoplo drew out elghty millionE fro,...1 Vhey brought bsuck. :taxi ton- 071t. h LIMA ty ,,ou thinx outuide A. r 1.);Ltika in 1)0ctittise One crr ai.fraiu rettsons irs tat, .c.;•4:01.k.t no 1.)4nice newt. the.. rtion colcl th.t. ' fai h ot:wr count r".? that d ,t. enn4A, to pLt it in CGiuntr, ch1ef rcazo Y1 k.)mnOf .1' 1)arilui in A,,, !;riou Is Lie inch _cep nurfl Onor.:-Lok,ti roisallte iAlCctIVut1;.e • 10 • rivh0 3. 4.1 t ro.44 Lb, / ,t .: Oovaltry people in Prance. 0. How -bout liostal 0,tvings 1)004.i.a, 'ably redueed A. The.; htom.; c-naid- he eLmaunt of mom., V at AL huardQd; but tht. chffi- tfloa .uf L116 of gettinc th Oultlf ti auvingvbar...00 0 to 'riling andi.wa.r.c i4:.otdair.iitii!:.4.08, in ; rlore LA:4 enerni visa 04C • POW ULU:. braohes !low •.)1.4telde? yo:J have ln Parts' A. El) It9' tivnivc. Two •11.4adre1 4.t.nt tho total :umber 41 br,Aroh(olit InclAing Ptocic, b.uale.rod NU6O fourteen. altoguther? omploplvti 1,R.vre P. ot,rtr!!on the;,0t4no. • Do ,o cov!:tr„,) • bwy up many u .ndepOnfion bx.-,Ica1h•ci ~h the .1.41• Itever. Mitt bocoews crt C.:te y 4 hiCh zt,Ktftrunr. 'r,ttre 0.143,1 of itit Lhe fo.ilures in cAnnot. v;;.., toutert begid rte of !3otat fail, A. glycol th,f.$ ort j ; t numbol aud for 4.4, number of :,,ears. We :;ou, :q,tcautc4o it in confidentia, to exAcii';:e it Itero am,re t L4. our C!orvaluaton an , deniers. L1vr10 • • Pten you aus.a.olish a brnah &n find a loc,o. with ‘.01A .? dent bunk there. A. vii ioT4O,gmulreklagy Can thib loc,1 ),Jk caradote T''ore arei certuAn plawts veatre yivate bank* .4fig, 1:#t. the :,,,ndency As for thn private ba:!ker t() have lc, t440 dImai,peur. '114-4e..110.N.-4141,40.--w-lu;44:11 SUMAS and have uvneru,4 br,.;(tahiin. of %)-v ;Iteblxo. •,,11,:-.CakAirarttay. :e t n evcr;" ura-11 dopoalt One greuwt elutinotAon As that Vhc aiwu,y* In the hands of ;#.4.teiiy. tako srui,1.1 rivzite bunk is A man vtliornij, tmrts a t.,rtivAe bo.nic ma, be a good bb.nicer t4nd fimmoicar .4.11c buE5inents man, but 1). doer; not adw11 follow tet hi:,;onwho will inYmrit in ull Likelihood) bus:a-plan, 1$111 bet capable of runni-.r it. Thes0 oint stock belnks dc.) not go from fh Cher to son but are Lti. way •.%tier Ft!ooti Do you no ,o - Q. /3. 10 1 • strr, A A. io c;. 1 joint stook .:larks in the not ntrh to keteunt vo ITIt.11 lot Ian •0r cl it Tt-mro trtme. in arse:1,10u and one. in al 1 :ions i.e., wh ch. !14%6 t 14en It, I TV Quo .L.rtest othe r tr.ial arid brchas Ande ighty ii1ion friAxica oap- tr:tte.r:, tn in .oh de.,oni.to? . 7* you tnow 9 t 4.he aize .ark of prance in0_0 • nth trig. but 0.1,,!. t•here ...re no bri.vo•Th•4.he one 4....1.:o4e maned is the Orecilt, i c tor? A. Linee :yen( aQd vw tin ct • f i(.3 d to eni.ab i Ixnchett are c.:f f.)-14 C stabi I tsh cci tn br;Inch ccorclance .0,!‘ but oaoh t vae • +„).1t;: ic..)v(31-:1 Jr-Int • e char- k,h t e f;:t 1,31.4`; (!i iwor P.. - f • br . L!4;1102 4, p.0 'Ult.: poople ot4trste of 'Chi: "rw.c1nbusInoco , towns th crohu.nt. raft"r t1t t wo is ent •i ,r(..!i 4') ixv.,;420 14t. • A. 10041 d,tffe rent. Purni t‘Irc $ ,a; tl,q3 ,o,.,'(1 rnikrzur,cttirers . 4/ Th A. r1Tt favor tht ritAnch btank.6 Thr.te f (21d co•r:::rod h.the fliM 'Ye will not lend o 1 rt ft n 01 1:37 0 4 1i\ t in not . "no oil axtd now Ca•iteLl }:on o I: put in ncw -41 Owe? We t 1.rod ouz capita in 1v00 fr(,ra 20),000,000 t 2601 0001 nm) fromes $ but Lb Is was on account L f .-ene riLl. bur, 7).no not an e. Arbr of brr;dhos. f..11e ..1,..nakfrers ediatit loc--ltt, in , tr brwich kat usually pile from Lho broach is situated, Sr do ,„•ou 41:1n ther z-;131te rorn as iaanago re th 14 In ;lace 0Vic, In neve r buy A. Seal Na, 11 t 1. tia:e otr otapl oyees cab. the. Isyrr.4-101 i itte d sthr r loy4111. 'Jew h.rt :eat j ui titoG.k. bi3 cooperate 111 3 of d i sc..° ca.kt: or do t hok,t, h ,v(t fer of 1, 0,ret.iitIing abo ahoh other llot co n Lich tere? Lialy 'Nay They tore 1her. Ore!re rv.!or3ent or tai-e• they nit.7 n vor.ç•o aro 3 T10 r cu.U1 tth ..erts, . do PeOre it onr 4.4t t.3 S of cr,. noottv t Tht • '.v.$ re ftlet of coittpet it ton compel x.; each of ih4Z3, to eo th':' .1 )e et buzilnesit they can •. Would th..,::. se Joint stock barticr au(' th t thfr.): 'Quad zoi) world. Thc,, think r,r-w;1Z1 On ill by ? A. o,t f t7 in the ;;:41, the zi,-y t crn of no Le it;aue b . t'H: bt.. f0 Is f,11, co alert t tx.nd ri,•\ not de:s'iro . nd hwo to accoflu°da t,e . ri ttl .0.11.y 1Intl 1.'1') pl,b110 44.p roc1 ate .0:%xceee.', ing3.:" the the zt r.y• '.e.1..1kjirti. in yo %Jr hki, 3jtm for e fiht of noi,c Lu- Wig e A. None *4410'4/v1r. The 1-,11, bunks and their s:,:s 1,tree The jI.) t 3t n: bw ., kt; w-ore c .catne. adjust th iv)"ire is to, 1..he. e ci p 1)91• of 'Pran on. of . it ti, Do you kc 0:: r amo t. a of non e:y. in . iky to by Axe, the ut brunches, or fron tHi briv)e}tes to Pariis? ono-rw..rth of -.11 our oLush • '; tar,t. do rabzfA, '.fi1.4 *. their own rir4..eonib'..lit:1' 4:1,eto 1itUe cti uNix loans vor,.. one tif 01' k in 1tac.t, and the :a.m.:lagers 40 not oo. sz.:V. A. br rulatio,m -Lain 'hank. its own They 'RVC?L lisraTIR4 .1 * 6 r4.11,Srr 0\r'4."TC.art) OI? ilo)rnAmc coicapsioN. 010 Ar ' '18.111CATM rTc. Cri.0 Zn apeninp. 1.ho onnain. 40. ..)r- 3.3t.,ittt n L1- ,tenteml The 'aron :- ,!Imitifticd the -.1ambrn ?-4" the !,1116-ico?..znittee, alth thf:ir 'Last& 4• t 1" ilik/1/11 A oh it..J.. • • . v. a I a. • i. Specie in twAnku And otbmr apecze • ADV.4.111!, "7MATOR V4id, on beituUf Of Vrte arti,...ed d t AT10 AL T • 1.1.1e.t • vpjczAjz)., grfArsol: f0' • 7.7IWAPT4 15 T.AITIRL I AIM if Sgut Colartorolal awiT :iublic anouritien (nunicipal) S. Advances u,.ion oollateral • Overdrawn acoountri • ntocle and bonds ko0 for salt 6. nem.' onttos thirir a.Liu - st,Ari eAdvaince atekt,i(rnor. 3 ran ts paid nu., I tes t etc. f01 1 cw%. : ITI'i,„?`‘. t,it3 jiy&r.' Deposit.0 ce • • iuo,u kce;`, %all,3f oovalt7.A t • 'Olt)4'440 rrnr\V•trit Co 1 gi I 11131 titiL 00- 0 d• 1/-4 15--o 41810 . AC" acicto;u1lin, I 0& 431. -f.5214 Aocaptan000 on ccvamoro1a1 oapwr • 4ondts gLven. t< oustorturs t kme dodoolt I, i i uLti not 31 nti C7‘.qt. iit ,J4, q 4gqSV 2- • 3ti.;.1 113- coo 000.00 /25,06o,Ooo -z5 ôoo • °°°.°° 2 115- 161 U:1:,0170 P.etise rye (Burp:Lilo) • '7. Ltis qi+ vrefil,-4, Ae, and -.2 on 111 1. r;tokt;.:7:t -. Ix IL I.)'14.t fli . ctt. 1!(// ars . rimirenent of law? 1,111 No, It 1.1, A. require- b:ilams. 1tun does on to c;overyttriont c r b,,nk? p'.4. 1 all WIC() * Do you i;(1kb,1 tshthe niOthAjatiltcmont8 in 4.110 1. A. Y.tlut bItt las On our 2101) rels,,onsibi1tt;4 t IHS 'h".4747,• 170r t h Can of IY.td to Ys• -1 t,r tho 4.;;.nda,t, Lo?,1 or c.. czt.re.'• tie• by. .ron ihioh .ou halm tjA;“ :.;u1) A. -vontft? )f.:n „ ,fmv ticivy 1-11.,. ch f In t.ti K. u*e nmi,on • ono la+py ev,01 as in rel tree. b A. ear- teo.nly. (Not.,:tiaron lir ten card fty.rn 1 illnd a oor of ' ., r•forred 104• sa relive o ted. This x tiaarannt in ik.n Yrienoh, And wt8 filfttl wi th othar ;i4t,i'era ij** 1,`„.• 0 COMINIi OS1On 1 to be tnimarklatrid). 41V • 4 LONMON,ENGLAND, August 20,1908. STATEMENT OF MR. LEON RUEFF, MANAGING DIRECTOR OF THE LONDON BRA= OF THE SWISS BANK, BEFORE A SUBCOMMITTEE OF THE NATIONAL MONETARY COMMISSION. Present: Senator Aldrich (Chairman), Senator Hale, Senator Daniel, Representatives Vreeland, Overstreet,Burton, and Padgett. Present also, Mr. H. P. Davis- on, of New York, and Mr. George M. Reynolds, of Chicago. Mr. RUM?: Ye have in Switzerland 22 Cantons, which are absolute States. They are all autonomous and have their awn special arrangements, and nearly all have cantonal banks. Part of these banks had the capital given by the Canton, either in the form of cash or in the form of securities or bonds of that Canton. A Canton Zurich has a cantonal bank Which haarip it" its capital thr:eugh the State issuing a fixed loan and handing over the proceeds to the bank as its initial capital. This was done for the purpose of issuing bank notes, and the law was for a long time that they had to have a capital of their own - what they called guaranteed capital - actually allotted Lo the bank; and accor ding to law they 0,111d issue a certain ratio of notes, Which notes , however, had to be covered by 40 per centum in gold and lega l temer (5 franc pieces, etc.). The other 60 per cent had to be in liquid assets. In those liquid assets, as long as the cantonal bank existed, were included bills with two well-known signa:ures, either Swiss or foreign, cash in hand, and adNrances on rlwiss government securities or cantonal securities. Agitation has been going on for 20 :ears to end that monopoly in the hands of the Federal Government. Vs have the referendum. We started to lerl.slate, and a popular vote was asked for on Article 39 of the Constitution, which gives the exclusive right of issuing bank notes to the Federal flovernment, which had the right to hand it over to a hank. After this was rejected by the people 13r a popular vote, another attempt was made in 10 years. Article 39 remained in the Constitution, .ut was a dead-lett r on account of not being able to come to an understanding Whether they would have a state bank or an absolutely private bank Which w,Juld be free of the influence of the State, with frioney belonging to shareholders and with the right of control by the government, like the banks of Prance and of Germany. Two years ago they passed a law which was accepted. referendum was asked, and it passed on October 6, 1905. was published October 11, 1905. Another The law It was dela.':ed by opposi'ion un- til the 9th of 7anuary, 1906, but the opposition did not succeed in getting together the necessary 30,000 signutures, and it came a law on l'anuary 91 1906. e- Some interests were op-osed to it, but nevertheless it bccame a law on Tanuary 9 1 1906. This law provides (Article 1): The Federation gives the ex- clusive right to issue bank notes to a central issuing insti'ution crea'd in cnformity with the provi.,ions of this lam, unaei name of "Swiss National Bank." This bank has all the rights of a civil person, and is administered with the consent and under the supervision of the Ped(ration. The national bank has for its principal object to serve the Swiss r,tovernment, to reulate the ,Tioncta ry market, and to facilitate operations of payments. Beside s thic, 'i'cy will underta'Ke l without any cost, to serve the Treasur; y of the PeOeration as far as this senrice s-all be delegated to them. I have here an article from the Tondon Financial Times of November 21 19r)5, on the Swiss Yational Pank, which I will read: "The bank has a capital of 50,000,000 francs. There are 100,000 shares of 500 francs each. Two -fifths of this anaunt will be subscribed by the Cantons, one-fifth by the existing banks of issue, and two-fifths by the public. Only Swiss citizens or corporations domiciled in Switzerland car 'e shareholders." State banks and private banks lunder ie limitations which ex- isted at that time, issued notes, but the re was no State or cantonal currency. Everybody had the right themselves, if they conformed to certain conditions, to issue not es. necessary to specially apply for this ript ht. Later on it was made You had to have a minimum capital of so much, and your iss ue was limited to a certain proportion of your capital. The notes, however, iad to he covered by 40 per cent in gold or legal tender, and the other 60 per cent had to be in quic assets. That was the former arrangement, but it has been changed many tines. It .h.as eon made eo stringent t7lat banks crvild find no profit in it, on acc ount of rates and advances to the 'Federal lovernment and Can tons. "Tile operations of the bank will be strictly 1iiiited to 1. The issue of notes. 2. The discoun;ing of three months' bil ls b•arinf; two signatures. 3. The sale nr purchase of foreign bil ls or clIcks payable in specie. 4. Advances for three months upon the security of bonds, but, not upon shares. 5. Transfers and money orders. 6. Purchases for its own at:mount, blit only as a temporary transaction, of the bonds of the Federal or CanLonal Covernment Of of foreign SLaLes, i)rovided they are payable to bearer and of easy realization. 7. Purchase and sale of gold and silver specie and bullion, and advances upon the saitie. 8. Issuing of gold and silver certificates." They can get on deposit gold or silver bars or foreign coin at a certain ratio and issue their notes agai nst it. be delivered in 20 kilogram ation. Coins should lots or pieces of the saAe denomin- Advances are made on t.ae 'oasis of 3,000 fran cs on the :Kilo- gram of gold, nine-tenths fine. "9. Interest-bearing and non-interest-bearing deposit accounts." They cannot give any interest to anybody bu This is to prevene the naIiGnal an the FederaU.on. from colapeting with other banks. "10. The safe keeping of scrip and o:jects of value. 11. Subscription on commission of a thir d party to Federal and Cantonal loan issues, but wit'-lout participation in the same." They cannot take part in any underwri ting syndicate. "The bank will publish its 1.an and discount rates at rerrular intervals, and will issue 1.)ank 11:7; of the denominaion of 50 francs, 100 francs, 500 francs, and 1,000 fran cs. Its note issue will have -!,o be balanced to its fill amount by a 40 per cent acecie reserve and 60 per cent bills I discounted at home or abroad. It will also be obliged to hid a reserve to 'balance all of its shortterm engagements - all that are terminated in 10 days. The distribution of profits is minutely prov ided for. Ten per cent of the profits go to the reserve fund ; 40 per cent Ire the maximum dividend payable ipon shares; the Lurp lus will be hanc..ed over to the Federal Treasury, to be deposited to the credit of the varius Cantons, upon a special scheme." The Swiss National Bank has no tax to pay upon their issue, add the private l'anks have to pay taxes. "All Cantons in naral will receive for the firkA 15 yearS an indemnity of 30 centimes per capita, while Cantons which draw profits from theif cantonal banks will recc:iN:e a apt_cial diribution. After the first 15 years, every Canton will receive 80 centimes =Raper capia l and in ca the s,trpluki in and finanuida year is insufficient to meet these payments, the Federal Council will advance the E31416 ileosary o pay indemniies." This is olake the place of from the taxs on privat..: banks. 4ounts fJr.-aerltz The P.edai G vernmfint hh.s all import duaLdes and cue-Gums with which to pay idlitise amoY:TAT,;s if the bank should not makc sufficient profit. rigo, of direu p1u8 is to h Thz Governmen has no axation, but they have same iuonopolies. 1'h ur- used for the payment of the bond isse, aid part of the surplus f7oes L ,he Cantons -cecause they had to give up the taxes. The ,Zate acqired the railroads, and the transacLlon should be comp16ted in 3 years. institution. State. The revenue does not go into the generi fund of tJ-!e Out of and tei have They are an absolutelj Liepaxate ie urplus tIle, have to provide, firs, Lhe loans, o laa.4- e provisions for payment of all the debts out- standing, While the cther sur-pluc remains as a .ceserve fund. I will now give you some of Lihe princi.al Love:fl- ing the conduct of the Lank. The shares arc Oiil L.L.nnsft.i.alc by endofaemont, and transfer must le approvd by the committec of the bank. approval gives its IL nok n wi tplanimity, the If t7le cluncil of the bank decision. 7Ye ne,Lion1 i l'nund 4L;, , ccept wits cu rest, in all its branches, payments for account of the p,!deration and to make all payments for their z.ccount equally, witb,ut any cost, but only up to the credit T,alance of the Pederptior with the bank; to receive any deposit, and, at 11-1,2 de-Tile-1i of the Federation, without any cost, all securities whir' elor to it or which are placed in its adclinietration (to cake for safe keeping all securities which belong to the Pederal (loverrment, and all different funds, like pension funds, etc.). They have to pul7lish a E.I.,Rter.ent evry wJek, and I .ave brourrht you thc last, ore, dated t1e 15th of August, 19 8, and also one of pli-ut a y-?ar ago, dated the 7t1" uf Aurrust, 1907. ments are published in two lan'uarres bank notes are in tore 73y, me of the langJaces otro 1 FS 'Trene,' ,1 and "ernar , All statebut the erman, and Italian. _ Stx y per 66tit, foreir-n and domestic bills - what does that mea, 19 Mr. Rueff: They Vitve no ripht to discount onder the official rate. There is no priirate ra1e.of•discouat. because they 1 e ye They cannot buy bills, Ihe coTiretition of all the ot.z.;r official rate nor is 3 lA per cent and the private rate je 3 1/8 per cent. The first object of the hank is not to Take dividends or to issi)e notes, but to rerrulate the noretary system. Profits: Ten per cent will be taken for a reserve fund, but there cannot he more than 500,000 francs in one year for this purpose. This is 'o ilievent the committee of the hark from making 'A.fT reserves so that tlhe Cantons would "et less. Aft- rware, 4 per rert Turimum dividend to the shareholders. The only indemnity which has to ,e paid by the nationa1 Lank to .t.e Pederation, and which is given up by the puderation to te Cantons, is co;vosed of the following elements: 5() centies per 100 francs o! it authorized issu( on the 31st of Pecemiler, 1.2n4 on the territcry of each Canton, 3n cetnti7cL.s per capita in ee).(111 Canton on ;he population az Givon hy tie la,st Pcderal census. (Note: uponded f!'IP rnaditv of Trere L.r. Rue: the law, saying that he would leave a copy • j.th thersi vn . The bank is the clearing house and for riving free transfrs from on,: ci ,y to another. They have accepted what the Reichsbank did a few years ago - they hav astked to open an accoun, wIGh and to have all %hese facilities which they give, uhey tax ev,rybody a certain amount in proportion to their "turn-over " uo tne bank. By—a,mambax_af_t414-4ommission: How many nranches as Lhe cen- tral lank? Mt. huef: Eleiren. Islow, as to Bci,r6 of ffanarTment d ConLrol. the p7eneral laeetinp: of the shareholders, then t rlittee, of the -bank. The local coretittees and rIrbu l council, or comhe control cum- mission have the ii!:eneral management and the loc manacemnt. The council of the lank is namc:d for four ,:ears; 15 desic ed by the meeting of the shareholders and .au- 5 by the Feewral Govern- ,nent must be representatives of finance, commerce, indusGrs, arts, etc. The nomination of 40 members will be made in the foliuvAng way: The Poderal Council nominates, in the first instance, P•esident and Vice President. e) After that the ceneral mueving of s},areholders nolinates 15 memb-rs and gives notice to the Feartral Council of the nominations which they have made. The Federal loun- .8Oil, after receiving t! at nomination, procd to tiv: nomination of 23 other Int,yrio,rs, of whicv. not .n.ore tllan L ,,mrs of tae I? .11,: Federal chambers and not more than 5 be menaluL-E of choice of thuse 23 iwrabers, ar. equitable of the Cantons. 2,:dresentation nd iii"no assur3d to the leading oankirvi; centers AleiJurs the p:.incipal centra of colaercf: L4ad 1-1Gustry. the Council ao ovrnments o , Aave to del:osit sharcs as qualification f2:: faela- bership. ae- The rest ef the statute is taken tails of how it i, FlotA lon Yr. 'verstrt.ct: does t,"1-,e 7.reeid....at act aE President after lwing deai7nated b, the council? :acs. . Rueff: Pour .), Ti 1er:islatio;1 vcxa ciulIromize between rad- icals, %filo wanted state bans, and tic conuervatives, who wanted a cent-al bank. T1-13 "Federal '",(vernriell'. guarante, s tain income for J:avin taken awa. 'Ile taxes of their banks, bal ) 4 pr ceri there is no guarantee of th, dividend. Aldrich: Was there much di.uLf3ic;r1 in r. Fueff: A. Cantons a cer- Ir Parliamenf-, has taken 20 37arsl fitting reat deal; i to ar;complish this Pldrich: Is t ere DT):1 way 0-10A lbe cap k.et the main fea- tures of that discusFioni Lhat is, the el_ :ctes of the principal people whr harr; ,a.l.en part in it an.r th b.rgunents used 17 both sides? MY. Ruoff: I have ro do.,b1 1. car b. i,r( cored in rwitzerland. W. Vreeland: It seems they were aL. in favor of some centralized authority of one kind or another. What were the conditions of the country 14hich led everybody to deLr:: csrLralization of their llote issues and bankin7 power? a .r. Ruoff: We have not ihriati one as far as , c7v , ric).* excllange 1-)etwe2n Berne and 7uricli, but so,(teti:rief: it hex leen difficiat to transfer mone) from one _,lace to e ot Those ',Inks were in- dividual banks Which looked for profits and not for the int reel of the conmunity. At certain !es, I t was Ter?, difficult t) aet fer'red. .1-1 They were afraid tb;-, citite sound. as your crop-rnoving times, notes and to get the i11OtjC penaps one of these trans- institutions This Tlas not liuppened, hut it (111}11. Ilavc happened. gr. Vreeland: Was ter(‘ any distrust of banks in on Oanton and rAnts of another riantr,ne) Mr. Rueff: There was a verv rigid supervision 1)37 troi!er. trusl; Threfore, ts regards deral comp- rotc's, then-, -Fes /-1) dip- ur as repards the manarement of certain tanks E)t-: buf-iines:1, there was some distrust. other To preven' these difficull b ; en the seva td ,:,.8 or eighties wF: made a co cprdat of the di!ferent banks, ).nd that association of t many facilities as - pssi!le for clearing house in 7uric. diffe ,'ent iosuing banks gave as transfers. It was a kind of They did not want a central institution, so the 1,anics pulled to72th3r and tried This was about 25 years ago 1111W, thIs was started. This concordat was ci)mposed of i3suing Lans of rwitz.rla.,i d, and amounte.d +o 50 1.er wont of the lankin- ctrength of rwilzerland. + if; net now in existence, but the cantonal ouluili ilavu ourt ea a new associa.ion to defend tl-eir interests. be tliowly withdrawn, and they will no Their bank not s will havo tlw pull any more over tl,c public, but they have nor rA. kind of deferisive orcanization so ac Lc dircuss betweon t'-ief;eives the steps they shall take to continde in Liii;iness P.rd "vlw l;'uy will go on after r-Li this has been set led. we are mzitirJr er active ;rrpar,anda in of checks. We havF3 0- orted check transfer systetri. Stbi Ilivitzerland for use the savinfrs bank and postal Individual del'ts are paid mostl.v in bank notes or coin, but they are trying now to avoid transfors of actual money and to t thei to use cbecks for the oayment of their df_ftts. Padp:ett: If a mar goes te the hank and nerotiates a loan, does he take the actual -Ioney awa with him, or does ht: deposiL in the hank and withdraw it, or does he take it in notes' , r. • Rueff: If he is a stranger and has not had a bank account, he wi'l tak bank notes and will pay GhLse notes to the man to whom he is indel;ted. r. Padgett: How about regular cuatomers9 Rueff: The merchant will have an accoart and will as a trans-rer to another account, He will write cut a check. use the pcstal transfer office for goods in a lit ie town. for He ;aav They have not used checks much in Switzerland. 71q.. Padgett: Supf.)ose 4 country mercan a 1)111 of goods from a wholesale merchant, payment for which ib due in 90 days, ant at the end of 90 days he wants to remit, to him, does he send him his check on some bank or does he u;et Lhe money and serd that by express, c,r ho w% (weenc Mr. Rueff: I suppos tr bfer 1 ? be wolild buy a draft on a bank that They do not often send individual chec.Ks. 'they place. e are trying to introduc3 that system. an,; r. Aldrich: Is there in exisance in fer...nch t;,JE1 acilL,ation and the final resAlt.s' histor. rl,os and articles. iblefr: 'Yes r. Aldrich: In one c)oo,i. Mr. Ruoff: We will inqL;ire. le :)66,a1 saving& qt. Ovorst,ret. Row ion - has an lecn in operation'; • .ueff: W3 ,fears. u1,opular? Overstre.A: Is • Rueff: Very popular. V. re the agents for them here. Mr. Overstrct: how are ,hc ceposits invested r. huff: ihe:; inveb' in (lova.:.nmctnt and State scari- ties, hut we are riot 1,Norougl-1y falailiar with ,1-,.at reatt...r,J qr.Overstreet: What int.:tvef;L io paid on deposits? J?:Jr Mr. Rueff: I think . OTcrstreet: Does the lioney pc, into ti- e (7,deral vi'. Rueff: No, i is a s:).lutely suarae. Mr. Overstrett: Does Gr cent ml y,a1-11 have supervision of the lkderal depubita? Rueff: No, a_soluLi:. aono. r. Davison: Are there ay !savings bans in •'4.;itzerland Rueff: Y, ver coo.0t:ra'Aire banLE, pvivatc, LE-vings ranks, statt Lavinge banks, benevolent saTingb barks, .16Te wIlere the wholu irofits arA distrilutee. 'fr. Davison: Do they pay a higher rate of interest than 2 tier cent? Mr. Rueff: Yes. SOCIETE ai7ERALE. "eplies of Louis Dorizon, Directeur, to the Inquiries of The ..ational lonetal.y Commission. I. The enclosed copy of our st.tutes furnishes all the desi-ed information with regard to the date of foundation of the Y'ociet rera1e, it er7aations, its cal;ital, the form and mode of transferring its shares. Accordir- to (Appendix 7o.1). our request, ';:e supplement this Information •tAh a table reproducing the averz).[,e quotations of our shares from 1901 down to October, 1(:)OL during the sa7ic )eriod. incl(ing the dividends paid (Appendix No.2). Every year at the end of 1ardh, the rectors and the council of administration present to the (:enerI :looting of the stockholders a rn-ort containing the changes in the different operations of the Societe and the ')rofits for the preceding .,-ear. I enclose herewith the reports of our last two general meetings (Ai )endix *.o.3 and 3 his). of the In the course ear the law requires no flirther publicit:); neverthc- les, the Journal Officiel de la Republ:que Francaise publishes per odically the monotwv balance sheet in th is enclosed as An;)endix o.4. form ;hihich Ths publication, conpulsory under the law of 1fl66, has been maintaine(1 1 although it has been voluntary since the Societe Cencrale was, in 187t, transformed into a joint-otock company, accordi!sr to the lawu of July 241 1r67 1 aLd Alv,13st 1, 1P93. 2. The me:flod of adrlinLstration, conditions of selecting, advancing, and remunerating officials are ext)lained in Appendix No. 5. The various pro-,-idtmt institu,icins for the employees and aents of the Socthe are explai::ed in docullents 6, 7 1 E l and 9. Iv. You selected one of our balance sheets, and have asked certain explanations about the items and their amounts. The first item of the assets, "Caisse et '02'que," P5,600,000 francs ineluts the specie in the vaults and the credit -i)alzJice of the Societe at the Bank of Prance. As regards the )crce.tar7e bet- ween liquid assets and liabilities, it would not be indicated by the the apparent proportion of the item "C(1,if.;se et -1anque" and mount of the deposits. The Caisse finds a powerful sLp- plement to its in ediate resources in the portfolio. discount of paper at the Bank of 1-.ance makes it The 1.e- Gssible to avoid the maintenance in our vaults of an excesfAve amount of cash. The portfolio holds alwa:s in reserve in qif' form of pap. r devices that can be i=ediately rediscounted, 75 to FO millions of paper, taking account of the .,enral offic( in Pars alone. the morrin On the other hand, the receipts effected dnrini en the days of important maturity, the 1..th and the Pnd of the month, balance the pay7lents made during those days and compensate ver;y appreciably for the withdrawals. The cash ariol th ou,:h (tiscount ol)erations is in c;iple only momentary. Thc. consequent immobilization of funds can be easily reduced by ri!sidcounting. this aay, means of rediscount, cur Lon('-time paper in e t.;. nsferred into short-time paper. The item "Coupons a encaisser," 17,40(),000 francs, from the point view of the treasury, is an importat addition to the account "Caisse et Agi que." variety :%; H elasticity The of the assets reenforcing our treasury re7iove any importance from the rigorous maintenance of a fixed perce1ano in the amour:, of cash held. in case of A3i(le from the security that it affords panic, resulting in a run of 6- ooit- ors, the system !;racticed in Thcarce by the Credit SocIeties permits the reuction to a flirimum of the amount of unproductive capital immobilized in the vaults. The reemployment of capital for short-time na-a occur without the ca. ital's ceasing to be a utilizable division of the item "Caisse et ,anque." V. The portfolio 5322 C0:J 000 francs embraces co er of wh.,ch the maximum duration is 'JO days. pap- We make no dif- ference f-om the point of view of our discount betwe, n note to order and a draft. In certa'n rer7ions our ar7ents offer to farmers and landed proprietors bankinr: facilities under the fo:Ti of LL, ricultural via 'ants and acoommodation paper. This paper runs three months and is discounted under two sir;natures at least, but it may be twice renewed. s (1- knew, our 4. branches also discount warrants and advL,nces upon merchandise. You have asked t2le classification of our portfolio, and we indicate here how the balance of 562,600,000 is subdivided: 217,200,000 270,100,000 44,000,000 k000,poo francs francs francs francs of of of of paper paper paper paper -53-2,600,075 on on on on Paris. Provirces. forei(;n countrics. warrants. All of these items ]:uve appreciably increased since the date of the balance sl:-et which your inquiry reproduces (the end of 1906). This ()It il± set: by comparinG the bal,nce sheets enclosed for the , nd of August and the end of September, 190'. "Bankable" paper enters into the total in a pro- portion of about 70 er cent. vi. The item "Effets a l'encaissenent," 52,9001 000 francs, is recruited from the laiLturinc, remittances, the dciay involved -beinc, 5 days for Paris, 10 da,;-s for the bankable colintr;,:, and 15 days for elsewhere. VII. "Rentes & Actions, .3ons Obligations, Avanccs sur T7ar- antics, -larticipations 'Tinancieres." Article 2 o the stat- utes shows that the Societe Cencirale is free to select the kind and amount of erplo:nent for its funds. In co- trast with tr'.t and savings institutions and insurance companies, it is under no obligation to invest in securities of a detcy ired type an, uore tha it oblif.ed to accrire real crate. 5. It is allowed to invest I:: "reports" (7L l t0.;2 000 f ac) an(1 to obta_n in this way an - ,:)reciable the aiC of locLno for short time. The "participations" are not lim_Lted to syndic, te operaThe Societe Gr. nerale can tae an interest in industrial an co al affairs. intr: d -vce sec- rities It is likewise our custom to te :.-so..rket by way of sales at our offices or at the Bourse. "Avancea sur :aranties." kin Our sttutcs (Jo not define the o: securities aamii3sible as collateral fo - loans (172,530,000 francs). be contracted for value of the pledf:e. sLate only Lhat these loans must dks and to the extent of for-fifths the jith the permission of the customers and viith a profit from the reduction of (Tharr;e2, certain advances 71ade Hpon b.nkablc seurities may stUtlate permission for the Societe to transfer this collateral to the Bank of / lorance in sup ,ort of operations riade by the :,ocietef at that institution. This :lethod of liquifying a certain class of securities is in practice little -e. It co- stitutes an ev- entual resource of our treasury, and although the proceedinc7 Is perfectly regular, inasmuch as it is foreseen in precise terms in the loan contract, its erlployment occurs especially orl. ir eriods of exceptionally hirth ore:: rates. VIII. "Real Estate" 25,900,000 fr,Lncs. thLs item of our bz.dance sheet. We Iuu do uo ake 'he ask 1;s iiittiativ caLling : ;our attention to theIrogression 21ncc: sevcral ‘,eivt.s 6. in the amount of 1. bit; item, ''ec - 1tinr0 from double procedure of ,11- council of administrtion - 1. To ins al our employees in better hyclenic conU tions, reserving for them ventilated and corafoitable offices; 2. Offering to our customers con- ditions appropriate to thfs. variety of our needs. These ideas have found nc:table a ;1 licat ion in the acquire-lent of a -;ons1(.1frable group c)f 'buildings near the Opera. Important trans- form. ions have likewise hem ma e in our branches in. Paris :.nd in the -1;rovinces. It will also .be noted that L11.,, 2 exi)r,r,se irvolved in these improvements in our branches and aj.encis is borne by the account "Genera.. .x.penses," and is not includ- ed in the item in the balance sheet of IS e:Kplained "Real Estate." This the circumstances that the offices of our agencies are almost always hired and not the ..roperty of the Societe. Ix. Itomptes de quo a i'nt et :amptes Divers," as the title indicates, incldes not 17rants foreign blances; it groups together su.ndry current accounts of our of:iceo in Paris and the country. You ask our motive for leav- ing to our credit with our corespondents such important sums. One must first of all takr account or he fact that in those balances the foreign accounts do not amount 10 more than 30 millions to our debit, ;:i.nr, to about 15 millions to our credit. Th s last sum itself is far from being altogether a demand account, and in constituted in part of bi11 ot ;et natured. 7. For the pirpose OJ avdCing com15ion2 a,n( cost of exchanr7e and other onerous losues, we do lot discount at Paris foreign bills. We remit our bil1:3 upon distant col,ntries for cllect- ion a suffic:etL 1oi'lime before their Llatlirity. Our cor- respondents credit us ,:ith the same at the moment of maturity. The condition: of thcse accounts often contain the stipulation of interest of 1 per cent below the -,-2.1„c of the T1,tIona1 Bank for the credit account and 1 ,cr cent above that rate f(,r the debil. "Les comptes de cheques," 339,728,000 fra:scs. ceive in theory an interest of 1/2 per cent. nese re— A hicher rate can -ae c-aned Ln consideration of withdrawal only upon ri›tice of L'n- rati.on of thc: deposit. item arise:, fro As ou can rie l this ro)osits subject to .iJ,hdrawal by chedk. XI. "Les deoot3 a echeance fixe." or certiricate (bon) of J.;]:,.-th a Jo.10). ociren i rf,e re. uneration a!IJ I: mo=1, on th:se certilicates claar (A,))entilx c.11). These give rise to a note enclo:.ced (A. - ,endix :Cl.lowe(1 at -1,1-1 , resent Ldicated in Lilo e :closed cir- It varies Etccorinc to the flue ua- Lion in tlic rate of discount an( the rate for advances by of 71/lance and accordin- to the general condi'ion of the )ion XII. "Effets a Pa—er - " 13' 91 ,- n O . Under this are 8. grouped our acce,)tances. operations iL; co 1/F per cent. hC co is6Lon charged for these only 1/4 and 1/2 per cent - occa2iol.a1ly These acceptances are granted in the ftajority of cases upon the iraporLation f:cui abroad of youl, coiLon, leather, coffee, etc. for 90 days; les The coJ.respondinr7 drafts are frequently for 60 da:s. XIII. "Profits et "3ertes" are presented in their totals, expenses being; deducted. From the totals for the branches ave 1,)'1-1 deducted a sort of instalment corresponding to ;,heir proportion of the expenses entaLled by directi(11 and adminsitrtion. XIV. In reply to :,our question concerninc the n1. I - ber of our branches in Daris and in the country, we enclose a list in the form of a poster (Appendix o.12). We add to it an advertise- ment (Appendix No.13) noting our principal ol)erations (t-d the charge for safety deposit boxes (Appendix 2To.14). Our branches are verd rarely created local banks. e abst)rption of :Much more often they are opened after an inquiry on the spot by the directors of neighboring branches and an examination of the opportunities which the locality offcrs for a bank. XV. You ask the amount and ature of the different taxeu paid by our establishment, ond we hand you herewith a study made on the occasion of the last Universal ]xpositiOrl, entitled "The Credit (.'ocieties an This r7iVCS the Tax System," (Appendix 77o.15). figures considerably icao than the amount of the fiscal carr,es levied aJs., resent upon the Societe. of taxes levied has increased oroportionatel The amount to the progrc2s in om:r opeationli 1ice L)00. X1/1. n77 We hand also the rules and statute o of thc. Hlaring Ho7)no. .)11 ?aria, (k; endix No.10, as well as statistics on the amount per day of thc oration No.17). of _t3 1.6 membcrs (ApHendix The clearing hota;es in Prance are far from reaching a development comparable to t:hat of the cLfarinc houses in 7f.land or the United t.atcs. It is not of or financial nlarket in thii hat the orGanization olAntr;.; is defective, but the banks and thc plblic have not: ,?t accustom(' the7.1selves to , makinr frequent use of it. XVII. You z -o without doubt in possession of the statutes and rni7ulation:; or Lhe 3ak of France anti knaw the services vfrieh it renders to the public, to the final:cial world, and dustr,. in- We recall onli the useful support which it brings to the credit societies from the re61scount of our pertfolios. ,Lt rket. 1r ho Li:x.le time the reculator o: the dIscount conditions T.3. or r2.".4% . iscribcd in our documents ar(' lLtbelled D:_scounLs and advances thui follow al)tonatf4 ically the modifications of lie rate of the Bank of "ranee. XVIII. You ask us if we have undr,T;one in :Prance Li ancial 10. We recall the r.'e.eral cf_filts of 1882, that of 1E95, especially upon . 1:h of 1F9(2. As •ealinc: r:old mlninf./, and the soczaled metal crisis or thc monetary crises of 1907 ard th , first ionths of 190F, it was on?:,' th situation in foreign rlarkets. fcebic x.ccussion uf the It is to lie olmerved jIlat the Bank of 'ranee in '1,1is last condition (id not raise its rate of discount until after the 'ationia :anks of other c untries, and in much lower degree. Its coin resoLrces permit- ted it LU put at the disposal of .vihc other countries a part of its own 7:o1(:)_ suppl:;. fected. Ordinar:" discounts were in no way af- Restrictions were onl; 0:-.derf'd arc') to the ap- ceWGuncesat the Bank of paper craLed abroad or drawn upon forein countries an of diocountin domiciled ir prance for the oole Hurpose at a mor advanar;eous rate. iIeccmiendation of Charles Dawos, Comptroller of the Currency, relative to "Limitation of Loans", contaiqed in his Report to Congress for 1898. One of the most iml'ortant reforms needed in the pres,:nt nationul bankin: law, is a proper ,provision the a:kunt which can be loaned to any one individual or corporation, in order to insure a general distribution of loans, and Ido preven an improper concentration of a bank's funds in the hands of a f.-crt borrowers. The provision of the present national banking law designed to carry into effect this important principal is as follows: Sec. 527.0: The total liabilities to any association or any person, or of any corAvany, corpofation, or firm, for money borrowed, including in the liabilities of a company or firm the li.tbilities of the several mtmbers thereof, shall at no time exceed one-tenth part of the amount of thc capital stock of such 4).:sociation actually raid in. But thn discount of bills of excl-ian,-e in good fa]th arail,st actually existin values, and the discount of commercial o business paper actually owned by the pel-son negotiatin - the _Bu.e, shall not be consido r:',3 as _cney borrowed ." Alu.rst as if in admission of the fact that this provision is unscientific, avid ill adapted to carry into practical effect the :rat princip-xl of protection to depositors an sharehold -s, svbserved oy generally distributed and safe loans, tne present law provides no specific peAulty against i.idividuals which the Comptroller can apply for violations of this section in the min of excessive loans, where such violations do not affect the solvency of the bank, nor justify the apo;nut of a receiver, A United -tates cotxt, under the i-Alrei1 provisions of he -2 law providini: for the forfeiture of the franchises of a bank for any violations of the hankin: act, might adjudicate the question of fact us o such viola_tions, but could apply no othr reredy than forfeiture of franchise. Sin,e he institution of he national banking syster:, thf_. violation of this provizion has beet: comf on, and the Comptroller, though arowinT no kn violatiun to escape his writte:1 proest, finds c-r at pructial difficulty in his enieavors,o enfoice thi3 requi-ement. On SeptHber 20, 898, the date of the las call by the Comptroller for statc,rents of midi-Lon of national banks, 1,124 barlks, constitutin7 nearly one-third of the enti:-e nurrber of banks in the system, r - ported loans in excess of the lindt alloJed sect on 5200, rtatut-s of the Unit d ';tates. r2lie principles ,In(ierlyini, the a.-e a present provision of the valuable to ,Atipositors and shJreholder in their up,di.ation to the bank:i of the large coml.:unities, us to the banks of the smaller communities, but the. observance of this provirdon, while not int.,:rferinu, with the current requirements of either the bunks or the public in smaller comm.lities, proves an almost insumzuntable obstruction to the business of our larger cities. The pr sent ned is for an amendeAt to this provision, which, uhile compelling, under penalties, the safe and proper distrib ton of loas of lar,:er banks, will enable the to ro:e nt.arly the :;ae.,e per ce.t of their total .,-,ssets dhich I:. this way he pro ent provislon allows to small banks. the 0:ricers of larp-,er banks can su ly the proper needs of the largyr comalunities without disre(jardin7 the 1.Jw, and the Comptroller can hold them lncler penalty to strict observance of the arleyC:-d law, which :rho,: disry.ard woul,:: indicate ireproper distritntion of loans, somethiii the proJent provisions in th ',nfr.A:',ions of case of riany banks do iOt neces sarily indi,;ate. The greater ratio borne by bailkin,,, resourc s to bankcaldtal in tLe larger coral:unities, as compared w_th the like ratio in sLialler COL nities, is espon.dble for the e- fectIve and unequal workinL; of thc present provislon. The average ratio of resources to the averat -e caital of the 47 nat_onal banks in the city of New York is as 1[; is to 1; of he 17 national banks in Chi:aro as 10.2 is to 1; of the 6 national banks in :It. Louis as 7.3 is to 1; of the 257 national banks in other resrve citit's as 6.6 is to 1; ALle in 3,255 co,'Wury banks the ratio is but as 4.7 is to 1. The law limitinr loans to 10 per cent of the capital, when applied to the 3,255 of the smaller communitie:.; of the coun'ry, as a -rhole would a1ior the loafl f 2.14 per cent of !heir total assets to one individual. As compared vith this, the banks of the city of hew York, cAl he ay. rae, could not loan over fifty-six one hundredths of 1 per cent of their total a(3ts t(, one individual; the banks of Ghica,:o not over ninuti-eic,ht one hundredths per cent of their total assets; ,,ne DE.us of St. Louis not over 1.4 per cent o: total Lu3setJ; the banks of ot,-.:r e,serve cities not ovur 1.1 -4- par cont of heir total assets. In other Jords, the proportion of their assets which the country banks of the United itatescan loan, in strict compliance with section 520, to one individual, is -ixty-three one hundredths of one per cent greater than in 257 reserve cities, seventy-four one hundredths of 1 per cent greater than in St. Louis, over tvrice as great as ii Chicago, and nearly four times as great as in the city of New Zork. This provis.on as it starCs A present constitutes an ince , tive to the making of loans the larger in proportion to the total %ssets of banks in mailer coraunities, whe:e, as a rule, large loans which are safe arc the ost difficult to secu ,-e; ihi1e in A.he larger business cinters of 'he country, whe-e commercial conditions or ate a certain de:'iand both from bans and borrowers for large and safe loans, its effect is the reverse to such an extent as to be injurious. A bank with smaller loai,s, is not necessarily a bank with the more distribut.,:d and safe low's. A liuk aith 0.00,000 capital :_uld 400,000 deposits, the latter being lc, w-ted in the maximum al!punts Lalowed ,y thu present provision (to-wit to 10 individuals at 0.0,000 each) has not as well distributed loans as a bank of 4,000,000 capital and (5,0)0,000 de- posits, the latter being lotA.1 d to 50 people, at of ;;100,000 each he maximum In the former case the loans are df..s- tributea among only 10 people and in the lattr case riong 56 people, and yet in each case there is strict compliance with the 10 p r cent restrictdon. One of the objects eviently designed to be subserved by the .ent provis.on of the law, was the protection of the -5- capi -1_ of a br.t.k, as distinguished from other assets of Lhe bank. The franers of the section undoubtedly considered the capital of a ba'.k as a greater safeguard for thr- depositors against loss, when not over one-tenth part of it was loved to a single individual or corpo-at_on .,,;_thout, security. They recognized the fact, however, that whe.i outside sec'.rity was had for loans, the capital did not need fol- its pretection the 10 per ce,.t, restriction; and hey provided accordingly for the exemption from the restricti, :1 of a certain class of secured loanJ follo.is: "But, the ii.;count of bills of exchange drawn in Food faith against act.tally existinr, and the discount r)f cor.imercial or business paper actuaLly ownyd by the person ner,otiatilv, the sae, shall (lot be considered as money liorroyed." In the Lodification cf section 5200 , which vie will recomm-J2nd, we invoke the same principal of outside security for the protection of the capital ac:ainst loss upon loans exceedin 10 per cot limit. The size of a loan is of its strength or weakness, such as to be undu tself no indicatLon either f If the size of a loan is i- ot concentraton of the assets of a bankini, institution in the hands of one illdividual or corporation, thus deprivin;-- its creditors and shareholders of the saf ty of the law of averar-e, it is not dse, either upon ecortomic grounls or uY)-n groirils of public r,olicy to forbid i. b;,, If, • o:Tever, the r:ize of a le.1:: is :3,1ch as to eau:3e su,..th concerltratiott, it prevention is justifiable on both -6- grounds. RecoF,nizin,- these truths, it is the iasier to understand why in riany instan'es a 2trict compliance with this provision of the Low (section 5200, 7..S.U.S.)is consistent with all the needs of the current business of a st,all con:unity and a proper protection to both banks and the public, yet in some larger commlnities it seriously interfers with the business requirements of both ba_ks and the piblic, and addsin no way to the safety of .Le ,:epositor. The lim.t of uhe al,e ,nt of sinFle loans to an arbitrary percen - age of either the capital, or the and surplus of a bank, does no sum of the capital insure a gr, ater or proper di,tribution of loans in all cases, Sin e, as stated before, the size of a loan is rot, per se, velatd to its safety, the more importa, t proportion to consiHer, when endeavoring to regulate the distribution of loans by law, is that of the arieunt of the loan to thc.: total assets, rather thrt. that of the loan to the amount of the capita'. Croulvls of public policy suggest as advisable the largest liberty in loans, not inconsistent with the absolute safety of the depositor. The _abitual jisrucard of the present provis-on by the officers of so many banks, interfers with the proper supervision of the banks by te Comptr-lLer, and tends to create indifference to the restritions of the national bunking laws The failure of , . he present law o provide the power to apyl.; a personal penalty for the makirw of excessive loans, sometimes embarrasses :he Comp. rolter in enjeavorin,- to check -7- tendencies toward 1.ecklessness in loaning, which poin t to the ultimate ruin of a bankini institution. As before stated the prent provision, when properly altered, should allow the banks of lari:er coLirufdties to have more nearly the privilege of la. i- nf: . a ive percent of theit total assets to cue individual, which now belongs under a strict corivliance with the present provisirL, to the bunks of the smaller communities. From this privilege they are now debarrA by 1 v. The :esired r,.-3s.11ts can b- obtainr,d, in cur judi:me,t, by -Iddiw_7, aftc.r the 'ords in 2ection 5220, "sha ll at no time exceed one-tenth part nf the a ount of the capi tal stock of su,:h association actually paid in" the foll owi;I: words: "Provided, Tat . he restriAion of this se..t ion as to the amount of total liabilities to any asoc iation,of any person, or of any coLipany, corporation, or firi for money borrowed, shall not up,.ly where a loan in ex:;e ss of one-tenth part of the capital stock shall be less than two per cent of the total asets of said ank at the time of makinr said loan. Guch loan shall be at all times protected 10,, collateral security equal to or Fr ater in value than he exce ss in the amount of said loan over one-tenth of the capi tal stock." A strict and p,--sonal enalty nfon .eahle by the Comp- troller, should then be provided for infracti ons of the asiended section by the officers of banks, to enab le the Comptroller to successfully enforce general and stri ct compliance with its terms. The suggested amendment will make sect:on :200 just an equitable in itn rob tions to all national bank s, and to all communiti,.s of our country, large and stal l, which is it not at pre.;ent. '-8- gectiori 52no thus amenled will not interfere, as at present, with .he ri.-ht of the banks in the larger comrnAnities to meet he legitimate requirements of business in ti.ese commer- cial centers. It will enaL)le the Comptroller, by its en- forcement, to prevent an undue concentration of loans and conserve their L,eileral distribution . Under the sect_Lon thus amelied the ,;L,pital of a bank will be protected, inasmuch Lts .c) loan in excess of 10 per cent can he1. be :.ade, except upon proper collateral security. -2he pe„alty clause will enalde the Comptroller not only to limit ihe size, but to enforce the securing of excessive loans. The following table shows the inequality of the pre:;ent law in its pr .ctical effects upon the banks of larger and smaller comunities, so far loans is concernt-A: s the i.ossihlo :iiL;ti•ibution of No. or Banks July 18, 1898. Yorh City Chi(;ar0 St. Louis 47 17 6 All central reserve cities 70 Other reserve cities 257 Country banks 3255 ../lited States 3582 Avurage Resources. Average Capital. I:aximum Ratio of Average average reloan 10 per sources to cent of cap- average ital• capital. 48,598,379 4,036,170. 11,632,219 1,144,118 1°,257,586 1,400,0oo Average naxinum loan to average rescurcos now allowed by section 5200 U. S. F. S. 1o3,c17. 114,411 14o,000 18 o 1 10.2 to 1 14.8 to 1 6.6 to 1 .68 of 1.51 pur cent .14...Ler_ cent, 6.4 to 1 1..56 pur cent 16,191,676 3,909,561 1,093,571 591,343 12o 88t, 109,357 1,11°,462 173,60 17,365 59,134 12,0088 7.3 to 1 .56 of .98 of 1.4 per cent For the purpose of ascertaining the general re:ult of the suFJ7ested ar.erdment to section 5200 U.S.R.S. an examination has been rade of the reports of condition of the national banks of date July 14, 1898, and examiner's reports for approximate dates near.st the -etc. In the foil ov.ring table is set forth the number of banks in reserv e cities named, total loans outstanding November 1, loans in excess of th: le, al limit, loans wiicL would be excessive if allowed to the limit of 2 per cent of the total resources, and number of banks in w ,iich loans equaling 10 per cent of their capital of total assets, the loanii limit would not increase. ou'd ho Lrt,;:te2. than 2 per cent 1 ,ower of which tho proposed The table also shows s_LnEu- lar infornation relntive to one hundred banks selected at randor: f ror, vario 5 sec tic s of the co;intry -10- Cities New York Chica-o St. T,fluis. Boston Albany Brooklyn PhilndelpLia Pittsbu:14 Baltiroore ThshinF,ton Savannah Ne7 Orleans Louisville Hou.Aon Cincinnati Cleveland Detroit Lalwaukee Desroines St.Paul Tanneapolis Kansas City ?,t.Joseph Lincoln Omaha San Francisco Total Total all resPrIre cities Cc,.int,ry Total Number of banks in which loans equaling 10 per cent of their capitul would No. of be greater tlJin 2 loans in per cent of total excess of assets,the loaning the propower of wlich the posed 2 prcposed limit would per cent not increase. limit. No. of Banks. Total No. of loans outstanding Nov. 1, 189E. 47 17 6 70 29,919 17,652 'LAIL 55,362 5o4 53 24 581 30 12 lo 52 52 43,123 6 4,326 2,510 5, 7725,134 30 2o,57o -22 15,533 11 0,471 2 1,230 4,6o5 7 6 5,216 1,21 5 13 14,542 13 lo,211 6 5,600 5 6,353 4 2,969 r 2,788 ) 6 2,951 3,911 5 ,..n 1,447 1,190 3 8 4,286 _ 4. 2,30 257 191,519 9 52 32 145 48 35 21 2 52 7 24 14 27 lo 6 2 4 14 31 21 3 8 6 573 1 17 4 38 14 11 5 o 2 2 1 5 12 2 1 0 2 2 9 4 0 1 ......2. 135 246,881 .11_1.55.9_ 298,431 1154 210. 14o4 187 E8 2,5 Y27 loo 427 No. of excessive loans under section 5200 2 2 4 28 1 lo 16 4 2 2 4 4 5 1 1 1 3 5 3 4 2 96 loo 154 MISCELLANEOUS DIVISION. Form 40M.—Ed. Sept. 5-07-1.50i). COPY, CERTIFICATE, CONSOLIDATED. Certificate .1‘,/*(). 1 I () MISCELLANEOUS FISCAL OFFICERS. wreasurn pr.')a'aincut, OFFICE OF THE AUDITOR FOR THE STATE AND OTHER DEPARTMENTS. Washington,' c , 190 ltricebti ccrtifg, That I have examined and settled the account of a aY-)("3-",...so_k 71_ " with the United States,from MOT 5-y tO LA-9 under his official bond dated the United States of ,1.90 9 , 190 ?, and find a balance due 1•.\ . dollars and (Caz Je'gr-, _st _ cents, under the several appropriations and headings of account as stated above. Please cause to issue the transfer and counter warrants scheduled on the reverse hereof. ,L Auditor. By lb the SECRETARY OF THE TREAS UR , eputy Auditor. (Division of Bookkeeping and Warrants). To the , cbJ 4r;V_A_A The above is a true copy of the original. Dep udito t=/ .••• •••••••• •••••D C'D ,••-•4•• -• c=2.I = . 1 !Min Total... Title of Appropriation. Charge by Transfer Warrant. 8 Credit by Counter Warrants. Let warrants issue acljusting appropriations in the amounts followinsi. o X0 HILL AO ISMOODV CONGRESS CLUB •TfUY 4'111i.'AA, OF KINGS COUNTY, NY.v YOF, No. 5P6 Bedford Avenue, Brooklyn, flew Yorl, City. February P6W.1009. ME1ORIAL AND PETITION TO THE CO/ HESS OF Till' UNITED STAT: RELATIVE. TO I:0NETARY LEG ISLATI •* * * * Your Femorialiat, "The Congress Club of Lings County", is a club incorrorated by the 7tdate of 'rew York for :7ocial and Political purposes. Itn rerbership consists of about one thousand rale etizens of the United States, qualified to vote at itr elections, inclu, irv the Sheriff of flings County, many Congressmen, ntato renatorc, Anserblynen, Judgos, Bankers, etc., etc. The subject of tL ionorial has ben before the club in to form of addresses and debates for more than a year and, at a rep;ular and duly aclvert4 ced and largely attended rooting held in the club rooms February 18tE inr,P, after a free disc71ss1or it was ordered, by a risin ••••••••••••knolp•••• "rawarifina.--+4 . ---•- ...,• • • . ana uns'inirrious vote, tiat t.l io club should present the natter to Congre3s, praying for its favorablo considr. ration. Realizing that your :Tonorable Body is full:: convercant wit the history of financial legislation, we shall refer only to such acts as seem to lead up to the one prayed for by your :'ornrialint. noctio ,P of the Constitution of the Unitod rtates declares tiat Congrees shall have power "to borrow ;onoy on the credit of the unitod ;7tates", "to coin money, rot-plate tho value thereof", etc., etc. The Act of Congress, ipril 2nd 1792, authorized the coinage of gold and oilvor, and fixod its value. Ir an offIcial circular from tl-,o, Treasury Departrent, dated July 1st 1P96, tfro lion. J. G. Carlthlo, recretary, says (ra ). "The first paper money ever isued by the United rtaten Government, was autorized by t!-le Acts of July 17th and. August 5th 1E,G1, .t.h notes iosued woro callod "derand notes" because they were payable on demand........the demand notes were paid in gold when presented for redemption, and they were received for all public duos, and these two qualities prevented tJleir depreciation." By Act of . arch 17th 1P62 these demand notes wore made "legal tender" and remained at par with gold at tires when all other forms of money curfcrod enormous depreciation,.the so-called greenbacks falling to fortynine cents on tl,e dollar. (roe page 52) The National bank notes authorized by Congreco in the year 1n03, though guaranteed by the Government, have been subject to like depreciation relative to gold, and nenator Aldrich, addressing tc) United rtatec renate, February 11th 190P, said of them: "To vlluo of to iational bank notes has always been fixed in the minds of the people by the certainty of Government rederrtion. no cno ovor &tops to enquire whethera National bank is located in - aine or Texas, whether its capital in great or small, or whether Its financial condition is such as to give credit to its notes." •r. Aldrich also said - "In the rocent panic there wa:- a general suspension of cash payrentn by Nattonal banks" an] that .4; to "The 1.6ss fror injury to business amounted to thousands of millions of dollars." The Corptitution does not appear to give power to any private body to issue circulating roney, and wherever ouch power has been delegated to banks, it has worked injury to the public. In the year 1694 t.e Aritish Government gave to the liank of England, a part payent for a large war loan, authority to 1.1c,ue circulating noney, and in 1863, under a like - reso of dire necessity, tho United 7, t f7tates Congress delegated a sinilv,r rower tc the National banks. 171-e if-qme of Circulating notes combined wth the bankinE business proved to be a dangerous evil, oven •non conducted by ouch a venerable and highly reopectale institution as the Bank of England, and ;arlinnont, in the year 11'44, "in an effort to make the notcs of the Bank of !nrland socure, enacted that the bank should be divided into two separate departronts, that the issue of note -- should be by a dopartrent entirely separate and independent from the one carrying on to business of discount and deposits, and in all dealings with each other, the two departments were made as independent as if they belonged to distinct corporations." Rererring to renato Docurient No. ^43 of the rIxti.oth Congress, first session, we find that on January 1st 1flO the total stock of roney in the United fltates was ,340,223,3P0 dil!Ided n.2 foflnAs: nilver and 1 7ational Bank Notes r. Nrftes t2,659,092,4S5 690,130,n05 j t. OM 4 Tese furos show that eighty per oent oP our money circulation is iosued direct to the people by the Go7c‘rnment without the intrvention of any ban). The National bank notes are issued by the Government throull, the banks, and though comprisinc only twenty per cent of our nonoLi supply, arc frightfully exp- nsivo, costinc th- Govcrnnent more than onc hundred and fifty million dollars every year (Hon. ir. Fowler, Chairman of House Connittee on Banking and Currency). The oighty per cent of our circulating money which is issued lirect to the people costs nothing beyond Its face value, except for prirtin and preparation, and goes on its daily rounds as quietly as day follows niLht, while the National bank Issues - though but one-fifth of the total circulation - are yet sufficiently lare to control aid disturb the entire system; in fact, the position of 'Ational brlak notes in our monetary system is analoFous to that of a voracious ie in a Trout pond, and all attempts to shield the trout from its assaults are tire and money wasted - the only true reredy I to RFCVL TUT PI', by rill means eliminate any and all bank issues from our monetary system. The stability of our currency is of such paramount importance that no experiments should be tried with It, and only such changes made as experience warrants; your lemorialist therefore proposes that the twenty per cent which now goes through the National banks at suoh unneoesoary cost and dangerous disturbance be eliminated from our monetary syster:. and added to the eir- t.:; per cent whioh is now issued by the Government direct, without cost and with such signal success. The issue of gold certificates in exchange for that notal, hao roulted in a steady and ap-arently unnoticed accurulatior of gold, until the !tnount held in tic United Niates in nearly two billion dollars. At t!.e ileetin of the club heretofore referred to, viz., February 1c7th 19n, tme following was moved by r. Theodore Cochou and seconded by r. Charles F. Franklin, and adoptea by a unanimous vote. RESOLVED \ That the Corgreso of the United f--taten be re- titioned to enact law directing the isnue of now United Fitates ! . :otes, all to be "legal teer" in the amount of three and a half billion dollars. Of this amount, place in the hands of the Comptroller of Currency, t(, be held as an enerEency reserve, one billion dollars. : r 16 bal-nce, two and a half billion dollars, to 1)e urod to retire present issues, an follows: , 1st. Al 1 2nd. All present gold certificates t I. and National bank notes 3.,215o,noo,non 2,250,000,000 •••••••••••••11.41.0. Tho circulation will then be - United rtates notes Golr! Coin 2,500,000,000 about 300,000,000 SI,Lvem zgalcor - Jiver Certificates - About Total . About 700,000,000 ,500,000,000 More is nothing experir7ontal about this proposition, or ni,w, except that the ,old now en tiorare with the Government and owned by everybody who happens to hold gold certificaten, will then bocone the prflperty of the Government, and with other cold to the total aiount of one and one quarter billion dollars, should to held as a reserve arAinst the (!nited States notes, being in the proportion of fifty per cent, which proportion cannot be equalled by any other nation in the .Norld. Continuo the rocelpt cf gold and silver on de7-- it as now, ;11.(1.h will Increase the volure of crculation about equal to its natrally increasing needs. To provide elasticity in seasons of unusual derand, let it be enacted that 111TIFVER, in the julgment of the :resident and Secretary of U_e Treaury, an emeri:ency exists which requires it 1st. Any incorporated bank or tru2t company owning or controlling flited states, or slitiofactory ntate or City bonds, may deposit them in ours not logs than ton thousand dollars with the Comptroller of Currency and receive therefor ninety per cont of their face value from the billion dollar re2erve money. The depositors of these bonds shall be entitled to their return on demand, upon payment or the ar'ount received by them, plus a tax equal to vix per cent; the principal to to returned to the reserve money and the tax put into a fund for the purpose of renewing old notes. PPovirrm That bonds not redeemed within one year shall be sold and the proceeds returned to the reserve money. Thus an ample emergency fund would be alaays available to oavings banks and trust companies who are able to deposit acceptable bonds, and every dollar of ouch orergency money would be as secure as any oth r dollar. Our monetary system will then be placed upon the solid roundation of the credit of the United States, secured by the poopession of more lands, buildings, ships 7 and materials of all kinds, and the actual ownorship of more gold and silvor than any bank or combinrItion of banks, corporation or combination of corporations, in t -le world, will be SOUND, SLTLE, FLATIC and ECOVOT:ICAL. itns tie`'oes1 of the ,pongress Official riplaturos thls lub and our &ty of Frosident. 7ooretary. 1909. .1, The Richmond Chamber of Commerce Richmond, Va., :lune 17, IyoS. Dear Sir:1 am directed to requey your attention to the subjoined copy of a Resolution adopted by tisir Chamber and to earnestly solicit your valued influence in support of the suggestion contained in said Resolution. I have the honor to be, Very respectfully yours, R. J. DUNLOP, Secretary. Preamble and Resolutions, submitted by the Committee on Banks and Currency of The Richmond Chamber of Commerce and adopted by the Chamber June 11, 1908: WHEREAS, The great shock to American industries by the currency panic of last fall caused leading banking and business interests throughout the country to investigate carefully the currency problem, and, subsequently, to condemn, almost unanimously, the bond secured provisions of the Aldrich currency bill, and to endorse the principles of true credit currency; and WHEREAS, Despite the overwhelming protests of the business interests of the country, the Aldrich-Vreeland bill, which retained the bond secured provisions of the Aldrich bill, was passed by Congress; and WHEREAS, The adjustment of our currency system upon a permanently safe basis which will be free from the domination of any favored interests; which will be absolutely fair to all interests and to all localities; which, in its normal operations, will automatically prevent the disasters and emergencies produced by our present defective system, and which will conserve the prosperity of the country at large, is one of the most vital issues in the coming presidential campaign because it directly affects the welfare of the largest number of people; and WHEREAS, The business interests of the country do not want an emergency currency, but they do demand a currency system which will prevent emergencies; RESOLVED, That the Chamber of Commerce of the City of Richmond, Virginia, respectfully urges upon the prospective presidential candidates, and also upon the committees on resolution of both national political conventions, the importance of adopting a financial plank which will definitely assure the large body of voters representing the general business interests of the country, that a true and sound system of credit currency will be promptly adopted after reasonable investigation and discussion; and we respectfully suggest the following as a basis for such a system: A true currency system should, on the one hand, protect the national credit against the danger of assault and the peril of repudiation, by limiting the financial transactions of the Government to its constitutional functions, namely, the coining of money and regulating the value thereof, and to the collection and disbursement of the revenues; and, on the other hand, it should further provide a true credit currency, redeemable in gold, which would always respond and precisely adjust itself to the ever varying needs of trade, just as checks and drafts do. It should be based upon the logical principle that with adequate redemption facilities, there is no essential difference between a hank-book credit and a bank-note credit, since the first is a bank credit subject to check, and the second is also a bank credit which passes current until paid. Such currency should be secured by the general assets of the bank, based upon the same reserve of lawful money which is required against deposits, and should be made absolutely safe beyond all peradventure. Such a credit currency would enable the farmer, the producer, the manufacturer and the merchant to convert, through the agency of the banks, their commodities into currency, redeemable by the banks in gold. It would tend to steady and avoid excessive rates throughout the United States. It would also avert the financial catastrophes due to the inelastic features of our present bond secured currency system, which system was devised for the primary purpose of creating a market for bonds, and which system expands and contracts the volume of currency, not in accordance with the normal demands of trade, but with the speculative price of bonds, thereby causing, at times a redundancy of currency when it is not needed by trade, and stimulating unhealthful speculation; and causing, at other times, a currency famine when the moving of crops and industrial needs require it, and thereby causing excessive interest rates and serious interruption to the business interests of the country at large. THE RICHMOND CHAMBER OF COMMERCE, By F. D. WILLIAMS, President. Attest: R. A. DUNLOP, Secretary. FINAL EDITIo ••••••••••,111 Arabemll of Political iiriencr In Or elitil of New Uock Incorporated 1910 F(wooded 1884 Program of Second National Conference on Currency Reform October 14-15, 1913 General Topic: The Reform of the American Banking System FIRST SESSION Tuesday, October 14, at Noon THE FEDERAL RESERVE ACT (New York Chamber of Commerce, 65 Liberty St.) EXECUTIVE AND PROGRAM COMMITTEE Henry P. Davison A. Barton Hepburn Joseph French Johnson Alexander D. Noyes George A. Plimpton Henry R. Seager E. R. A. Seligman Theodore N. Vail Paul M. Warburg H. Parker Willis SAMUEL MCCUNE LINDSAY, Chairman Ex-officio E. W. KEMMERER, Secretary EDWARD J. EULLWINKEL DAVID M. HEYMAN TII0MAS H. WATSON, JR. Assistant Secretaries PROCEEDINGS The addresses, papers and a summary of the discussion at the meeting will be published in a volume as part of the proceedings of the Academy and distributed gratis to all members. Orders from non-members for this volume will he received and entered for delivery as soon as issued, if order is prepaid at the rate of $1.50 per copy in paper binding and $2.00 per copy in cloth binding. 2 SECOND SESSION Tuesday, October 14, 3 p. m. CENTRALIZATION OF BANKING AND MOBILIZATION OF RESERVES (New York Chamber of Commerce, 65 Liberty St.) THE THIRD SESSION Wednesday, October 15, 10:30 a. m. THE ELASTICITY OF CREDIT (Earl Hall, Columbia University) FOURTH SESSION Wednesday, October IS, 230 p. m. FOREIGN AND DOMESTIC EXCHANGE FUNCTIONS OF THE REGIONAL BANKS (Earl Hall, Columbia University) FIFTH SESSION (BANQUET) Wednesday, October IS, 7 p. m. BANKING REFORM IN THE UNITED STATES (Hotel Astor) Earl Hall, Columbia University is near 116th St. Station, Broadway Subway. 3 SECOND SESSION TUESDAY. OCTOBER 14, 3 P. M. NEW YORK CHAMBER OF COMMERCE, 65 LIBERTY Subject: "The Centralization of Banking and Mobilization of Reserve!." FIRST SESSION •••••••••••••1•1,0•1•1.106.1111........ TUESDAY. OCTOBER 14, AT NOON NEW YORK CHAMBER OF COMMERCE. 65 LIBER 7f ST. Presiding Officer ALBERT SHAW "Iteview of Reviews" Subject: "The Federal Reserve Act" I. Presiding Officer SAMUEL McCUNE LINDSAY President of Academy of Political Science Addresses (limited 1. to 20 minutes each): Score and 01 golizzation of the Propose,i keytowt! Banks Parker Willis, The Journal of Comm. roe and Commercial Bullet in A. Barton Hepburn, Chase Nation:II Ihtd, (), M. NV Sprague, Harvard University Address of Welcome John Cla11in, President of Chamber of Comme rce Speakers: Hun. Robert L. ()wen, Chairman of the U. S. Senate witty(' on Ranking and Currency Hon. Carter Glass, Ciairtnau of the House ( ommittec on llankit;g and Curre of R , prese”tancy lion. Robert J. Rulkley, member of House of Representittives, Committee on Bunking and Currency. ThH meeting will be follow d by an inform al luncheon tendered hy the Clrimher of Commerce to those in at T. 1. The Mobilization of Reserves. Arthur Reynolds, Des Moines National It Discussion (under •1 ten-minute rule): I. N, N 'w THIRD SESSION WEDNESDAY. OCTOBER 15. 10.30 A. M. EARL HALL COLUMBIA UNIVERSITY Subject: "The Elasticity of Credit" Presiding Officer H. PARKER WILLIS "Journal of Commerce and Commercial Bulletin" 4 5 iii I. Addresses 1. The Rediscount Functions of Banks 2. The Note Issue Joseph French Johnson, New York University E. W. Kemmerer, Princeton University the Proposed Regional Frank A. Vanderlip, National City Bank II. Discussion FIFTH SESSION Edward L. Ilowc, Princeton, N. J. Irving T. Bush, New York City A. Platt Andrew, Gloucester, Mass. WEDNESDAY. OCTOBER 15. 7 BANQUET P.M HOTEL ASTOR Subject: "Banking Reform in the United States" FOURTH SESSION WEDNESDAY. OCTOBER 15, 2.30 P.M. EARL HALL Presiding Officer COLUMBIA UNIVERSITY JOHN H. FINLEY President of the College of the City of New York Subject: "Foreign and Domestic Exchange Functions of the Regional Banks" Address by the HONORABLE NELSON W. ALDRICH Presiding Officer EDWIN R. A. SF.LIGINAN Columbia University Guests of Honor: The Chairmen and members of the United States Senatt Committee on Banking and Currency and the [louse of Representatives Committee on Banking and Currency A Symposium under the ten,minute rule I. Domestic Exchange Problems: W. M. Van Deusen, National Newark Banking Company Fred. I. Runt, Bankers' Trust Co. Joseph T. Talbert, National City Bank II. Foreign Exchange Problems: John E. Gardin, National City Bank .1. A. Neilson, Brown Brothers, New York 4. GENERAL COMMITTEE JOHN H. FINLEY, Chairman Frank B. Anderson, San Francisco, Cal. A. Piatt Andrew, Jr., Boston, Mass. Nicholas Muri ay Butler, New York City John Claflin, New York City Henry P. Davison, New York City Davis R. Dewey, Boston, Mass. Cleveland H. Dodge, New York City Fred W. Fleming, Kansas City A. Barton Hepburn, New York City Henry L. ifigginstm, Boston, Mass. Edmund J. James, Urbana, Ill. Jeremiah W. Tenks,• New York City Samuel McCune Lindsay, New York City Robert J. Lowry, Atlanta, Ga. Henry Morgenthau, New York City John Perrin, Pasadena, Calif. Lawrence C. Phipps, Denver, Colo. Carl C. Plehn, Berkeley, Cal. .Tnlins Rosenwald, Chicago, Ill. Charles F. Scott, Iola, Kansas Heni y R. Seager, New York City E. R. A. Seligman, New York City William F. Slocum, Colorado Springs, Colo. Robert W. Speer, Denver, Colo. James Speyer, New York City Benjamin Strong, Jr., New York City Frank Strong, Lawrence, Kansas E. F. Swinney, Kansas City, Mo. Frank W. Taussig, Cambridge, Mass. Frank Trumbull, New York City Theodore N. Vail, New York City Frank A. Vanderlip, New York City Henry Walters, New York City Paul M. Warburg, New York City Harry A. Wheeler, Chicago, Ill. H. Parker Willis, New York City CHAPTER 119. An Act relating to Bills of Exchange, Cheques and Promissory Notes. SHORT TITLE. 1. This Act may be cited as the Bills of Exchange Act. Short 53 V., c. 33, S. 1. title. INTERPRETATION 2. In this Act, unless the context otherwise requires,— Definitions. (a) 'acceptance' means an acceptance completed by delivery 'Acceptance: or notification; 'Action.' (b) 'action' includes counter-caaim and set off; (c) 'bank' means an incorporated bank or savings bank 'Bank.' carrying on business in Canada; (d) 'bearer' means the person in possession of a bill or note Bearer.' which is payable to bearer; (e) 'bill' means bill of exchange, and'note' means pro- Bill,' 'note.' missory note; (f) delivery' means transfer of possession, actual or con- Delivery: structive, from one person to another; (g) 'holder' means the payee or endorsee of a bill or note Holder.' who is in possession of it, or the bearer thereof; (h)'endorsement' means an endorsement completed by'Endorsement.' delivery; (i)'issue'means the first delivery of a bill or note, COM- 'Issue.' plete in form, to a person who takes it as a holder; (j) value' means valuable consideration; Value.' Delence.' (k) 'defence' includes counter-claim; (1) 'non-business days' means days directed by this Act Non-busines, s.' to be observed as legal holidays or non-juridical days. 2. Any day other than as aforesaid is a business day. 53 V., 13"sin'ess das. c. 33, ss. 2 and 91. PART I. GENERAL. 3. A thing is deemed to be done in good faith, within the Thing done meaning of this Act, where it is in fact done honestly whether' good faith. it is done negligently or not. 53 V., c. 33, s. 89. 2143 4. R.S., 190f1. Chap. 119. 4 Non-compliance with requisites. ITneondi'onal order. Bills of Exchange. Part 11. demand or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer. 2. An instrument which does not comply with the requisites aforesaid, or which orders any act to be done in addition to the payment of money, is not, except as hereinafter provided, a bill of exchange. 3. An order to pay out of a particular fund is not unconditional within the meaning of this section: Provided that an unqualified order to pay, coupled with,— (a) an indication of a particular fund out of which the drawee is to reimburse himself, or a particular account to be debited with the amount; or, (b) a statement of the transaction which gives rise to the bill; 53 V., c. 33, s. 3. unconditional. is 18. An instrument expressed to be payable on a contingency event does not cure the cont i tegcney. is not a bill, and the happening of the defect. Addro,,,ed to 2. A bill may be addressed to two or more drawees, whether t wt or more they are partners or not but an order addressed to two drawees (Ira wees. in the alternative, or to two or more drawees in succession, is not a bill of exchange. 53 V., c. 33, ss. 6 and 11. Illstrir:!cnt In 19. A bill may be drawn payable to, or to the order of, the drawer; or it may be drawn payable to, or to the order of, the drawee. Two or more 2. A bill may be made payable to two or more payees jointly, payees. or it may be made payable in the alternative to one of two, or one or some of several payees. 3. A bill may be made payable to the holder of an office for holder of office payee. the time being. 53 V., c. 33, ss. 5 and 7. Payee, drawer or drawee. Dra wee to be named. 20. The drawee must be named or otherwise indicated in a bill with reasonable certainty. 53 V•, c• 33 s• 6• Tra nsfer words. 21. When a bill contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid as between the parties thereto, but it is not negotiable. 2. A negotiable bill may be payable either to order or to bearer. 3. A bill is payable to bearer which is expressed to be so payable, or on which the only or last endorsement is an endorsement in blank. 4. Where a bill is not payable to bearer, the payee must hznamed or otherwise indicated therein with reasonable certainty. 5. Where the payee is a fictitious or non-existing person. tip. bill may be treated as payable to bcarer. 53 V., c. 33, ss. and 8. 2146 22. Nev:otiable bill. When payal de to bearer. Certainty of payee. Fict it ious payee. R.S., 1906. Part 11. Bills of Exchange. Chap. 119. 5 22. A bill is payable to order which is expressed to be Bill payable. order so payable, or which is expressed to be uayable to a particular to when. person, and does not contain words prohibiting transfer or indicating an intention that it should not be transferable. 2. Where a bill, either originally or by endorsement, is ex- When paypressed to be payable to the order of a specified person, and , c1? odr pre e-r. not to him or his order, it is nevertheless payable to him or his order, at his option. 53 V., c. 33, s. 8. 23. A bill is payable on demand,— Payable on (a) which is expressed to be payable on demand, or on pre- demand when. sentation ; or, (1)) in which no time for payment is expressed. 2. Where a bill is accepted or endorsed when it is overdue, Endorsed it shall, as regards the acceptor who so accepts, or any end orser when overdue. whi) •,i) endorses it, be deemed a bill payable on demand. 53 V., c. 33, s. 10. 24. A bill is payable at a determinable future time, within D..terminthe meaning of this Act, which is expressed to be payable,— able future time. (a) at sight or at a fixed period after date or sight; (b) on or at a fixed period after the occurrence of a specified Sight. event which is certain to happen, though the time of hap- Specified pening is uncertain. 53 V., c. 33, s. 11; 54-55 V., c. 17, event. S. 1. 25. An inland bill is a bill which is, or on the face of it Inland bill defined. purports to be,— (a) both drawn and payable within Canada; or, (b) drawn within Canada upon some person resident therein. 2. Any other bill is a foreign bill. Other bills. 3. Unless the contrary appears on the face of the bill, the Presumption. holder may treat it as an inland hill. 53 V., c. 33, s. 4. 26. Where in a bill drawer and drawee are the same person, Bill or note. • • or where the drawee is a fictitio us person or a person not having, capacity to contract, the holder may treat the instrument, Option. at hi, option, either as a bill of exchange or as a promissory note. 53 V., c. 33, s. 5. 27. A bill is not invalid by reason only,— Valid bill. (a) that it is not dated; Not dated. (1)) that it does not specify the value given, or that any statement of value has been given therefor; value. (e) that it does not specify the Olive where it is drawn or Statement of tile plaee where it is payable; place. ((1) that it is antedated or postdated, or that it bears date on Irregular a Sunday or other non-juridical day. 53 V., c. 33, ss. 3 date. and 13. 2:1 2147 28. I Z.S., 1 906. 6 Chap. 119. Sum certain. 28. The sum payable by a bill is a sum certain within the meaning of this Act, although it is required to be paid,— (a) with interest; (b) by stated instalments; (c) by stated instalments, with a provision that upon default in payment of any instalment the whole shall become due; (d) according to an indicated rate of exchange or according to a rate of exchange to be ascertained as directed by thG Interest. Instalments. Default. Exchange. Figures words. and With interest. Bills of Exchange. Part 11. 2. Where the sum payable is expressed in words and also in figures, and there is a discrepancy between the two, the sum denoted by the words is the amount payable. 3. Where a bill is expressed to be payable with interest, unless the instrument otherwise provides, interest runs from the date of the bill, and if the bill is undated, from the issuc thereof. 53 V., c. 33, s. 9. True date presumption. 29. Where a bill or an acceptance, or any endorsement on a bill, is dated, the date shall, unless the contrary is proved, be deemed to be the true date of the drawing, acceptance or endorsement, as the case may be. 53 V., c. 33, s. 13. 17ndated bill payable after (late. 30. Where a bill expressed to be payable at a fixed perio d after date is issued undated, or where the acceptance of a bill payable at sight or at a fixed period after sight is undated, any holder may insert therein the true date of issue or acceptance, and the bill shall be payable accordingly: Provided that ,— (a) where the holder in good faith and by mistake inserts a wrong date; and, (b) in every other case where a wrong date is inserted; if the bill subsequently comes into the hands of a holde r in due course the bill shall not be voided thereby, but shall operate and be payable as if the date so inserted had been the true date. 53 V., c. 33, s. 12 54-55 V., c. 17, s. 2. Inserting wrong date. Liability of holder. Perfecting bill. Ant hority. 31. Where a simple signature on a blank paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount, using the signature for that of the drawer or acceptor, or an endorser; and, in like manner, when a bill is wanting in any material particular, the person in possession ef it has a prima facie authority to fill up the omiss ion in any way he thinks fit. 53 V., c. 33, s. 20. When to be complete. 32. In order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its completion, it must be filled up within a reasonable time, and strictly in accordance with the authority given Provided that if any such instrument, after completion : , is negotiated to a holder in due course, it shall be valid and effec2148 tual R.S., 1906. 41 Part II. Bills of Exchange. Chap. 119. 7 tual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given. 2. Reasonable time within the meaning of this section is a Reasonable question of fact. 53 V., c. 33, s. 20. time. 33. The drawer of a bill and any endorser may insert Referee in therein the name of a person, who shall be called the referee in case of need. case of need, to whom the holder may resort in case of need, that is to say, in case the bill is dishonoured by non-acceptance or non-payment. 2. It is in the option of the holder to resort to the referee Option. in case of need or not, as he thinks fit. 53 V., c. 33, s. 15. 34. The drawer of a bill, and any endorser, may insert stipulations, therein an express stipulation,— (a) negativing or limiting his own liability to the holder; Limiting. (b) waiving, as regards himself, some or all of the holder's Waiving rights. duties. 53 V., c. 33, s. 16. Acceptance and Interpretation. 35. The acceptance of a bill is the signification by the Acceptance drawee of his assent to the order of the drawer. defined. 2. Where in a bill the drawee is wrongly designated or hi, Drawee's name is misspelt, he may accept the bill as therein described, name wroitg adding, if he thinks fit, his proper signature, or he may accept by his proper signature. 53 V., c. 33, s. 17. 36. An acceptance is invalid unless it complies with the Acceptance. following conditions, namely:— (a) It must be written on the bill and be signed by the On the bill. drawee; (b) It must not express that the drawee will perform his For money. promise by any other means than the payment of money. 2. The mere signature of the drawee written on the bill with- Mere out additional words is a sufficient acceptance. 53 V., c. 33, signature. s. 17. 37. A bill may be accepted,— Acceptance. (a) before it has been signed by the drawer, or while other- Before cornpletion. wise incomplete; (h) when it is overdue, or after it has been dishonoured by a Overdue. previous refusal to accept, or by non-payment. 2. When a bill payable at sight or after sight is dishonoured Acceptance by non-acceptance, and the drawee subsequently accepts it, the after honour. holder, in the absence of any different agreement, is entitled to have the bill accepted as of the date of first presentment to the 33, s. 18 54-55 V., c. 17, drawee for acceptance. 53 V. 5. 3. 2149 38. lt.S., 1906. 8 Chap. 119. Kinds. 38. An acceptance is either,— (a) general; or, (b) qualified. 2. A general acceptance assents without qualification to the order of the drawer. 3. A qualified acceptance in express terms varies the effect of the bill as drawn and in particular, an acceptance is qualified which is,— (a) conditional, that is to say, which makes payment by the acceptor dependent on the fulfilment of a condition therein stated; (b) partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn; (c) qualified as to time; (d) the acceptance of some one or more of the drawees, but not of all. 4. An acceptance to pay at a particular specified place is not on that account conditional or qualified. 53 V., c. 33, s. 19. General. Qualified. Conditional. Partial. Time. Drawees. Specified place. When acceptance complete. Proviso. Bills of Exchange. Part II. 39. Every contract on a bill, whether it is the drawer's, the acceptor's or an endorser's, is incomplete and revocable, until delivery of the instrument in order to give effect thereto: Provided, that where an acceptance is written on a bill, and the drawee gives notice to, or according to the directions of, the person entitled to the bill that be has accepted it, the acceptance then becomes complete and irrevocable. 53 V., c. 33, s. 21. Delivery. 40. As between immediate parties, and as regards a remote party, other than a holder in due course, the delivery,— A ut hority. (a) in order to be effectual must be made either by or under the authority of the party drawing, accepting or endorsing. as the case may be; inditional. (b) may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill. Presumption. 2. If the bill is in the hands of a holder in due course, a valid delivery of the bill by all parties prior to him, so as to make them liable to him, is conclusively presumed. 53 V., e. 3:1, S. 21. 1:equisites. Part nic with possession. 41. Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor or endorser, a valid and unconditional delivery by him is presumed until the contrary is proved. 53 V., c. 33, s. 21. Computation of Time, non-juridical days and days of (7rare. Computa42. Where a bill is not payable on demand, three days, tion of tune. ca lied days of grace, are, in every ease, where the bill itself 2150 (1.)e5 R.S., 1906. Part II. Bills of Exchange. 9 Chap. 119. does not otherwise provide, added to the time of payment as fixed by the bill, and the bill is due and payable on the last day of grace: Provided that whenever the last day of grace falls on a legal holiday or non-juridical day in the province where Last day any such bill is payable, then the day next following, not being grace. a legal holiday or non-juridical day in such province, shall be the last day of grace. 53 V., c. 33, s. 14. of 43. In all matters relating to bills of exchange, the fol- dical days. lowing and no other days shall be observed as legal holidays or non-juridical days:— General. n (a) In all the provin c(iN Of Caada, Sundays, New Year's Day, Good Friday, Easter Monday, Victoria Day, Dominion Day, Labour Day, Christmas Day, The birthday (or the day fixed by proclamation for the celebration of the birthday) of the reigning sovereign; Any day appointed by proclamation for a public holiday, or for a general fast, or a general thanksgiving throughout Canada, The day next following New Year's Day, Christmas Day, Victoria Day, Dominion Day, and the birthday of the reigning sovereign when such days respectively fall on Sunday; (b) In the province of Quebec in addition to the said days, Quebec. The Epiphany, The Ascension, All Saints' Day, Conception Day; (e) In any one of the provinces of Canada, any day ap- Provineial .larna pointed by proclamation of the Lieutenant Governor of r.r"P nn such province for a public holiday, or for a fast or thanksgiving within the same, and any non-juridical day by virtue of a statute of such province. 53 V., e. 33, s. 14; 56 V., c. 30, s. 1; 57-58 V., c. 55, s. 2; 1 E. VII., c. 12, SS. 2 and 4. 44. Where a bill is payable at sight, or at a fixed period after Time of date, after sight, or after the happening of a specified event, pnyment. the time of payment is determined by excluding the day from which the time is to begin to run and by including the day of payment. 53 V., c. 33, s. 14. 45. Where a bill is payable at sight or at a fixed period a fter Sight bill. Si!zlit, the time begins to run from the date of the acceptanee if th 2151 TLS., 1906. 10 Chap. 119. Bills of Exchange. Part IT. the bill is accepted, and from the date of noting or protest if the bill is noted or protested for non-acceptance, or for nondelivery. 53 V., c. 33, s. 14. Due date. Month.' Capacity of parties. Corporations. Effect of disability on holder. 46. Every bill which is made payable at a month or months after date becomes due on the same numbered day of the month in which it is made payable as the day on which it is dated, unless there is no such (lay in the month in which it is made payable, in which ease it becomes due on the last day of that month, with the addition, in all cases, of the days of grace. 2. The term month' in a bill means the calendar month. 53 V., c. 33, s. 14. Capacity and Authority of Parties. 47. Capacity to incur liability as a party to a bill is coextensive with capacity to contract: Provided that nothing in this section shall enable a corporation to make itself liable as drawer, acceptor or endorser, of a bill, unless it is competent to it so to do under the law for the time being in force relating to such corporation. 53 V., c. 33, s. 22. 48. Where a bill is drawn or endorsed by an infant, minor, or corporation having no capacity or power to incur liability on a bill, the drawing or endorsement entitles the holder to receive payment of the bill, and to enforce it against any other party thereto. 53 V.. e. 33, s. 22. Forgery. 49. Subject to the provisions of this Act, where a signature on a bill is forged, or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the bill or to give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded Estoppel. from setting up the forgery or want of authority: Provided that,— Ratification. (a) nothing in this section shall affect the ratification of an unauthorized signature not amounting to a forgery; Recovery of (b) if a cheque payable to order is paid by the drawee upon amount paid a forged endorsement out of the funds of the drawer, or is on forged cheque. so paid and charged to his account, the drawer Shall have no right of action against the drawee for the recovery back of the amount so paid, nor any defence to any claim made by the drawee for the amount so paid, as the case may be, unless he gives notice in writing of such forgery to the drawee within one year after he has acquired notice of such forgery. D.fa tilt of 2. Tn ease of failure by the drawer to give such notice 'vii h in notice. the said period, such cheque shall be held to have been pa id in 2152 R.S., 1906. • P • • • i I111 11;111 Part II. Bills of Exchange. Chap. 116. 11 due course as respects every other party thereto or named therein, who has not previously instituted proceedings for the protection of his rights. 53 V., c. 33, s. 24. Recovery of 50. If a bill bearing a forged or unauthorized endorsement amount paid is paid in good faith and in the ordinary course of business, by on forged or on behalf of the drawee or acceptor, the person by whom or endorsement. on whose behalf such payment is made shall have the right to recover the amount so paid from the person to whom it was so paid or from any endorser who has endorsed the bill subse,quently to the forged or unauthorized endorsement if notice of the endorsement being a forged or unauthorized endorsement is given to each such subsequent endorser within the time and in the manner in this section mentioned. 2. Any such person or endorser from whom said amount ha,Rights over. been recovered shall have the like right of recovery against any prior endorser subsequent to the forged or unauthorized endorsement. Notice of 3. Such notice of the endorsement being a forged or un- forgery. authorized endorsement shall be given within a reasonable time after the person seeking to recover the amount has acquired notice that the endorsement is forged or unauthorized, and may be given in the same manner, and if sent by post may be addressed in the same way, as notice of protest or dishonour of a bill may be given or addressed under this Act. 60-01 V., c. 10, s. 1. ion 51. A signature by procuration operates as notice that the Procurat signatures. agent has but a limited authority to sign, and the principal is bound by such signature only if the agent in so signing was acting within the actual limits of his authority. 53 V., c. 33, s. 25. in 52. Where a person signs a bill as drawer, endorser or Signing representaacceptor, and adds words to his signature indicating. that he tive capacity. signs for or on behalf of a principal, or in a representative character, he is not personally liable thereon ; but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not exempt him from personal liability. Rule for 2. In determining whether a signature on a bill is that of determining the principal or that of the agent by whose hand it is written, capacity. the construction most favourable to the validity of the instrument shall be adopted. 53 V., c. 33, s. 26. Consideration. 53. Valuable consideration for a bill may be constituted Valuable. by,— cy. (a) any consideration sufficient to 5111)111)rt a simple contract; Sufficien nt Antecedv (b) an antecedent debt or liability; debt. 2. 9153 iZ.S.. P.106. 12 Chap. 119. Form of bill. 2. Such a debt or liability is deemed valuable consideration, whether the bill is payable on demand or at a future time. 53 V., c. 33, s. 27. holder for value. 54. Where value has, at any time, been given for a bill, the holder is deemed to be a holder for value as regards the acceptor and all parties to the bill who became parties prior to such time. 2. Where the holder of a bill has a lien on it, arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien. 53 V., c. 33, s. 27. In case of lien. Accommodation bill. Liability of party. holder in due course. Not ice. Good faith. Title defective. Right of subsequent holder. Bills of Exchange. Part 11. I. 55. An accommodation party to a bill is a person who has signed a bill as drawer, acceptor or endorser, without receiving value therefor, and for the purpose of lending his name to some other person. 2. An accommodation party is liable on the bill to a holder for value; and it is immaterial whether, when such holder took the bill, he knew such party to be an accommodation party or not. 53 V., c. 33, s. 28. 56. A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions, namely:— (a) That he became the holder of it before it was overdue and without notice that it had been previously dishonoured, if such was the fact; (b) That he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it. 2. In particular the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud. 53 V., c. 33, s. 29. 57. A holder, whether for value or not, who derive s his title to a bill through a hold(Ir in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in (Inc course as regards the acceptor and all parties to the bill prior to that holder. 53 V., c. 33, s. 29. Presumption of value. 58. Every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value. Due course. 2. Every holder of a bill is prima facie deemed to be a holder in due course; but if, in an action on a bill it is admit ted or 2154 proved R.'S., 1900. A Part H. Bills of Exchange. Chap. 119. 13 proved that the acceptance, issue or subsequent negotiation of the bill is affected with fraud, duress or force and fear, or illegality, the burden of proof that he is such holder in due course Burden of shall be on him, unless and until he proves that, subsequent to proof. the alleged fraud or illegality, value has in good faith been given for the hill by some other holder in due course. 53 V., C. 33, s. 30. 59. No bill, althouuh given for a usurious consideration or Usurious upon a usurious contract, is void in the hands of a holder, unless consideration. such holder had at the time of its transfer to him actual knowledge that it was originally given for a usurious consideration, or upon a usurious contract. 53 V., c. 33, s. 30. Negotiation. 60. A bill is negotiated when it is transferred from one By transfer. person to another in such a manner as to constitute the transferee the holder of the bill. By delivery. 2. A bill payable to bearer is negotiated by delivery. 3. A hill payable to order is negotiated by the endorsement By endorsement. of the holder completed by delivery. 53 V., c. 33, s. 31. 61. Where the holder of a bill payable to his order transfers 'Without enit for value without endorsing it, the transfer gives the trans- dorsement. feree such title as the transferrer had in the bill, and the transferee in addition acquires the right to have the endorsement of the transferrer. 2. Where any person is under obligation to endorse a bill IZepresentain a representative capacity, he may endorse the bill in such t lye capacity. terms as to negative personal liability. 53 V., e. 33, s. 31. 62. An endorsement in order to operate as a negotiation,-- Endorsing. (a) must be written on the bill itself and be signed by the Writing. endorser (b) must be an endorsement of the entire bin. Entire bill. 2. An endorsement written on an allonge, or on a copy of Allonge. a bill issued or negotiated in a country where copies are recognized, is deemed to be written on the bill itself. 3. A partial endorsement, that is to say, an endorsement Partial enwhich purports to transfer to the endorsee a part only of the dorsement. amount payable, or which purports to transfer the bill to two or more endorsees severally, does not operate as a negotiation of the bill. 53 V., c. 33, s. 32. 63. The simple signature of the endorser on the bill, with- Signature out additional words, is a sufficient endorsement. 2. Where a bill is plyahle to the order of two or more payee',Two or more or endorsees who are not partners, all must endorse, unless the payees. one endorsint, has authority to - endorse for the others. 53 V c. 33, s. 32. 9155 64. R.S., 1906. Bills of ExcliatIT'. 14 Chap. 119. Misspelling payee's name 64. Where, in a bill payable t.) order, the payee or endorsee is wrongly designated, or his name is misspelt, he may endorse the bill as therein (lescribed, adding his proper signature; or he may endorse by his own proper signature. 53 V., c. 33, s. 32. Presumption as to order of endorsement. 65. Where there are two or more endorsements on a bill, each endorsement is deemed to have been made in the order in which it appears on the bill, until the contrary is proved. 53 V., c. 33, s. 32. 1)iregarding Condit ion. 66. Where a bill purports to be endorsed conditionally, the condition may be disregarded by the payer, and payment to the endorsee is valid, whether the condition has been fulfilled or not. 53 V., c. 33, S. 33. Endorsement in bla nk. 67. An endorsement may be made in blank or special. 2. An endorsement in blank specifies no endorsee, and a bill so endorsed becomes payable to bearer. 3. A special endorsement specifies the person to whom, or to whose order, the bill is to be payable. 4. The provisions of this Act relating to a payee apply, with the necessary modifications, to an endorsee under a special endorsement. 5. Where a bill has been endorsed in blank, any holder may convert the blank endorsement into a special endorsement by writing above the endorser's signature a direction to pay the bill to or to the order of himself or some other person. 53 V., e. 33, ss. 32 and 34. Special endorsement. Application of Act to. Conversion of blank endorsement. Rest rictive endorsement. What is. Rights of endorsee. If furt her transfer is authorized. Part 11. 68. An endorsement may also contain terms making it restrictive. 2. An endorsement is restrictive which prohibits the further negotiation of the bill, or which expresses that it is a mere authority to deal with the bill as thereby directed, and not a transfer of the ownership thereof, as, for example, if a bill is endorsed Pay D only,' or Pay D for the account of X,' or 'Pay D, or order, for collection.' 3. A restrictive endorsement gives the endorsee the right to receive payment of the bill and to sue any party thereto that his endorser could have sued, but gives him no power to transfer his rights as endorsee unless it expressly authoring him to do so. 4. Where a restrictive endorsement authorizes further transfer, all subsequent endorsees take the bill with the same rights and subject to the same liabilities as the first endorsee under the restrictive endorsement. 53 V., c. 33, ss. 32 and 35. 69. Where a bill is negotiable in its origin, it continues to be negotiable until it has been,2156 (a) R.S., 1906. When negotiability ceases Part III. Bills of Exchange. Chap. 119. 15 ((1) restrictively endorsed; or, (b) discharged by payment or otherwise. 53 V., c. 33, S. 36. 70. Where an overdue bill is negotiated, it can be negotiated Overdue bill. only subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a Equitk.s. better title than that which had the person from whom he took it. 2. A bill payable on demand is deemed to be overdue within Demand bill the meaning and for the purposes of this section, when it when. appears on the face of it to have been in circulation for an unreasonable length of time. 3. What is an unreasonable length of time for such purpose Time. is a question of fact. 53 V., c. 33, s. 36. 71. Except where an endorsement bears date after the Presumpmaturity of the bill, every negotiation is prima facie deemed tion as to. to have been effected before the bill was overdue. 53 V., c. 33, s. 36. 72. Where a bill which is not overdue has been dishonoured, Taking bill with notice any person who takes it with notice of the dishonour takes it of dishonour. subject to any defect of title attaching thereto at the time of dishonour; but nothing in this section shall affect the rights of a holder in due course. 53 V., e. 33, s. 36. 73. Where a bill is negotiated back to the drawer, or to a Re issue prior endorser, or to the acceptor, such party may, subject to bill. the provisions of this Act, re-issue and further negotiate the bill, but he is not entitled to enforce the payment of the bill against any intervening party to \lion' he was previously liable. 53 V., c. 33, s. 37. 74. The rights and powers of the holder of a bill are as Rights follows:— of of holder. (a) lie may sue on the bill in his own name; May sue. (b) Where he is a holder in (Inc course, he holds the bill free Prior defects. from any defect of title of prior parties, as well as from mere personal defences available to prior parties among themselves, and may enforce payment against all parties liable on the bill; (c) Where his title is defective, if he negotiates the bill to a Title from holder in due course, that holder obtains a good and com- him. plete title to the bill; and, (d) Where his title is defective if he obtains payment of the Discharge bill the person who pays him in due course gets a valid from him. discharge for the bill. 53 V., c. 33, s. 38. Presentment for Acceptance. 75. Where a bill is payable at sight or after sight, present- When ment for acceptance is necessary in order to fix the maturity of necessary. the instrument. 2157 2. 11.S., 1906. Chap. 119. 16 Bills of Exchange. Part II. 2. Where a bill expressly stipulates that it shall be presented for acceptance, or where a bill is drawn payable elsewhere than at the residence or place of business of the drawee, it must be presented for acceptance before it can be presented for payment. eases. 3. In no other case is presentment for acceptance necessary in order to render liable any party to the bill. 53 V., c. 33, s. 39. Express stipulation. Other Prese;it ment excused. 76. Where the holder of a bill, drawn payable elsewhere than at the place of business or residence of the drawee, has not time, with the exercise of reasonable diligence, to present the bill for acceptance before presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for payment is excused, and does not discharge the drawer and endorsers. 53 V., c. 33, s. 39. Sight bill. If not presented. Reasonable time. Rules. By holder to drawee. To all drawees. To personal representat Post office. 77. Subject to the provisions of this Act, when a bill payable at sight or after sight is negotiated, the holder must either present it for acceptance or negotiate it within a reasonable time. 2. If he does not do so, the drawer and all endorsers prior to that holder are discharged. 3. In determining what is a reasonable time within the meaning of this section, regard shall be had to the nature of the bill, the usage of trade with respect to similar bills, and the facts of the particular case. 53 V., c. 33, s. 40 54-55 V., c. 17, S. 5. 78. A bill is duly presented for acceptance which is presented in accordance with the following rules, namely (a) The presentment must be made by or on behalf of the holder to the drawee or to some person authorized to accept or refuse acceptance on his behalf, at a reasonable hour on a business day and before the bill is overdue; (b) Where a bill is addressed to two or more drawees, who are not partners, presentment must be made to them all, unless one has authority to accept for all, when presentment may be made to him only; (c) Where the drawee is dead, presentment may be made to his personal representative; (d) Whqre authorized by agreement or usage, a presentment through the post office is sufficient. 53 V., e. 33, s. 41. 79. Presentment in accordance with the aforesaid rules is excused, and a bill may be treated as dishonoured by non-acceptance,— Drawee dead. (a) where the drawee is dead, or is a fictitious person or a person not having capacity to contract by bill ; (b) where, after the exercise of reasonable diligence, such presentment cannot be effected ; 2158 (r) R.S., 1906. Excuses. Part II. Bills of Exchange. Chap. 119. 17 (c) where although the presentment has been irregular, ac- Waiver. ceptance has been refused on some other ground. 2. The fact that the holder has reason to believe that the bill, Excuse. on presentment, will be dishonoured does not excuse presentment. 53 V., e. 33, s. 41; 54-55 V., e. 17, s. 80. The drawee may accept a bill on the day of its due pre- Time for ,entment to him for acceptance, or at any time within two days acceptance. thereafter. 2. When a bill is so duly presented for acceptance and is not Dishonour. accepted within the time aforesaid, the person presenting it must treat it as dishonoured by non-acceptance. 3. If he does not so treat the bill as dishonoured, the holder Loss of shall lose his right of recourse against the drawer and en- rights. dorsers. 4. In the case of a bill payable at sight or after sight, the Date of acceptor may date his acceptance thereon as of any of the days acceptance. aforesaid but not later than the day of his actual acceptance of the bill. 5. If the acceptance is not so dated, the holder may refuse Refusing to take the acceptance and may treat the bill as dishonoured by acceptance. non-acceptance. 2 E. VII., c. 2, s. 1. 81. A bill is dishonoured by non-acceptance,— Dishonour. (a) when it is duly presented for acceptance, and such an Present rnent. acceptance as is prescribed by this Act is refused or cannot be obtained; or, (b) when presentment for acceptance is excused and the bill Excuse. is not accepted. 53 V., c. 33, s. 43. 82. Subject to the provisions of this Act, when a bill is dis- Recourse in honoured by non-acceptance an immediate right of recourse such case. against the drawer and endorsers accrues to the holder, and no presentment for payment is necessary. 53 V., c. 33, s. 43. 83. The holder of a bill may refuse to take a qualified ac- Qualified pptance, and if he does not obtain an unqualified acceptance acceptance. may treat the bill as dishonoured by non-acceptance. 2. When the drawer or endorser of a bill receives notice of a Assent. qualified acceptance, and does not within a reasonable time express his dissent to the holder, he shall be deemed to have assented thereto. 53 V., e. 33, s. 44. 84. Where a qualified acceptance is taken, and the drawer Qualified or an endorser has not expressedly or impliedly authorized the accept a nee Without holder to take a qualified acceptance, or does not subsequently authority. assent thereto, such drawer or endorser is discharged from hi, liability on the bill: Provided that this section shall not apply l'art ia I to a partial acceptance, whereof due notice has been given. 53 accept rice V., c. 33, s. 44. 2159 Presentment 2 R.S., 1906. 18 Chap. 119. Bills of Exchange. Part Presentment for Payment. 85. Subject to the provisions of this Act, a bill must be duly presented for payment. Result of 2. If it is not so presented, the drawer and endorsers shall be none. discharged, Manner of. 3. Where the holder of a bill presents it for payment, he shall exhibit the bill to the person from whom he demands payment. 53 V., c. 33, ss. 45 and 52. Necessity. Time for. 86. A bill is duly presented for -payment which is presented,— Due date. (a) when the bill is not payable on demand, on the day it falls due; Demand bill. (b) when the bill is payable on demand, within a reasonable time after its issue, in order to render the drawer liable, and within a reasonable time after its endorsement, in order to render the endorser liable. Reasonable 2. In determining what is a reasonable time within the I ime. meaning of this section regard shall be had to the nature of the bill, the usage of trade with regard to similar bills and the facts of the particular case. 53 V., c. 33, s. 45. By and to whom. Two accept ors. Personal representation. 87. Presentment must be made by the bolder or by some person authorized to receive payment on his behalf, at the proper place as hereinafter defined, and either to the person designated by the bill as payer or to his representative or some person authorized to pay or to refuse payment on his behalf, if, with the exercise of reasonable diligence such person can there be found. 2. When a bill is drawn upon, or accepted by two or more persons who are not partners, and no place of payment is specified, presentment must be made to them all. 3. When the drawee or acceptor of a bill is dead, and no place of payment is speeified, presentment must be made to a personal representative if such there is, and with the exercise of reasonable diligence, he can be found. 53 V., e. 33, s. 45. Plaee of. When speei tied. When not sperifipd. NV ben no addresA S given. Other cases. H.S., 1906. 88. A bill is presented at the proper place,— (a) where a place of payment is specified in the bill or acceptance, and the bill is there presented; (b) where no place of payment is specified, but the addre, ,s of the drawee or acceptor is given in the bill, and the bill is there presented; (c) where no place of payment is specified and no address given, and the bill is presented at the drawee's or :Receptor's place of business, if known, 011(1 if not at his ordinary residence, if known; ((/) in any other case, if presented to the drawee or acceptor wherever he 'an be found, 4,1e if presented at his last known place of business or residence. 53 V., c. 33, s. 45. 2160 89. Part II. Bills of Exchange. Chap. 119. 19 89. Where a bill is presented at the proper place as afore- Sufficient said and after the exercise of reasonable diligence, no person presentauthorized to pay or refuse payment can there be found no ment. further presentment to the drawee or acceptor is required. 53 V., c. 33, s. 45. 90. 'Where the place of payment specified in the bill or Pre,entacceptance is any city, town or village, and no place therein is ment at specified, and the bill is presented at the drawee's or acceptor's office. known place of business or known ordinary residence therein, and if there is no such place of business or residence, the bill is presented at the post office, or principal post office in such city, town or village, such presentment is sufficient. 2. Where authorized by agreement or usage, a presentment Through office. through the post office is sufficient. 53 V., c. 33, s. 45. post post 91. Delay in making presentment for payment is excused Delay in mc t.ittwhen the delay is caused by circumstances beyond the control prez of the holder, and not imputable to his default, misconduct or negligence. 2. When the cause of delay ceases to operate, presentment Diligence. must be made with reasonable diligence. 53 V., c. 33, s. 46. 92. Presentment for payment is dispensed with,— Dispcn,,e (a) where, after the exercise of reasonable diligence, pre- with. Impractisentment, as required by this Act, cannot be effected; cable. (b) where the drawee is a fictitious person; Fictition, (c) as regards the drawer, where the drawee or acceptor is drawee. not bound, as between himself and the drawer, to accept or pay the bill, and the drawer has no reason to believe that the bill would be paid if presented; (d) as regards an endorser, where the bill was accepted or Acconitno41.1made for the accommodation of that endorser, and he has tion no reason to expect that the bill would be paid if presented; (e) by waiver of presentment, express or implied. Waivi.r. 9. The fact that the holder has reason to believe that the bill Not (h-Terise will, on presentment, be dishonoured, does not dispense with with. the necessity for presentment. 53 V., c. 33, s. 46. 93. When no place of payment is specified in the bill or pen acceptance, presentment for payment is not necessary in order p specitie:;(.) to render the acceptor liable. 2. When a place of payment is specified in the bill or accept- If place ,eciifletd ance, the acceptor, in the absence of an express stipulation to z that effect, is not discharged by time omission to present the bill g for payment on the day that it matures, but if any suit or action be instituted thereon before presentation the costs thereof shall be in the discretion of the court. 3. When a bill is paid the holder shall forthwith deliver it Delivery on pament. up to the party paying it. 53 V., v. 33, s. 52. 13G 2161 94. R.S., 1906. 20 Chap. 119. Time for presentiment. 94. Where the address of the acceptor for honour of a bill is in the same place where the bill is protested for non-payment, the bill must be presented to him not later than the day following its maturity. 2. Where the address of the acceptor for honour is in some place other than the place where it is protested for n on-payment, the bill must be forwarded not later than the day following its maturity for presentment to him. 3. Delay in presentment or non-presentment is excused by any circumstance which would in case of acceptance by a drawee excuse delay in presentment for payment or non-presentment for payment. 53 V., c. 33, s. 66. Pn rt ies in different places. Excuses for delay. Bills of Exchange. Part IL Dishonour. Non-payment On presentntent. Excuse. Recourse. 95. A bill is dishonoured by non-payment, (a) when it is duly presented for payment and payment is refused or cannot be obtained; or, (b) when presentment is excused and the bill is overdue and unpaid. 2. Subject to the provisions of this Act, when a bill is dishonoured by non-payment, an immediate right of recourse against the drawer, acceptor and endorsers accrues to the bolder. 53 V.) e. 33, S. 47. Notiee of dishonour. 96. Subject to the provisions of this Act, when a bill has been dishonoured by non-acceptance or by non-payment, notice of dishonour must be given to the drawer, and each endorser, and any drawer or endorser to whom such notice is not given is discharged : Provided that,— Subsequent (a) where a bill is dishonoured by non-acceptance, and notice bolder. of dishonour is not given, the rights of a holder in due course subsequent to the omission shall not be prejudiced by the omission ; Notice of (b) where a bill is dishonoured by non-acceptance, and due non-payment. notice of dishonour is given, it shall not be necessary to give notice of a subsequent dishonour by non-payment. unless the bill shall in the meantime have been accepted. Notice to 2. In order to render the acceptor of a bill liable it is not acceptor. necessary that notice of dishonour should be given to him. 53 V., c. 33, ss. 48 and 52. 97. Notice of dishonour in order to be valid and effectual must be given,— Time for. (a) not later than the juridical or business day next following the dishonour of the bill; By holder or (b) by or on behalf of the holder, or by or on behalf of an endorser. endorser, who at the time of giving it, is himself liable on the bill; 2162 (c) B.S.,1906. Notice. Part II. Bills of Exchange. Chap. 119. 21 (c) in the case of the death, if known to the party giving Personal notice, of the drawer or endorser, to a personal representa- mi.)et.t n tative, if such there is and with the exercise of reasonable diligence he can be found, (d) in case of two or more drawers or endorsers who are —rawees. not partners, to each of them, unless one of them has authority to receive notice for the others. 53 V., c. 33, s. 49. 98. Notice of dishonour may be given,— Notice. (a) as soon as the bill is dishonoured Earliest time. (1)) to the party to whom the same is required to be given, To whom. or to his agent in that behalf (c) by an agent either in his own name or in the name of By agent. any party entitled to give notice whether that party is his principal or not (d) in writing or by personal communication and in any Manner. terms which identify the bill and intimate that the bill has been dishonoured by non-acceptance or non-payment. 2. A misdescription of the bill shall not vitiate the notice Misdeserigunless the party to whom the notice is given is in fact misled tion• thereby. 53 V., c. 33, s. 49. 99. In point of form,— (a) the return of a dishonoured bill to the drawer or an endorser is a sufficient notice of dishonour; (b) a written notice need not be signed. 2. An insufficient written notice may be supplemented and validated by verbal communication. 53 V., c. 33, s. 49. Form. Return of bill. Signature. Verbal supplement. 100. Where a bill when dishonoured is in the hands of an Nctiee to agent he may himself give notice to the parties liable on the bill, agent. or he may give notice to his prineipal, in which case the prin- Effect on eipal upon receipt of the notice shall have the same time for principal. giving notice as if the agent had been an independent holder. 2. If the agent gives notice to his principal he must do so Time for. within the same time as if he were an independent holder. 53 s. 49. V., e. 101. Where a party to a bill receives due notice of dishon- Notice to ('lit'('lit'he has, after the receipt of such notice, the same period ofant(edent pattie,. tittle for giving notice to antecedent parties that a holder has after dishonour. 53 V., c. 33, s. 49. 102. A notice of dishonour enures for the benefit,— Benefit subsequent holders all and of all prior endorsers who enures' (a) of have a right of recourse against the party to whom it is given, where given on behalf of the holder; 2163 1361 'b) R.S., 1906. 22 Parties to W110111. Sufficiency of giving. Sufficieney of notice. Death of party. Chap. 119. Bills of Exchange. Part IL (b) of the holder and of all endorsers subsequent to the party to whom notice is given, where given, by or on behalf of an endorser entitled under this Part to give notice. 53 V., c. 33, s 49. 103. Notice of the dishonour of any bill payable in Canada shall, notwithstanding anything in this Act contained be sufficiently given if it is addressed in due time to any party to such bill entitled to such notice, at his customary address or place of residence or at the place at which such bill is dated, unless any such party has, under his signature designated another place, in which case such notice shall be sufficiently given if addressed to him in due time at such other place. 2. Such notice so addressed shall be sufficient, although the place of residence of such party is other than either of the places aforesaid, and shall be deemed to have been duly served and given for all purposes if it is deposited in any post office, with the postage paid thereon, at any time during the day on which presentment has been made, or on the next foll owing juridical or business day. 3. Such notice shall not be invalid by reason only of the fact that the party to whom it is addressed is dead. 53 V., c. 33, 5.49. Miscarriage in post service. 104. Where a notice of dishonour is duly addr essed and posted, as provided in the last preceding section, the send deemed to have given due notice of dishonour, notwiths er is tanding any miscarriage by the post office. 53 V., c. 33, s. 49. Ex( use for 105. Delay in giving notice of dishonour is excused where the delay is caused by circumstances beyond the control of the party giving notice, and not imputable to his default, miscon(litet or negligence. 2. When the cause of delay ceases to operate the notice must be given with reasonable diligence. 53 V., c. 33, s. 50. 106. Notice of dishonour is dispensed with ,— (a) when after the exercise of reasonable dilig ence, notice as required by this Act cannot be given to or does not reach the drawer or endorser sought to be charged; (b) by waiver express or implied. 2. Notice of dishonour may be waiv ed before the time of giving notice has arrived, or after the omission to give due notive. 53 V., c. 33, s. 50. Diligence. Dispensed with. Reasonable diligence. Waiver. Time of. pikpenseil with. 107. Notice of dishonour is dispensed with as regard, the drawer where,— person. (a) the draw er and drawee are the same pers on; Fictitious (b) the draw ee is a fictitious person or a person i,crson. not having capacity to contract ; 2164 R.S., 1906. Part II. Bills of Exchange. Chap. 119. 23 drraur. ese,erited to (c) the drawer is the person to whom the bill is presented P for payment (d) the drawee or acceptor is, as between himself and the No obligadrawei, under no obligation to accept or pay the bill; tion. AI er(e) the drawer has countermanded payment. 53 V., c. 332 Countermand. d. s. 50. nsed 108. Notice of dishonour is dispensed with as regards the INDispensed endorser where,— (a) the drawee is a fictitious person or a person not having Fictitious capacity to contract, and the endorser was aware of the person. fact at the time he endorsed the bill; to (b) the endorser is the person to whom the bill is presented Presented endorser. for payment (c) the bill was accepted or made for his accommodation. Accommodation. 53 V., c. 33, s. 50. Protest. 109. In order to render the acceptor of a bill liable it is not Necessity necessary to protest it. 53 V., c. 33, s. 52. of. 110. Protest is dispensed with by any circumstances which Dispensed tn. would dispense with notice of dishonour. 53 V., c. 33, s. 51. " 111. Delay in noting or protesting is excused by circum- Delay stances beyond the control of the holder, and not imputable to excused. his default, misconduct or negligence. 2. When the cause of delay ceases to operate, the bill must Diligence. be noted or protested with reasonable diligence. 53 V., c. 33, s. 51. 112. Where a foreign bill appearing on the face of it to be Foreign bill, no -a such has been dishonoured by non-acceptance it must be duly ance.cceptprotested for non-acceptance. 2. Where a foreign bill which has not been previously dis- Non-payhonoured by non-acceptance is dishonoured by non-payment, it rnent. must be duly protested for non-payment. 3. Where a foreign bill has been accepted only as to part it Balance. must be protested as to the balance. 4. 1' .1 foreign bill is not protested as by this section re- Tv drawer and endorsers are discharged. 53 V., c. 33, ss. 44 and 51. Protest of 113. Where an inland bill has been dishonoured, it may, if inland bill. the holder thinks fit, be noted and protested for non-acceptance or non-payment as the case may he; but it shall not, except in the province of Quebec, be necessary to note or protest an,in- Quebec. land bill in order to have recourse against the drawer or endorsers. 53 V., e. 33, s. 51. 114. 2165 IL S., 1906. 24 Chap. 119. Discharge in default of protest. 114. In the case of an inland bill drawn upon any person in the province of Quebec or payable or accepted at any place in the said province the parties liable on the said bill other than the acceptor are, in default of protest for non-acceptance or nonpayment as the case may be, and of notice thereof, discharged, except in cases where the circumstances are such as would dispense with notice of dishonour. 2. Except as in this section provided, where a bill does not on the face of it appear to be a foreign bill, protest thereof in case of dishonour is unnecessary. 53 V., c. 33, s. 51. Protest unnecessary. Bills of Exchange. Part II. Subsequent protest for m m-payment. 115. A bill which has been protested for non-acceptance, or a bill of which protest for non-acceptance has been waive d, may be subsequently protested for non-payment. 53 V., c. 33, s. 51. l'rotest for better security. 116. Where the acceptor of a bill suspends payment before it matures, the holder may cause the bill to be protested for better security against the drawer and endorsers. 53 V., c. 33, s. 51; 54-55 V., c. 17, s. 7. A ccentance for honour. 117. Where a dishonoured bill has been accepted for honour supra protest, or contains a reference in case of need, it mu-sr be protested for non-payment before it is presented for paym ent to the acceptor for honour, or referee in case of need. Protest for 2. When a bill of exchange is dishonenred by the non-payment. acceptor for honour, it must be protested for non-payment by him. 53 V.) c. 33, ' s 66 . Noting equivalent to protest. 118. For the purposes of this Act, where a bill is required to be protested within a specified time or before some further proceeding is taken, it is sufficient that the bill has been noted for protest before the expiration of the speci fied time or the taking of the proceeding. 53 V., c. 33, s. 92. Noting or protest. 119. Subject to the provisions of this Act, when a bill is protested the protest must be made or noted on the day of it: dishonour. 2. When a bill has been duly noted, the formal be extended thereafter at any time as of the date ofprotest may the noting. 53 V., c. 33, ss. 51 and 92. FAtending protest. Protest on copy or particulars. 120. Where a bill is lost or destroyed, or is wrongly or accidentally detained from the person entitled to hold it, or is accidentally retained in a place other than wher e payable, protest may be made on a copy or written particulars thereof. 53 V., c. 33, s. 51. Plare of protest. 121. A bill must be protested at the place where it is dishonoured, or at some other place in Canada situate within five 2166 miles R.S., 1906. • Part II. Bills of Exchange. Chap. 119. 25 miles of the place of presentment and dishonour of such bill: Provided that,— (a) when a bill is presented through the post office and re- Where bill turned by post dishonoured, it may be protested at the returned. place to which it is returned, not later than on the day o." its return or the next juridical day; (b) every protest for dishonour, either for non-acceptance or Time when. non-payment may be made on the day of such dishonour, and in case of non-acceptance at any time after nonacceptance, and in case of non-payment at any time after three o'clock in the afternoon. 53 V., c. 33, s. 51. 122. A protest must contain a copy of the bill, or the on- contents of piotest. ginal bill Ma y be annexed thereto, and the protest must be signed by the notary making it, and must specify,— Person. (a) the person at whose request the bill is protested; Place. (b) the place and date of protest; Reason. (c) the cause or reason for protesting the bill; Proceeding. (d) the demand made and the answer given, if any; or, (e) the fact that the drawee or acceptor could not be found. Excuse. 53 V., e. 33, S. 51. 123. Where a dishonoured bill is authorized or required to official wlem notary. is be protested, and the services of a notary cannot be obtained at accessibnotle. the place where the bill is dishonoured, any justice of the peace resident in the place may present and protest such bill and give all necessary notices and shall have all the necessary powers of a notary in respect thereto. 53 V., c. 33, s. 93. 124. The expense of noting and protesting any bill and the Expenses. postages thereby incurred, shall be allowed and paid to the holder in addition to any interest thereon. 2. Notaries may charge the fees in each province heretofore Fees. allowed them. 53 V., c. 33, s. 93. 125. The forms in the schedule to this Act may be used in Forms. noting or protesting any bill and in giving notice thereof. 2. A copy of the bill and endorsement may be included in content:4. the forms, or the original bill may be annexed and the necessary changes in that behalf made in the forms. 53 V., c. 33, S. 93. 126. Notice of the protest of any bill payable in Canada When notice s ri'l:qt shall be sufficiently given and shall be sufficient and deemed to t served, if given during given and the day on gien duly have been which protest has been made or on the next following juridical or business day, to the same parties and in the same manner and addressed in the same way as is provided by this Part for notice of dishonour. 53 V., c. 33, s. 49. 2167 Liabilitie R.S., 1906. 26 Chap. 119. Bills of Exchange. Part II. Liabilities of Parties. Equitable assignment. 127. A bill, of itself, does not operate as an assignment of funds in the hands of the drawee available for the payment thereof, and the drawee of a bill who does not accept as required by this Act is not liable on the instrument. 53 V., c. 33, s. 53. Engagement by acceptance. 128. The acceptor of a bill, by accepting it, engages that he will pay it according to the tenor of his acceptance. 33 V., e. 33, s. 54. Estoppel. Genuineness and authority. Capacity of drawer. Payee and capacity. Drawer. Engages acceptance and compensation. Estoppel or to payee. 129. The acceptor of a bill by accepting it is precluded from denying to a holder in due course,— (a) the existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the bill; (b) in the case of a bill payable to drawer's order, the then capacity of the drawer to endorse, but not the genuineness or validity of his endorsement; (c) in the case of a bill payable to the order of a third person, the existence of the payee and his then capacity to endorse, but not the genuineness or validity of his endorsement. 53 V., c. 33, s. 54130. The drawer of a bill, by drawing it,— (a) engages that on due presentment it shall be accepted and paid according to its tenor, and that if it is dishonoured lie will compensate the holder or any endorser who is compelled to pay it, if the requisite proceedings on dishonour are duly taken; (b) is precluded from denying to a holder in due course the existence of the payee and his then capacity to endorse. 53 V., c. 33, s. 55. Liability by 131. .No person is liable as drawer, endorser or acceptor of signature. Irregular en. a bill who has not signed it as such: Provided that when a dorsement. person signs a bill otherwise than as a drawer or acceptor he thereby incurs the liabilities of an endorser to a holder in due course and is subject to all the provisions of this Act respecting endorsers. 53 V., c. 33, ss. 23 and 56 Trade or asslimed name, Firm name. Endorser. 132. Where a person signs a bill in a trade or assumed name he is liable thereon as if he had signed it in his own name. 2. The signature of the name of a firm is equivalent to the signature by the person so signing, of the names of all persons liable as partners in that firm. 53 V., e. 33, s. 23. 133. The endorser of a bill, by endorsing it, subject to the effect of any express stipulation hereinbefore Engages (a) engages that on due presentment it shall be accepted and acceptance compenpaid according to its tenor, and that if it is dishonoured or sation. he will compensate tlw bolder or a subsequent endorser 2168 who R.S., 1006. Part II. Bills of Exchange. Chap. 119. 27 who is compelled to pay it, if the requisite proceedings on dishonour are duly taken ; (b) is precluded from denying to a holder in due course the Genuineness and regugenuineness and regularity in all respects of the drawer's larity. signature and all previous endorsements; (c) is precluded from denying to his immediate or a subse- Validity. quent endorser that the bill was, at the time of his endorsement, a valid and subsisting bill, and that he had then a good title thereto. 53 V., e. 33, s. 55. 134. Where a bill is dishonoured, the measure of damages Measure of damages. which shall be deemed to be liquidated damages shall be,— Amount of (a) the amount of the bill; bill. (b) interest thereon from the time of presentment for pay- Interest. ment, if the bill is payable on demand, and from the maturity of the bill in any other case; (c) the expenses of noting and protest. 53 V., c. 33, s. 57. Expense. 135. In case of the dishonour of a bill the holder may Recovery recover from any party liable on the bill, the drawer who has same. been compelled to pay the bill may recover from the acceptor, and an endorser who has been compelled to pay the bill may recover from the acceptor or from the drawer, or from a prior endorser, the damages aforesaid. 53 V., c. 33, s. 57. of 136. In the case of a bill which has been dishonoured abroad Re-exchange in addition to the damages aforesaid, the holder may recover and interest. from the drawer or any endorser, and the drawer or an endorser who has been compelled to pay the bill may recover from any party liable to him, the amount of the re-exchange with interest thereon until the time of payment. 53 V., c. 33, s. 57. 137. Where the holder of a bill payable to bearer nego- Transferrer tiates it by delivery without endorsing it, he is called a trans- by delivery. ferrer by delivery.' 2. A transferrer by delivery is not liable on the instrument. Liability of. 53 V., c. 33, s. 58. 138. A transferrer by delivery who negotiates a bill thereby Warranty by. warrants to his immediate transferee, being a holder for value,— (a) that the bill is what it purports to be; Genuineness. Right to (b) that he has a right to transfer it; and, fact transfer. (C) that at the time of transfer he is not aware of any Bona fides. which renders it valueless. 53 V., c. 33, S. 58. Discharge of Bill. 139. A bill is discharged by payment in due course by or Payment. on behalf of the drawee or acceptor. 2169 2. R.S., 1906. 28 Chap. 119. Payment in due course. 2. Payment in due course means payment made at or after the maturity of the bill to the holder thereof in good faith and without notice that his title to the bill is defective. 3. Where an accommodation bill is paid in due course by the party accommodated, the bill is discharged. 53 V., e. 33, s. 59. ACC01111110d lion bill. Payment by drawer or endorser. Gives rights. Second negotiati(01. Bills of Exchange. Part II. 140. Subject to the provisions aforesaid as to an accommodation bill, when a bill is paid by the drawer or an endorser, it is not discharged; but,— (a) where a bill payable to, or to the order of, a third party is paid by the drawer, the drawer may enforce payment thereof against the acceptor, but may not re-issue the bill; (b) where a bill is paid by an endorser, or where a bill payable to drawer's order is paid by the drawer, the party paying it is remitted to his former rights as regards the acceptor or antecedent parties, and he may, if he thinks fit, strike out his own and subsequent endorsements, and again negotiate the bill. 53 V., c. 33, s. 59. Acceptor holding at maturity. 141. When the acceptor of a bill is or becomes the holder of it, at or after its maturity, in hi o‘Vn right, the bill is discharged. 53 V., e. 33, S. 60. Renouncing right,. 142. When the holder of a bill, at or after its maturity, absolutely and unconditionally renounces his rights against the acceptor, the bill is discharged. 2. The liabilities of any party to a bill may in like manner be renounced by the holder before, at, or after its maturity. 3. A renunciation must be in writing, unless the bill is delivered up to the acceptor. 4. Nothing in this section shall affect the rights of a holder in (Inc course without notice of renunciation. 53 V., c. 33, Against one party. Writing. 11 older in due course. 8. 61. Ca ncellat ion of Of any signa ture. Discharge of endorser. Unint cut ional cancellation. Burden of proof. 143. Where a bill is intentionally cancelled by the holder or his agent, and the cancellation is apparent thereon, the bill is discharged. 2. In like manner, any party liable on a bill may be discharged by the intentional cancellation of his signature by the holder or his agent. 3. In such case, any endorser who would have had a right of recourse against the party whose signature is cancelled is also discharged. 53 V., c. 33, s. 62. 144. A cancellation made unintentionally, or under a mistake, or without the authority of the holder, is inoperative: Provided that where a bill or any signature thereon appears to have been cancelled, the burden of proof lies on the party who alleges that the cancellation was made unintentionally, or under a mistake, or wit114 111t, authority. 53 V., c. 33, /3. 62. 211'0 145. R.S., 1906. Part II. Bills of Exchange. 29 Chap. 119. Alteration of 145. Where a bill or acceptance is materially altered with- bill. out the assent of all parties liable on the bill, the bill is voided, except as against a party who has himself made, authorized, or Holder in assented to the alteration and subsequent endorsers: Provided due course. that where a bill has been materially altered, but the alteration is not apparent, and the bill is in the hands of a holder in due course, such holder may avail himself of the bill as if it had not been altered, and may enforce payment of it according to its original tenor. 53 V., c. 33, s. 63. Material. 146. In particular any alteration, Date. (a) of the date; Sum. (b) of the sum payable; Time. (c) of the time of payment; Place. (d) of the place of payment; (e) by the addition of a place of payment without the accep- Adding places. tor's assent where a bill has been accepted generally; is a material alteration. 53 V., c. 33, s. 63. Acceptance and Payment for Honour. Acceptance 147. Where a bill of exchange has been protested for dis- for honour honour by non-acceptance, or protested for better security, and supra protest is not overdue, any person, not being a party already liable thereon, may, with the consent of the holder, intervene and accept the bill supra protest, for the honour of any party liable thereon, or for the honour of the person for whose account the bill is drawn. 53 V., c. 33, s. 64. 148. A bill may be accepted for honour for part only of the In sum for which it is drawn. 53 V., c. 33, s. 64. 149. Where an acceptance for honour does not expressly state for whose honour it is made, it is deemed to be an accept ance for the honour of the drawer. 53 V. c. 33, S. 64. part. Deemed to be f‘'r honour of drawer. Maturity of 150. Where a bill payable after sight is accepted for honour. tAfitirr sight its maturity is calculated from the date of protesting for non acceptance, and not from the date of the acceptance for honour. 53 V., c. 33, s. 64. 151. An acceptance for honour supra protest, in order to he Requirements. valid must,— (a) be written on the bill, and indicate that it is an accept- Writing. ance for honour; and, (b) be signed by the acceptor for honour. 53 V., c. 33, 8. 64. Signature. of 152. The acceptor for honour of a bill by accepting it Liability honour.occneptor for g accordin the pay bill ent, presentm our. engages that he will, on due drawee, the by paid not is it if ce, acceptan his of to the tenor provided 2171 R.S., 1906. 30 Chap. 119. To holder a 3 others. provided it has been duly presented for payment and protested for non-payment, and that he receives notice of these facts. 2. The acceptor for honour is liable to the holder and to all parties to the bill subsequent to the party for whose honour he has accepted. 53 V., c. 33, s. 65. Bills of Exchange. Part II. 153. Where a bill has been protested for non-payment, any person may intervene and pay it supra protest for the honour .4 any party liable thereon, or for the honour of the person for whose account the bill is drawn. If more than 2. Where two or more persons offer to pay a bill for the one offer. honour of different parties, the person whose payment will discharge most parties to the bill shall have the preference. Refttsal to 3. Where the holder of a bill refuses to receive payment receive paysupra protest, he shall lose his right of recourse against any ment. party who would have been discharged by such payment. Entitled to 4. The payer for honour, on paying to the holder the amount bill. of the bill and the notarial expenses incidental to its dishonour, is entitled to receive both the bill itself and the protest. Liability for 5. If the holder does not on demand in such case deliver up refusing. the bill and protest, he shall be liable to the payer for honour in damages. 53 V., c. 33, s. 67. Payment for honour supra protest. Attestation of payment for honour. Declaration. Discharge. Subrogation. 154. Payment for honour supra protest, in order to operate as such and not as a mere voluntary payment., must be attested by a notarial act of honour, which may be appended to the protest or form an extension of it. 2. The notarial act of honour must be founded on a declaration made by the payer for honour, or his agent in that behalf, declaring his intention to pay the bill for honour, and for whose honour he pays. 53 V., c. 33, s. 67. 155. Where a bill has been paid for honour, all parties subsequent to the party for whose honour it is paid are discharged, but the payer for honour is subrogatted for, and succeeds to both the rights and duties of the holder as regards the party for whose honour he pays, and all parties liable to that party. 53 V., c. 33, s. 67. Lost Instruments. tn duplicate of lost bill. ha% 0 Refusal. Compulsion. 156. Where a bill has been lost before it is overdue, the person who was the holder of it may apply to the drawer to give him another bill of the same tenor, giving security to the drawer, if required, to indemnify him against all persons whatever, in ca-;e the bill alleged to have been lost shall be found again. 2. If the drawer, on request as aforesaid, refuses to give such duplicate bill, he may be compelled to do so. 53 V., c. 33, s. 68. '1172 157. R.S., 1906. Part II. Bills of Exchange. Chap. 119. 31 157. Tn any action or proceeding upon a bill, the court or Action on a judge may order that the loss of the instrument shall not be lost bill. set up, provided an indemnity is given to the satisfaction of the Indemnity. court or judge against the claims of any other person upon the instrument in question. 53 V., c. 33, s. 69. Bill in a Set. 158. Where a bill is drawn in a set, each part of the set Bills in set. being numbered, and containing a reference to the other parts, the whole of the parts constitute one bill. 2. The acceptance may be written on any part, and it must Acceptance. be written on one part only. 53 V., e. 33, s. 70. • 159. Where the holder of a set endorses two or more parts Endorsing more than to different persons, he is liable on every such part, and every one part. endorser subsequent to him is liable on the part he has himself endorsed as if the said parts were separate bills. 2. Where two or more parts of a set are negotiated to differ- Negotiation different ent holders in due course, the holder whose title first accrues is, to holders. as between such holders, deemed the true owner of the bill : Acceptance Provided that nothing in this subsection shall affect the rights in due prefirst part the pays or of a person who in due course accepts course. sented to him. More than 3. If the drawee accepts more than one part, and such one part accepted parts get into the hands of different holders in due accepted. course, he is liable on every such part as if it were a separate bill. 4. When the acceptor of a bill drawn in a set pays it without Part accepted. requiring the part bearing his acceptance to be delivered up to Payments NVithollt dc• him, and that part at maturity is outstanding in the hands of a livery. thereof. holder the to liable is he course, holder in due 5. Subject to the provisions of this section, where any one Discharge. part of a bill drawn in a set is discharged by payment or otherwise, the whole bill is discharged. 53 V., c. 33, s. 70. Conflict of Laws. 160. Where a bill drawn in one country is negotiated, Reg isit es 0: form. accepted or payable in another, the validity of the bill as regard, requisites in form is determined by the law of the place of issue, and the validity as regards requisites in form of the supervening contracts, such as acceptance, or endorsement, or acceptance supra protest, is determined by the law of the place where the contract was ma(le: Provided that,— (a) where a bill is issued out of Canada, it is not invalid 1),\ Unstampeil reason only that it is not stamped in accordance with the law of the place of issue; (b) where a bill, issued out of Canada, conforms, as regard- Conformi,iir to the law requisites in form, to the law of Canada, it may, for tin of ransida. purpose of enforcing payment thereof, be treated as valid ft F.-4 2173 1904.1 82 Chap. 119. Bills of Exchange. Part III. as between all persons who negotiate, hold or become parties to it in Canada. 53 V., c. 33, s. 71. DJ' taci. Li'w(.f Canada 161. Subject to the provisions of this Act, the interpretation of the drawing, endorsement, acceptance or acceptance supra protest of a bill, drawn in one country and negotiated, accepted or payable in another, is determined by the law of the place where such contract is made: Provided that where an inland bill is endorsed in a foreign country, the endorsement shall, as regards the payer, be interpreted according to the law of Canada. 53 V., c. 33, s. 71. Law as to duties of holder. 162. The duties of the holder with respect to presentment for acceptance or payment and the necessity for or sufficiency of a protest or notice of jishonour, are determined by the law of the place where the act is done or the bill is dishonoured. 53 V., c. 33, s. 71. Currency. 163. Where a bill is drawn out of but payable in Canada, and the sum payable is not expressed in the currency of Canada, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts at the place of payment on the day the bill is payable. 53 V., c. 33, s. 71. Due date. 164. Where a bill is drawn in one country and is payable in another, the due date thereof is determined according to the law of the place where it is payable. 53 V., c. 33, s. 71. PART Ill. CHEQUES ON A 1L\ N1. Cheque defined. Provisions as to bills apply. 165. A cheque is a bill of exchange drawn on a banK, paynide CM dC111:111(1. 2. Except as otherwise provided in this Part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque. r)3 V., e. 33, s. 72. 166. Subject to the provisions of this Act,— (a) where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or the person on whose account it is drawn had the riuht at the time of such presentment, as between him and ihie bank, to have Measure of the cheque paid, and suffers actual ditm:Ige through the (1a ma ge. delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of such bank to a larger amount than he would have been had such cheque been paid; 2174 (b) li.S., 1906. Presentment for payment. I Part III. Bills of Exchange. Chap. 119. 33 11(.1,1er (b) the holder of such cheque, as to which such drawer or becomes person is discharged, shall be a creditor, in lieu of sucb creditor. drawer or person, of such bank to the extent of such di charge, and entitled to recover the amount from it. 2. In determining what is a reasonable time, within this sec Reasonable tion, regard shall be had to the nature of the instrument, th( time. usage of trade and of banks, and the facts of the particular case. 5:3 V., c. 33, s. 73. Authority ta 167. The duty and authority of a bank to pay a cheque pay. drawn on it by its customer, are determined by,— Counter mind. (a) countermand of payment; Death. (b) notice of the customer's death. 53 V., s. 33, s. 74. Crossed Cheques. 168. Where a cheque bears across its face an addition of,_ Definition. (a) the word'bank'between two parallel transverse lines, either with or without the words not negotiable', or, (b) two parallel transverse lines simply, either with or without the words not negotiable'; such addition constitutes a crossing, and the cheque is crossed General. generally. 2. Where a cheque bears across its face an addition of the special. name of a bank, either with or without the words not negotiable,' that addition constitutes a crossing, and the cheque is crossed specially and to that bank. 53 V., c. 33, s. 75. 169. A cheque may be crossed generally or specially by the By drawer. drawer. 2. Where a cheque is uncrossed, the holder may cross it gen- By holder. erally or specially. 3. Where a cheque is crossed generally, the holder may cross Varying. it specially. 4. Where a cheque is crossed generally or specially, the Words ma': added. holder may add the words Not negotiable. 5. Where a cheque is crossed specially the hank to which it BY bank foreolleetion. is crossed may again cross it specially to another hank for collection. 6. Where an uncrossed cheque, or a cheque crossed generally, Changing is sent to a bank for collection, it may cross it specially to itself. gr° , , 8sroI n,Ing. 7. A crossed cheque may be re-opened or uncrossed by the drawer writing between the transverse lines, the words Pay rash, and initialling the same. 53 V., e. 33, s. 76. 170. A crossing authorized by this Act is a material part Materially. of the cheque. 2. It shall not be lawful for any person to obliterate or, ex- Altering c,ept as authorized by this Act, to add to or alter the crossing. ero:' n1 53 V., c. 33. s. 78. 2175 171. R.S., 1906. 3-1 Crossed to more than one bank . Liability for improper payment. Rona fides. Protection in such case. Chap. 119. Bills of Exchange. Part III. than one 171. Where a cheque is crossed specially to more for collecbank, except when crossed to another bank as agent thereof. tion, the bank on which it is drawn shall refuse payment 53 V., c. 33, s. 78. drawn, 172. Where the bank on which a cheque so crossed is ally gener nevertheless pays the same, or pays a cheque crossed wise than otherwise than to a hank, or, if crossed specially, other g as its to the bank to which it is crossed, or to the bank actin cheque agent for collection, it is liable to the true owner of the been so for any loss he sustains owing to the cheque having payment paid: Provided that where a cheque is presented for crossed, which does not at the time of presentment appear to be have or to have had a crossing which has been obliterated, or to this been added to or altered otherwise than as authorized by ut witho Act, the bank paying the cheque in good faith and ity, nor negligence shall not be responsible or incur any liabil having e chequ shall the payment be questioned by reason of the haybeen crossed, or of the crossing having been obliterated or by rized autho ing been added to or altered otherwise than as than to this Act, and of payment having been made otherwise ed, or cross a bank or to the bank to which the cheque is or was he. to the bank acting as its agent for collection, as the case may 53 V., c. 33, s. 78. 173. Where the bank, on which a crossed cheque is drawn, in good faith and without negligence pays it, if crossed generally to a bank, or, if crossed specially, to the bank to which it is crossed, or to a bank acting as its agent for collection, the bank paying the cheque, and if the cheque has come into the hands of the payee, the drawer, shall respectively be entitled to the same rights and be placed in the same position as if payment of the cheque had been made to the true owner thereof. 53 V., e. 33, s. 79. Not negotiable' 174. Where a person takes a crossed cheque which bears on it the ‘vords not negotiable,' he shall not have and shall not be capable of giving a better title to the cheque than that which had the person from whom he took it. 53 V., c. 33, s. 80. 175. Where a bank, in good faith and without negligence, receives for a customer payment of a cheque crossed generally or specially to itself, and the customer has no title, or a defec""k jiving. tive title thereto, the bank shall not incur any liability to the ii""" ild". true owner of the cheque by reason only of having received such payment. 53 V., c. 33, B. 81. Customer without 2176 i.S.,1901.( PA WV Part IV. Bills of Exchange. PART Chap. 119. 35 IV. PROMISSORY NOTES. 176. A promissory note is an unconditional promise in Definition. writing made by one person to another, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person, or to bearer. 2. An instrument in the form of a note payable to the Endorsed by maker's order is not a note within the meaning of this section, mak" .' unless it is endorsed by the maker. 3. A note is not invalid by reason only that it contains also Pledge. a pledge of collateral security with authority to sell or dispose Invalidity. thereof. 53 V., c. 33, s. 82. 177. A note which is, or on the face of it purports to be, Inland not e. both made and payable within Canada, is an inland note. Foreign note. 2. Any other note is a foreign note. 53 V., c. 33, s. 82. 178. A promissory note is inchoate and incomplete until delivery thereof to the payee or bearer. 53 V., c. 33, s. 83. Delivery. 179. A promissory note may be made by two or more Joint and makers, and they may be liable thereon jointly, or jointly and several note. severally, according to its tenor. 2. Where a note runs I promise to pay,' and is signed by Individual promise. two or more persons, it is deemed to be their joint mid several note. 53 V., c. 33, s. 84. 180. Where a note payable on demand has been endorsed, it Demand note premust be presented for payment within a reasonable time of the sent men t. endorsement. 2. In determining what is a reasonable time, regard shall be Reasonable had to the nature of the instrument, the usage of trade, and the time. facts of the particular case. 53 V., c. 33, s. 85. 181. If a promissory note payable on demand, which has Endorser been endorsed is not presented for payment within a reasonable discharged. time the endorser is discharged : Provided that if it has, with Security. the assent of the endorser, been delivered as a collateral or continuing security it need not be presented for payment so long as it is held as such security. 53 V., c. 33, s. 85. 182. Where a note payable on demand is negotiated, it is Notikeined not deemed to be overdue, for the purpose of affecting the holder °`erd". with defects of title of which he had no notice, by reason that it appears that a reasonable time for presenting it for payment has elapsed since its issue. 53 V., e. 33. . 65. 2177 183. 137 R.S., 1906. 36 Chap. 119. Bills of Exchange. Part IV. Presentment, where, 183. Where a promissory note is in the body of it made payable at a particular place, it must be presented for payment at that place. Liability of 2. In such case the maker is not discharged by the omission maker, to present the note for payment on the day that it matures; but if any suit or action is instituted thereon against him before presentation, the costs thereof shall be in the discretion of the court. Note payable 3. If no place of payment is specified in the body of the note, generally. presentment for payment is not necessary in order to render the maker liable. 53 V., c. 33, s. 86. 184. Presentment for payment is necessary in order to render the endorser of a note liable. Place where. 2. Where a note is in the body of it made payable at a particular place, presentment at that place is necessary in order to render an endorser liable. What 3. When a place of payment is indicated by way of memosll randum only, presentment at that place is sufficient to render the endorser liable, but a presentment to the maker elsewhere, if sufficient in other respects, shall also suffice. 53 V., c. 33, s. 86. As to endorser, 185. The maker of a promissory note, by making it,— (a) engages that he will pay it according to its tenor; (b) is precluded from denying to a holder in due course the existence of the payee and his then capacity to endorse. 53 V., c. 33, s. 87. Maker. Engn gement. Estoppel. 186. Subject to the provisions of this Part, and except as by this section provided, the provisions of this Act relating to bills of exchange apply, with the necessary modifications, to promissory notes. Terms corre2. In the application of such provisions the maker of a note sponding. shall be deemed to correspond with the acceptor of a bill, and the first endorser of a note shall be deemed to correspond with the drawer of an accepted bill payable to drawer's order. Provisions 3. The provisions of this Act as to bills relating to, inapplicable. (a) presentment for acceptance; (b) acceptance; (c) acceptance supra protest; (d) bills in a set; do not apply to notes. 53 V., c. 33, s. S. Application of Act to notes. Protest of foreign notes. 187. Where a foreign note is dishml, ured, protest thereof is unnecessary, except for the preservation of the liabilities of endorsers. 53 V., e. 33, s. 88. Its., 1906. 2178 SCHEDULE. Sch. Bills of Exchange. Chap. 119. 37 SCHEDULE. FORM A. NOTING FOR NON-ACCEPTANCE. (Copy of Bill and Endorsements.) On the 19 , the above bill was, by me, at the request of presented for acceptance to E. F., the drawee, personally (or, at his residence, office or usual place of business), in the city (town or village) of and I received for answer: ' • • The said bill is therefore noted for non-acceptance. A. B., Notary Public. (Date and place.) 19 . Due notice of the above was by me served upon {A. 13”1 C. D., S drawer, 1 the day of 1 endorser, A personally, on the (or, at his residence, office or usual place of business) in day of ,on the (or, by depositing such notice, directed to him at in Ills Majesty's post office in the city, [town or village], on the day of prepaying the postage thereon). and / A. B., Notary Public. 19 . (Date and place.) 53 V•/ c. 33• sch•/ form A. FORM B. PROTEST FOR NON-ACCEPTANCE OR FOR NON-PAYMENT OF A BILL PAYABLE GENERALLY. (Copy of Bill and Endorsements.) day of , in the year 19 , I, On this A. B., notary public for the province of dwelling at , at the request of , in the province of did exhibit the original bill of exchange, whereof a true ( drawee copy is above written, unto E. F., the ,acceptor thereof ( personally (or, at his residence, office or usual place of busi2179 137i ness) R.S., 1906. 38 Chap. 119. Bills of Exchange. , and, speaking to himself (or his wife, his clerk, or I acceptance his servant, &c.,) did demand thereof unto payment ( he / which demand she answered: ness) in Wherefore I, the said notary, at the request aforesaid, have protested, and by these presents do protest against the acceptor, drawer and endorsers (or drawer and en(lorsers) of the said bill, and other parties thereto or therein concerned, for all exchange, re-exchange, and all costs, damages and interest, present acceptanee and to come for want of of the said bill. payment All of which I attest by my signature. (Protested in duplicate.) A. B., Notary Public. 53 •/ c• 33/ sch form B. FORM C. PROTEST FOR NON-ACCEPTANCE OR FOR NON-PAYMENT OF A BILL PAYABLE AT A STATED PLACE. (Copy of Bill and Endorsements.) day of On this in the year 19 , 1, A. B., notary public for the province of , dwelling the , in province of at , at the request , did exhibit the original bill of exchange of whereof a true copy is above written, unto E. F., the drawee } thereof, at , being the stated acceptor place where the said bill is payable, and there speaking acceptance did demand to ( payment S of the said bill unto which demand he answered: Wherefore I, the said notary, at the request aforesaid, have protested, and by these presents do protest against the acceptor, drawer and endorsers (or drawer and en(lorsers) of the said bill and all other parties thereto or therein concerned, for all exchange, re-exchange, costs, damages and interest, present and c acceptance of the said bill to come for want of payment S An of which I attest by my signature. (Protested in duplicate., A. B., Notary Public 53 V., e. 33, sell., form C. 21S0 R.S., 1906. FoRm Sch. Chap. 119. Bills of Exchange. 39 FORM D. PROTEST FOR NON-PAYMENT OF A BILL NOTED, BUT NOT PROTESTED FOR NON-ACCEPTANCE. If the protest is made by the same notary who noted the bill, it should immediately follow the act of noting and memorandum of service thereof, and begin with the words and afterwards on, etc.,' continuing as in the last preceding form, but introducing between the words 'did' and 'exhibit' the word 'again,' and in a parenthesis, between the words 'written' and 'unto,' the words: and which bill was by me duly noted for day of non-acceptance on the But if the protest is not made by the same notary, then it should follow a copy of the original bill and endorsements and noting marked on the bill—and then in the protest introduce, in a parenthesis, between the words 'written' and 'unto,' the , by day of words:'and which bill was on the , notary public for the province of noted for non-acceptance, as appears by his note thereof marked on the said bill.' 53 V., c. 33, sch., form D. FORM E. Y. PROTEST FOR NON-PAYMENT OF A NOTE PAYABLE GENERALL (Copy of Note and Endorsements.) , in the year 19 , I (hay of On this dwelling A. B., notary public for the province of , at the request of at,in the province of id exhibit the original promissory note whereof the promisor, a true copy is alx,ve written, unto ess,) personally (or, at his residence, office or usual place of busin his wife, his (or lf himse , and speaking to in ent thereof unto clerk or his servant, etc.) did demand paym c he which demand she answered: Wherefore I, the said notary, at the request aforesaid, have the promisor protested, and by these presents do protest against other parties thereto or and endorsers of the said note, and all interest, present therein concerned, for all costs, damages and note. said the and to come, for want of payment of ture. signa my All of which I attest by (Protested in duplicate.) A. B., Notary Public. 53 V., c. 33, sell., for,. E. 2181 FORM R.S., 1906. 40 Chap. 119. Bills of Exchange. Sch. FoRM F. PROTEST FOR NON-PAYMENT OF A NOTE PAYABLE AT A STAT LI) PLACE. (Copy of Note and Endorsements.) , in the year 19 , I, day of On this , dwelling at A.B., notary public for the province of , at the request of , in the province of , did exhibit the original promissory note, whereof a true copy is above written, unto , being the stated place where the the promisor, at did said note is payable, and there, speaking to demand payment of the said note, unto which demand he answered : Wherefore 1, the said notary, at the request aforesaid, have protested, and by these presents do protest against the promisor and endorsers of the said note, and all other parties thereto or therein concerned, for all costs, damages and interest, present and to come, for want of payment of the said note. All of which I attest by my signature. (Protested in duplicate.) A. B., Notary Public. 53 V•, e. 33 sch•, form F. FORM G. N0TAI:IAL NOTICE OF A NOTING, OR OF A 11:4)-I'LST FOR NONACCEPTANCE, OR OF A PROTEsT FOR NON-PAYMENT OF A BILL. (Place and Date of Noting or of ProlM.) 1st. To P. Q. (the drawer) at Sir, Your bill of exchange for $ , dated at the day of , upon E. F., in favour of C. D., payable after sight wa, this day, at the request of 1 date dully c noted non -acceptance 1- by me for protested non-payment 21S.3 H.S., 1906. days A. B., Notary Mililie. (Placf, Bills of Exchange. Sch. Chap. 119. 41 (Place and date of Noting or of Protest.) 2nd. To C. D., (endorser. (or F. G.) at Sir, , dated at Mr. P. Q.'s bill of exchange for $ the day of , upon E. F., in your favour (or in favour of c sight, 1 and by you endored, days after 1 date, C. D.,) payable duly was this day at the request of c non-acceptance I 5 noted 1 1 by me for ( non-payment I protested A. B., Notary Public. 53 V., c. 33, seh., form G. FORM H. NOTARIAL NOTICE OF PROTEST FOR NON-PAYMENT OF A NOTE. (Place and Date of Protest.) Te at Sir, , dated at Mr. P. Q.'s promissory note for $ days r after date to months i e payabl day of , the on J i you 1c or order, and endorsed by you, was this day, at the , duly protested by me for request of non-payment. A. B., Nota? y Public. 53 V. c. 33 sell., form II. FORM T. NOTARIAL SERVICE OF NOTICE OF A PROTEST FOR NON-ACCEPTANCE OR NON-PAYMENT OF A BILL, OR NOTE. (to be subjoined to the Protest.) public, did And afterwards, I, the aforesaid protesting notary the foreof law, by serve due notice, in the form prescribed non-acceptance 1 C bill } thereby going protest for non-payment c of the note protested 2183 R.S., 1906. tt Chap. 119. 42 Bills of Exchange. Sch. 1 ,. c drawer protested upon j P. Q. personally, on the i c• D., c 'fle 1 endorsers } day of (or, at his residence, office or usual place of business)in, day on the of ,(or, by depositing such notice, directed to the said 5 P. Q" 1 at , in his Majesty's post D., 5 office in on the , and day of prepaying the postage thereon). In testimony whereof, I have, on the last mentioned day and aforesaid, signed these presents. year, at A. B., Notary Public. • 53 V., c. 33/ sch form I. FORM J. PROTEST BY A JUSTICE OF THE PEACE (WHERE THERE IS NO NOTARY) FOR NON—ACCEPTANCE OF A BILL, OR NON— PAYMENT OF A BILL OR NOTE. (Copy of Bill or Note and Endorsements.) day of , in the year 19 , I, N. 0., On this Majesty's justices of the peace for the district (or one of His , in the province of county, etc.), of dwelling at (or near) the village of , in the said district, there being no practising notary public at or near the said village (or any other legal cause), did, at the request of and in the presence of well known unto me, exhibit the original S bill I whereof true copy is a above written unto P.Q., the I note (drawer thereof, personally (or at his residence, office or ' acceptor .promisor usual place of business) in and speaking to himself (his wife, his clerk or his servant, etc.,) did demand i acceptance 1 thereof, unto which demand he } answered: (payment she d 9 Wherefore I, the said justice of the peace, at the request aforesaid, have protested, and by these presents do protest drawer and endorsers against the -f promisor and endorsers of the said acceptor, drawer and endorsers j bill 1 and all other parties thereto and therein concerned, / note for all exchange, re-exchange, and all costs, damages and in2184 terest, R.S., 1906. terest, present and to come, for want of said chi:p. 119. Bills of Exchange. Sch. acceptance payment 43 of the bill / note All which is by these presents attested by the signature of the said (the witness) and by my hand and seal. (Protested in duplicate) (Signature of the witness) (Signature and seal of the J.P.) 53 V., c. 33, sell., form J. OTTAWA: Printed by SAMUEL EDWARD DAWSON, Law Printtr to the King's most Excellent Majesty. 2185 R.S., 1906. 7-8 EDWARD VII. CHAP. 8. An Act to amend the Bills of Exchange Act. [Assented to 10th April, 19081 IS Majesty, by and with the advice and consent of the. Senate and House of Commons of Canada, enacts as follows:- H 1. Section 133 of The Bills of Exchange Act is amended by R.S., c. 119, striking out the word "endorser" in the second line of parai3n3ded graph (c) of the said section and substituting therefor the word sa.me endorsee.), OTTAWA: Printed by SAMUEL EDWARD DAwsoN, Law Printer to the King's most Excellent Majesty. vol.. 1-12 177 Attention is invited to the article on International Banking or Foreign Exchange, which is contributed to this number by Mr. William G. Bliss, and contains a discussion of some of the difficulties encountered by banks in this important brnich of bankii,: 4. Mr. Miss is the :intlior of the Lc:xi book on Foreign Exchange issued by the International Correspondence Schools of Scranton that is now part of the complete course of study in Banking and Banking Law that will be taken up by members of the Correspondence Chapter of the American Institute of Banking. Mr. Bliss's work is most complete and practical and it seems a pity that its use is to be restricted to those who take that course or will buy the volumes of the Technical Library of the schools, but such is the case. Foreign Exchange. tof provides that the drawee who Paragraph XIII of the (;erman law e that the receipted cheque pays the amount of the cheque can requir as to receipt might be useshall be handed to him. This provision versies not infrequently arise fully incorporated in our law, for contro ck over the counter can reas to whether the bank which pays a che of identifying him as the require the payee to indorse as a means ceiver. s is definitely fixed by the The time for presentment of cheque s drawn in Germany and the German law at ten days upon cheque which cheques drawn abroad Federal Council fixes the period within wn in the United States on Ger are payable in (iermanv. Checks dra months. many must be presented within two in the (;erman law in which The above are only some of the points es4-11,tr. ••1 1 1• 1 1 1 INTERNATIONAL BANKING, OR FOREIGN EXCHANGE AND INCORPORATED BANKS. A Discussion of Some of the Difficulties Encountered by Banks in this Important Branch of Banking. BY WILLIAM G. BLISS. WING to the increase of foreign trade and other financial interests, also to territorial expansion, the demand for foreign banking facilities in the last twenty-five years has become so general throughout the United States, that national and State banks have been compelled to provide the means to meet that demand. Some banks in the largest cities have done this by organizing what are commonly known as"Foreign Exchange Departments ;" but the majority have wisely contented themselves with handling such for- 0 eign business as may come to them, through private banking houses and incorporated banks having such departments. The recent panic demonstrated clearly and conclusively that incorporated banks of large resources, properly equipped for international banking, are in position to render invaluable services to the country in general, as well as to their own customers. But there are certain difficulties that confront incorporated banks engaging in International Banking or Foreign Exchange, and that deserve special consideration with a view to their adjustment. GENERAL LACK OF ACQUAINTANCE WITH THE SUBJECT. As the first among these difficulties, attention is called to the lack of acquaintance with the most elementary principles of international banking. A little conversation with the average bank officer or director will bring out two facts: (1) that the term "Foreign Exchange" conveys to him a somewhat vague idea of banking altogeLlicr different from ',he oidinaiy domestic bailkini4 ',.,, v..11ich Ilk, has become accustomed by training and practice; and (!) that he believes he has not the time to make a careful study of the subject. This vagueness of idea in regard to international banking or general lack of acquaintance with it is attributable in part to failure to study the different monetary and banking systems of the world, and in part to failure to appreciate the fact that in principle, the transactions common to international banking are identical with those of domestic banking. The former are subjects deserving special study at this time and the press has devoted considerable space to a discussion of them ; but it will undoubtedly help to remove any difficulty connected with the latter, to point out what, from an account- 546 THE BANKING LAW JOURNAL. difing standpoint, is involved in international banking, and what ferentiates some international transactions from corresponding domestic transactions. International banking involves: (1) The maintaining by banks in and this country of accounts current with banks in foreign countries, this in by banks in foreign countries of accounts current with banks country, known collectively in reports of condition as the "Due from banks" and "Due to banks" ; (2) discounts and loans to customers and loans to foreign banks—bills receivable; (3) loans obtained from foreign banks, acceptances for the bank's account or for account of its customers—bills payable; (4) rediscounts; (5) deposits; (6) cash, inconsisting of foreign money, etc. ; (;) collections; and, not frequently, (s) securities of various descriptions. The principal points of difference between international and domesg tic banking are seen in the following: (1) International bankin usually involves two or more differing currencies, while domestic banking involves but one currency; (2) in international banking practically all paper (commercial and bankers) consists of bills of exchange, while in domestic banking it consists of promissory notes; in international banking whenever two differing currencies are involved, the amount of discount is not an item of record, since the discount is applied to the rate of exchange at which one currency is converted into the other, i. c. at which bills of exchange are bought and sold (discounted); while in domestic banking the discount being applied to the face of the note or bill, its amount becomes an item of record ; and (4) in international banking the commercial letter of credit as a basis of credit and exchange is a most important factor while it is comparatively unknown to domestic banking. There are other minor differences due to banking. and commercial usages and laws abroad which it is unnecessary to describe here. REDISCOUNTS AND THE REPORT OF' CONDITION. A further difficulty to which attention is called is the form and place in which the Comptroller of the Currency and the State Superintendent of Banks (New York)* require rediscounts to be reported. The importance of having- this difficulty removed is apparent to every one who is acquainted with the subject and who wishes to comply with the requirements of the departments since in international bank ing a very large part of a bank's remittances abroad consist of time bills of exchange that have been bought or discounted. These bills are rediscounted abroad either immediately on their acceptance by the drawees, or when required by the state of the American bank's account, and if the apparent intention of the Departments with regard to rediscounts were regarded by the banks, they would report * The writer has not examined the forms in use by the Banking Departments of other States, and therefore refers to that in use in the state of New York. INTERNATIONAL BANKING. 547 these time bills as rediscounts. But the requirement itself is wrong from an accounting standpoint, for it obliges a bank to report as an actual liability, its liability by endorsement, which is (z conting-ent liability.f That the requirement is wrong is evidenced by the fact that when observed its effect on the report is to make it a false or incorrect report of condition, since it obliges a bank to report a fictitious asset as the contra to this contingent liability. That this is the case is clearly shown by the fact that the bank that rediscounts any of its bills receivable either receives the cash for them, or charges them to its account with the discounting bank, so that there is merely a change in the position and title of the asset from "Discounts" to either "Cash" or "Due from Banks." But in a financial statement or report, such as banks are required to make in which the resources should equal the liabilities, no liability can be shown without some asset as its contra. Therefore, in order to make the rediscounts appear as an actual liability in the statement of condition, it becomes necessary to create a fictitious asset, and banks that comply with the requirement usually do this by leaving the rediscounts in "Discounts." Obviously then, since no new asset has been created, but only a change in position has been made, and since the same asset cannot be produced to the Bank Examiner at the same time in two accounts, i. c. both in "Discounts" and in "Cash" or "Due from Banks," one of them must be fictitious. The difficulty in the case is apparently due to the wish to enforce the recording of the contingent liability involved, and overlooks the fact that contingent liabilities can only be carried in a memorandum account, apart from the Actual Resources and Liabilities. Furthermore, when the volume of the foreign bills that pass through our banks is taken into consideration, it is clear that the publication as an actual liability of the contingent liability involved only creates an altogether incorrect impression as to the nature of that liability and at the same time necessitates the showing of a correspondingly large fictitious asset. As far as the foreign exchange department is concerned, therefore, banks disregard the requirement. This is not to be construed as an indication that the banks question the right of the Federal and State Departments to require a report of this Contingent Liability, but rather that they wish to emphasize the undesirability and injustice of requiring its publication. In the official report to the department the item may very properly be called for in a foot note, but it should be omitted from the published report. It may here be noted that the handling of the Foreign Commercial business of the country by incorporated banks would be greatly t The liability of the endorser of a bill is contingent on the failure of the principal parties to the bill to fulfill the contract involved, a liability, that is most remote in every well conducted bank. MS THE BANKING LAW JOURNAL. hampered if the same prejudice should prevail with regard to the rediscounting of foreign bills, as at present exists among bankers with regard to the rediscounting of domestic paper. THE BEARING OF THE PRESENT LAW ON ACCEPTANCES OR LOANS. Still another difficulty in international banking has been encount- ered by our banks, owing to the interpretation of the law whereby banks are not permitted to accept time bills of exchange drawn on them. It is particularly opportune to call attention to this difficulty, which is purely American, at this time when a congressional commission is considering what changes should be made in our currency and banking systems. As already pointed out, the instrument of a loan in international banking is the bill of exchange while, in domestic banking it is the promissory note so that to give effect to a loan in international banking it is necessary for the drawee to place his acceptance on the bill of exchange, the instrument of that loan. But it has been held that a bank may not assume the liability involved in placing its acceptance on a bill that is payable at a fixed future date, although it may assume the liability involved in placing the loan to the credit of the borrower subject to withdrawal at any time. In other words, the law seems to discriminate against the instrument of the loan by permitting incorporated banks to make loans to any bank or institution against a promissory note but not against an acceptance or bill of exchange. It cannot be argued that the acceptance of a bill of exchange is not properly a loan but is an accommodation acceptance because in international banking there is a consideration—a commission charged by the acceptor to the drawer. Neither does it seem reasonable, y articularly when collateral is deposited by the drawer as security for the payment of the loan to hold that a bank may not by its acceptance obligate itself to make the necessary payment to the holder at a known future date. The question has, however, a broader application and should be considered in the light of its bearing on the usefulness of our banks to the commercial and financial interests of the country in respect to the acceptance of drafts drawn under commercial letters of credit, and in respect to the usage in those foreign countries in which bankers and merchants make their remittances by means of bankers time bills of exchange instead of checks. In the former, obviously the effect is to limit our banks to the issue of sight commercial credits, whether payable in this country or abroad, since a time credit authorizes the drawing cf time bills of exchange on the issuing bank or on some other bank or banker whose acceptance and payment of the bills the issuer guarantees. Nevertheless it is the common and approved practice of both national and state banks to issue time credits payable abroad but not in this country. INTERNATIONAL BANKING. 549 But this is clearly an evasion of the law as interpreted, unless it is permissible for an incorporated bank to guarantee and protect another bank in that bank's acceptance of the bills which it is prohibited from accepting itself. One of the worst features of this evasion is that the acceptance under a commercial credit, which is an actual liability, is only carried by the American bank in a memorandum account and therefore does not appear where it properly belongs in the report of condition. In the latter, the inability of banks to accept bills of exchange not only causes annoyance to foreign banks, bankers, and merchants accustomed to the use of time bills of exchange for their remittances to all other countries, but it has a tendency to divert from our banks a considerable amount of business that is legitimate, safe and profitable. The law is frequently evaded in this case, by noting the date, either of acceptance or maturity, on the face of the bill without signature. The bills are then either carried in a memorandum account, or credited to a draft account and charged to the issuing bank. If carried in a memorandum account, what is understood by the holder and the drawee to be an actual liability does not appear in the report of condition as such. Any one understanding the importance of haying our banks properly equipped for international banking cannot fail to see the mischief and injustice of the present situation, for until the present rulings are modified or revised or new laws or amendments to the present law are passed, the banks will be unnecessarily restricted and required to turn down good business, or they must evade the laws with the tacit approval of the Federal and State Banking Departments. BANKS IN CHILE. In the Republic of Chile on December 31, 1907, there were in operation 24 banks wiih paid-up capital of 124,040,525.63 pesos (a peso equals 36,'/C cents), and aggregate resources of 811,363,263.17, as shown by the balance sheet of the banks published in the February 22d edition of La Revista Comercial of Valparaiso, Chile. The most important of the banks is the Bank of Chile, the subscribed capital of which is 30,000,000 pesos. 550 THE BANKING I„A,W JOURNAL. BANKS IN MEXICO. HARTERS are granted in Mexico for the establishment of three kinds of banks, viz., banks of issue, mortgage banks, and loan banks. Banks of the class first mentioned are those which are permitted to issue notes of the various denominations, which are redeemable at par on demand. Circulation is limited to three times the paid-up capital stock and the banks are required to have cash on hand to the extent of at least one-half of the amount of their circulation, plus sight deposits and deposits at three day's sight. The minimum capital is $500,000, at least 50 per cent of which must be held in cash before begining business. Banks of issue are prohibited from discounting paper of any running nature, negotiating paper running over six months, or accepting notes or other documents for discount which do not bear two responsible signatures or are not guaranteed by mortgage security. They can not secure loans or contract any compromise on notes of their own circulation, and are forbidden to mortgage their properties or surrender their discounts for collateral security to any third party. They can not accept mortgages, except under special circumstances, and with the approval of the department of finance. A mortgage in favor of a bank of issue that does not exceed one-fourth of the paid-up capital, and taken to protect a credit, which will mature within two years from date of the transaction, may be accepted, within the approval of the department of finance. Mortgage banks are those which make loans on real and urban properties and issue bonds which accrue interest and are amortizable through special conditions and at specified dates, being protected by mortgages. The minimum capital must be $50,000 and 50 per cent of the total subscribed paid in cash. The third class of banks, banks of loan, are institutions which are authorized or expressly organized for the purpose of facilitating mining, agriculture, and industrial enterprises by means of privileged loans without mortgage security. These banks issue short time credit bonds, which accrue interest and are payable at specified times or dates. The minimum capital is 8.200,000. All banks in the Republic are subject to governmental control and required to publish monthly statements in a form specified. C 0 APPENDIX A. NUMBER AND CAPITAL OF STATE BANKS AND TRUST COMPANIES CLASSIFIED ACCORDING TO POPULATION OF LOCALITIES. lcomPiled from rePoit, made to Ihe Compthille, of the Currency in June, NI 1, and from Bankers Pireitorie,.1 New England States. Number of banks. Amount of capital. Southern States. Eastern States. Number of hanks. Amount of capital. Number of banks. Amount of capital. Middle Western States. Number of banks. Altmann of capital. Western Number of banks. States. A1114)11111 of capital. Island possessions. Pacific States. Number of banks. Amount of capital. N umher of banks, Amount of capital. Total United States. Number of banks. Amount of capital. STATE BANKS. (Including stock savings hank'.) POPULATION 3,000 ANI) LEsS. '.Banks of and above $25,000 capital . 2. Less than $25,000 5 $229.500 I o6 84.052,000 2 38,425 280,000 29 25,000 9 1,259 $45,050,067 1,727 $56,089,968 589 $18,620,150 412 2,199 29,450.517 2,625 29,509.165 252 816,640,58i 3,180.365 2,077,000 2,049,800 79 68 9.424.700 1,763,800 76 14,243,710 81,321,857 507 74.718,937 79 3,517,145 115,130 898 37i 795,956 29,800,244 1,999 26,437,450 2.278,500 212 13,305,800 190 11,197,900 245,000 210 5,474,962 129 3,686,950 43 88 4. lob 0140.683,066 7.077 88,615,922 ss8 399163,900 505 13,2459512 POPULATION OVER .L000 TO 6,000. 1. Banks of and above S50,000 capital a. Less than $50,000 5 POPULATION OVER 6,000 TO so,000 1. 2. Banks of and above $100,000 capital. .... Less than $100,000 4 4 6so,000 42 5,363,100 165 23,2099470 188 , 26,805,800 28 229,700 41 2.155,250 302 12,780,456 321 13,642,275 147 5 4 1,840,000 64 63 30,911,300 49 155 18,818,593 10, 294.417 79 28,641,675 4 1,000,000 450,000 129 8,235,530 36 1.637,500 62 60 19 2,999,500 241 43,604,000 1,685 100,364 730 2,184 1229 735,343 704, 700 115 7,838,981 2,666 54,9879285 2,778 55,015,272 664 2,896 259422.150 9 38,552,465 34 1,635,000 36 21 983,500 13 375.400 2 30,000 3,125,00° 5.356,000 POPULATION OVER so,oco i. 2. Banks of and above $20o,000 capital Less than 8200,000 ...• • 1. Total State banks conforming to national hank I standards as regards capital. 2. Total State hanks not so conforming 5,400,306 4,000,000 268 115,011,812 3,714,961 4 377,500 451 30,110,214 629 701109,235 9 5,321,857 459 12,176,271 8 492,630 5,439 8,931 369,577,71 c 169, 767,604 I0 It 104+060 142 to 9,092,310 0 ° ,0 430 114 11,369.()C.)o 25,000 23 boo,000 TRUST COMPANIES. POPULATION 3,000 AND LESS. . 2. Banks of and above $25,000 capital Less than $25,000 900 28 1,516,450 3 55,600 5 58.500 45 6,123,150 3,477. 144,100 POPULATION OVER 3.000 TO 6,000. 1. 2. Banks of and above $50,0o0 Less than S50,0oo 750.000 26 ' 2.266,450 22 1,400,000 5 400,000 8 190,000 9 255,000 2 55,000 28.315.120 , 51 10.376,100 62 8,9m,coo 14 1.952,986 3 25 1,336,000 65 3,180,550 16 769,500 7 800,000 325.000 309 142 54,161,715 88,311 ; 41 18 ; 32,621,800 90 79.076,000 8 I,900,oo0 15 9.650,000 372 30098909140 1,550,000 39 3,494,000 5 525,000 4 450.000 143 15,181,824 146 1 56 46,780,800 3,134.500 195 113 90,359,500 40 4,628,386 31 6,929,550 25 1.379,500 12 11,984,060 800,000 2 50,000 27 3,817,509 152 25 1.245,000 4 48 z6 28.666, 100 1,563,057 170 61 7,599,367 , 122 34,868,609 43 2,858,057 403 69 186,892,410 i 7,768,278 25,000 3 POPULATION OVER 6,000 To so,000. I. Banks of and above Suao,000 capital 2. Less than Stoo,000 6,944,361 POPULATION OVER 50.000. t. Banks of and above $2.00,000 2. Less than S2o0,0oo t. Total trust companies conforming to national hank standards as regards capital 2. Total trust companies not so conforming 16717-APP 148,976,240 937 I 318 A-I I • 375,513,765 22,870,285 APPENDIX B. NUMBER AND CAPITAL OF BANKS AND TRUST COMPANIES, BY STATES. [Compiled from reports made to the Comptroller of the Currency in June, Nix, and from Bankers' Directories. ] National banks. Statt'S, etC. Poi ailation. Maine. ....... New Hampshire 2 3 Vermont.. 4 5 Massachusetts. . 6 Connecticut Total New England States 9 10 70 $7,850,000 56 5,235,000 51 :88 Number of companies. Capital. 42 17 Pennsylvania Delaware. ..... ... 5,210.000 53,617,500 7.943,057 4.125,000 6,552,681 466 98,526.950 28 3, 704,200 :65 37,726,666 C 198 32.728,000 C 85 71, 731,000 23 2,298,500 83 !if), 565,000 741 302 275,826,370 21,987.000 7,665,111 830 tr:8,288,270 d '39 d 289 104,629,658 1,258 237,815,309 202,322 28 2,373.985 C4 14,897,381 520,000 15 1,735,030 47 4,629,015 1j512 314,016,625 364 50,443,881 472 194,66o,688 2,348 559,121, 194 3,596,488 1,613.890 C17 8,563,000 210 29,741,898 cc 8,000,000 31 15,715,890 26.595,970 128 16,618,5oo C 240 9.187.000 2,206,287 74 8,385.000 322 7,048,867 1,515,400 2.609.121 45 5,410.000 114 13.841,000 308 c564 22 Texas 23 Arkansas. 24 25 Kentucky.. Total Southern States. Ohio. 27 Indiana 28 Illinois. 29 Michigan.. 30 Wisconsin... ....... 31 Minnesota 32 Iowa 33 ..... ..... Missouri 35 36 Nebraska 37 Kansas .38 Montana 39 Wyoming. 40 Colorado 41 New Mexico. 42 Oklahoma Total Western States 43 Washington 44 Oregon 45 California 46 Idaho 47 Utah 48 Nevada.., 49 Arizona 50 Alaska Total Pacific States iT i2 53 Hawaii Porto Rico Total United States 2,252,800 410 12,078,282 c 14 8 360,000 359 17,848,282 22,532,350 6 2.450,000 684 38,823.350 500.000 164 10. 532.490 4 367.000 295 20.776.600 373 16,804,770 6.375,000 240 22,564,600 5,893,590 117 4,138,900 210 lt,029,930 3,335.000 8.120,000 342 13.469,770 31 189 8,069,600 20 511 20, 718,673 17,686,667 44.904,000 C 595 13,813,500 C52 7.554.25o 2,158 66.271,750 1,574.449 2,289.905 46 4.435,000 381 11,062,912 2.100,000 440 17,596,912 244 17.405.900 C 430 12,633.783 '3 C 43 8.302.250 617 2. 184.789 100 12,435.000 371 14.936,600 10 930.000 481 38,341,933 28,301.600 27,529,853 1,572 183,034,070 4,351 155,372,015 202 49,915,300 6,125 388,321,385 4,767, 121 380 62.347.257 C422 17.295,438 c68 23.573.800 870 2,700,876 103.216,495 261 27,453,000 312 11.571,302 110 10,816.60o 683 5,638,591 49,840,902 438 73,220.000 C500 32.071,300 C 44 32.000.000 982 2,810.173 137,291,300 100 14.710,000 ('405 22.949, 775 2.400.000 510 2,333,860 128 17.080.000 532 15.910.150 II 2.360.000 671 40.059.775 35,350.150 39.655,000 2,075,708 272 22.671.000 721 1 4.334.000 997 327 21.380.000 977 .32.485.700 e4 C 14 2.650.000 2.224,772 1.900.000 1.3:8 ;5,765,700 1,093 31.132.950 C52 21.589.050 1. 274 88,377.000 4.962 177.750.615 3o8 97.289.450 7.305 549.556,322 13,046,000 129 35,655.000 ! 25,844,435 2,035 577,056 148 102 274.516.257 - ... C 555 C 516 7.411,000 4 350,000 707 4.205,000 6,978,275 II 575.000 629 11.758,275 245 16,062.500 678 14,053,540 923 30,116.040 1.690,949 208 11.817.500 e 866 16.626,300 C4 525.000 1.078 28,968,800 376,053 58 4.875.000 4, o6o.000 '7 1.150,000 155 10,085,000 I. 267,000 3.005,750 583,888 1.192,214 ........ 5.285,000 145,965 29 1.685,000 799.024 126 10.515.000 327.301 1,657, 155 42 276 12,622,500 c633 9,701,750 C II C3 7,349.605 1,234 69,162.500 3,560 63.974.615 2,095,000 871,000 100.000 84 000 2.635.400 285 t6, 156, 150 86 3,428,486 210,000 912 22.534,250 65 6,007,886 4,859 139,145,001 462,486 1 1,141.990 So 12,200.000 c 215 8,319,000 C /7 3.250,000 312 23,769.000 672.765 77 7,371,000 151 7,968,100 500.000 231 15,839,100 2,477, 549 203 51,803,750 444 53,668,836 3 6 6.700.000 653 :12,172,586 ;25.594 46 2.640.000 134 3.607,264 Cl2 654.060 192 21 6,901,324 03,351 2.780.000 4.423.180 C2 550,000 96 81,875 II 73 I9 1,835,00o 3 1,130,000 33 7.753. Ig0 4,707,00c 1.742.000 204.354 23 1.030.000 C 39 1,592.126 64,356 2 100,000 13 872.000 5.241,834 453 79,666, 750 1.088 82, 285,s06 191,909 4 610,00o 7 C'S e 2,000.000 1.118,012 100.000 1.309,921 93,346,543 52 15 2,622,126 It 584 174,736,316 2.399. 500 11 .4.009, 500 1.414.987 9 5 710,000 :7 5,814.487 7,277 1,019,633,152 14,370 M9,343;319 a Includes stock savings hanks. Banking institutions known as ' Bank and Trust companies'' which do not transact a trust business have been classed with state banks. Num-Data for State banks and trust companies, not otherwise indicated, from hankers' directories 167 1 7-- -APP B-- II 371 292 9,379,670 Philippines Total I,!mid possessions 959.000 _ North Dakota South Dakota.... 1,202.000 45 3,293,335 Total Middle Western States 34 3 81 31 40,850,500 C5 752.619 3,896,542 ............... . . 8,775.470 10,572,673 2,138,093 1.797, 1 14 1.656,388 Tennessee 26 _ 271.367,370 106 Louisiana 139,957,816 659 458 196 1,221,119 21 26.229,20o 2,537,167 :4 I West Virginia :5 North Carolina. Mississippi . 15,1:8,307 II 30 :3 • Virginia 20 37 475,000 2.190,000 C is Alabama. 6,660,000 74,401,109 '.7 C86 Florida 6,274.200 241 79 6,1o2,000 t8 $11.275,000 73 20,783,609 C4 17,582,410 19 112 53 6,7oo, 2so II Georgia . Capital 80 19,914,200 107 17 Number. 1,450,000 22 331,069 2,061,612 ' District of Columbia South Carolina "fotal 29 '114,756 1 19,518,214 Maryland 06 $3,425,000 $1.039,200 1'2999346 I2 Capital 542,610 9,113,614 New Jersey Total Eastern States. 11 742,372 Number of banks. Trust companies.b - New York 8 Capital. 430,572 355,956 3.366,416 Rhode Island Number ' of banks (June 7, 1910. State banks.a 43 12,784,060 972,000 1.514,987 2,000.000 1,21,:5 11 398,384,050 22 6,524,487 22,902 1,957,362,521 ----------- e Prom reports compiled by the Comptroller of the Currency, as of June 7, 191i. yi From annual report of the commissioner of banking, Pennsylvania, for 191C. e Classification by municipal districts /THE AMERICAN BANK UNION. A PLAN FOR A BANK CURRENCY FOR THE UNITED STATES. The Congress to charter a Bank to be located in Washington, D. C. The stockholders to consist of, first, the UNITED STATES, for such sum as the Congress may deem proper; and the other stockholders to be the Banking Institutions (only) each one to the extent of one-tenth, or one-fifth, or one-quarter, or one-third, of its own Capital, as it may elect. All subscriptions to be paid in GOLD COIN of the United States. The Capital stock of the AMERICAN BANK UNION to constitute a reserve, on the strength of which and other security to be given by the stockholding Banks, the AMERICAN BANK UNION may issue its notes in the proportion of three dollars in notes to one dollar in GOLD. Any stockholding Bank to be permitted to borrow of the AMERICAN BANK UNION its notes to the extent of three times the amount of its subscription, provided it deposit with the AMERICAN BANK UNION security consisting of a part of its assets, but all securities offered must be approved by the Board of Governors of the AMERICAN BANK UNION with a margin to be specified by said Board; provided further, that in estimating the margin of security for such loans, the Board of Governors must take into consideration the value of the stock which the borrowing Bank owns in the AMERICAN BANK UNION, and regard it as a part of the security. Stock in the AMERICAN BANK UNION will not be transferable so long as the stockholding Bank is indebted to the AMERICAN BANK UNION. For such loans the borrowing Bank must pay interest at the rate of two per cent per annum. In the event of a great demand for currency, such as financial panic, or the movement of the crops, any stockholding Bank may borrow additional notes of the AMERICAN BANK UNION, to the extent of one and owe-half of its interest in the AMERICAN BANK UNION, upon depositing with the said Bank additional securities acceptable to the Board of Governors, the margin to be determined by said Board; but must pay for the loan of said notes interest at the rate of five per cent per annum for the first half of the additional loan, or any part thereof, and six per cent per annum for the second half, or any part thereof. Any stockholding Bank may borrow less than it has the right to borro\N% Any stockholding Bank may increase or diminish its indebtedness to the AMERICAN BANK UNION according to the demand within the limits stated, provided that not more than ten millions of dollars shall be withdrawn in any month, from the whole Bank note circulation. The AMERICAN BANK UNION shall do no other business than to issue its notes, lend them to its stockholders and redeem them when presented; except that it may receive on deposit GOLD COIN and issue its notes therefor, dollar for dollar. (The AMERICAN BANK UNION would simply be a Currency Bureau for all Banks which became stockholders.) The profits of the AMERICAN BANK UNION should be divided semi-annually after setting aside annually one-tenth of one per cent of its capital as a Guaranty Fund, until that Fund shall reach the sum of Twenty-five Millions of Dollars, and said Fund should be maintained at these figures. All notes loaned to any Bank should be designated by a 2 number, by which the different Banks would be distinguished. The AMERICAN BANK UNION must redeem all of its notes presented for redemption, and when as much as Five Hundred Dollars (bearing the same number) have been redeemed, notice should at once be sent to the Bank designated by that number, to forthwith remit to the AMERICAN BANK UNION, the same amount in GOLD COIN, on receipt of which, the old notes should be destroyed and new notes issued and sent in place thereof. In case of the failure of any Bank indebted to the AMERICAN BANK UNION, the Board of Governors should have the power in their discretion to sell the securities deposited with said Bank, within sixty days, and out of the proceeds, including the par value of its stock, to redeem the notes loaned to the failed Bank, and turn the balance over to the receiver or other representative of the failed Bank, but its share of the Guaranty Fund should be forfeited to said Fund. If for any cause the capital stock of the AMERICAN BANK UNION should become impaired, a pro rata assessment should be made on the stockholders to make the same good, but it should be understood that the reduction of the capital when paying off the stock of a Bank that has failed, is not to be considered an impairment. As to the organization of the AMERICAN BANK UNION, the Comptroller of the Currency should be Chairman of the Board of Governors, and the other members should be elected by the stockholders, and should reside at or near Washington, and be allowed a reasonable salary, commensurate with their duties and positions. All officers of the Bank should be elected by the Board of Governors and hold their places during good behavior, but for cause should be removable by a two-thirds vote of the Board. (This rule to keep politics out of the Bank.) All National Bank Currency should be retired within six months after the AMERICAN BANK UNION commences operations, under such rules as may be recommended by the Secretary of the Treasury. Two agencies to be established for redemption only, one at St. Louis and one at San Francisco. February 12 1906, Norfolk, Va. 4 1111.101:4o•rue.o. .4a • - ego?' • A CENTRAL BANK TO BE CALLED THE AMERICAN BANK UNION. Principal features of a plan for a Bank Note Currency for the United States of America. First. A Uniform Bank Note Currency. Second. To be Guaranteed by all the Banks participating; in other words, all Banks who may become stockholders in the Central Bank. An issue of Bank Notes based on a deposit of Gold in the proportion of three in notes to one of Gold. 'Third. The Notes will be secured by a deposit of Securities by the Banks borrowing said notes, which Security must be approved by the Board of Governors of the Central Bank. Fourth. All notes to be redeemed in Gold on demand by the Central Bank, which is to be reimbursed by the Bank for which they were issued. Fifth. A Guarantee Fund to be set aside out of the profits of the Central Bank of One-Tenth of one per cent per annum, as a further security. Sixth. The Central Bank to do no other business than to issue notes, lend them to the Stockholding Banks and redeem same when presented. Seventh. The United States to be a Stockholder and the Comptroller of the Currency to be Chairman of the Board of Governors. Eighth. The exclusion of politics from the management of the Central Bank. 5 ' Ninth. The entire issue of notes may on ordinary occasions be equal to the sum of the Capital Stock of all the Stockholding Banks, and in time of i panic, this amount might be increased by fifty per cent. Tenth. The elasticity of the Bank Currency is provided for by allowing the Banks to borrow only what they require in dull seasons, and permitting them additional notes in times of financial stress or when more currency is needed to move the crops. Remarks:—As the Central Bank will usually have outstanding notes for three times its Capital loaned to the Stockholding Banks at the rate of two per cent per annum, it will be earning six per cent per annum on that Capital. A fter paying all expenses and taxes and setting aside the annual contribution to the Guaranty Fund, it will be able to declare Dividends of three to four per cent per annum to the Stockholders. So the reserve fund will not be idle. Thus the Banking Institutions of the country can he provided with a Currency which must command the confidence of every one. All the machinery for redemption will be provided by the Central Bank ; all expense of Engraving: all Taxes on Circulation will be paid by the Central, which expenses and taxes, the Individual Banks now have to pay. The notes issued to each Bank would be treated by it as its own CIRCULATION, and it would take measures to make good their redemption by the AMERICAN BA N K UN IO N. There would be 110 use for Gold outside of the Central Bank's reserve, except in the event of a heavy and continued balance of trade against this Country: then the immense Gold Reserve of the Central Bank would come into use, and would be able to stand an immense strain, especially in having all the Ilanks in the Country lending their support. This Plan does not affect the National Banks except as 6 / to the issue of circulating notes; all other privileges and duties would remain as at present. It would furnish a circulating medium for all parts of the United States, no matter how remote. Under our laws at present, there is undoubtedly a discrimination against the State Banks; with such a plan in force, there would be no demand for a repeal of the law imposing a penalty of ten per cent per annum for putting in circulation State Bank notes. The present issue of the National Banks to be retired within six months after the AMERICAN BANK UNION C( mmences operations.