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NELSOil ALDRICH

Moue

CO .."..:2311

MISCHLii I

http://fraser.stlouisfed.org/
4
Federal Reserve Bank of St. Louis

INTERNATIONAL INSTITUTE OF SOCIAL
BIBLIOGRAPHY.
37 & 38 CHANCERY LANE, LONDON, W.C.

tzg. Library, National Monetary Comma anion,
Washington.
Sir,
I have the pleasure to inform you that you have been enrolled as a
Member of the British Section of the International Institute of Social
Bibliography, your Membership to date from the
January tat., 1911
•
I am, Sir,

tary.

MOBINING

SUNDAY

TriE

EVENING

SUN
THE A. S. ABELL COMPANY,Publisher%

BALTIMORE. MD.

Nov.

9, /911.

National IVonetarv Corritssion,
Waqhington, B.

Dear Sir:—
The following inquiry has been referred to the "Answers

Column of

Th3 EventnE Pun.
Give the oarital of the Ba_nic_ of England and the

Bank of Prance.

If you can furnish this information I shall appreciate it very much.
Gratefully yours,

(9
Editor, "Answers."

NATIONAL MONETARY COMMISSION,
WASHINGTON , D. C.

e
43-A-

V1 7\4~LL
r

• • Al .

61,

Y". ,L,AAAy

c._t •
/I/ t
1E1

-1.

THEODORE E. BURTON .

FLSON W ALDRICH , pt I .

i„ JOHN W.WEEKS

CHAI IR MAN

EDWARD B VREELAND, N

ROBERT W. BONYNGE . coLo

VICK CHAU R MAN

VUMUEL P. PADGETT,

JULIUS C BURROWS, M IC H

GEORGE F. BURGESS.TEX
ARSENE P.PUJO. LA.

EUGENE HALE. mr
/HENRY M TELLER,coLo
/ HERNANDO D MONEY, miss.

GEORGE W.PRINCE, .LL
JAMES MC LACHLAN

JAMES P.TALIAFERRO.FLA

SECRETARY.

A PIATT ANDREW,
ASSISTANT TO COMMISSION

WASH I NGTON,D.C.,

CAL

ARTHUR B. SHELTON ,

BOIES PENROSE,PA

ASM

ONNIMI

From H. P. Davison.

UNITED JT-TES GOLD LOAN
Three Years - Two Percent.
In denominationo of $10., $20., $50. and 0100.
Face of the notes in one piece; interest warrants in
another.
Face of the notes to be legal tender and receivable
for all duties, and to be counted by the banks as part of
their reserve, to the extent of 10% of the required reserve
of each bank.
All subscriptions to be accepted during the Whole of
one day at every Bub-Treasury and National Bank in the
United States, and must be payable in gold, gold certificates or greenbacks.
The Treasury must keep at all times at least 50% in
gold against the outstanding notes of this issue.
The Treasury may deposit the other 50% in the National
Banks, (the proportions in different localities to be substantially pro rata to their subscriptions), with the right
to call it back from the National Banks at proper intervals.
All deposits must be paid in gold back to the Treasury
by the National Banks within the three years.

NATIONAL MONETARY COMMISSIO
WASHINGTON, D.C.

teed

ij
(

-C/t/t4-t

?94/

2
;
y2 6
4
,(
4

Abram Platt, Jr., economic writor and diroctor of the mint,
was born at La Porte, Ind., lob. 12, 1873, son of Abram Platt and Holon
(Morrill) Andrew, and grandson of Abram Platt Anirow, a pioneor ourvoyor and
turnp11,33 tailder, who settled in Indiana in 1818.

Mr. Androw was odu.cated

at the Lawrencevillo (Now Jorsoy) School, and at Prim oton and at Harvard
Universities;

he also studied at the universities of Halle, Berlin, and

Paris and received tho d.ec7oe of Doctor of Philosoplw at Harvard in the year
1900.

In the same year he was rado instructor in the clepartrnont of oconomics

at Harvard Univorsity and throe years later be became assistant professor,
which position he occupied until 1909, conducting large courses on ganoral
economics, money, banking and. comma/vial crises.

White at Harvard he sorvod

as assistant editor of the "Quarterly Journal of Economies".

He was also

fbr several years faculty membor of the athletic oommittoe and faculty rorroscmtativo of ther'Corcle Francais", in which capacity he entertained many of
the distinguished Frenchmen Who camo tO Arrrica.

In 1906 the Minister of

Public Instruction in France conferred upon Pre fossor Andrew the titlo of
"Officior d'Academie“.
In 1908 When the National Monetary Cannission was orgenized to
doviso a plan fbr reorganizing 4the American banking oyster:4 Profossor
was crigaged to assist the Cormission in its researches;

j'aulrow

and having been given

two years' loavo of absonee from Harvard University, ho vi sited London, Berlin, Paris and other important financial centres of '2unt rx3 with Sonator
the chairman of the Commission, to collect information about foreign
banking systems and methods of rrevonting crises.

Upon his return to this

country he was charged with the editing of tho Comission's publicatio
ns,
Which will comprino noarly two score volumes mid constituto the most comprehensive library dealing with tho world's banking that has over been
publ ishod.

-2Numerous articles upon curren.cy and tanking and other financial subjects have been contributed by Prof. Andrew to leading public ati ons.

Among

those v:hich have attracted wide attention were his "The Treasury and the Banks
under Secretary Shaw" and his "The United States Treasury and the Money Market" issued at the tiro) of the retirement of the former secretary of the Treasury in 1907.

He has published a series of studies on currency questions as

they concern Oriental countries, notably "Currency Problems of the Last Decade in British India" in The Quarterly Journal of Economics" fbr August,
1901, and "The End of the Mexican Dollar" in the same periodical in May 1904,
and various articles on the subject of financial crises such as "The Influence
of the Crops upon Business", (1906).

Hoarding in the Panic of 1907", (1908)

and "Substitutes for Cash in the Crises of 1907", (1908).

In the later he

describes more than 200 substitutes used for money at that time.

Other of

his articles concern the general theory of money such as "The Influence of
Credit on the Value of Money" published in the ixroceedings of the American
Economic Association in 1904.
In August 1909 President Taft appointed Prof. Andrew Director of the
Mint.

Tie assumed office on November 1, 1909 and served in that capacity until

June, 1910, when he was nominated Assistant secretary of the Treasury in charge
of the fiscal bureaus.

During the seven months of his incumbency he intro-

duced various labor-saving methods and processes in the nint service, in particular, latchines for the autonstic weiGhing of the coins in place of the hand
weighing hitherto employed, and mechanical feeds for the coining presses in
place of the hand feeding.

By these and other means the number of employees

in the Philadelphia Mint was reduced by more than 100 persons and the services
of an equal number will be dispensed with from the other institutions.

SEM

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ett2

co it

ai(4

a- Az-7 .19P/Oogie"

r04/1(AZ 2y

ttn

111"
of the Monetary Dermrtrirnt

of late a 0,,vot

of Econoflic Policy I oiAaintd fro:1 him a glimpse
into the
strane,e world of Silver Politic,s, which sek2med to
me to
contin matter Of irit,rt'r t. L
conrlderin4,:. vow pu(nzILIrly

rneric•

t thiS juncture,

emocratii and Repu011enne

wort. divided NT* in the latt Silv,r coht.05A in Congresg
.
Not trItst1;it

7:
74

TImory

IKCCJEOCi the sti: in writinb.

4"
--it A. A.- :"
Ct

q-C

'
11./
'
-1 /

ov
'it,
•4,
1
,

)‘"-c. V‘
r
tt4

tk.

-"a

HuropeaLs

tra(;12211y learnln;.. thc, ics.,.,on o1

Act in tne dnilted

•t:es; an

teing verlkened in it'
,

that _o

ilver

so ear from

-fr , t, is rathr strongthoned by th•

late reaction Crom thc- romarknble height the price of Silver
.-eirst attained.

Toe fall, no doubt, haJi causeci loss, e-

pecially in England, but lt shows, all th. mo.ce

eor

that, th“. nccessity tor a settl(:ment,

interest

th;A: Fu*J'op

is to join tt,(' Unitt,d States in bririt1,6 tHat settlement
about,
In fact, men are realising that alternations oC ii

:91d fall

oC ow% money Jwtal against another need only to co-le
onol6h in saccession to impart an actual seasickness to the
entire bus1ne3s world in Europ(.

Tilt, conviction which would

tr!us be imoosed on all the leaders oe businurs IF precisel
y
wnat tneSjLvr reformord desire -- nnmely the conviction
that
a stAtlumcnt of Silver apoll th

atR basis ()V paritl with

Gold is in toe hit, ref-t of oil tni

oup,nt to 1)‘. attcnc:,.(

to at once.
I am told that agitntioux Lo t,h iF

ei',.ct

o 5k, pressed

both by the German and the Rnelisn Silvr Leagoes 1-ith rent.wt,d
energy now that public attention hat- been 1Jat
on tht alert,

ftectully

in th(- Alsonce of an awatk,ninc of interest,

swil as is no'i witnessed, the

these organizations is

rather uphill work, it Tntst hi confessed.
1.

Thu apparent

plArorm neoesl:arily ourntt:s to discoarage

to ad)pi,
effort.

rosp(!ctivk - (overnments

of success if;

romotyrws

(111rFzo, thc,re is a natural oisposltion to

T on, or

t:Itost. t;-- ilce carc, of Si1v r F•71riclu-har.ded,

Omit ,

i is

Tvltn only platonic wcii vishin, frc..1 1no1vidui....1c ot

ide

oc toe ocean, and witilout the co-operation of Governments.
has well been 11

Tnis

id to *,hat, of flu

wa“mer in

flO prayed for Hercub:s to lift his waren

AEsop's ttb1 t

Ilrt!, and was aorlonished tnat wollu Hercules might
lp

'Itlfct put r1I

O.tl FHo,C.1(it• r to t:ne

Arnerioan .Act tz.oinc. into

So,
sory

re '1(tcli,

(, to InoLde,i

th,

'Hercitit's'
disoosoo to talc

both ih,3_.1td. and in Germany, were
.plled "hurrahing for

-oat

to )iilyltic,

Austri

ncws s'rom petc-,rsburt.

•

and Vienna, however, secs to hPvt
awaken t'et

th,.y were

ih(n ;1.1ve-r ac.nt (Amin

momm 1-16 the cfrt.:t to

to a more practical disposition.

Th: idea that

rir1 Russ ia were 11spou0Act. this junct.nre to set thvir

moaetary nouce it: order or tilt! plan adopted in London and
namLly oh tn., Gold Standard, ws a sharp monitjon.

It has

ro-en observed im consvgevice that th, (1s(!ussions in

uss 1 a.

Austria that must ireeedc any overt acts os s7ch financial
manitade oft'ored to tno Envlish an

orrnan rveormers

favoJ ratat

occatilon to set on foot a vihotlrous carrIpalgn
of

propa6ariz!.,

t.(3)

uducat

p,iolle

1)011Gy
-

o!' :4t.!rti:q;

pr:71,etical

formcr
rnments to put. Sllvkrbac- to 1tk
ix pL,.ce

0!'
gldt= by

"!ith

1(1.

or tr- c,
Austrda

i;o far rr; theru is

Of curse, from the point of view
that r;ould bc tnp wlsot

t'or Aussia, and it th1:7 be tfue
, ail U.-1M', is neyoed

is icleatirn to .iataralin. tt)at. conv
iction amone, tPe quuslatis
;trio NuFAr1;4ns
!0

it concf-.'us.

far as the Press can indice.tc thc
(IsomiltIon pr(-valling

I;. t"t,se wwntrics, the recolinised

T1I

ofricial objcAive
(;: lri •

Lhe aooptloc or Silwx coinae;
Rs mi ,tters siwmd

in klther country,

roulr! f%)1). to osablish th;lt fixlf.y
of
th(-

oV Lonclon anc

whlcil is trt, main riesithratum
in nn)' refonn o'
systems

i)a.per money.

harr:ly

presert

Fvery-orv: 7ou10 n;Aurally sal it

Yile to KOt the cumbrous machihc.ry of
pollf1

In Ilotior anri

orit

great etipcnse, if -;t, th

tei or

Is:rq.;

r
I act;r

accomit

thu Titt;,111c rottb14. and the
wtattIc rldrin, respt,ctivcly,
a . luctuating comodity, as comporcd witil
the
now y 01'
thf' ;1.(-11.n,

' l'ho trade with the eoautries oP tilc
rouble and
flri in which, or with rt,fort'nce to
which, no much
6.

Of RasHian and Aastrin tn.qie must be defectively carritli on.
thk- !dart

:kit, unfortunatuly

iI(‘ro rf: 'to tht

T (,0

Cold.

t hit

in ltv path, namkjy

otmtaclk

iE a

or (;ol(i resurtpt.ion, (hcrt,

rh 'loolty 01 eotting
dil-ii-'1.cu1ty of

tbo ustwl :;pro,e, tht JJ; 1-,() say,

Gold in

g-Ltint: !lorwy, whicrl prnotionlly means Acttine, the control of
ht.co hEfore, n;Iplely

bt' c:o:11106ed, cs it

riThat

o;Tit:11.

by lnans to bk: plactd in th- grunt ecrLtre

caoital.

The O1i'r1c;a16, I spea. o° pertains to the .wulli,r c!-!prketor
loan
rion

)(lc or tht

wlen tho loan is mado, thv asv to bi
Thk: object o!' S_1'h

of such

n(- ,tso.

:trill

It Le ;1 rww

lewn woulri h

rrom?

en:Triu ity 1

to ht

ri,.privk,d of'

or c:xperit.nce wouln

dinpry

Where is to

1s to part with his stock? What blisirwss
the

Tio;-w: o° mchanf. upon

iv f.t1

its busint.as depends?

is to tm

in fact, a

aim won 16

squofAration or Rs ano so nue?) fold.

ooft

prwiltet

r (otri, now 1,,and to tr;tnitfer

poss, sion or

conl

ir to be

for non -tar,' purposk_s; it ariveli

100K

It )(

mule witn tne s;Amu f\our

viltoh rtwr,
nk

utt1(. i iv

, 0,uf.;t

thla

or-

int-notqi mr.r-ly to tr,lwr 1 thu control of

.‘ t
TV fre+! coinc,

or s1lvte hive h-ri cntanliPhvd in tot, orate(

ati

Stat

ti' t

f;0 .11;141.Y

to seal; of

1).• no trotthiU

Jot. (7X1

you

amci ti

l-',uropcit.ns hoped it would be, such scruples as

newt ht; no (;(11;)y.

Th, re are f1nrcac1,s1

OTkOU t,h in Europe vrrio wolorl only

too r(,ar:y to

t ;ict•

or Austro-flunearlan 1(lan at f;- 1r inttreA ic they knew thcY
C01110 dip out tht-lr buokets
the Unit r

old Proti the mot stocks of
socurf- that th:!:: rrol:ari not

nt y,)t,

thc-r(.hy by brinellic on a squeeze in the rioney rwrkA,s of
Europe.

This scurity

S1Lorsufferad no lirot:Al.on
then

ivt

II)Ated. St;itt-tsaf,
nt!.,v m

reI

(70111:'g0

d f;tatc-s.

fit out tie Ear tern KlpireF witr

It will thus ht. iwn that tht•

11. tne Crol

They could

they necd.

Ihsenco or -erect ;..oinatr,e 1'i the

hiF or1ticp.1 jxncl,utro impose', it 1./•to

i AEuroGe whic!ii i; if adoptk,d,

OU1

ort 1..ty the

cold and weaken thc poFit,lon of -;11ver.
It, 1:-1

peculiar sitoation tbat the Europc-•:on advo-

cotev of Si1vr obtpin th tir levrave in recommv.nning a serious

ervort at a g,:neral reconstroction or :, rionetary systems.
lcraili

1Y V-le

spirits in the two great I.:astern Empires can only ho

hr,
,»1,1,t to unru•rstand t)tt iesr,ons of the emoorience

or Lnwson ;is to

Aoricy, as

E21t;11 fin ano the irerm rfl b i--7nt•t,al1 ists

int.c•rpr(-4, Ln..i an ltnpiast• may com, frofl tilt, vast in vesponse to
that wilich has been 1,1vvn hi the new Silver Law in the vr(-.,,at

Renublie of tie West.

Cortninly if tho Cabinets of Petersburg

and Vienra FThoul(: serioufly
j010.,

xv.ert:,ke to promott: tht, policy oiLl

tn pot Silver 11:i.ek

11.t ..r; it wfly., they

t(; rf:tiovt: the, inrliff P4 Het'
coo:nt;Jus,

No roubt a

tj.1P+.

ho',"(Ar

hns prcvniled in otht'r

tJAJ. wluld takf: time, but Fome ravour—

ahlt. 1.(!Unri murt reritlt if! ti-v end.

On t'lt- ()trier hano, if these

Empires ',ow hocom! seriously cotvittted against Sikvur
-- their
niAtinnal pridc enlisted in continuinv to acolzmulatd colC
aE
ri-st t..-se !
, may -- thvr no doubt thc! pPtn of' t,r'
wilt bt

t'ound besct "it,?' ncw and srions obstaelcs.

So it is plainly
En v 1iF1

SU.vr avocates

very oractical course for this German rtrd

Leagues to trv to call

halt, atir

mae tnuir ideas

felt 1.; the proper (loartrs t in rMssia ;qui Auotria -t this tine.,
even 1
tmv,
Act

rcforri.

The,
'mumt

the

tht

r,)11

t5()

by what it does

it (UVOP

tIOCk

t.rui by what

tht' bus 111'

t itocs not do.
,-orld which puts

on the calondar evryvhoro in Furope, whi1J.
oter lt 1n'o711:14's
do

ONtJ

svtt1.:::v2nt hy free coinve, ir Furo!w
l'orLirles the proposal by rkfusiner, to

an"

Silvcr

11:4F 4orangod a fl.-Jd tor t: or work, and in l'et domitor the

situation
()1

o no more #han to prov(mt that eommital to rhicll

‘3.

Clearinc.

Action of te

association, Decamber 5, 1863.

They resolved, first, tat the national banks w_uld be wat is
known in the west as wildcat banks;
Second, t:mt the use of nationv.l bunk notes would add from 5
to 10 per cent

o the cost of all articles purchased;

Third, that the government would lose ,18,000,000 a year or the
pro osed issue of

300,000,000.

eyond the authorized liMit no note can be issund unless ft-16-1
equivalent value in gold coin or bullion is held in the issue de)
,
partment of t12e bank.
•

From Journal Institute of Bankers, November, 1905.

Bank of England now has right to issue notes against securities
to the amount of 02,250,000
It has 3 London offices and 9 branches in the provinces.
It 1ms 250,000,00G of dei-,osits, a considerable p, rticn of which
is in the bank balances of the various banks of the Unitud Kingdom.
Government (e)sits range from 425,000,000 to 05,000,000
- - o - Bank of France, the government appoints its governor and two
sub-go.ivrnors, Whidh are only removed at the government's pleL,sure.
Average deposits for past 5 years a little more thall ;95,000,000
While no stipulations are made as to the metal reserve against
notes, for the past teh years ending 1905 the amount of such reserve
was 80"; of outstanding circulation.
The bank is required to advance $36,000,000 to the government
free of interest !uring t:-, e continuation of its charter.
The average gove..nment deposits in the bank are $50,000,000
- 0 -

The GERMAN BANK is under the control of the Imperial Government.
Issues of the Imperial Bank are--uncovered issue, $119,000,000
the issue of any further notes is against equivalent amount
of specie held
a still further amount subject to a tax of
against this latter class of notes specie must be held
against 1/3 of the amount, and good bills of exchange
vgainst 2/3.
In recent years the privilege of extension unde - the 5,i;
provision has been freely used
For V-, e 5 years from 1900 to 1905 the average outstanding circulation was t285,000,000, against WLich reserve was held
of 4220,000,000

FIFTY-NINTH CONGRESS.
NELSON W.ALDRICH,CHAIRMAN,
WILLIAM S. ALLISON, JOHN W.DANIEL,
JULIUS C.OURROWS, HENRY M. TELLER,
HERNANDO D.MONEY,
THOMAS C.PLATT.
H. C.HANSSROUGH, JOSEPH W. DAILEY.
ARTHUR P.GORMAN,
JOHN C.SPOONER ,
MOILS PENROSE,
IEUGENt HALE.
ARTHUR S.SHELTON,GUINN

COMMITTEE ON FINANCE.
U.S. SENATE.

German Bank, (continued)
Bills against shich currency may be issued must have not more
than 3 months to run and many of the reports of the hank Show that
m .3-e than 1/3 of the bills TwAured witHin 15 days.
During the 5 years from 1900 to 1905 the government deposits
averaged 4'.51,000,000.
Three-fourths of the profits of the bank above 3 1,/2T.;:are -ayable
to the State and 1/4 to shareholders.
- -0

IMM.

Note.--In all cases referred to the national bank has protically a moncwoly of issue.
-

o -

The AUSTRIAN BANK has a right to uncovered issue of 4'83,000 7000,
and above that to any extent against specie, with f:rther provislc.
n
for t:xcessive or supplemental issues subject to a 5% tax.
THE . ROYAL BANK OF SWEDEN, which 11%.s had the sole right of issue
since January 1, 1904, may issue 12,-.) to t22,500,000 against covernmert bonds or ( (od bills of exchange.
All issues above this are coven,d by actual gold in hand or
abroad.

Firrv- NINTH CONGRESS.
•:ELSOel W.ALDRICH,CHAI-RMAN,
WILLIAM S. ALLISON. JOHN W.GANIEL,
JULIUS C.SURROWS, HENRY M. TELLER,
THOMAS C.PLATT. HERNANDO D.MONEY.
H.C.HANSSROUGH, JOSEPH W.BAILEY,
JOHN C.SPOONER. ARTHUR P.GORMAN,
SOIES PENROSE,
EUGENE HALE.
ARTHUR B.SHELTON,CLERIC.

COtel'AITTEE ON FINANCE,
U.S.SENATE.

In dealing with the problem of a "Central Bank of the

United States", one should properly discuss first the advantages

and Uiti;-tdv:):Itag,,s uf th,3 centrA. bz4nk syrtem in general, una Then
the purticuls,r problem of a centrztl lowlk of the United States.

For the purvose of ihAs dircussion, however, I may take

it as a matttlr of common agreement, that in the preeent state of

our civilization, wherever circumstances permit of itE establish-

ment, the central bank system is the most suitable and efficient.
When the millennium comes, when the

reign of eternal peace iF ush-

ered in, and when competinF armies and navies no longer exist s we

may see a system which will centralize all the gold of all countries
into one big international reserve or a system which can be operated without the use of any Eold at all, av some theorists, like
Prof. vnupp, of Strasbourg, foresee.

I, for one, do not believe

that either we or our great-grandchildren uhall ;Itive to dircurs
these possibilities as more than theoretical questions.

While we all hope that the arbitration movement gill con-

tinue to grow and that wars may in the future become less and less

cf struggles fultonv nations alwys re-

mains.

Fence nations will nevr cont-int entirel:, to abolish their

rr:it.rC nt.irlf4, and jiat ur little

1 they gill ,,ive up their

reserves of powder and guns, will the' agree to give up their re-

serve o

Thi

F inortt--nt, ior ihilc

ihin the confines of

our own political boundaries our present money system acts as a

wAtionia clearin

credit inp.

to each of uti the net result of

his work, and accomplishing this practically without the actual

UEIQ

of cold, by meant of bank accounts or of checks to beurer,viz.:

btAnk notes, still Ulterior payments between nations whenever all

other f.eans of settling a debit buLince with. a creditor nation

have been exhausted, must be made in fi.old.

To meet the immense volume of demand obligations, which

are, by their terms,

,t11 pi

.hl

-2-

An ,Told, there exists in actual

gold under a modern banking system an amount equal to but

fra.ction of the total auount of gold debtr.

ThiF system ir there-

fore safe only if the credit c)*

r,o vr,roniT, m. to inspire

len1. reliance that even if actuill ,Yold in larp;

at one and the

th.; -A,a1

UI flu

thirthtnOed frQn' onr, or i:ror,

.44hrtefull

be nediessi

credit of

,-verta banks,

hoarded, thH public

banku thoneelvtir bin.

A.11 bft rent!voFited, ro long

quantity in

C;T

thr-J.e rf,rtAin soPt institutions,the

hich cannot be shaken.

1';artl2F:rmore, the system ml.:?t be

vo convtitutd,tut in care of a demand for gold, each solvent, bank

will puy out the metal free

and boldly, recogni-ing thif, au iTho

role muthod of stopping an internal drain, and of preventing it

from degeneratirw into L vanic.

Cition, the system must pro-

vide for a means of successfully combatting the export of i;old,and

of encour:

discount rate.

import,when necessary,through tl.!e m.:dium of the

This again presuppusee the existence cf

1J(rf-,e

voluve of safe commerciAl pz.pc.r endorsed

cr bcf4ring the hce:ept-

baWr or 1)k,,,-.F., vap

ance of,

:1.c.1, is sa.3

&.t any time nnd lalich, by the cuEtom: of the country, ir

pur-

cimsed or re-sold, sr their daily needs develop, by f1nt.nci;-1 firms

and instituti‘ns.'?inkaly, the lbws f,overning and suleguarding the

creation and collection of such paper muiLt he so olehr hno. unifcrm

and the collection of such paper in every phrt of 4,htl country must

be so easy, as to make 1..n investment in such paper not only the

suff,st, but aaso the quickest asset of ti bt,nk.

These conditions ac-

tually pre7bil in countries enjoying a po.:erful and -oll-orj%nized

central bilmk.

There is tt very old Englivh 101r4se a, ing, "John 731,11 can

stand anything, but he cannot stand 2%".

Since thin phrase orig-

inbted, centuries ago, John Aull hns sesn lower rates, but none the

less; i

rtv4int- true tudcy.

It means that money seeks to draw a

f*Ax return of interest, rini It illutrz.

•••

r, furthermore, ihy

wtriod of tot-, -lasy money invariabl:: bring', in it

of expansion nrd ovPrspeculvtion.

choing th

With 1-.oth phnvee tine centra

As tht, mtteorologirt draws hir chrt

connf.cted.

bk.nk ir

trin

points of high ;11d lo* prersure, and from 1- 1"re deduces

eEALer, vo a nap could be drvwn show-

the probbilitior of 'inci p.nd

ing how money, among fin4ncia11y :e11-org4nized nr,tions, flows with

abuolute certainty from the

int-xert rott-r to tile

tAiint whclre a•. higher return chn 0%fely be secured.

And jurt al4 low

1.eft-,1Lre iv not the only factor determinAng btnoupheric tranrformn-

tioni, but

A.e temperature and humidity are tmportsnt elements es

,
inportt,.nt, loea
IC so there;,,re,

ti--.L; movement uf

questions to bei taken into account.

which, ac the ()use may

,211th.7:r Eidd to the :Lnterftst rate to be

earned in another country
,) or eItr.

ceived.

derfr.n:Age 'he retl,rn to be re-

There is furthermore the toektion

dence enjoyed by eac1.1 countr7,.

!'llch erf - 1.et rato.r of exchange

f the fiegree of confi-

As the insurance pre-tiiiam is cammensurste with the risk of

such tranacticn, eu money evicts iA1rr rf,turn fron

invertnent

in countri,ae wh.lch arc cons i(iered fi.leacialy loss becure or tn

%hich, owing to 0, rmuller or riore irregularmtirket, the invtmeqt

cannot be ro

juiccly reEold.

,ourt which tile investor
The tot&l !,

is willinrs to place in each pvrl.iculr country will depend upon

theFe contitions.

Pr investigt.tion

Euroir, condf,fione will rho,/ thet

money mcvt:it freely, according to

and

”liF

principle, between the T,irger

,1 centres.
ell-re6ultAed Furopeen financi;

In the nine of pol-

itical antagonifime money i,ill flow to tht,t ontre

retr- e hi&est

inturert return cen he received, provided tJlz.t. confifience in th(it

port. .cuir

countr

ie Fo t,tron,

i.ht r rht-

doer not

tel!,

ak5k

deterrent 11;i1. Rs an indictment.

flo

into Angland when the Rnglish hank rote wont up to 72:, Nt the

ena of l7irt .year.

Thr.

tylg;in to

Preneli. npital at the attractive interest rate

..ur inverted in 2ng1iv.h bills to such “ degree, Illut the bkaancr:

between tht:t o n,Ntions tirnd in fsvor o:

settled by shipmentr of Eold.

ri t

In h rimilur

to be

Ipmdreds of mil-

lions of foreign capital move into Germhny when rt$--t, benome re-

.rgin,

in rb,t4iv, t. -le

the diftorence

countr

Tuunorutivt thrt;, sno

W,r11,or ("Nile

t, diFti.kehrf.

We ccnnot to,', strongly grasp this ides of the po;Jer of

the 1”3nk mto to protc . trid to 4ttri,ct Rola.

the centml 11:,nk a:.'ten

the fA*st drain

Without such ?ower

for it would collapse when

ccure.

ir it 1)4.4ce,ib1e, it is often t:,ske, for Englhnd to do

this enormous business which conasto it ;E( te world's clestring

house, with so small in amount of gold.

Tht sris'pver generally given

is that it it possible only through Xng1k4nd's 1,0er to c,r7mund the-,

gold

thus implying the ideai of immense balunces due to Krigl4nd,

.4nich ure caled in wt,t,n ni:eded.

'Milo this at c.rtFtn timer rr,tk,y

important cauee, narbel;/,
be correct, it does not state the most

Engit,nd's ercCit,

he £r't eonfince ccnncled by the English

e that thbt pupor can flbanks and by their paper und the knowledg
whatroever, and that, if re-

be reuuld without

.
quired, it can be collected in actual gold

Angland's crecUt knd

render her olAstem fors*
her 0)i1ity to i:djurt her rat.F. 6f interest

sible and effective.

to
Retween the indebtedness of one nation

lies

Ihk-t debt in icuid
another :.na `1- 1 actual petilement of

ne, co. rAtnitlbuffer - the borrowing power uf the banki

the respective countries.

Nations, financially weii-organied,

y 1, 11.1. i'lo, 4o
will find thA for a moderate inducement mone
for
freely for the purchase of Fc!cliritiefL, or

of thort

Xnglnd, ,Av. it is
time investment. This buffer is strong in

the united States.

We have no modern “nd re•Aily stdeublc,i paper

int-rketc, and while
which in critical times we can offer to foreign
in fr,-ctione of one
the European bunko word with fluctuatioNs oith

-8

our primitive method

per cent.,

eun bu turnnd we

1OJ, un:1

f.11 ia

often moan that Ilefor

the tide

it suffer fluctuationv of .1nterect rKti3v of

of secl„.ritiee to '0:2nkruptcy pricls.

Jul-t

it: i)verItiv. pIer.

the

cotcotiv,, oowr,-r of tlIc Central

Alen money bectomer to vbundtint

there ie alw&ys danger that it ru-..y. lek.ve the country, In° also that

eecul*itiun rau:i bc undul:), stimulbted.

It iv during such L period

of gener;.1 exuberance and expansion that the Centra Bank, if wise-

ly mbnagoe"

ill draw in its funds 0.nd prtpure for the cumin

storm;

to t.ccumplik,h trir i, will seek to stiffen money riitp, awl, by

Loundint, i“ note of warning, it v1l ufn

v(Irt te comingcrisis

or modi4 it into that normal form uf 110,1,(1- 1 re.kction wilt& inevi-

tfdbly followr any periuJ of grei.t prosperity 6,nd expanuion.

On tho other 11.1.tnd,

i)orfect centrA bank syrttin will

Protect the eountry nut only from too easy monoy, but also from too

hia rat(ls during thoFe pnriods ahen money is in activl demald, aF

MID

for instance, in our country, during the crop season.

timec a ),rfect central bank fytei

nuring such

undul:

111,

the rate, provide freely for legitimate demands.

incrf,srAg

It will he pro-

reserve dtwrettse materially, kno. ng by expriencle

1)trect to let it.

thf.t th,t notes issued in excess of its normal circulation will

quickly return after tYe parliculr,r buririess or a givt,n resion has

her' done.

Thus

see thtit the and of necamber annually brings

with it a larjo increase in the note nirculhtiun of the Gernan

Reichrbrink, whj.ch notes, however, quickly ret4rn for redemption

during the first two weeks in Jknukry.

From the btInkr's point ol vie, th

advantages of a Central 71ank System are

(1)

the protction rind

f features and

follov4ing:

I n*1 no wit

gold holdings;

(2)

t'-)e cre;:tion of in civrtic currency ahinh tends to

prevent too low money rates in timer of ihun614.nce, ;is well Hs too

high rates in times of mon4y scarcity;

(.5)

bills:

the establiuhment of a broad ii,LrkeA for commercial

this r,arket at bottom owes its existence and itfT import-

inc; t.o the r(;ritrl Rank's reAness Lo ditcount t;lich bills ;t hny

time, thus ifiakinr the commerni51 bill tht, b-st quick-arset of

bank;

(1)

the fRct that it

ir a bed-ro(* fount.tion ror

ccnficience in tirf- of utreut, becuuie I. cc.ntralizer t'r!,-, reserves

- free and effectilre
of the conriry, thuv rend' ring poorib1E! the'

uue;

un0 fimaly

(14)

ubli. to deal

the fart thht it creatr a lentra) Arrtit,t*irn

other rn,tionr, in care exptionnl merur4tr be-

and with whieh other nhtionr evcIn in tines of the

v.orrt Idanic, can negotiate to furnish or obtftin 1Rrgo! loanr 6f

h! r f,..tquently be.tn thc:

r))etrg-Pn PrNnee Prid Angland.

Thl eYortest ano most rtriidnr: wpy to :Illustrate the

elrt-co7,inEr of our systeni will probr,b1:

nce cf lart yeur:

to review o'er oxperi..

!riod of rapid exWe Ilhd, like Xurope, gone throwh a pc,

pansion,

to co,ne

robly over-ex:pion:ion, knd

na,1nr-,1 reaction

t) Furop, und it did come to buth.

while vie v4.ent into

ie, weather the stoiT, ,1k

movt disgraceful ett,te (.f

bound

FxpE=nrion

why then did

1,,:rry than with ur;
lyrobubly riorn f,ctut ,:l in (,

Germ&ny, much •,:euker 1h4n

Yft-tP

out

utter hdp1ei-F-0

and tfimporury b&nkruptcy?

We may leave the ephon:eral quition aside as to 4hich

"rtr" it 4AE., thst "broke the canel'i

After a lone, i‘eriod

of
of prosiAlrity, there will, almot a)Aa1;, (tevelup some point

weaknss, and there thi. bret,k

ill first occur, an6, as a rule,

of
that break and the enruina itrin .:4111 briag down other parts

the rtructure afected by dry rot.

Some "bubbles" were pricked

in Gerribn:, taro, and to7Le ugly ftA.lur,3E occurr,,CA

did nut create any panic.

Distrust did not spread in aermuny,

because the gerwral systi:14,ein, whiAt it

ere, 1.)At, they

)Alibiluken the

belief that against go wl assets, gocd money ;All

able,

lwhys be hvuil-

1(1 ro "hoarding" reains an lInthinkable phenomenon.

er'ure, tivtrri was unirired confid,:nce that so long bag the Reichs-

bank :iatx in eeneral toulh wiUt the sitw-Ltion, though sore things

might bf;,

otten, they . Aul•.-i rer.hln the exce,4 ions, and that it

wouln be impossible for all cr :Dven

ny lg,.re;e prcportien of the

firlaqciLd institutions to be unsound.

We shall not deal with the queetion wi- ther with us bad

jwigment

mirmanagenent had be-m so extreme that the reslaltant

outbrwaic of divArAit

natural consequence, bound to be

as violent as it proved to be, or 4hetl7er artilAcial fanninp, of

the flame by agit::.tion, sensation, ;Inc; exageration played an

part

in the unfortunate development, or whether such a complete col-

lapse of credit would under taly c'Irci.mstances have been porsible

had the lewd foundatlon on QIh the .thole industrial and l'inan-

clal etructurd reated, bettn firmly and e.juithbl,,, conrtrunted and

htiA it bobn lees vubject to violent uphLvals.

coribind in the United fltates,

wIlktver

to brinr: !lout

cririr of 1907, it c;,i.nnot be doubted t1I0., it

nt'v r .hrIve re:.cht-0 ri,ch 13.1)1:ailing (AnienFlone ha6i. n( . been

1:40k of eltasticit:f in or cur ..inc:;

for

of our referves;

t;oinv t,(A. f:,,ect;

tht

u' tfr uselflusness

our inability to ;411,3:( th(, brIceu while -e

thr tAlkenc

of any ileanv. to negotiate for measures

of relief ,i- h othr ccuntriec thrcwh a channel recognize

off.Lcial;

und

ch, ntt,

Tic' 1

b;
: them

tilt; i1 Gf modern AN rican Fills of Ex-

rervinp. ar th-.

boAnc(.'s of tht

:re

fans cf r•ttling the daily

nation, :ould huve be(=;11

'r,kve realized in Yurol,e and in th,it

k,r1

thf;. bk.nkp

-45, by re-

r!,

dircuuntinrr mmongrt each ot1-.er or ;It a rentr;-41
,

Wb..n the pbnic crime no outflov of kuld h)-t0 tz,..kn place,

and no nuturill sl'ortage of currency prevailed.

c%idito currency was very

k,ir

)ro

much in exceur of tht of r:tost

other nations, and there were hundreds of millionr of currency

in ¶ie bunks

n. trwt corperies.

But When owing to en epidenic

05: dirirw,t, people been to withdra• crsh, it bcame rtrikincly

apparent that our system wan on17 i

tThir weather system,

abrolute collapge in adverse tires.

Thrc, ar 4,ith

tionta currenc:,

tihere sir-

no means of iruing adfli-

int. tbe best oammercial

enormous reserver of cash, accumulato6 in

arBetk,

where the

11cr, cannot h

ired

because each monager fears a run on hir own bank if his reserves

ti'vt 25'i; limit, it is inevitable thst each bank must at-

tempt 1.Q draw upon thr reserver of every other bank, an

Aill h-rita.te to

cPrh kt

time Th.nt1-1

tl-rtt each

panic-stricken

public sl-toulf! be fortified in its confidence Ovit its mony is

safe Knd thtit ch is cominf:; out freHly everywhere.

Under such

concationE t.h-: drain by the public must increKre inrtead of being

ateAyad, and

it"

innvit011

t11% 4- the Aurst and mort aggressive

hoarder will become the bunk or trust company which, realizing

that its 2f

cash reserve is quite useless will, ar

selfprotection, and because no other way exists, use every means

of "buildinE, up" a. reserve, by preying on its neighbors, at the

1.l rieans be dereared.

very moment .hen reserves should by

'irom such a

ystem thert cr result only one ccnsellience:

a tremendous rise in interest riqt r and cl tremendous fall in th_e

pcice of securities;

and if even t.1-1re

effectr du not at-

tract foreign capital and do not convert t 1-!,-bum-

otor ;71,1

hoarder into Investors, a general suspension - politely 00.1e1

clearing house crtificates - must folio

wholesale individual suspensions.

in ordlr tn r'rev-;,1+

Our rysten, in 'act, did not

even permit us to suspend scientifically.

When '.TPv vork began to

issue clearing houre certificates and all the rest of the courtrT

had,

4115

a nhturN1 consequence, to follo, the struggle for gold

and currency became even more acute Fetonu tjip .virionr cAtiP;s 1 fol0

-16-

111

a shameful gold premium which lasted fur several months, drhined

Europe's z old chests and brought needlero harm -./1(t anxiety to our

frifInds on th, other f.idP of the Atlantic.

cir

(.;r1;im to,n,

tlmt

yeert hgo

whfin bk

rtn.ne,,,r arcived late at night in a

Kbow

1F.sp.w

driver who, how-

ur. on] v one c;..1.1 left.

4o move, hnd the policmgan txrleined that as the law

?rescribdu th:.t one cf,l)

taway: be in welting

tt!
, 00) could re4117 no* )1e allowcId to 7.ea-v! !

tui

rtory mny

prescribed that the

it is TAite,

tht. utation

Ridicraour its

`',o our luo4 which

5T -eserve murt alvirlyr be kept intact.

It c;.nnot be too stron7,1y empharied th.f. our most urgent

neodv in Rddition to the creetion of an elKstic curri,mcy,stre con-

centrutiun of reserves find

lieu of ()Ili- present vyrter

Gf concertw, action in

if deccntrraizatiun.

T.et uu now conrider wYat cireurirtiinces there are to pre-

-17-

vent uy

frc,

establitihing a OentrL1 Bank simil-r to the found

axistInce

Tha chief difficlatier ara

in the w,urokean

curcen,v, the decentralization of our not,, is-

of or

ruing io-er uad of our reserveii, the lack of modern (Nomercial

on vallch to 1)et3 an tatietle currcmc::, thf-

obEolete ueury lama,

and finUly the up-rooted popular 1.1-eiud1ce

nAF_t ahiug bearine,

alikt, of politice

nur:e of a "ce.ritrza b:)nk";

fear

n bncss and of brinerr in puliticr,

It is unnecesoary to make

eecured currency.

Y-WIttmcf. of our

1on6 argunent,aw'hond-

cad \eak uatione or

peo)le in tinker of :tress,

hon4-t-.6curagl eurfenc ,, 6n,!

generally during a aar,

every healthy nation us ro;u1 as it WbF aeuin stront

abolished thir obtio).1out eystem of inflation.

havt thik bontoured curren,

As long

e cennot rucceed in gettine, an

elartic one. TWnd tecured currency always expands, it hardly ever

contractr.

Our recent legirlation, enactee latit uumer, woe wigs..

-16-

ly creL,tec a

a tervorary reur

on1, eince h far-re:ching re-

form could nut be 1,ucceksful1y achieved

thc.row,h reseLrch,

inafi..luch

bfiu ft.j

hltrry and without

ne new lav, is en :,mpt.rtt.,nt rtep in i.dvence,

l'cr the firrt timc comnerciel paper IF admitted as a

it,tto of noteE.

Flut unfortunatel

the iErue of notes

c.AraiLercitllpF;r .-1.r made deoindent upon the previo/he ierue

bon6

ecured currency to the extent of no lefE tha(1 40r, of the

note ieEuin6 power of a benic.

uF on

ThiE, and other conditions impoved

Acii note iuutw, rtake the ne

cur:ency Etn emergency currency,

but not a healthy uncl nurmally elartic currenc.

elutt:;xity ide generally conAet.

rubber-band.

If .de

id; ci

t.n old and fray,A rubber-bkqd, sii01 1443

been :tretched to itu utmotAt ci,pc*ity by hulciing together 4 largo

bundle of papore, vie cannot make the old rub}or elilttie by t ing

u it c nev. piece of elurtic bands

There thie

have indeed made room for niure papers and

nuen doitt vve

when this no* room is

filled, some little elhsticity will develop, but if the papers

eYould thn decre;Ape belc— t

band

rth:y

ir -

rvict -!,ximum size, the rubber-

.A.11 rio': oGntrhct.

In order to have

effective elasticity, the band must still fit tight when thf: bun-

dle has been reduced to itr smallost size.

This means, that in

order to make the ol(l band elhstic, .:;e must shorten it considerably

before we affix the new elartin adO,ition.

In uter v:ordE, Ne mutt

first of aT1 redeem our bond-secured currency so tlib.t our note

issue may hereafter be 011e

1- 0

nontrY, in time of bbundhrice and

so thht roughly from the lowest point up,hrds, the note ipaue shall

remain

in healthy touch with the elemond for curency.

In redeeming the bond secured currenn71 1 two points will

have to borne in mind:

The one is thht it must he done without

injuring the banks that now own these bonds - or it will nevt:r be

done, and besides, to do it otherwise would be unfbir, - and the

other is that we must be able to provide new currency when we with-.

2(:)=1.

draw the old, so that no scarcity will be artificially creatd.

If I were asked to sugest how this could be done, I

shoul6 pr6i)o1e ttn inveree eonvexrion of the borws, i.e., I thould

advocate the conversion of tho presenl. .overament bonds in' o bonds

betirinr

rbte

f interort hie,h4r by uo irkuch tn;,1 f,rter the ,rivi-

lea,e of irruinp rioter

tIv!

shall hhve been withdrawn, the

bonds will sell jurt 74F hi=711 ar, ind portibly

they now sell with tI'Lif privileL!6.

in w-iriour

ayr;

little higher,than

Thir clik be done gradudi. and

it would indeol nean an incre

in tne

int,Irert chbre to be bcrnr by the United Sta.ts, bat it would put

our bonds on

nxiturt,1 lmpir, like ;he Englir.h Contiolr or irench

R,intes, so thEtt, th

Governr,r1nt

nonds.

Americn peovle coul:; i,fford t.o own their own

In fr:t, thit;

1)3, v:Icuring a healthy

syrtqm, irld by protectinF us from a repbtition of

Fbi-

con-

vulsions, would come b;.clic to us a thousandfold, and ,ould consti-

tute th

b-rt eJ;)enditure that our govs:ramont could mk.tke.

In creating the ne4 currency,

could probhbly follow

thr; lines of the recent legition, t,n,1 provide fur the orgbliza-

' ,",urrne:/ Arrocitiotiv throw,hout 1,be country.

Thlre avso-

ciatione, ihcr. rl...ould be o v-1 it1Fo for Statrt bhnkv hnd porribl:!

Ed e° for Trurt Comkon.,.t.6,

khou,Lc

ILodifiea in nny

other reE)ec,i, wou1:1 cliccounf. the lz-45it1mate co.erci.l pk,ptr

ht:notd in 1); ti' IL f-embl,
:rr

ndp4114 11 on with their endorreALent,

to thfl Cdntral 1Frue 1rtent

noter LiEf,binkt FUC1

';4..shinton, which in turn would

ii.r;-Iteed paper.

Of court, ruch

-ettpr with ruch gnarntee kLould he taken tikt par, and not ht

lit prerent 1,rovided, and it Fhould be tatkoli ht a uniform r•te,

to be pablisrled from time To time, by the Central Issue nepartment.

The ('Ilrrency A :oci:-tiont

int. in tbfl pt,per

huld receive fruii. the invtitution }lend-

certk.in reh,uneration for every endurveille:It ur

gwo-h4nt e executed by them. (Whether the profit, Lft.:r paying 'or

the runninif, expenbes and after having hccumulated a idr.-e reserve

fund, Fhoulti in yearE to comu be paid out to the members of the

associations, in proportion to their pro rat

u detail to be 4orkod out later).

such

of the guarsnty, is

A mort imi.ortunt consequence of

be 11.;:t ;(3 Fhou1d bret,k
.
developrient ,ould

dang-rous fystem by

.1-1ch

4 11k'

it.1.1 our present

17nkr 1,re filled with single nkme pa-

p'r which they c,,nnot re-rell,

und - r our present concep-

tion of twriking, they could not 0,teiript to Fell without ruining

their credit.

filu laiv4s vdould, Of coure, hsive to be ro

mended,

!, 4r1(1 it
that bunks coula en6orrti ;prid hccept freely ss in 7uro:,

ill in tire follow

nit

Fit;

will be created,

netura cieveloprent that nircount Comp

in Angl , ril, t,nd

active devisnd in thu f7o14th kn, off%!red fr

Southern banks instet ! of re 'iscountin

'-t when mone-, ir in

)3.y An

he Rftrt, th

their afrocistion,

.111 be able to rediccount frnkly and openly in Ne,p, York or in

lioston or in Europe.

If, Rr it ir t, "nr, hoped, the Currency Anro-

Oiutiunb and the Diecount r!omphnier will, Pit the proper moment,

begin to estahliph two different rater for guarantein
g papr, a
higher one for rinp;1

name paper, and a lower one for paper bear-

ing in addi'ion to the conrereita rigniAture the acceptance
of
bank or Imnkinc firm, we shal give a:, 4.dd6d stimulus to the
modernizatAon of our paper.

When our bankr once f‘;d1 thiA they can

rely on binp7 able to redifeount their legitiniat(t paper, they
will
be ab1G

risk

loirch.Jpe the Ea. freray ,thout,

n, runnine the

1 dLrLeroly lockin, up their cital through
buch inv,Hst-

ment.

I have repeatedly dealt with thie 4uestion and with the
dikastrcur Elffects of our urury la.,

tri• d to uhow

our ryrtcm is in thir reupect directly opi,oeed to the
European
oyrttm, Find

our kamost annuul (QnYUlEion

i11 perforce con-

inue unlepr we make our comrercita paper the 4uickeut 4i4Eet,
and
the b/rir of our ImnkinF, inste4d of uring the rtuck exch/A
nge call
loin for thir purpose.

-24-

As for the organization of such

rentrka lksue Depurt-

-- ent, I hbve also dealt with this quertioll on previouv occusiona,

and I mAst not go full-

Sufi'ic61

in+o the details of thht i;roblem here.

to rby that the bol,rd of truFteos or directors should

11( eurpu.ed of flelers fron

the Irrious rlurrency Asr,ocitions,

; of the mreasury, the (7omptro1ler of the Currency,
of the 7,ecretbr-

poste membrs of

h-1 flen7-

of fh,e commercitil n

boldrr.

of 1 .1c Troul l to :thorn rome members

,ser mirrht, "t-) ftdt;od. by ol(;ction of thi-; Ftock-

Thir body of -len vhou16 alect, too governorv, sa14ried

o 'floors of bip.hs+ rtnnriinG and tri,in:Ln, 4
- ho would be retaino(1

ir. offin

of t..

heir.

1,s long sr they an! effctiv

f.47-0.3

irreaoiotive

ticbT 1iurt2t thtA raiy for th- tjithtling he

the

The powers of the Pentrd new,rtment uf Ierue should be

strictly limited, and should be r..s follows:

, not to exceed
runnint

socitions;

montJ,r, ff)r 4 h

to discount paper,

v::riow currency

hs'"

to make advancer apvins+ certain bonds (novernmont

bonds, ravings bi,nk bonds, etc.) ;A uniform, publirhed rt.ter 4rd

orirnatrA

U) tu certf-in 1,rcentae of tlier vriptrk,,t vm1,1P to

frun time to tine,

(ibetbr such advanc.-s bre to )10 vale on17,

through the Currency Arsocibtion or ulro direct, is

d0";-1

411.nh

can bP left open for the time bein0;

to buy and sell foreipn bills runninff no

three months and bearinp at lour+ three bon

to exced

fide sicri,:+lrer;

to deal in bullion and to eontrl,c+ fo,- loans of billion;

to act

the depositary of 'hP trebsur7': norply

giving collateral;

and finally, t

ciations.

receive deposits from the curronny

FatEIC"

The Central Issue Department my issue natal, .h.,c11 MItit

by gold or ,nomr-eracial paper;

to be at all times covero

no labs thbn 1/6 of th, nutek

by gold or legul tender.

A Centr;:i Peptrtr.t u1 Iiue

: pc,ssibilit
beyond hT

e cuvered

coi;tituted woula be

of bbueu for pulitical or othet- purpoLes.

The conrtitution of the board and. the liliiitutions vits power

preclude any suc+ pospbility, however rer,:ote.

Ar tYe Central rep4rtmeLt uf Issue must command the

highest potsible confidence and in order to provide ts arong gold

fror the stk4rt, it is stag eLted tput thel T)eprt-

purch‘tinc,

ment he endowed ositb. a lurge stuck ct,v itl ut, let ta t4t,

4110G,O('J,00C.

In order, hov.ever, to 1,reven1. uny posk,ibility of

repz.rtment atinlinist(::-ed with u view of earning large

dividnds for thc! ,stuckhulden:,

rupused tu iimit the divi-

dends to a crt.in percentug, and after having accumulk,td cor-

tt,in resrtrver, to turn over the balance tu the United States GOV-

ernment.

WIlether or not, in considerution of rueh profit to

received, the United States should AYuar;,ntee

noteF, m.y 'r) !, left

for future .
i onfidertition.

The bugbear that Loirlebody mighf buy the control of ruch

an Inititution rkay Fafely be dismisred.

purcntii

A man ur

group of rylen

the stock \c,ould not i:rive the sliphtert profit from

it, exc(:10 te lir.ited return on the investment.

They could not

H oint the ho%rd, find even if they could do uo, they would not

profit by it, as the ne,partment is restricted to a limited number

of safe tranractions.

T1.!e rentral nelThrtment of Issue should have the right to

ir4k fror time to time, that the .1 ankis, through the Avrociationr,

deposit with it * certtaln proportion of their cash reserves, and

the law would have to be amended uo Elcr to allow 4.h€. bunks to count

as cash their deporits with the rentrul nepfArtment of Issue.

The

object of such an amendment it' obviouF" as th,1 gold in the hands

of the Central Issue 'nepartment can do thrice

he amount of good

thbt it can do with the individual b.nk, ihich, after the orgt,niza-

tion of u. Central Ite nepi,rtment, need not fear the withdraal

Of c,Fh

o lonE as by rediecounting its round and legitir,ate paper

it cn tecure

currency.

AF for Greenbacks anti Silver ‘erti.fics, I believe

could well aford to leave the

unto)Ached for

he time

beim', and povFibly ut the surpluv, to be derived fro' the

•i•-ofitri

of the rentr . Isrue nepartment, for the purpose of gradually re-

tiring

he greenbacks.

With the bond-secured currency redeemed

and rellaced by an elartic currency, it is conserva'Ave to h,pe

that with the large exporting power of this country, we shall be

sufficiently equipped to protect our r,old, and tht

prenbacki

and silver crtIficates will represent. no more thein thc, pocket

money of our large population.

Foever, thir scheme with all itr

detail, us fur am they curl he outlined in this brief address,

-29-

does no

pretend to he 1The only solution of th

sugp±Istion, subject to If:any mo(!ificE:tions.

In outlining it

riousl

tt all, for

problem;

it iE

I hive great hesitation

the !fonetary ComrrtiPsion iE so se-

work, accumultinc ..hterial for thought and study, I

E.0u1l have i)referred not to exprer,s ay vies Ni thit

ever,

11
'
,0

*hi: 'rA)Ft important question cr‘nnot be solved by the poli-

tician alone, nor by nen of science alon,i, nor by tho business man

.lon(!, 1 i'er.4 that i4e, each of ur, mutt do our little share, when

c:aleo 14i)un, z_noI therefort-t accepted your invit:Ition, thoqgh fully

r;.!alizing my own Fhortnomingr for such an Andertaking.

The hdvantage of the schenie a; 0121 lined

of tryinp new eerients, it proceeds on

e.ucc,Issfull:! followed In th,-t most importunt

that in:tead

ic1 have ben

centers.

Conditions are tuo different oith us to lerrIlit of an eJuir;t copy of

any of the Xuropean systems;

but *he proposed plan would tend to-

yard the gradual evolution here of r!unditions thbt, an '.Ne develop

-3)-

would render the (Intr.,1 I.”sue nert:rtment mcp-e

4nd fimpl

nor

in okeration.
provollemrls, Alich huve heratofore been advrInned,
po•,ver with the ntltional bnk,

pore !ci 1,Jave 111,1 not -t

to rtigulat,,

vid

rat ec by is o€--ntr:,1 boc.-.rd or rimilar

cu.

in sqch pilau- ) the rbort-

lor 0,1e, 40

comingr of *hicll axe,

in order to he efficient, there must be

t(A, mur:11 intcrference

P-icrt:! of conductinE buFiness. 701"
1.

to dictate thq rater
such u contra ho.rd 1.ould cvelAutaly huvc
money, or to lend money,
ut ,.hich the banktA would be allod to takf,
one of tile logicLl eonand a gem:rul guarhnteu of depurite .. - only

seqwmcer of tuch a uchera.J.

Ar a mtter of fvot, uncier thut

eng all the banks scheme th(re *Quid be ur., contri b0Lrd rains

an entirel2 uei

uuch more druPtic than any neitral

Belnic.If under

schal%P such c_11,r-1. int!!rfartrice

less efloctive than

iov

qude

oe iin.d, our prevent dufectvoriz.: the

11111,

LAS

weakness oi" i'cattered reserves, ano tne oang,r of thi-! deci:ntrtdiza-

tion or the note-issuinv power into more

renALn

506 banks 4ou1d

obnoxious as before.

Utter schemes have been rug ested, which propose to regu-

late Lae whole quatition automatically by

pbly t.leet in

em.

Tax;

bu÷. aqtomatic

m:Jyt A7IicLAI; way Lal the difrer-

wit.ulAties tnat may arise.

A drain

fro;

ith:1n muFt be met

In a very different way from a drain from wil hou

anq

druln

froi both within and without will awain have to be treated in

different way.

ure which

How then can we hope to attempt r,o create une meas-

by a tax will automatically Jlee.:tll tneue Irtrying re-

quireiiientt9

riesides, these vAtut,ures provide

for iafiatiun without

creLing new reserves or effective meant, to attract

gold.

wui rataln the

)4ort of iliere Lieksurs will rer.h..i.n phsvive ;,.!asures;

they

scarcely hove any preventive or protective power at all.

Some people belive that we should it,,itate the Can4dian

system.

Without eoing into the question villPther

alvu be tell :Adapted

rovpd a runceor for six rillion

fur

ster, that has

pc)dultion of eirrht7-five or niq,Ity millionv,i

tllet point •lietIllr 4hi.

or7nized 7nr11s

hoeht:

luny ol1iere -

clore re,atiunship with the

s-ifienc.. of

coulri f,urvive j

out this onf

yrten - 1i

(and without

1 12.a.11 only follow
inkins6 comLunit.1), wu ,

C1n :.jotm is bea Qn Lhe omial

number cf sorr.e 30 bbnks with brncilf!s in ,!vory hltrilet.

but thu ma-

r.PutichiAta of r.= bank arlmirribie by laa

:orlty of thm !wiles hav,, a . T.uch 1LrL;or citl,

- 3(;( L,OGo.

of our 6,650 iTz_tion:.1

of ).err than A100,(:C0.

And woulri. not

11:4rOP of

foi4

The: mini-

ore up to

1 367 have a 0,

Are vil of tilcse to 6o inio liquithction?

concentration of the whole banking power lat.() thb

71g4ntic InstitIztionr

1th brunch-banku bring about

the vqry condi*ions whih poular sentthent abhoru s and which the

Government is rtriving to avoid?

-3Z-

The (ntra Tl&nk Systra -

tdaltot.

ded ayeteth uf a cen-

trul iff. no deTurtment - rt,;.:nes for Foundcr i..rinGivick; in th_s ru-

Ect:

it contrflizer

reservef &ri

r1ngz about the pokiiiibilit,y

Qf oc,ncerted r,IcticAl in thF ftzct

creLtine., F6fo

ofl

rmial bz.nk indc;,e c:i6ent 4..nd the dia.ng.,;r of an

over-poverp:

ofJuin& aggravated, is,

lrei-led by a Ceatral Liue Deprtmdnt.

for this rehron,

Thuv

rentrit IV:=;

n * I'Llenacti

!-Lunt would i)rutect the blaall bunk and

genorally bolievud.

Ipntra1 Irttua napzu-tmen!. Ix sound altio in thit., thLit

euklh tr4-rwnction whi'.:h 1

hrin6e abuut, directly or lAdJ-recti. t iu

a 1)1•=1n Wasiners tntnr:,ction.

If z. bank debirev itr paper guaran-

teod 'by the ('Itrreney Avrociticn th;;

pap; the comens4rate

commirrion for sur.h. indorrer7en1, :,.nd the cuarantore earn the com-

mlerion.

If tho r'urrenny Ariftdci:Aiun findb the oecurity inPuf-

ficient, it will refurn the b-isiners.

-34-

Eiszki transaction is an in-

dividmil one, curcTu11,, c..erut4ud, and

here is no unbusinesslike

wholesale gl;hrt,nty.

rf,t;.1 intewkerenc,i;

Nor ir thre

eacA banx deal,

with the Currenpy Asroci;ktiun 01 itL.; o..11 ire,: volition l and through

it with the ren,rrl Trcw; 7.1urt.thunt..

it; (ieln -c.ral belle ;)epixt-

it is tiiiu

!rent cfAl port

other?, but. it (1,:nnot forc

nor directly intrff',re

ith

to uo btAinems with

,INybogy, to ao bur,inebb at these rates,

nybo44 1 v conauct vi business.

It is

its in(lirect influence which lc itrohg, 0.nn v4h1ch ie of the most

beneficial

7Plirthermorl, it

a Li LLid krinuipie that the kinancial

affairr of ;1 nition rhould bc; guided not by an automaton but by

will-po:ier &And brains behind the Llaichinery though Ftrong restric-

tionp rt.,rt

tho arrurnce thut this will-poer crinot, t.r ;;o beyond

ou 4 vast improvement upon

certain ebrt;

our present Trerilr7 orgrinimition, which iv constructed on the

one Alind in order net to do Aht 4 '‘'.entriii BwIlic of If-u
du k,.nd which, on the ott-,,.r hand, i-ars a comsetiunct;

syetem, hus grLoutial

ouisht to

our defective

vected lhe ;t:ertJ',6ry ol tne rrtit.1;ury aith

more autocraticulia aictutorii,1 puv,ors

tA.ny Central 134.nk :%nti-

gtf could WILY ( 0:er(l
e.

kre

(;uticeffiti.

and money ietuing &re t'lho entirei

eisel:r in order to Womte eagerneBs

of mon6y

:(n** nalking

1.uticloati.

vtunt;

pre-

'fiat trIc;. leruing

t tiglev mutt, be renck.red ti,ure

biAnk muet be put bey%,nd the danger 0,

losser

4.nd b,:yund tKe povulbility of being oray,n in,‘; in,!ividwd

f(r otherv.ire itr creGit hill not be unuesalliible

oii

murt )e, even an

1),.n/c., en th

oth,.r 11.4.LnJ, in

of ',Ati v•orFt panic.

,n elowy modern cultntr:', gen,,rul bk.aking

tirdln-iry

the duty of teilting co:'1.erc1vl risk?

aJ1( of curryine, en inqividurd tranctlons.

;-)F

Tim

it kb-

-4,t it why with us,

tie

ruing of notes

must be kept separate.

I have 4vo1deci cz,lling the inutltution of *he future a

Centrill '13ank, because,

proposeo. here, it is not *k Central :flank,

If, instead of the Indeliendeni, Currelifs:,

rientrnI

Itasuine Departaent ',4ere endowed with lintiv6 branch offices depend-

ent upon the Head

Elicit a mune

,- 111(.1 be correct.

Centna Bank -with uctive branch

be the 1.•ore,t efficient.

so fur as conoerns the, contrulline, of

rateb itrid itt rinE:ncisl safety.

vo floubt a

he country's ;;;old., itr money

But #vith our present politicfil ,sind

iinanciia conditions, it would probtAbly he impossiblc, 4,nd in

muny res.vectL, unottre, to vet such vhst pot
,ers snd dutier in one

body.

Though the Ecystem sug-t'ited .by ne

lye tind more cumbersome, we murt

little less effect,

fo;- the beginning, at leaFt,inter-

polbte the .:urrcincy
.
Avrociktion t ur t.erv:

stunt; ,As

tt;‘,..

iii..r institution,to

uurtintor and exap,iner bet.4eun the r•entri,1

IFsu1n.

"nepart-

i4eni, on the one side and the lockd bank and its customer on the

other.

mod.irn and au st:d'e stkandardc

As qi; bankinc,

saLe develop, Kt( we outgrow. 1.11F? finncial rind politicta

for

clanger:,

which aro stronger in

growth than ilndor condition

orii

lvaltcud and slower devlop-

- and it ic to .r);hoeu,

ment, we ev,ey

systam.

country in itr periock or rkpid

Jat it ir f,.4'e to lve titi

future, i,rovided tht

e no

ta.blishm..mt of a souna

Oun "'

simplify the

further development to the

nd t. right principle ror the es-

In cunutructing such

basis, it is

to err on the conservutive side than to uLtowpt too big c

bete

stride at the bee,inning.

While we may 61Eajr,!(: ati to the extent to

which a CtintrEd 73ank Sypter% may be ctv.dlid

neginnin, :,here

cannot he the slightest doubt that the principle of thht Eystem

murt,

haOptt-td.

currency uyFtem

murt surprising that co ineffective and obsolete st

thut of t?'.n United 7tLl1- ev Ehou1d have been to

la;:antained by so eninontly pr;Aetic,i1 a mtion.

The eAidanb-

tion is, that the wonderful rerts of the country, itu marvelous
-38

prosperity bnd nbturiLl everisting credit bzxl:nce hg%inrt other na-

tionL :41,eured to legitimItize and jurtify our syrter_

oy returner h6s al a ri bo.n wet with th

rie

our,'n—

argurent thbt •:Mae thee-

wight be 800d for pocr littla Irduroi,e:, practice proved that the

iricn Lyriem ObE sounJ eno40 for thc TTnitc0 Stntes.

ITe 11,-d to

live througr lbst yevr's horrble cririr, to le&rn that Pe Yid been

prosperini. in rpite of our IL 4 tIi 3 no

tn ec,nrequencr; of it, and

that, unleer le efff:t a thorou01 reform, the flitur

is bouild

bring us similar disasterc an: similar dirgm,c,i ar the p;is

It 11

crir duty to kep the memory of the cfisi: of 1907

fresh in our minds, for

gz.rp nut ;)-ril

the certJ41nty of itt reappeuirvnce,

the

r ble

rh: 11 not realize th,

ings and the abrolute neecrity of a Centrul Bank Systam in

United

tctep.

bless—

Jir"qv"'

.ng matter vrnished by the National
further notice for
Is released witnol
aternoon
f
papers of
morning
MELVILLE E. STONE,
General Manager,
The Associated Press.
CONFIDENTIAL.
TO EDITORS: The faith of the International News Service and
of the National News Association is pledged that no part of this
matter furnished by the National Monetary Commission shall be
published until
R. A. FAERELLY, General Manager,
International News Service.
National News Association.
CONFIDENTIAL.
EDITORS: The faith, of the Nc w York Sun Press AssOciation
is pledged that no part of this matter furnished by the National
Monetary Commission shall be published until
E. A. FOWLER,
Washington Correspondent.
CONFIDENTIAL.
EDITORS: The faith of the United Press Associations is
pledged that no part of this matter furnished by the National
Monetary Commission shall be published until
ROY W. HOWARD,
Gen'l News Mgr. United Press Ass'ns.
CONFIDENTIAL.
TO EDITORS AND CORRESPONDENTS: The following
matter is furnished to you by the National Monetary Commission
oil the express condition that no portion of or reference to it shall
be published before
ARTHUR B. SHELTON, Secretary,
National Monetary Commission.
52103-10

The management of,the Bank of Belgium consists ot a governor appointed by the King, and six directors or managers
elected annually by the shareholders, who also elect a board of
censors, supervisory body which inspects the accounts, and
whose approval is req4ired in all important questions of policy.
In case of government; ownership of banks, like those of Russia
and Sweden, care is token to sepa4te carefully the operations
of the bank from those of the gover4ment, and the management
of these banks is anslogous to th4se with private ownership.
Note issues in these countries are rilade exclusively by the central banks and are .obligations of the banks and not of the
govetnment.
The United States, in granting charters to national banks,
hao prescribed the conditions under which national bank notes
could be issued and redeemed. It has established rules and
regulations governing the organization and the character of the
business which they may transact. It has provided for reserves and for examination, to insure public confidence in their
solvency and stability. But no proposal has ever before been
made or considered to control these institutions and manage
their business by government officials.

In coiv(iidet!ing the da erous character of'government note
issue, TATQ 11St\.110t, los sight of the fact that, while in each case
the first issues hav been strictly limited in amount and surrounded by sakguards and restrictions for the purpose of
giving permanence to the value of the notes and insuring their
circulation and convertibility, that sooner or later in every case
limitations, safeguards and restrictions have been, one after
another, removed or modified. In this case if it shall be found
that there is any practical limitation upon the freedom of issue,
we can feel sure that no Congress will be able to resist the
popular demand for the removal of all impediments. In this
_
vrnTlep hns valuable lessons.

ofti
.____
ir......................R7,....

f
1

A
,\

_t_)„r

trihution of their products, and our bankers at the same time
have been deprived of an opportunity to invest their funds in a
class of securities which is preferred to all others in every other
country and which is entitled, from the point of view of sound
banking, to the highest credit.
EFFECTIVE REMEDIES SUGGESTED BY EUROPEAN EXPERIENCE.

While there seems to be a general agreement as to the nature
of the reforms demanded, unfortunately there is no such consensus of opinon as to the methods and machinery which should
be employed in securing the desired results. This is to be
regretted, as it seems certain from the experience of other
nations that simple and effective remedies for defects are
easily within our reach. While we have suffered greatly
in almost every decade of our history from the evil
effects of financial crises, the people of the great commercial
countries of Europe have been entirely free for nearly half a
century from disastrous losses arising from this cause. This
exemption may be said to be due solely to the character and
efficacy of their credit and banking organization. The experience of England and France, and later of Germany, in this
respect, has led all the important commercial nations of the
world except the United States to follow, in the essential
features of their credit organization, in the foot-steps of these
great countries. The adoption within a few years by Sweden,
Switzerland, and Japan of banking organizations along the
lines of the countries I have referred to,completes the adherence of the commercial world, outside of this country, to
one general monetary nm;,...

1. Each of these institutions is essentially a bank of banks,
and is looked upon by all the financial institutions of their
respective countries as the only unfailing resource for assistance
and support in time of trouble.
2. They are given by law the sole right of note issue. The,
expiring remnant of ancient grants furnish the only exception
to this rule, art+tifte-are insigHicaeaat-in character.
3. They hold a very large p of the gold reserves of their
respective countries, and they ye ample power, whenever
occasion requires, to increase their holdings indefinitely. These
reserves form a central reservoir •r the entire banking system,
which is at all times available w enever protection or assist7
ance is required. This fund is al looked \ipon by the public
as a substantial guaranty of th convertibility of its note
issues and of the ability of the b
to meet at all times iits
obligations.
The central banks are the fisca agents of their respective
governments and are bound by
obligation which, if not
expressed, is nevertheless recogniz•. to sustain at all times the
public credit. I think it may be sai that these banks, without
-a,. exception, by tlie-wiedera-ef4heir i anagement and the character and extent of their resources,
commanfildrunixersal
confidence in their stability and solv cy as the conservators of
public and private interests. It is he wise policy of these
central banks to keep their assets, .zide from their golid reserves and government securities, in iquid form throu,gh investments in short time commercial paper of a recognized
standard. For an illustration, the av rage maturity of paper
at-Qui-lime it. reached the Bank of F i nce in 1910 was 24.46
b :ph-,
days, and this v#es about the average4for a number of years.
Their holdings of gold and standard cOmmerical paper taken
///, together form a-satisfaetery basis for their note issue.
7. The central banks fix from time to time the rate of discount
which governs their transactions, This bank rate under
tlie usual trade conditions is higher than the market rate. It is
not thought desirable that the centrtil banks should fix their
rate of discount at a point which woul4 enable them in ordinary
times to enter into competition with t.e banks of discount and
deposit for commercial business. Tile changes in the bank
i
rates of the European banks are w4tched with the keenest
interest throughout the financial world. The weekly reports
of klipse Institutions showing their stock of gold and the proportion of the gold holdings to their note issues and other
liabilities are looked upOn as furniiiiing a reliable index of
existinv business and bankg conditions.

An advance in the bank rate has ben found to be the most
effective agency to check tendencies tci overexpansion of credit.
In times of stress, the joint stock banIfs usually cooperate with
the central banks in making .the 4ank rate effective. At
times, however, the central banks halite been obliged to borrow
money in the street or take other means to make the market
rate conform-to the bank rate.
The joint stock banks treat thr credit balances in the
central banks as part of their cash r serves, and these reserves
can be replenished, and the loaning jower of the banks increases
in time of need through a redisco nt of their standard commercial paper by the central orga4ization. The character of
the commercial paper accepted bf the central banks for rediscount practically fixes a standar4 which,for obvious reasons,..
is usually followed by the other nks in their discognts
p.4'
investments.
Very much the larger part of all\the domestic exchanges, of,
the transfer of credit or funds bet een the different parts of
their respective countries for bank , individuals, and institutions of all kinds, is carried on tlu.o gh the central banks and
their branches. They transfer fu ds from one locality to
another either free or for a small co mission. These transfers
are usually made by a notification of he branches and a transfer
on the books of the bank. This syglerri successfully avoids the
frequent disarrangement of domestic exchanges and the great ,
cost and dilatory character of the sqvice from which banks and
the public alike suffer in this countrk.
The features of these three foreign systems which have perhaps the greatest interest for us, aside-frost-these-thairTelate-to
tha-organisatien-and'Ailittlens ofithfreentraHleutlee-are: (1)
The methods by which panics are prevented or by which their
disastrous effects are averted in ithose countries. (2) Those
that fix either by law or custom a/standard form and character
of commercial bills of exchange oi acceptances which are available for discount or rediscount at central banks and the banIgs.of discount and deposit. (3) Tliose that fix the terms and con- ditions of note issue.
The effective methods by which panics are avoided and by;
which excitement is allayed and public confidence restored in
times when serious trouble is threatened are well understood.
At such times the central banks, as the responsible custodians:
of the gold reserves of the co ry, are relied upon to strengthen
their own reserves and repl .sh them whenever necessary.
The central banks control the ovements of gold to secure the
adequacy of their reserves,(1 by an advance in the bank rate.
When serious trouble is
ent this advance must be rapid
and substantial in character. (2) By their holdings of foreign
bills of frequent maturity. (3) By borrowing gold from or
accepting assistance from ot r central banks. At times other
means are taken for encour
gold imports and discouraging
gold exports, but the main lances of the banks are upon
the
methbds I have suggestel,
"1RP methods have been fe

•
The attempt is made by the friends of the measure to justify
this exclusion from the councils of the proposed government
central bank by a reference to the manner in which central
/
banks of Europe are controlled, but no precedent an be found
,,,,,,f.mnlated in this case.
in European nrnetio. fetr

The joint stock banks, w
scheme of relief, replenish t
in such emergencies, by r
central banks. With adeq
central banks and joint

se cooperation is necessary in this
r own reserves, whenever required
ounting commercial paper at the
ate gold reserves maintained, the
ok banks establish confidence in

business circles by discounting freely all legitimate offerings of
paper upon credit or securities which are accepted in ordinary
times. A rapid advance in the bank rate is at once a restraint
on speculative ventures and a warning to the representatives
of legitimate business that they should avoid undue expansion
of their credit and exercise the greatest care as to the nature of
their new engagements. The simultaneous strengthening of
reserves and the sriaatiag-ef- liberal extension of credit to all
deserving borrowers have not failed for fifty years to produce
the desired result of establishing confidence and avoiding the
disastrous effects of acute finapcial crises.
The relations between the central bank and the commercial
banks in the various countries are friendly, and while some of the
central banks are authorized to, receive individual deposits and
to discount for private parties,i the tendency of modern legislation has been towards restnctlng the central banks to powers
and functions belonging strictly!to banks of issue. In countries
where central banks are autho zed to do commercial business
this fact has not interfered wi the rapid growth of deposit
banks. For instance, in Franc the deposits in the commercial
banks increased from 790 milli ns of francs in 1885 to 4,940
millions in 1911, while the depo ts of the Bank of France have
remained practically stationa for many. years at between
400 and 500 millions of francs.
There has been a very mark movement in recent years in
European countries towards he consolidation of banking
capital and resources into the ands of a few very large commercial banks with numerou branches established in every
community of their respective ountries. We have thought it
wiser in this country and mor in consonance with the spirit of
our institutions to preserve t independence of the thousands
of our commercial banks, bel ving that a local banker would
be more in touch with local iterests and would have a more
accurate knowledge of the w ts of the people and would be
better able to serve them sati actorily than an agent sent from
New York or Washington t4 control a local branch in their
canmunity.

/IA AdAetN,

The European central ba
nk/is an important el
ement in the
international organizati
on of *edit as well as
in that of their
own country. In our time
s, aid when internatio
nal commerce
has grown to enormous
proptitions, with mean
s of instant
communication to ever
y part oftthe world establ
ished, and with
modern facilities for rapi
d traniportation (when
the products
and securities of every
importaiit cbtihtry se
ek
a
market in
every other), there has
been naturally develope
d
a
new and
stronger mutuality of int
erests between diiterent
commercial
nations, and a closer interrelation and interdepen
de
nce between
the banking and financ
ial interesias of all countr
ies
. All the
great commercial nati
ons, among which the
United States
should have the first plac
e, are vitally interested in
maintaining
financial peace and in se
curing the 'liability of
ba
nk
ing institutions in all countries.
This result dan best be
secured by the
cooperative action and su
pport of balks and bank
ers in times of
trouble. It is the dutSro
f each centgal organizati
on to keep in
close touch with the fin
ancial need4 and condit
ions of every
country and to be read
y to act promptly to aff
ord assistance in
emergencies. The active
cooperatioriof the three
great European
banks has saved many a
dangerou4ituation, an
d the want of a
great central organization
in the Milted States in
1907 in touch
with and having the co
nfidence of The great Eu
ro
pean banks,
with the credit and the
power to bolTow gold,
co
st
ou
r people,'
greeti many millions of do
llars:
I have made this!ext
ended reference to the
caracter and
methods of foreign!syst
ems becauge I am sati
sq
d that, with
proper adirctmeati tO
meet our conditions,
their furnish 'precedents that may be'saf
ely folio+ in the prep
form lag:riga Minn
aration of re-

VIONET ARS

The Secretary of the Treasury
directed, in accordance with the prov

s hereby
ions of Sections

to coin subsidiary coins to the
full extent of the demands of the country, and to carry
to the various Subtreasuries and Mints of the United
States, for distribution, not
of such coin at all times.

less than $10,000,000.00

,Z„CtliJTAI
Philad elkhia,

Traders Leartle,

Syracuse,

Clamber of Conrerce.

ttsburrth
Charleston,

T-.; orb er of Corner ;3.
tunb r3r of Correroe

S!tn r`rancisco

Mfrs.
ro.ticerot A9. o
rerellnt39

'Jew 'York,

Mierc1iant3' A,33ociation.

Detroit,

Botir

7onlia,.

of Comierce.

ston 1

Cher of Comrierce.

ica{ro

Meociation of' Conrerce,
.111inoi3 Minufactureree Aglocintion,

Indianapolis,
,ochester,

oar,'

Trade.

C's.arber of Corverce,
flnuf•loturere
'

l'ercllants

B ltimore,

roar:3 of 'ire 0.

At "riar7.0

Intion c1.1 Af350Ciation o 7 'tinuf!Icturera,
1:rational ALlsoci!ition o' Credit — en,
7rition!4 Aasociation 0€' Cotior

iJortl um),

7ere'l ant3

011

nr-e

Atlanta,

Cther of Con.lerce,

Clevel:vld

C'iarther of Comerce,

'tion,

or'0° 1.ra,le,

country *no, vice vkIrrfq,

1,d141th.y growtb or the countr:i

Imnkf.
ir bound to brim:, prori,ority to Lhd
p1ac,441 on bi

oliti foundwpion

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Add at the end cf secticn 2 (S. 3223,' as a -)roviso the following:

"-rovided, That no rqorte bonds 4of any railroad company shall
be acceptA, as security for joisej circlAlatin,-, notes Provided for in
t7,is J.`.ct unless the :ecretary of the Trea.sury shall have

reviously

asce:-taired, from infornatL n furnished by tie Tnterstate Clora erce
, sion, the Isar value cf the propert7; securing said bonds, and
CornmiF.,
a5
shall 1-ave approved said bonds and declaxed them to be acceptable
such_ security, and the Interstate Corru,terce Commi scion is required
the
tc furnish such inforaticn upon the request of tTe L'ecre -LE.try of
reasury."

•

Add at the end of section 2 (S. 3023) as a proviso t2ae following:

"provided,that no mortgage bonds of any railroad company shall
be accepted as security for the circulating notes provided for by
this Act unless the Secretary of tie 1reasury shall have previously
ascertained, from information furnished by the interstate Comerce
Commission, the value of the property pledged to secure said bonds,
and s:ftall have thereafter approved said bonds and declared them to
be acceptable as such security, and the interstate Commerce ComNission is hereby required to furnish such information upon the request
of the Secretary of the ireasury."

Add rt te end of siction 2 (S.,X)23) as a proviso t7.-1(; following:

wProvided, T7,. t nL IT:Ft/rage bonds cf

comHlny shall

be acceptod, as security for the circiaatinr: notes provided for by
tilir Act unless the Secreary of the Treasury shall live )1- v1ously
ascertained, from information .rurnished 1J:7 the Int, rstate Cort,lerce
Carl:isr.iun, :Acting, under ct: ,rovisi ns of Section twunt:,- of an Act
,ntitl d "An Act to ror:plr„te Commerce", approved Ye .r'ry fourth,
eighteen hundred anci eirrt:f-sevan, as amended, the Val e Jf the pro•..
:erty by

,c111 said bonds are secur3d, and shall have tliorearer ap

prov :d sa 'II bonds and declared them to be acr;opte—le as such security,
and the Interstate Camerae Commission is hereby required to furnidh
such information upon the request of the Secre tary of the Treaoury."

•

Add at the end of section 2 (S.3023) as a proviso the following:

"Provided, Tat no mort,•::ce bonds of any railro .d company shall
be accepted as security for t"le c ircu1atin7 notes provided for 12::
this Act tuilesf- t' e Secretary of the Treasury s:abil have previously
ascertained, from inforiaution furnished by the Int ,rstate Com:ierc2
Contaisiion, the vc)..lue of the property

Iyy

\r,ich said bonds are se-

cured, and shall have t:lercla'ter approved said bonds

nd declared

them to be acceptable as such security, and the Interstate Com ,erce
Comiission is hereby required to furnish such inforati n upon the
request of the S,:cretary of the Trear3ur ."

Add at tl.e end cf s cti.(;r1 2 (S. 3023) ;-_s a proviso t.'ne

*Provided It at no :rlert--are "bon::.s

tny

compz4ny shall

a,.-copted arl security for t e additional ciroi).1c.tinr: notes .;)rovided
for in t7: ir; Act tu,loss) t•
vic•is1;7

•lecre.L:.r:: of t'.e "Ageasur;" stall

pro-

.1-tain.,d, from information flkrnidli-d b:' t o Interst:,.te

Cortat -0,f! Com licsicn, to vz1.22.).o of the propety securing said bonds,
and s'q.I.11 :Lave ,,,p_Tovee said bonds and doolv.ret'. t',em to be L..oc ptable P.s sch security, and the intv-rstat- Commerce Co:1 Assien is requi)-ed to 12.Arnish such inform.tion ul)on
of t'e l'roar31.ry."

request of t o flocretar:

proviso te foliccAng:
Add at t'.e end of sntion 2 (S. 3023) as a

orX, company shall
TProvided,t at no mortr:age bonds of any milr
ciroulating notQs provided
be a-cepted ti securit:: for t'e additional
t- c (2reasury shall have prfor in tic Act u_lless t a ecretL;r7 of
cLi'd by t c InterstLte
viously ascrtain;d 1 frorl information furni
prorty securing said bonds,
Commurce Coaticion, tc v1c of t7-e
and shall have

be ace pt"
.1)i)rovce, said bcilds and declarer:, them to

erce Commission is 1-1able as such d(lcurit: , and 1.7 c; interstatu Comn
reclur'st of tile Secretor,
quired to furnish such information upon the
of the YreasurY."

Add at 1.he end of seeticn 2 (.1. 3023) as a proviso tT. foblowinc:

"Provided,t:at no ...ort.-,a..7e 7:.)onds of ,•.lny railrop.d coral)a.ny thali
cLonopt,..td at; securitr for to

notcs provided for by

this Act unles:: the Secretor:7 of te Treamlry shall have -_)rt.:7L;Lt31y
ascertained, fro;:i informaticn tumid:led

r: Interstate Cort. erce

bonds,
Cormaission, t7.1 ,3 vzaue of VI° rro)erty plodced to secure said
and eSiall have tl-lerev., ..cr zyroved said bonds and docic6recltiori

Corrleroo Coui-'
be acc!e:•table as such security, and t7.,.c Into;.8 4,,ate
1c

, qu1r. to furnish such in2or.1tic1n upon the recill.:!st
is7:,.erel)y rc.,

e:" Le Secrr:4....ary of t7- t:: Treasury."

Add at the end of section 2 (S....')026) as a proviso t2-LL: fo1lowing:

"Provided o t-at no • c:rt'. e 1)ond3 of :- ny railroad com)any shall
be accepted af-; security for the circulatinn notes )rovided for by
this Act unles..; the Secretary of the Treasury than have )reviously
aocrtiuucl, fro

infornatiun furniehed by the Interstate Cort‘erce

Corrnission t t7:-Le value of the

rc; ierty pledr:ed to secure said bonds;

and shall have therea i,er t.tp :
. roved. said. bonds and declared them to
be acne -...table as such securit,7, and 1,',e Intf. rstz_tte Con ore° Cora ic
siu

is '. -.ere.,)y required. to furnish such infcra:.ticn upon the requust

of V-e Secri-:; .1 ..ciry of t'±e Treasur,7."

Add at t:-Le end

f secti,,,n 2 (S. 3023) as a .•rcviso t710

"?rovided, rf- at no mertr• 7e bonds of .A'1:;r r.lire; d com)any
be accept:xi

.f:', security for-.j circlilatinr7 notes "A-ovided il'ur -jar

this Act unless the Secretary of the Treasury shall have
asce tained, from inforiati n furnished by t"
COM:711 S Sion

the AM' value

f the propert,:\

te C.Q.121 .e roe
sal4;4111111MUT

ncI

shall llave aplroved said -ocndr, cxid declared\them to be -,.,cceptv;:le ar;
/V
such security, and the Int-rstate Cornrierce C alission is req "red
to furnish. such inforn%tion u.:on the request çf

secretary of the

Treasury."

Oi./-r1/4-1

•
Provided, Thrtt nc.)ricTtrEtt7e bontls of any railrod eonvany shall
4.,,oceff,t,,..,:td eui securit:; for
for in V.:is Act un7..,

circulr.ting nott!s L;*ovi.ded

ancorta .
. ned,

Iv t.'.43 Inter-

infur!,..ation ft),rnlallqd

preport:-,t s..0urin7 said 1),..nf:is

ntn.te Cerarnere,

securlt:- fcr t

affords safc '.id
bonds, nor un12fir
condition and. .1:.rninr7o
UL) tf

2re.-403,.:.ry shall hqve

:• tirlt.orestary of

prtyra-nt cf said :nortr,ar:e
is sat.isfic,d that

Fic.0r.;try

ce7;pany are sl;(7.:-.

t7r.,

1..)rolT)t ;.1i.zrr1ent of t"no inter st on said bonds,

t7-•!..; 7ocrt,tztry

f tsri

?III

olrtrr."(.1 them to Ito !ter‘e,t!.1)10

WAti,7.1 11.rtve ;.:,opmvfod
i7;011 at.;curity;

undor

ton

oipty sevon,

:CI,

"An Act ti-.;

.Ary fourtL o o.iitn hund.r,le,Rnd
And prey Lded

oont,ten. of tl-le entiro ice of

f!rnt nortparte bencin or toly rallror.d ocitiy
as '‘of.ntrit:: frun any nat,.cnal

und

to be ol)taincd b

tLiunded, cr other prov ri n

furth-r. 7-.tit n-1; .1,-:re than tf,n p

nor until

tl7e len re taar,..r of

Drevici.../no 1.f snction twf)nty or 1.n Act

rr.37.11!).to cor1:1 roe,* anf}roved

to in.-

and t'he Intorntate

Icrry:,,res Cerrnif'Tmion s"-.Q. 11, u:ton r•-• quo st
Try..2cuviry Vie inf

BP,

LhO

a1I bs v.ecoftted

The Treasurer of the United States, with the approval of
the
Secretary of the Treasury, may, for the purposes of this
act, accept
any of the securities enumerated in this section, in
such amounts and
in such proportions as he may from time to time
determine, and he
may, with such approval, at any time require any
association to
change the character of the securities on deposit
by the substitution in whole or in part of other securities there
for, and he may
also at any time require any additional securities
to be deposited;
and such acceptance ribuall be upon the condition that
if any association shall at any time fail to make the substitution
herein provided
for, or to make the additional deposit required, the
Secretary of
the Treasury shall have the right, without notice,
to sell the securities on deposit either at private or public sale;
and it shall
be the duty of the Secretary of the Treasury, in case
of such failure, to proceed forthwith with the sale of such securities
, and it
shall be his duty to commence proceedings against such
defaulting
association-------

Section 2. Every national banking association no in reserve or central
resarvu cities, 31 1:1.11 hereafter hold as a part of its 19:al reserve, at
all times 'n its own vaults, a sum of lawful noney equal to -t least
I per contum of its deposits, and the re-nainder of the legal reserve now
required by law .31:t11 be held by such banks in the classes of bonds
described in Section 2 of this Act.
Every national banking association in reserve cities shall
'-ereaftr 'old as part of its legal reserve a sum not less than 15 per
centum of its deposits, in lawful money, and the re-lainder of the reserve of 25 per centum required by law shall be carried in bonds aescril)e6
in Section 2 of this Act.
Evt,ry national banking association in central reserve cities
hereafter hold as part of its legal reserve a sum not less t'lan 20
per centum of its deposit liabilities, in lawful money, the re,ilainder of
titc reserve of 25 per centum required by law shall be carried in bonds of
the class described in Section 2 of this Act.
P'',OVIDED, that the provisions of Sectiou 8 shall not be compulsory prier to July 1, 1910.

''rovided that no mortgare bonds of any railroad company shall be
accepted
as security for the additional circulating notes provided for
in this act
unless the Sacretaryo,f, the Treasury shall 'aave previously ascert
ained from
•

information furnished

the Interstate Commerce Commission that the prop-

erty securing said bonds lax cafe and auLf-iolent-security for the paymen
t
of saferRiit6are bonds, ant, shall have approved said bonds and declar
ed
them to be acceptable as such security, The Interstate Commerce Commis
sion,/
P.:
0V
;1
0
.
the-request of the Secretary of the Treasury, MINK furniSh,sach
infor4.

tion obtained b7-'Llt under the provisions of ::ection twenty of i\
an act en".!21 act to retulate Commerce," appfovod February fourth, eirtteen
hundred and eighty seven, as amended, or -if-Poi-my authority confer
red on it
by law.

t
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Pro-iced, That no mort age bonif,cz of any railroad company shall
be accepted as security for the additional circulatin7 notes provided
for in t- is Act unlesr: the Secretary of the Treasury sal1 have previously ascertained: from information furnisl-led him by the Interstate Con-nerce Commission, that the property securinr- said bonds
affords safe and pc.,Iple securty for the payment of said mortgar7e
bonds, nor unless the Secretary of the Treasur:, is satisfied that the
condition and earnings of the rrilrod comnany are slxc's as to insure the prompt payment of the intertst on said bonds,

nor until

the Secretary of *r,e Treasury shall have approved said hords r,10 declared then to

pcoentable as such security;

and the Interstate

Commerce Con-ni-sion shall, u20n request, furnidh the Secretary of
the Treasury the inf -ir-qation herein r-quired, to be obtained by it
under the pro7icions of section twenty of an Act ertitled "An Act to
re7ula.te commerce," nnroved Fel)ruary fourth, eirrhteen hundred and
eighty se-Ten, as amended, or other provision of law:

And provided

furtl—r, Trt not -ci-e than ten per centum of the entire isue of
the first ,,,ortg-0-e --ords of any rallrot)d conry shall be accepted
as securit7 from rry natj.onril

pr -1 ciation.

••••••••••••

37
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1. Provide that three-fourths of the reserves in Reserve City and

Country banks shall he kept in their vaults, distributing the

increase gradually over a period of ten years under the direction

of the Comptroller of the Currency.

2. Provide that no bank shall make loans of its depositors' money
to an amount exceeding five times its capital, but that whenever

such loans at present exceed such proportion, the change shall

be gradually brought about within a period of ten years, either
by an increase of capital or a reduction in loans, under the

direction of the Comptroller of the Currency.

3. Provide for the incorporation of Clearing House Associations
with a capitalization of not less than ten million dollars, and
compel each national bank to become a member of such an association i making such Clearing House Associations the agencies for
the distribution of emergency currency among their members, upon
securities deposited with such Associations and guaranteed by
them as well as by the individual membership.

-2-

4. Permit State Banks to Lecome members of such Associations, provided
they will submit to the regulations of the National Bank Act
regarding their reserves and capital, and will subject themselves
to examination under the National Bank Act.

5. Provide that such Clearing House Associations may, with a view to
Increasing the amount of cold available for bank reserves, present
silver bullion to the Treasury and, subject to the discretion and
control of the Secretary of the Treasury, receive therefor

the

market value of such bullion in United States notes constituting
a legal tender in sums not exceeding fifty dollars, the
Government retaining the balance of the bullion as seignior age
and turning it over into the redemption fund as security for
United States notes outstanding;

such limited legal tender notes

to be issued ty the banks in return for gold or legal tender
notes which can be employed as cash reserves.

6. Provide that the Presidents of the Clearing House Associations shall
meat annually at Washington and shall select nine Corrinissioners

.3..

from the different sections of the country who shall represent

them at Washington

EAB

members of a Banking Commission, of which

the Secretary of the Treasury and the Comptroller of the Currency

shall be, respectively, the Chairman and Secretary;

Commisaioner to be under a salary of

dollars per annum;

each

OOOOO •00000,000•00041•0411

the duties of the Commission to be merely

advisory to the President, to the Secretary of the Treasury,

and to Congress;

such Commissi on to be charged with the duty

of considering and recommending changes in the Banking Act and

also of considering methods for promoting and improving inter-

national exchange.

,
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First National Bank of Neenah, Wiscaalar

We think there is nothing better than a farm mortgage and with judgment
Think majority of banks would be careful in loancitY mortgages are good.
ing on mortgage, and as State banks are permitted to carry mortc-ages national
banks are at a disadvantage, which they should be permitted to overcome.

' Our savings departMent and Zipr cer ifiates\of d6hosit'which'Npre 10.1
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savings de*sits are todai:
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Checking accounts
983,152.64
So you
e
and conditions
the usiness is
they ].,expect

segr
ion of ,savings dep9xits would pt us 4?)-s+ of laviness
must be he 8964Nrith ma7A bahks situated in diINIcts-,:w.06i4e
of the safle ,Class .E3 ours, a wage earner and farm?? community,
Interest on their deposits.

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7,3.

A BILL
To give,savings institutions, state banks, national
banks, trust companies, and all corporations and individuals, the privilege of depositing with the Treasurer of
the United States, bonds of the United States, and such
state, county and municipal bonds as may be approved by
the President of the United States and the Secretary of
the Treasury, and securing therefor certain legal tender
notes; providing for a tax on said notes; and providing for
the issue of bonds of the United States to maintain the parity of said notes; thereby securing an elastic emergency
circulating medium

OT exchange, and thus lessening the

danger of currency famines and financial panics.
Section 1.

BE IT ENACTED by the Senate and House of

representatives of the United States of America, in Congress assembled,
That the Secretary of the Treasury is hereby authorized and required, as rapidly a. practicable, to cause to
be provide i and kept in readiness for issuing, upon such
demand or demands as may be made according to the provisions
of this bill, a su:Tly of circulating notes to be known as
United States Currency Notes.

Said notes, in the payment

of alt debts, either public or private, shall be legal
tender for the equivalent of a dollar ol twenty-five and
eight-tenths (25.8) grains of gold, nine-tenths(0.9) fine,
for each dollar they represent, and they shall be exchangeable for gold-bearing bonds of the United States in the
manner provided for in Section plour of this bill, and
when
exciianged, they may be re-issued.
-1-

Said notes snail be

provided in sufficient quantities tu insure there being in
the Treasury, at all, times, ready for issue, an amount of
them equivalent to one hundred millions of dollars, and
they shall be issued only vhen secured by deposits of bonds
as !Irovided in Section Three of this bill, or in exchange
for other noter or coin of the united states.
Section 2.

In order to furnisn suitable notes for

circulation, the Secretary of the Treasury shall cause plates
and dies to be engraved in the best manner to guard against
counterfeiting and fraudulent alterations, and shall have
printed therefrom and numbered, such quantity of circulating notes of the denominations of one dollar, two dollars,
five dollars, ten dollars, tv,enty dollars, fifty dollars,
one hundred dollars, five hundred dollars, one thousand
dollars, Ave thousand dollars and ten thousand dollars,
as may be required to supply the demands c)
to receive the same.

those entitled

Such notes shall express upon their

face or back:
First.

That they are secured 1:1'.; bonds, deposited

with the Treasurer of the United States.
Second.

That in the , ayment of all debts, either

public or private, they are legal tender for the equivalent
of a dollar of twenty-five and eight-tenths (25.8) grains
of gold nine-tenths (0.9) fine, for each joilar they represent.
Third.

That United States Currency Notes, if present-

ed to the Treasurer of the United States, in amounts of
one hundred dollars or multiples thereof, wiii be exchanged
at their face value for gold-bearing bonds of the United
-2-

interest at
States maturing in five (5) years and bearing
quarthe rate of three (3) per centum per annum,payable
terly.
Fourth.

The engraved signatures of the Treasurer and

ry.
Register, and the imprint of the seal of the Treasu
Fifth.

Sucn devices and sucn otner statements, not

the Secinconsistent with the provisions of this bill, as
retary of the Treasury shall, by regulation, direct.

Section 3.

Any and all savings institutions, state

banks, national banks, trust companies, or other corpot
rations, firms or iniividuals, so desiring, may deposi
with the Treasurer of the United States, bonds of the
United States, or, subject to the approval of the President
ry,
of the United States and the Secretary of the Treasu
bonds of states, counties or municipalities, vdthin the
United States, and such depositors shall receive, in exchange for the bonds deposited, United States Currency
Notec, such as are orovided for by Section One of this
bill, in amounts equal to ninety-five (95) per centum of
the par value of the Ponds of the United States, and in
amounts equal to sixty (60) per centum of the par value of
all other bonds, proviAed, however, that should the market
value

of such bonds, in the judgment of the Secretary

of the Treasury, be or become depreciated, the Tresurer
of the United States is hereby directed to require the
depositor

uo deposit in addition, lafui money of the

United States equal to the depreciation of the market
value of said bonds below their par value; and should
the depositor fail to 2,romptly make the said additional

deposits of lawful money, or should he fail for six months
to pay the tax hereinafter erovided for, the Treasurer of
the United States is hereby required to iirn-nediately sell
said bonds at public or private sale, and credit the depositor with the v)roceeds of said sale.

Each depositor of

bonds under the provisions of this bill shall pay quarterly
on the first days of March, June, September and December,
to the Treasurer of the United States, a tax equal to six
(6) per centum per annum on the amount of said notes received by nim, during" the time said bonds remain gin deposit; and each de,wsitor shall receive all interest on
said bonds, the same as thouh they were in his own possession.

Any depositor, or his representative, or assic,nee,

may, at any time, demand and receive the bonds which he
deposited, or the )roceeds of their sale as provided by
this Section, together with any and all deposits of lawful
money which the depositor may have been required to make,
upon the return to the Treasurer of the United States, of
an amount of United States Currency liotes, or other notes
or coin of the United States, equal to tne face value of
the notes received by the said depositor, and the unpaid
tax thereon as herein provide-.

Section 4.

The Secretary of the Treasury is hereby

authorized and required to have f)repared, frop time to
time, and in sufficient cluantities to meet the provisions
of this pill, bonds of the United States, in denomination
of one hundreu dollars or 1.ultiples thereof, the interest,
and principal of which shall be ):yaoie in gold coin of
the United States, if demanded.

Said bonds shall be

payable five :,- ears after date, and tney snail bear interest at freptr-merre-t11i tree ( ) per centum per annum, payable quarterly.

Said bonds shall be free of all taation.

And the Secretary of the Treasury snail issue said bonds
at their face value, to any and all persons deNandinE them,
who present to the Treasurer of the United States, in exchange therefor, United States Currency Notes in amounts of
one hundred dollars or multi des thereof.

Section 5.

All Acts or parts of Acts inconsistent

herewith are hereby repealed.

Full text of Nelson W. Aldrich Papers : Monetary Commission : Miscellany, Reel 58, Box 84, Folder 3

FRASER