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Monetary

MISCELLANY

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20 PER CENT.

2 NB
MONO. SEC.
A BILL
To incorporate the National Reserve Association of thc
United States.r---_

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Charter Capital. and IA cation.
Sec. 2. Membership. amount of capital lc, be subscribLd by each bank,
and amount required to be paid in.
Organization committee: .
Se -.
Sec. 4. Location of; branCh6i and the division of country into districts.
Sec. 5. Organization of local associations.
Sec. 6. Election of directors by local associations.
Sec. 7. Election of directors by branch associations.
Sec. 8. Directors of the National Reserve Association.
Sec. 9. Appointment of officers of the National Reserve Association
Sec. ro. Organization papers of the National Reserve Association.
Sec. ii. Articles of association of the National Reserve Association.
Sec. 12. Organization certificate of the National Reserve Association.
See. 13. Ownership of stock in the National Reserve Association: Increasc
and reduction of capital.
Sec. 4. Exemption from local and State taxation.
Sec. 15. Executive committee of the National Reserve Association
Sec. 16. Auditing committee.
Sec. 17. Executive officers of branches.
Sec. 18. Executive officers of local associations.
Sec. 19. List of sharehoHers.

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TA 14 AND LC/CATION.

„
A.

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
the National Reserve Association of the United States be,
and it is hereby, created and established for a term of
fifty years from the date of the execution of its organization certificate with an authorized capital equal in
amount to twenty per centum of the paid-in and unimpaired capital of all banks eligible for membership in said
National Reserve Association. Before the said association shall be authorized to commence business, two hundred million dollars of the capital stock shall be subscribed and one hundred million dollars of the capital
stock shall he paid in cash. The capital stock of said
association shall be divided into shares of one hundred
dollars each. The capital stock may be increased from
time to time as ubscribing banks increase their cap tal
or as additional banks become subscribers or may be
decreased as subscribing banks reduce their capital or
leave the association by liquidation. The head office of
the National f(c:,erve, .\ ,smiation shall be located in
,
Washington, in the District of Columbia.
NIUMBERS11/13
.

SEC. 2. All national banks, and all banks stXtrust companies chartered by the .law's of any State of the United
States or of the District.of Columbia, complying with
the
requirements for memberihip in the said National Reserve
.Association, hereinafter set forth, *ma)E subscribe to its
capital to an amoun4 equal to twenty per centum of the
paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
provided. Fifty per centum of the subscriptions to the
capital of the National Reserve Association shall be fully.."
.
paid in; the balance of the subscriptionsiwill remain a
liability of the subscribers. subject to call and navinent

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tne.saici National Keserve
requirements for membecoMp in

to its
Association, hereinafter "set forth, ma? subscribe
of the
capital to an amou$ equal to twenty per centum
bank,
paid-in and unimpaired capital of the subscribing
g banks
and not more nor less; and each of such subscribin
nafter
shall become a member of a local association as herei
to the
provided. Fifty per cent= of the subscriptions
iv
be fully,.,
capital of the National Reserve Association shall
remain a
paid in; the balance of the subscriptions will
payment
liability of the subscribers, subject to cal and
s of the
thereof whenever necessary to meet the obligation
and in
National Reserve Association under such terms
directors
accordance with such regulations as the board of
of the National Reserve Association max' prescribe.
A bank or trust company which is incorporated under
the laws of any State may become a member of a local
in;
association and have all the rights and privileges there
provided:
First. That (a) if a bank, it shall have a paid-in and
unimpaired capital of not less than that required for a
national bank in the same place; and that (b) if a trust
company, it shall have an unimpaired surplus of not less
in
than twenty per centum of its capital, and if located
s
a place having a population of`Lfifty thousand inhabitant
or less shall have a paid-in and unimpaired capital of not
less than one hundred thousand dollars; if located in a city
s
having a population of more than fifty thousand inhabitant
,,
and not more than two hundred thousand inhabitant
shall have a paid-in and unimpaired capital of not lcss
than two hundred thousand dollars; if located in a city
having a population of more than two hundred thousand
inhabitants and not more than three hundred thousand
inhabitants shall have a paid-in and unimpaired capital
of not less than three hundred thousand dollars; if located
in a city having a population of more than three hundred
thousand inhabitants and not more than four hundred
thousand inhabitants shall have a paid in and unimpaired
capital of not less than four hundred thousand dollars;
if located in a. city having a population of more than
four hundred thousand inhabitants shall have a paid-in
and unimpaired capital of not less than five hundred
.4
thousand dollars.

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20 PER CENT. I

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3 NoTYPE SECTION
Second. That it shall have and agree to maintain
against its demand deposits a reserve of like character
and proportion to that required by law of a national bank
in the same location: Provided, however, That deposits
which it may have with any subscribing national bank,
State bank, or trust company in a city designated in the
national banking laws as a reserve city or a central reserve
city shall count as reserve in like manner and to the same
extent as similar deposits of a natio nal bank with national
banks in such cities.
Third. That it shall have and agree to maintain against
all other classes of deposits the percentages of reser ve
required by this act.
Fourth. That it shall agree to submit to such examinations and to make such reports as are required by law and
to comply with the requirements and conditions imposed
by this act and regulations made in conformity therewith.
The words "subscribing banks" when used hereafter
in this act shall be understood to refer to such national
banks, and banks or trust companies chartered by the
laws of any State of the United States or of the District of
Columbia, as shall comply with the requirements for
membership hereinbefore defined.
LII4GANIZATION COMMITTEE,.,

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Sic. 3. The Secretary of the Treasuryete Secretary of
Commerce and Labor, .niki the Comptroller of the Curreuey are hereby designated a committee to effect the
preliminary organization of the National Reserve Association, and the necessary expenses of said committee
shall beAfeici-outsaLaalafraterrer-ith.41iii-Tveafteielter
wiao.optmistoriettioi, upon vouchers approved by the +Whew
members of said committee, and the Treasury shall be
reimbursed by the National Reserve Association to the full
amount paid out therefor.
Within sixty days after the passage of this act said committee shall provide for the opening of books for subscriptions to the capital stock of said National Reserve Association iwougio.pietwoordiMOPPRIiiimitttorimr.defoirvertrBefore the subscription of any bank to the capital stock of
the National Reserve Association shall be accepted, said
bank shall file with the organization committee or with
the National Reserve Association a certified copy of a resolution adopted by the board of directors of said bank
accepting all the provisions and liabilities imposed by this
act and authorizing the president or cashier of said bank
to subscribe for said stock.
LOC.ITLWI oF BRANCHES AND DIVISION or THE COUNTRY
INTO DISTRICTS.

SEc. 4. When the subscriptions to the capital stock of
the National Reserve Association shall amount to the sum
of two hundred millions of dollars the organization committee hereinbefore provided shall forthwith proceed to
select fifteen cities in the United States for the location of
the branches of said National Reserve Association: Provided, That one branch shall be located in the New England
States, including the States of Maine, New Hampshire,
Vermont, Massachusetts, Rhode Island, and Connecticut;
two branches in the Eastern States, including the States of
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of




vided, That one branch shall be located in the New
shire,
States, including the States of Maine, New Hamp
cut;
Vermont, Massachusetts, Rhode Island, and Connecti
States of
two branches in the Eastern States, including the
; four
New York, New Jersey, Pennsylvania, and Delaware
of
branches in the Southern States, including the States
h
Maryland, Virginia, West Virginia, North Carolina, Sout
sCarolina, Georgia, Florida, Alabama, Mississippi, Loui
Id -.0
iana, Texas, Arkansas, Kentucky, Tennessee, and
le
the District of Columbia; four branches in the Midd
ana,
Western States, including the States of Ohio, Indi
and
Illinois, Michigan, Wisconsin, Minnesota, Iowa,
Pacific
Missouri; four branches in the Western and
h
States, including the States of North Dakota, Sout
,
Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado
,
New Mexico, Oklahoma, Washington, Oregon, California
Idaho, Utah, Nevada, and Arizona.
When the cities in which the branches are to be located
have been selected the organization committee shall forth
with divide the entire country into fifteen districts, with
each
one branch of the National Reserve Association in
•
district.
The districts may be readjuste(Q-om time to ti14and
new districts and new branches maybe created by the
directors of the National Reserve Association.
oRGANumrrow --nr-LOCAt -ASSOCIATIONS.
ict shall
SEC. 5. All subscribing banks within a distr
organgroup themselves, subject to the approval of the
atitrn,
ization committee er—t4e--14ftthiettel'44€3CFVC Assed
with an
into local associations of not less than ten banks,
of
aggregate capital and surplus of at least five millions
Provided,
dollars, for the purposes hereinafter prescribed:
in each
413.1177--ritipromil that the territory comprised
the
association shall be contiguous: Provided further, That
ng a
territory included in the local associations comprisi
in said
district shall be so apportioned that every bank
of some
district shall be located within the boundaries
every sublocal association: And provided further, That
local
scribing bank shall become a member only of the
association of the territory in which it is situated.
usted
The local associations in each district may be readj
created
from time to time and new af,sociationl, may be
the
by the directors of the branch of said district with
approval of the National Reserve Association.

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20 PER CENT.

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4 OTYPE SEC
NB TION
MON
The members of the local association shall :join in
articles of association, haying been first authorized
to do
so bv resoluti3n ,
banks..of & board of directors of each of the
member
y fliese articles shall provide that the
board of dirQctors of the local association shall be
authorized to disonnt Or rediscount paper for any
member
thereof and to offer such paper for rediscount
with the
branch of the National Reserve Association for
that
district, the gain or profit accruing to the local associatio
n
from said transactions to he distributed from time
to
time, after the pa vnient of all expenses, among the
several
banks of the local association in proportion to the
ratio
which their capital and surplus bears to the aggre
gate
capital and snrphis of the m in')ers of the local associatio
n.
In the event that Lae expenses shall exceed the
earnings
or that any losses shall occur t on any of the pape
r so
rediscounftd, the scveral bank composing the local
assodation shall bear said expc.iss and losses in propo
rtion
to the ratio to Nvhich their capital and surplus bears
to
the aggregate capital and sTirpli:s of the members
of the
local associo.tion, and the- cli:-e:._•to;s of the
viocal associations shall be a:Ithorized by the articlf associatio
n to
levy an assessnmlt for these pu-.),ogs. The total amou
nt
of rediscounts by a. local •
NN ith the National
Reserve Associa
i-cv,)t at any time exceed the
aggregate capital and
plus of the banks forming such
local associati6n. T ese articles, which must be appr
oved
by the board ois Oreetors of the National Reserve
.
Ass°dation, shall be exis cutryl in triplicate, and one
,
copy,
together v,ith the ctsstified cotY,of the resolutions
of the
boards of directors authorizing the subscribing bank
s
to sign them, shall be filed v,ith the National Reser
ve
Association, one copy shall be filed with the branch association, and one copy shall lv
L uimed by Ow
association.
Upon thirty days' notice in writing to each member
bank the articles of L.L!-•,ociation al the local association
may be amended by a vote of three-fourths of the member banks by and with the approval of the National
Reserve Association and in like manner as to vote and
approval the local association 111aV assume and exercise
such of the powers and functions of a clearing house as
are not inconsistent with the purpoes of this act. The
National Reserve Association may equire any local association to perform such services n facilitating the domestic exchanges of the Nationa •Zeserye Association as the
public interests may requir
A local association may bv a vote of two-thirds of the
members, suspend a baifk from the privilege of membership for a failure for thirty days to maintain its reserves,
or to make the reports required by this act, or for misrepresentation in any report or examination as to its
condition, or as to the character or extent of its assets
or liabilities, or for failure or for refusal for thirty days
to comply with any of the provisions of this act. A
suspension from a local association shall operate as a
.suspension from the privileges of the National Reserve
Association.

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:inc. 6. Each local association shall have
a board of
directors, the number to be determined
lw the by-lawq

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to comply with any of the provisions of this act. A
suvension from a local association shall operate as a
.suspension from the privileges of the National Reserve
Association.
KETHe- -10141 0P-1/titeeT 4ii
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tOCA t, ASSOCI-ATI0NS.

SEC. 6. Each local association shall have a board of
directors, the number to be determined by the by-laws
of the local association. Three-fifths of that number
shall be elected by ballot cast by the representatives of
the banks that are members of the local association, each
bank haying one representative and each representative
one vol e for each of the positions to he filled without
reference to the number of shares which the bank holds
in the National Reserve Association. Two-fifths of the
whole number of directors of the local association shall be
elected by these same representatives of the several banks
that are members of the association, hut in voting for
these additional directors each representative shall be
entitled to as many votes as the bank which he represents
holds shares in the National Reserve Association. In
neither case shall voting by proxies be allowed. The
authorized representatives of a hank, as herein provided,
must be either the president, vice president, or cashier of
the bank he represents.
Each director when appointed or elected shall take an
oath that he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such
association and will not knowingly violate or willingly
permit to be violated any of the provisions of this act.
The directors originally elected shall hold office until
the second Tuesday in February immediately following
their election, and thereafter the directors shall be elected
annually on that date and shall hold office for thy term of
one year.
The board of directors of the local association shall have
authority to make by-laws, not inconsistent with law,
subject to the approval of the directors of the National
Reserve Association.

ELECTION OF MRECTORS BY BRA N CII ASSOCIATIONS.
SEC. 7. Each of the branches of the National Reserve
Association shall have a board of directors, the number, not
less than twelve, to be fixed by the by-laws of the branch.
These directors shall be elected in the following manner:
he boar of each local association shall elect by ballot
a voting rep esentative or proxy holder. One-half of the
directors of the branch shall be elected by the vote of such
representatives, each representative having one vote for
each of the positions to be filled, without reference to the
number of shares which the bank composing the association which he represents holds in the National Reserve

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MONO. SEC.
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Association. One-third of the directors shall be elected
by
the same voting representatives or proxy holders, but each
voting representative at this election shall have a numb
er
of votes equal to the number of shares in the Nati
onal
Reserve Association held by all the banks composin
g the
local association which he represents. The remainin
g onesixth of the directors shall be chosen by the direc
tors
already elected_iind At_q fairly represent the industrial
,
tnCrand
LTTim_ercia,l agricultural, and other interests of
the diss all not be officers or, while serving,"directors of
banks, trust companies, insurance companies, or
other
financial institutions. The manager of the branch shall
be
ex-officio a member of the board of directors of the
branch
--dna shall be chairman of the board.
Each director when appointed or elected shall take
an
oath that he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such asso
ciation and will not knowingly violat.: or willingly perm
it
to be violated any of the provisions of this act.
All the meinlIcrs of the board of directors of the bran
ch
except the ex officio member shall at the first meet
ing of
the board be divided into three classes. One-third
of the
directors shall hold office until the first Tuesday in Marc
h
immediately following the election; one-third of the
directors shall hold office for an additi()nal period of one
vear
after the first Tuesday in March innnediati'ly follo
wing'
the election; the remaining one-third of the directors shalt
hold office for an additional period of two Years after
the
first Tuesday in March immediately following the elect
ion.
All elections shall be held on t1V tiis. Tuesday in Marc
h
of each year, and after the first election all directors shall
be elected for a term of three \rcars.
The board of directors of the branch shall have authority to make by-laws, not inconsistent with law, subject to
the approval of the National Reserve Association.
la/RECTORS, CIF

THE N:ATLON.V.___RESERVE

ASSOCIATION,

SEC. 8. The National Reserve Association shall have a
board of directors, to be chosen in the following manner:
First. Fifteen directors shall be elected, one by the
board of directors of each branch of the National Reserve
Association. In case the number of districts shall be
increased hereafter, each additional district shall be entitled to elect an additional director.
Second. Fifteen directors shall be elected, one by the
board of directors of each branch of the Nv.tional Rese
rve
Association, who shall fairly represent the industrial, commercial, agricultural, and other interests of the coun
try,
and who shall not be officers 411Pbooke ior, whil
e serving,
directors of banks, trust companies, insurance comp
anies,
or other financial institutions. In case the
number of districts shall be increased hereafter, each addi
tional district
shall be entitled to elect an additional direc
tor of this class.
Third. Nine directors shall be elected by
voting representatives of the various districts, each
of whom shall cast
a number of votes equal to the
number of shares in the
National Reserve Association held by the
banks in the
district which he represents. Not more
than one of these
directors shall be chosen from one district.
Fourth. There shall be seven ex officio members
of the
board, namely: The governor of the National
Reserve
Association, who shall he chairman of the boar
d, two
deputy governors of the National Reserve Association,
the
Secretary of the Treasury, the Secretary of Agriculture,
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National Reserve Association held by the banks in the
district which he represents. Not more than one of these
directors shall be chosen from one district.
Fourth. There shall be seven ex officio members of the
board, namely: The governor of the National Reserve
Association, who shall he chairman of the board, two
deputy governors of the National Reserve Association, the
Secretary of the Treasury, the Secretary of Agriculture,
the Secretary of Commerce and Labor, and the Comptroller of the Currency.
All the members of the board, except the ex officio
members, shall at the first meeting of the hoard be divided
into three classes. One-third of the directors shall hold
office until the first Tuesday in April immediately follow,ing the election; one-third of the directors shall hold office
for an additional period of one Year after the first Tuesday
in April immediately following the election; the remaining
one-third of the directors shall hold office for an additional
period of two yel,rs Lfier the fir-;t 'Iuciday in April immediately following the election. All election, shAl he held
on the first Tuesday in April of ccf- h year, and after the
first election all directors shall be elected for a term of
three Years.
Each director shall take an oath that he will, so far as
the duty devolves upon him, diligntly and honestly
administer the affairs of such association and will not
knowingly violate or willingly permit to be violated any
of the provisions of this act.
The hoard of directors of the National Reserve Association shall have authority to make by-laws, not incon.sistent with law, which shall prescribe the manner in
which the business shall be conducted and the privileges
granted to it by law exercised and enjoyed.

APPOINTMENT OF OFFICERS OF THE NATIONAL RESERVE
ASSOCIATION.
SEC. 9. The governor of the National Reserve Association shall be selected by the President of the United
States from a list of not less than three submitted to him
by the board of directors of said association. The person
so selected shall thereupon be appointed by the said
board as governor of the National Reserve Association
for a term of ten years, subject to removal for cause
by a two-thirds vote of the board. There shall be two
deputy governors, to be elected by the board, for a term
of seven years, subject to removal for cause by a majority
vote of the board. The two deputies first elected shall
serve for terms of four years and seven years, respectively.
In the absence of the governor or his inability to act the
deputy who is senior in point of service shall act as
governor. The board of directrrs shall have authority to
appoint such other officers as may be provided for by the
by-laws.
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• 16

20 PER CENT.

6 NB SECTION
MONOTYPE
OFICrAN.UATION PAP€RS OF THE NATIONAL
CIATION.

RESERVE ASSO-

SEC. to. When the board of directors of the National
Reserve Association is duly organized it shall call upon'
the subscribing banks for a payment of fifty per centum
on the amount of their subscriptions to the capital stocki
of the association. When one hundred millions of dollarsof such capital have been paid in the board of directors
shall at once proceed to execute and file with the Comptroller of the Currency articles of association and an
organization certificate as hereinafter provided.

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ARTICLES OF ASSOCIATION OF THE NATIONAL RESERVE
ASSOCIAtION.
SEC. ii. The articles of association shall specify in general terrns the object for which the National Reserve Association is formed and shall contain such other provisions,
not inconsistent with law, as the association may see fit
to adopt for the regulation of its business and the conduct
of its affairs. These articles shall be signed in duplicate
by at least three-fourths of the directors of the National
Reserve Association, one copy being retained by the
National Reserve Association and the other filed with
the Comptroller of the Currency. These articles may be
amended at any time by the vote of three-fourths of the
board of directors, a copy of the amendment to be filed
with the Comptroller of the Currency.

ORGANIZATION CERTIFICATE OF THE NATIONAL RESERVE
ASSOCIATION.
SEC. 12. The organization certificate shall be executed
by the directors of the National Reserve Association and
shall specifically state:
First. .;I:fie title of said association.
Second That its head office shall he located at Washington, in the District of Columbia.
'Third. The amount of capital stock and the number of
shares into which the same is to be divided.
Fourth. The title and location of each bank holding
stock in said association and the number of shares held
by each and the amount paid thereon, which must in no
case be less than fifty per centurn of the amount of the
capital stock subscribed for by said bank.
Fifth. The fact that the certificate is made to enable
such association to avail itself of the advantages of this
act.
The organization certificate shall be signed by ai least
three-fourths of the directors of the National Reserve
Association and acknowledged before a judge of a court
of record or a notary public, and shall be so executed and
acknowledged in duplicate, authenticated by the seal of
such court or notary, one copy to be retained for the
„files of the association and one copy forwarded to the
Comptroller of the Currency.

OWNERSHIP OF STOCK IN THE NATIONAL RESERVE ASSOCIA•
.110N, INCREASE AND REDUCTION OF CAPITAL..
.
SEC. 13. Shares of the capital'If the National Reserve
Association shall not be transferable, and under no circumstances shall they belowned otherwise than by the
subscribing banks, nor may they be owned by any bank
other than in the proportion herein provided. In case
a subscribing bank increases its capital it shall thereupon
subscribe for an additional amount of the capital of the
National Reserve Association equal to twenty per centum
of the bank's increase of capital, paying therefor its then
book value as shown by the last published statement of
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110N, INCREASR. AND RDUCT0 ON OP CAPITAL.
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SEC. 13. Shares of the capital - of the National Rese

r no cirAssociation shall not be transferable, and unde
by the
cumstances shall they belOwned otherwise than
bank
subscribing banks, nor may they be owned by any
. In case
other than in the proportion herein provided
thereupon
a subscribing bank increases its capital it shall
al of the
subscribe for an additional amount of the capit
centum
National Reserve Association equal to twenty per
for its then
of the bank's increase of capital, paying there
ement of
book value as shown by the last published stat
ership in
said association. A bank applying for memb
after its
the National Reserve Association at any time
capital
formation must subscribe for an amount of the
um of the
of said association equal to twenty per cent
for its thea
capital of said subscribing bank, paying there
statement of
book value as shown by the last published
National
said association. When the capital of the
account
Reserve Association has been increased either on
association
of the increase of capital of the banks in said
ip of said
or on account of the increase in the membersh
exccuSe
association, the board of directors shall make and
amount
a certificate showing said increase in capital, the
shall be
, paid in and by whom paid._ This certificate
-4--court of reeerd .er a
ackungriedged:rael
Comp
notetry-public -a4441.44ta41-14e filed in the office of the
g bank
troller of the Currency. In case a subscribin
onate
reduces its capital it shall surrender a proporti
iation,
'aniount of its holdings in the capital of said assoc
shall
and if a bank goes into voluntary liquidation it
iasurrender all of its holdings of the capital of said assoc
and the
tion. The shares surrendered shall be canceled
l to
bank shall receive in payment therefor a sum equa
d
their then book value as shown by the last publishe
statement of said association.
If any member of the National Reserve Association
the
hall become insolvent and a receiver be appointed,
and
stock held by it in the association shall be canceled
the balance, after paying all debts due by such insolvent
red
bank to the association (such debts being hereby decla
ver
to be a first lien upon the\'stock),shall be paid to the recei
of the insolvent bank.
Whenever the capital stock of the National Reserve
n
Association is reduced, either on account of the reductio
n
in capital of members of the association or the liquidatio
shall
or insolvency of any member, the board of directors
tion of
make and execute a certificate showing such reduc
capital stock and the amount repaid to each bank. This
t
a
c,:::.ificate shall be iftelmewleelgertivtewe a judge of cour
filed in Cle office
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„
i
f t.....,... -ei-recota of- riV:17-intblievoodt-fh,44-bc
of the Comptroller of the Currency.

A II

r;

E

4
,

Arv\,,

20 PER CENT.
°

,

r,..• *.t

6.. 1
411
'
,
.•.•

••ftialr

7 MONO. SEC. imiltaimi
NB
E...(E1111'TIoN PROM LOCAL AND STATE TAXATIoN.

SEC. f5. Th.' National Reserve Association and its
branches and the local associations shall be exempt from
local and State taxation except in respect to taxes upon
real estate.
EXECUTIVE COMMITTEE Or THE NAT1oNAI4 RESERNT
ASSOCIATION.

Sgc. 15. The directors of the National Reserve Association shall annually elect from their number an executive
committee and such other committees as the by-laws of
the National Reserve A.sociation may provide. The executive committee shall consist of nine members, of ‘vhich.
the governor of the National Reserve Association shall be
ex officio chairman and the two deputies and the Comptroller of the Currency ex officio members, but not more
than one of the elected members shall be chosen from any
one district.
The executive committee shall have all the authority
which is vested in the board of directors, except such as
may be specifically delegated by the board to other committees or to the executive officers, or such as may be
specifically reserved or retained by the board.

V

c/f,.

AUALTi-NG CommiTTElt..

0,.- 101 e1
,

;1 XintvA4
(

1 4
1

A.A#




a/1
4

Awl?4tti.v4

Sgc. 16. There shall be au_auditiug...4xonunittee elected
annually by the board of directors from among their number, excluding the members of the executive committee,
of which the Secretary of the Treasury shall be ex officio
chairman. It shall be the duty of this coittmittOe to-audit the- hooks of the National Reserve Association and
of the branches and to make a public repent of the result
of such audit at least once a year.

IOLUeernfit OrPICKRS

OF BRANCHES.

SEC. 17. Each branch shall have a manager and a deputy manager appointed from the district by the governor
of the National Reserve Association with the approval of
the executive committee and subject to removal at any
time by the same authority. The powers and duties and
-length of-service of the manager and deputy manager and
of the various committees of the branches shall be prescribed by the by-laws of the National Reserve Association.

-- EXECUTIVE OFFICERS OF LOCAI, ASSOCIATIONS.
SEC. 18. The directors of each local association shall
annually elect from their number a president, a vice president, and an executive committee, whose powers and
duties aluiPtiersuiraf-0234e shall be determined by the bylaws of the local association, subject, however, to the
provisions of this act.
usTs

J rlivAAiLeAd

OP SHARRIMI,DERs.

SEC. 19. The National Reserve Association shall cause
to be kept at all times, at the head office of the association, a full and correct list of the names of the banks
owning stock in the association and the number of shares
held by each. Such list shall be subject to the inspection
of all the shareholders and creditors of the association,
and
a copy thereof on the first Monday of July of each year,
-verified -17y the-esti, of the-governor or deputy-fillAgeffler,
shall be transmitted to the Comptroller of the Currency.

••I

7

1..411./..4

'

'a

•

".?XtAf

.

4

• • ••

.8 NB

4.

MONO. SEC.
- KARN-1=S----A ND DIVIDENDS. -L--------,
...
___ ,......

SEC. 2 ..Thr earnings of the National Reserve Associatio
lall' beetti.Afthote+1, in the following manner.
.
' After the payment of all expenses and taxes the shareholders shall be entitled to receive annually four per
centum orlilhe paid-in capital, which minimum dividend
/Shall be eumulati;e'A Further net earnings shall be
divided, one-half to go to the surplus fund of the National
Reserve Association until said fund shall amount to
twenty per centum of the paid-in capital,-orw4o4F+11-4-erge
4.ertiturid Sit-a+eti, and one-fourth to the shareholders,
but when the shareholders' dividends shall amount to five
per centmn per annum on paid-in capital they shall receive no additional dividends. , After the shareholders receive five per centum on the paid-in capital the net earnings
shall then be divided, one-halt to be added to the surplus
fund of the.National Reserve Association and one-half to
go to the United State' After the shareholders reCeive five per entinn per annum on paid-in capital and
the surplus fund of the National Reserve Association
amounts td twenty per centwn of the paid in capital,
)
one-half of/the net earnings shall go to the United Statesi
and one-hdlf to the contingeqt fund, which fund shall be
maintained at an amount eq1al to one per centurn of the
paid-in capital, but not to e. cced iu any event two million dollars, and shall be us 4d to meeti\
rlosses;id sucTi .
fund shall upon the final issolution of the National .
Reserve Association go to tic United States, and shall '
not under any circumstances be included in the book
value of the stock, or go to the shareholders. Whenever
and so long as the contingent fund shall remain unimpaired all excess earnings shafl go to the United States.

)

-€44RIACIRA1E POWERS Or Ilin NATIONAL, RESERVE
S
As ,SCICIATION.

al IA,

j
f

SEC. 2 1 . Upon duly making and filing articles of as4
) 24
1,
sociation and an organization certificate the National
•
)f41
1
•
Reserve Association shall become as from the date of the

execution of its organization certificate a body corporate
and as such and by that name shall have power—
First. To adopt and use a corporate seal.
447)\-•
, Second. To have succession for a period of fifty years
v.
from the date of its organization.
Third. To make contracts.
41444
ift4/A`ttiv"r.
Fourth. To sue and be sued, complain and defend, in
any court of law and equity, as fully as natural persons.
4414
;‘) Fifth. To elect or appoint directors and officers in the
1
„LAT
manner hereinbefore provided, define their, duties,
rw quire bonds of them, and fix the penalty thereof.
,t.
`t-It4k
k. a f
Sixth. To prescribe by its board of directors by-laws
not inconsistent with this act, regulating the manner in
afv\X
M-dt4e2/
which its property shall be transferred, its general busi40+4 i/f*A°1-11. ness conducted, and the privileges granted to it by law
,
; r.te
ex:rcised and enjoyed.
e ),
t

/
' oh4 1A41

(ft

•

14




Seventh. To exercise by its board of directors or duly
authorized officers or agents, subject to law, all powers
and privileges conferred by this act.
---ftttAlt-ANTTErn.

ASSOCIATION.

Any member of a local association may apply
association for a guaranty .of the commercial
to such
4r• rr.ei;c.
,,,
••••• cif the hrsIneh of the
SEC. 22.

40.1.•

.

'•




Seventh. To exercise by its board of directors or duly
authcrized officers or agents, subject to law, all powers
and privileges conferred by this act.

-ftt'ARANTrEs OF LOCAL ASSOCIATION.
SEC. 22. Any member of a local association may apply
to such association for a guaranty 'of the commercial
paper which it cksires to rediscount at the branch of the
National Reserve Association in its district. Any such
bank receiving a guaranty from a local association shall
pay a commission to the, local association, to be fixed in
each case by its hoard of director-. The guaranty of the
local association, in the event of loss, shall he met by the
member:i of the local association in proportion to the ratio
which their capital and surplus bears to the aggregate
capital and surplus of the members of the local association, and the commission received for such guaranty,
after the payment of expenses and possible losses, shall
be distributed among the several banks of the local association in the same proportion. A local association shall
have authority to require security from any bank offering
paper for guaranty, or it may decline to grant the application. The total amount of guaranties by a local association to the National Reserve Association shall not at
any time exceed the aggregate capital and surplus of the
banks forming the guaranteeing association.
itovSE.

Any local association may by a vote of threefourths of its members and with the approval of the
National Reserve Association, assume and exercise such
of the powers and functions of a clearing house as are not
inconsistent with the purposes of this act. The National
Reserve Association may require any local association to
perform such services in facilitating the domestic exchanges of the Reserve Association as the public interests
may require.
SfiC. 23.

"SrSPENSION.
-

SEC. 24.

44-tarm-thirds

--- suspend a bank from the privileges of membership for a failure for thirty days to maintain its reserves,
or to make the reports required by this act, or for misrepresentation in any report or examination as to its
condition or as to the character or extent of its assets or
liabilities.

PRIVILeGES OF SUBSCRIBING BANKS.
SEc.

25. All of the privileges and advantages of the

National Reserve Association shall be equitably extended
to every bank of any of the classes herein defined which
shall subscribe to its proportion of the capital of the
National .Reserve Association and shall otherwise conform
to the requirements of this act.

giNB

MONO. SEC.

GOVERNMENT OF THE UNITED STATES AND BANKS OWNING
STOCK TO

He

SOLE DEPOSITORS.

SEc. 26. The Government of the United States and

banks owning stock in the National Reserve Association
shall be the only depositors in said association. All
domestic transactions of the National Reserve Association
shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of Government or State securities or securities of foreign governments or of gold soin or bullion.
(0,44
1

RESERVE ASSOCIATION FISCAL AGENT OF THE
-.4CoVERNMENT.

SEC. 27.AThe Government of the United States shall

6(ttt-




deposit its general funds with the National Reserve Association, and thereafter all receipts of the Government
shall be deposited with the National Reserve Association.
All disbursements by the Government shall be made
through the National Reserve Association.

'T. ON DEPOSITS. SEC. 28. The National Reserve Association shall pay no
interest on deposits.

EXCHANGE ARISING OUT OF
COMMERCIAL TRANSACTIONS FOR SUBSCRIBING BANKS.
DISCOUNTS OF BILLS OF

SEC. 29. The National Reserve Associatio may rediscount for and with the indorsement of any bank having
a deposit with it, notes and bills of exchange arising out
of commercial transactions; that is, only notes and bills
of exchange issued or drawn for agricultural, industrial,
or commercial purposes, and not including notes or bills
issued or drawn for the purpose of carrying stocks, bonds,
or other investment securities.
Such notes and bills must have a maturity of not more
than twenty-eight days, and must have been made at
least thirty days prior to the date of rediscount. The
amount so rediscounted shall in no case exceed the capital of the bank applying for the rediscount. The aggregate of such notes and bills bearing the signature or indorsement of any one person, company, firm, or corporation, rediscounted for any one bank, shall at no time
exceed ten per centum of the unimpaired capital and
surplus of said bank.

REDISCOUNTS FOR SUBSCRIBING BANKS OF NOTES AND
BILLS OF EXCHANGE Gl7ARANTEED BY THE LOCAL
ASSOCIATION.

v‘ r14,

SEC. 30. The National Reserve Association may also
rediscount, for and with the indorsement of any bank
haying a deposit with it, notes and bills of exchange
arising out of commercial transactions as hereinbefore
' defined, haying more than twenty-eight days, but not
exceeding four months, to run, hut in such cases the paper
must be guaranteed by the local association of which the
bank asking for the rediscount is a member.
OF DEPOSITING RANK
DISCOUNT OF DIRECT OBLIGATION
INDORSIJ BY LOCAL ASSOCIATION.

of the governor of
SEc. 31. Whenever, in the opinion

interests so
the National Reserve Association, the public
executive
require, such opinion to be concurred in by the
and to
committee of the National R:\serve Association
of the Treashave the dciinit, approval of the Secretary
2
: : e•
the
A
.
1,

•

eNeer(IIIIg IOW

11It11LIVI, It) I

LILA.

alL

Ot4,-aar

L

must be guaranteed by the local association of which the
bank asking for the rediscount is a member.

DISCOUNT OF DIRTXT OBLIGATION OF DEPOSITING BANK
__IISIDORSI) BY LOCAL ASSOCIATION.
SEC. 31. Whenever, in the opinion of the governor of
the National Reserve Association, the public interests so
require, such opinion to be concurred in by the executive
committee of the National Reserve Association and to
have the definiti approval of the Secretary of the Treasury,__
the National Reserve Associatin'thay discount the
direct obligation of a depositing bank, indorsed by its
local association, provided that the indorsement of the
local association shall be fully secured by the pledge and
deposit with it of satisfactory securities, which shall be
held by the local association for account of the National
Reserve Association; but in no such case shall the amount
loaned by the National Reserve Association exceed threefourths of the actual value of the securities so pledged.

RATES OF DISCOUNT.
SEC. 32. The National Reserve Association shall have
dt vetvei




t
,,—ft
Atet,teetA.

authority to fix the rates of discount from time to time,
which when so fixed shall be published, and shall be uniform throughout the United States.

-PURCHASE OF ACCEPTANCES BY THE NATIONAL RESERVE
_ ASSOCIATION.
SEC. 33. The National Reserve Association may, whenever its own condition and the general financial conditions
warrant such investment, purchase from a subscribing
bank acceptances of banks or acceptors of unquestioned
financial responsibility. Such acceptances must have
arisen out of commercial transactions, must have not
exceeding ninety days to run, and must be of a character
generally known in the market as prime bills. Such
acceptances shall bear the indorsement of the subscribing
bank selling the same, which indorsement must be other
than that of the acceptor.

-INVESTM-ENT IN GOVERNMENT AND STATE BONDS.
SEC. 34. The National Reserve Association may invest
in United States bonds, also in short-term obligations
having not more than one year to run of the United
States or its dependencies, or of any State, or of foreign
governments.

PER TO DEAL /N GOLD COIN OR BULLION.
SEC. 35. The National Reserve Association shall have
power, both at home and abroad, to deal in gold coin or
bullion, to make loans thereon, and to contract for loans
of gold coin or bullion, giving therefor, when necessary,
acceptable security, including the hvpot hecation of any
of its holdings of United States bonds.




10MONO. SEC.
NB
• -POWER TO DEAL IN FOREIGN EXCHANGE.
SEC.

The National Reserve Association shall have
power to purchase from its subscribing banks and to sell,
with or without its indorsement, checks or bills of exchange
payable in such foreign countries as the board of the National Reserve Association may determine. These bills of
exchange must have arisen out of commercial transactions,
must have not exceeding ninety days to run, and must
bear the signatures of two or more responsible parties, of
which the last one shall be that of a subscribing bank.
36.

POWER TO

MAINTAIN PANIC ACCOUNTS AND TO ESTABLISH
AGENCIES IN FOREIGN COUNTRIES.

SEC. 37. The National Reserve Association shall have
power to open and maintain banking accounts in foreign
countries and to establish agencies in foreign countries for
the purpose of purchasing and selling and collecting foreign bills of exchange, and it shall have authority to buy
and sell, with or without its indorsement, through such
correspondents or agencies, checks or prime foreign bills
of exchange which have arisen out of commercial transactions, which have not exceeding ninety days to run,
and which bear the signatures of two or more responsible
partici.
--pcoitrtsAtte- exeTTANcES.

SEC. 38. It shall he the duty of the National Reserve
Association or any of its branches, upon request, to transfer any part of the deposit balance of any bank having an
account with it to the credit of any other bank having an
account with the National Reserve Association. If a deposit balance is transfei red from the books of one branch
to the books of another branch, it may be done, under
regulations to be prescribed by the National Reserve Association, by mail, telegraph, or otherwise, at rates to be
fixed at the time by the directors of the branch at which
the transaction originates, or an executive committee
thereof.

-RES;ERVE,6 OP SURSCRIIIING BANKS.
SEc. 39. All subscribing banks must conform to the
following requirements as to reserves to he held against
deposits of various classes, but the deposit balance of any
subscribing bank in the National Reserve Association and
any notes of the National Rel,erve Association which it
holds mav be counted as a part of its required reserve:
First. On demand deposits: National banks in different localities shall maintain the same percentages of
reserve against demand deposits as is now required by
law, and the same percentages of reserve against demand
deposits shall be required of all other subscribing banks
in the same localities: Pr,, ided, however, That all or any
part of the legal reserve of all subscribing banks may be
kept on deposit with the ational Reserve Association
or its blanches.
Second. On time deposits: All time deposits and
moneys held in trust payable or maturing within thirty
days shall be subject to the same reserve requirements
as demand deposits in the same locality. All time
deposits and moneys held in trust payable or maturing
more than thirty days from date shall be subject to the
same reserve requirements as demand deposits for the
thirty days preceding their maturity, but no reserves
. 1-,11
,

Is

re•ru,ircrl

t

irteriarVe

frtr thic. rtrwirwil




as demand deposits in the same locality. All time
deposits and moneys held in trust payable or maturing
more than thirty days from date shall be subject to the
same reserve requirements as demand deposits for the
thirty days preceding their maturity, but no reserves
shall be required therefor except for this period. Such
time deposits and moneys held in trust must be represented by certificates or instruments in writing and be
payable only at a stated time not less than thirty days
from date of deposit, and must not be allowed to be withdrawn before the time specified without thirty days'
notice.
Third. On sayings deposits: Savings deposits, as defined in this act, shall be subject to notice of withdrawal
of not less than thirty days and shall be covered by a
reserve amounting to forty per centum of that required
against demand deposits in the same locality.
.hitrirseRvr or THE NATIONAL RESERVE ASSOCIATION.

SEC. 40. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bullion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, however, That whenever and
so long as such reserve shall fall and remain below fifty
per centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increasing in proportion to such deficiency as follows: For each
two and one-half per centum or fraction thereof that the
reserve falls below fifty per centum a tax shall be levied
at the rate of one and one-half per centum per annum.
4.J.L1 •21c is ,esf ti4.-Naitiona1 Reserve AsseetatIon
-1 .
must be covere to the e tat-of at lealt• one-third by
gold or other law 1
ey, anOltf-remaining portion by
bankable co
re
paper- as herein defined or obligations
e lj..uitett tates, but
-to notes shall be issued
w enev.pliie lawful
neV so held shall fall below onethird'Of the notes outstaviding.
In computing the demand liabilities of the association
a sum equal to one-half of the amount of the United
States bonds held by the association which have been
purchased from the national banks, and which had previously been deposited by those banks to secure their
circulating notes, shall be deducted.

'REPORTS OF CONDITION OF THE NATIONAL RESERVE
A S.S.00IATILIN.
SEC. 41. The National Reserve Association shall make
a report, showing the principal items of its balance sheet,
to the Comptroller of the Currency once a week. These
reports shall be made public. In addition, full reports
shall he made to the Comptroller of the Currency coincident with the five reports called for each year from the
national banks.

1
.

11 NB

MONO. SEC.

RrroRTs oF SUBSCRIBING BANKS To THE NATIONAL
.1414{4E+tivii Ass()crxrirmi
.
Stic. 42. All subscribing banks shall, under regulations
to be prescribed

by the

National

Reserve Association,

make a report monthly, or oftener if required, to said
association showing the principal items of their

balance

sheets.
ENAXINATIONS.
Six. 43. The National Reserve Association may for all
subscribing banks accept copies of the reports of the
national-bank examiners for national

banks and copies

of the reports of State-bank examiners for State banks
and trust companies, where the furnishing of such information is not contrary to law: Provided, however, That
the standard of such examinations,

both

National and

StateA meal the requirements of therttional Reserve
Association.

The National Reserve Association shall have

the right at any time to examine
by its own representatives any

N.auteuaLaii444,4,411.e...ulyiin in

or cause to be examined

.t -he \

subscrt1)in
')an
'4k
—

t-s oimiii—ix1941fre0044-44it4+04444—

d by the National 'Reserve
1la..41,1alig—rdeiewrist, to it as the directors
cunsidtcl equitable.
FURTHIk NOTE ISSEWA NV NATIONAL BANKS PROHIBITED.
Si%c• 44. There shall be no further issue of circulating
notes by any national bank beyond the amount now (mt-

standing. National banks may, if they choose, maintain
their present note issue, but whenever a bank retires the
whole or _ttiy part of its existing issue it shall permanently
surrender its right to reissue the notes so retired.

Iii




..1)URCHASII, 01: TWO PERCENTITM BONDS BY
t4V,SU1VE
SEc. 45.

The

NATIONAL

Associ,m()N.

National Reserve Association must, for a

period of one Year, offer to purchase at a price not less
than par and accrued int crest the two per cent 11111 bonds
held by subscribing national hanks aud deposited to secure
their circulating notes.

The National Reserve Association

shall take over these bonds and assume responsibility for
the redemption upon presentation of outstanding notes

Association shall
issue, on the terms herein provided, its own notes as fast
as the outsta:Idid, notes 1-ccured by such b011(15 so held
,
,y,
shall be pres:...nted f.)r rerlemption and may issue further
notes from time to time to meet business requirements.
secured thereby.

The National Reserve

.1.)..kov-E-kittNtS TZV,T/T-TRING DLI'OSIT

UUNDS 111' NATION AL

Six. 46. All pr.)yision,-; of law requiring national
to hold or to transfer and deliver to the Treasurer

banks
of the

United States I inited States bonds other than those required to secure out

circulating notes and Gov-

ernment deposits are hereby repealed.
TAX UN NOTrS 01: NATIoNAL RESERVE ASSOCIATION.

Sic. 47. Any notes of the National Reserve Associa-

tion

in circtdation at any titne in excess of nine hundred

dollars which are not covered by an equal amount
of lawful money held by said association shall pay a special tax at the rate of one and one-half per cent mu per
minion

annum, and any notes in
hundred million dollars not
cial

excess of one

billion

tax at the rate of five per cent um per annum.

--cfRetTLATING NoTtts

two

so covered shall pay a spe-

FiRsT LitiN ON

Assrrs.




A•
al ails.' 111M! in excess or nine hundred
million dollars which are not covered by an equal amount
of lawful money held by said association z:hall pay a special tax at the rate of one and one-half per centum per
annum, and any notes in excess of one billion two
hundred million dollars not so covered shall pay a special tax at the rate of live per centum per annum.
AA•

CIRCULATI NG NOTES FIRST LIEN ON ASSETS.

SEC.

The circulating notes of the National Reserve Association shall constitute a first nun upon all its
assets and shall be redeemably in lawful money on presentation at the head office of said association or any
of its branches.
48.

FOR WHAT CIRCULATING NOTES (IF N:
ATION A L RESERVF:
ASSOCIATION ARE R EC143 VA HLE.

SEC. 49. The eirculd tiag notes of the National Reserve
Association shall be received at par in payment of all
taxes, excises, and other dues to the United States, and
for all salaries and other debts and demands owing by
the United States to individuals, firms, corporations, or
associations, except obligations of the Government which
are by t;leir terms specifically payable in gold, and for all
debts due from or by cue bank to another, and for all
obligations due to a bank.
'CIRCULATING NoTES FORWARDED ON APPLICATION.
SEC. 50. The National Reserve Association and its
branches shall at once, upon application and without
charge for transportation, forward its circulating notes
to any depositing bank against its credit balance.
liACHANGE OF 2 PER CENT FOR 3 PER CENT HON DS.
SEC. 5 . Upon application of the Natio,ial Reserve Association the Secretary of the Treasury shall exchange
the two per centum
bearing- the circulation privilege purchased from tile banks for three per centum bonds
without the circulation privilege, payable after fifty years
from the date of issue.
FRANCHISE TAX.
SEC. 52. The National Reserve Association shall pay to
the Government a special franchise tax of one and one-half
per centum annually during the period of its charter upon
an amount equal to the par value of such bonds transferred
to it bv the subscribing banks.
SALE OR REDEMPTION OF LioN DS.
SEC. 53. The Reserve Association shall agree to hold
the three per centum bonds so issued during the periodi
c
its corporate existence: Provided, That after live N'ears
the Secretary of the Treasury may at his option permit
the Reserve Association to sell not more than fifty millsuch bonds annually: And provided further, That
the United States reserves the right at any time to pay
any of such bonds before maturity, or to purchase any of
them at par for the trustees of the postal savings, or
uthemisc.

4/

A-4,„ft
e

e

(

'

,.
'
.4

•
flItAr

,

•

•

")1A04.3
•

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,

BANKS

ING

OF

NOTE

:AeDEN.

ISSUES.

1SC4-1:o0S.

1899
End of

Riksbank

Other Banks

1900
Total

Riksbank

Other Banks

Total

Mill.Rr.

Mill.Kr.

January

80.4

74.2

154.3

ftbruary

60.4

75.9

136.7

iittroh

65.3

80.S

148.1

81.2

145.2

April

81.9

78.9

13P.9

79.5

140.1

May

63.3

72.0

155.3

73.7

136.0

June

72.0

78.8

14P.8

b0.1

147.0

July

84.1

72.5

M.4

134.7

, August

34.9

73.4

138.3

. September

71.5

83.3

154.8

1 Ootober

36.0"

78.8

145.5

35.2

November

W).7

77.1

143%8

84.3

d2.2

146.5

beoember

75.2

80.0

155.2
1

72.0

22.4

154.4

Maximum

75.2

83.3

155.2

72.0

88.1

155.0

Minimum

60.4

72.0

134.8

57.9

72.8

130.7

Average

60.1

70.8

142.9

83.5

79.4

142.9

Variation

14.8

11.3

20.8

14.1

13.3

04.3




Vill.Kr.

Mi11.Kr.
72.8

Mill.Kr.
130.7
136.5

5g.6

137.3
E3.1

155.0
149.4

2
OUTSTA :DING

NOTE

ISSUES.

1901

Fnd of

Riksbank

1902

1
Other Banks: Total

!Rikabank

Other Hanks

Total

Mill.Kr.

Mill.Kr.

January

59.8

74.7

134.3

85.8

49.0

134.6

February

56.9

79.0

135.9

85.3

50.0,

135.9

March

611.E

83.0

149.1

95.3

52.5

147.8

April

61.1

140.4

90.0

4E1.5

13.5

Iday

83.7

75.9

139.6

90.5

45.7

136.2

June

F 0.8
,

79.4

149.2

101.3

47.0

14.3

July

72.0

72.3&)

144.3

98.e
,

39.7

August

75.0

68.8

143.6

104.0

35.5

140.3

September

b8.0

71.3

159.3

121.4

35.1

158.5

October

90.8

81.1

151.P

121.0

November

57.0

148.4

121.2

Decomb,
w

55.6

:44XiMUM

1C.1.0

11.1Cr.: 11111.Kr.
,

-7.(3.C.:
,

56.6

Avepge

74.4

a)

44.1

23.0

15;7..0
28.6

14.8

137.4

182.C
,

134.3

86-.3

134.8

145.9
1
I

162.6

ib8.6
1
I
1

71.6

Variation

Mill.Kr.

,7.4
1;
7

63.8

Min!nual

Mill.Kr.

1
i1 104.3

145.2

22.3

i 52.1
1

27.F
•••••••••••••••••

During the i.ro yoars follo8tnr7; thg! Inid(tio nf Ig01 there Were
concluded al, Iniibrvula operative arrangemems between Lho Bank of `iieuen
.A.nd other notu-issuing btAks, in virtue of wilich the latter ceased to
issue their own notes.
he effeut of the firat. of these is seen in tie
July return of 1901, :1.nd the oth,re, as they name into force, contribW,ed
to the rapid reduction of oututandlne, ibeues
Enskilda Bank-notes.
thn Pank of Sweden ftlone has hhd "API r1(;ht of issuo,
From I. J4n.1904




3.

OUT-7TANDING

NOTE

ISSUES.

1903
End of

Pob:i-uary
March

Other Bunks

Mill.Kr.
J:tni.... ,..lry

Riksbank

Mill.Kr.

1004
Total

Riksbank

Other Banks

n111.Kr.

,,, 0
4,-. r

20.9
20.3

nill.Kr.

143.5

124.3

;44.ro

136.8

Total

149.6

3.4

,
.--,

1Z1.0
16.:5

:;•0

_

3.0

166.'2

April

131.4

18.1

!:ay

1._.!.
,

J.41

14:,.

15.2

1.,

12.8

148.5

141,-_!.4

0..,
. .,

12.1

161.
,..3

7.5

18P.1

174.0

1.01L

..::.2

"1 2.0

103.9

Novnaber

154.2

5.3

159.5

rz

158.5

December

1(L.b

4.8

170.4

2.4

172.7

10.6

k,O.v

170.4

171.4

4.1

174.0

121...0

4.6

143.5

145.5

4

149.6

142.2

13.1

155.3

157.0

=.1.0

160.0

4j.;,

16.3

26.9

25.9

1.7

24.4

June
July
Aucust
Sel'ttiml,er
OctoLc..'

Maxiout,
Ninimum
Average
Variation




)49.5

136.7
11-

•%..•

;
.,•:

4.1•111MON.....

1b3.8
153.4

CUT;TA7DIM

'TOTR
a.• ••••

17157TYcL

OD MI

1906

End of

RiksbanIc

O 4 Ir Pankc

Total

Biksbank

Other Bunke

Total

..ftwommo.ftumpiammeMEMINE.M.....mmairommummmormar.e-me,

Mill. Tr.
January

,

146.5

February

J.LX.Kr.

149.

labb.4

1.6

157.0

. .6
,
.

.A.6.i..7

t.6

180.6

15.2

167.7
.i.6 .6

1-1.1

156.5

July

166.4

AugaLit
Sev:.onio.3r

103.2

No

J.G3.3

Junger
_

186.5
166.4

157.7

.
...76.5
lAs.3

-

108.6

-

180.9

201.J

Decelvber

198.3

1o0.1)

105.4

-

166.3

Octolar
,Auvathbor

F111.Kr.

.06./

Ay
June

Mil.L.Kr.

160.i

"
1.
arch
April

Yill.r.

eurrent

201.9

OP%

Maimuo

7

Minimum

146.5

r




37.2

0.

6

7.01 .9

.4

.,

"
15 ,0

1 ' ',.. 2

7

Average
Variation

201,
9

•0

0.4

46,9

0,0

44.2

MTSTANDING

!TOTE

I 3317S.

......
MOD40.0011

1007
lilnd of

1908

Rik S;)ank

Rik al.:ank

-111.7r

TTili.Yr.

gm..11"..110•1•-••••••••••-abr

january

173.4

173.1

February

A.76. i:

.1.74.1

Mar cal

1.96.3

183.3

AI,r1.1

18:).1

174.9

r.:7-ay

9
1a,

176.1

Juno

194.4

iLe.8

ju.i.j
.

178,2

174.4

Pozu4t

183,9

17U.0

Seidtorb or

207.6

196,9

0ct,ebo r

196.6

1910.

1107(-Yraber

189.6

134.5

December

190.1

Ze...,.. 5

'
Evicimum

1V0.1

201.3

inintr

1743.4

173.1

Averace

187.3

IF,3.1

Variation




16.7




P ciale

by the way, is thu rxeatust or most iraportart cornorcia.1 b!.i.n'k in tila world), rind thu Comptoir
( 1 :-'ascomptt.:,
1
under

raortne.-t: hank, tlit.; Credit Poncier, which is

av orm.i n t cont,rol o I Eiritkin

It s

own obli ratIons

ar!ainot L.lortc:w8 1 11d by the hank; proraotin- or synclicato
,k.
han}r,s, like t.
, }4tell• de Paris 3t des ",
le
,
.1.rs 7cani and of
co-Oper'ativu, ariri c atitral and savinr:s banks.
To rri mind tht: syntern of (ler:Any is to ils thumost
intarestinc of any; for thy rlenlan 7irapire has very litrgely
swlo industrial eind (.;oix....urcAAL1 int)roets that wt:hv
In L'au Unitad

ttus.

The Gorman war)

cruat financial systurne to bo

Ligdoptudi

last of t,hce.
and ht.r firw,noial

lagielation hau beun rocrItly Llo,.1111:iud ims Liao reulat of
a very important inquiry iado by a cognisesion is.ppointod in
1208.
no

Of courso thuru Arc certain condition:3 hurt; that do

exist in Guralny.

For inOtarcu,s,..,;1.1-;.0

a

much

•
P.

reatur usu of checks apd other credit; inritr;.L.Atnts than thu
lorrians.

T./16.1r covernnunt is tryinp:, howuvur, to cnoolzrart;

an increased use of these.

They rea1.1zo the irriportanco of

nr, to tHsir firarsial institutions this prcftt ti1:1:lort
of

Olasticity

of credit.

Ci-un.44n ntcu oonsirstrs of tho Ileichsbank;




-10-

considural
Dcutsc:Ic:

ntiA)x. or lztrcJ joint-otoc

barn liku the

t.); nrosdrer lank, and trio Disconto GesollT:r31 are co,:iy.lercial banks; but thc:y also do mcm3

aoaft.

or 1Jstl or %n unctorwritinr, or oyndicato business.
s ndicat

or pomotin

This

b7131noss is limittld to a raaconabla

percontagp of the capital of thc bark; and, so far as T.
have been able to disccv, has not prodItcad any injurour;
rasulte.
Germany has ban() ban

of many descriptions

novul and very interestin7, to me.

'2or instancL:,

31IU

has

thousu.nds of cooperative crudit societies (GenousJnoc:Ilft n),
which hitvu diffortmt function: frcTL. tosu of any othur
banks t.

(Ala

know of

,rti sonuthinc lfl

our lAutual savin[7s-banks in z,lo UalstQrn Vtatos.

Thuy

managed by tiiG leadinc ciAzons of the locality --- far:Aurn,
professional

thti pv'Jrci)al

of oach community
--

who lausuaily serve without compensation.

They aro con-

ducted for the benefit of the molAbers, who are the small
borrowuro and small depositors of tho noir:hborhood.

They

take vary snail deposits, and make loans of very small sums.
If a man wants to bu;r a cow, or wivIts nonuy adv,tnoed upon his
crops, or for i.ny of the r:reat fetass of minor Istrto of mun,




-11-

the loan is made by one of ,,:_4w; co-oporD.Ov

organizations.

They do not compnto to any [7:resat extent with the commercial

In addition to these, rounaany hhs land mortgae banks
of ,i.iffururt classtm --- some that take mortga
irps on urban

proprties and is:ylc socrities ar7ainst them, and some thRt
perform a like sorvic

in the case of lard in the colAntry.

3rany has 41mo a clatin of couraun49.1 and co,inty evincs
m.e unique in thoir
Gerzany has suvural othur classes of Imi.nks, parts
of iltr rurtural krntwa; bot I shall not hckvoLu
ni :It to tQ

thew up and consider thwa cc:parately.

asad, howevk:r t

uhlt, on

In-

a It:. propose to Ovu ‘!/ acc,Aratc: d„;-

8criun of all of t,:txx in Llw literatur,;
soon

imo) to-

4 .^
( :-16 SUbjact o

wu

I hop.; '%.11Q: will rocivo
;
7

your cii.rk;ful conriidraLion.
The Ger...lams h4vt3 7iNrn :-reat attwition (as they do
to Livary detail of all pub7A0 coustions) to the character
*,id organization of their wtrious financial instit,, ,ions.
12:13:: different instit'itions are all parts of
unsiv

and All dopund

bAnk for roseryos and for ascistanc

compre;-

1.1on the 7oic*Inin timo of trollb100.




-12-

Tho continuod oxistenou uf Ju

ri;iru financial struct;Ara

of all Lhs.: contrAJs de:Asnde upon thc vtrencLh of thuir
contral innutIons, ard Ulu wisdom of their ,taanagulitent.
Thu num7e5tions

which

Y wapal

;ht with refurmal(e tonJ,

c:ncu to notiloas umployed to reliovo corditlons of panic do
not involve an examin:dion of the froticro of any of thoso
differont institutions oxcept the central banks and the
joirC_-ntoc
anY ;/or

banks of deponit and discount.

I will first

ttortior to tha oil(i.ractf;r of thu central incti-

tutions.
cont ral
rtrid yt:t

s

f t:iusb co _Intriu2 .trt not

4ro not unliko.

is:.;cs in common.

J.3.I

They havu ,any chttraoter-

T:au principal f,nctions of t:1Jso banks
,

0.fu rtO1 dofinsd by luOslative acts.
7rowt;: of cJntaries of experiunod.
acintially modifiod fran tiLl

They hre the out-

Tliud 11,1.vkl buL:n us-

to time, thro1

drocoss of

ovoluk.icr, Lo medt exIntInr: requirumunts, until it may ho
fairly saidt

L their most importEtnt foatrou Axe :371611

as it has be!,1 fwAnd necu3nary to adopt ,
Ithin a conoration
to

ar /MO r

the danands of modurn corlitiona.

or instanco s tho great r nctIona of the lAnk of
7x,:aand today concern liatters

weni not tbourtt of




or reforred to in

proeded

w. followL d th44
!d
,
4 0X,Ion of
qeniitny,

L1A=

P1 Act in 1344.

?r%cti, and in

1911411

In

cortries to vhich

4;21t1 organizat;on of crodit in an out.

growt'L of modcrn conditions
corditiors.

4110 VW/

in fact, of very recent

7Th.(1 positiun occed 1r/
,

c:reat certral

dil.tios and obligations (r7hici tile

are not

wil1in7 to )inor).adeo in a public wazi
) with refercc

credit, and

biiii,A3 to
0,..1wyr;

Ly1,1

to

resonsi-

othcr im.nhs in havinc,

avo.11u an adequate 0.1d reserve s kA,ru
of recent

on (In.
To rik!
on

mos4 inturacLinc Iiiaau of our
foroijI
1,union..41 blattyy made of Lilo .Aotual

lattmAgers of .!:UHJ t7rat banks for
Lho purposo of (incur
thy prdcisu dui,ails of
their inotitqtiono.

And I

represertativt:s of

t

.cttcal workin: s of
:
in i- zA.33in
)

():Imissaion received the 7roatont

posofhlo corrtesy from the mtnacere
of all of t::use f7mlat
aJ:n--m osoci411: ti
,
CLL'

averror of the Bank of

pholl, , ow roiArtid, alld hie asnociRt
!
en; and from

Pallain, t ::overnor of the 73an7 of
Trarce,

Is




rtt finarci3,1 r-clf,),oritios

Justly considurt:ft on.. or th

Le
72..- bank of 1ra.nc:1 has her. oxt,r:.1y forfl t:'40 past in t:1 c:orActor of its manarors, but
,

tUfltt

in with

it halo never in its 1113tory4(1 a.t its :leaa

k)resunL,

more irc„ullicunco or cr,:ittor wisdom tiLz3.r. t:,
:bunt of tl:.,;•.t office.
us, holpin::

M. P4114.in wa,t3 mora e.:ourtt:otts to

in tvery i)oscible way, not, only in his uwn
ti:Irour:h hie influonou witi.1.,ht; rJprasontativus

of w,hur colirtrios.

The officitia ria.nagors cf thu

bank, in :':Jorlin, nu:10,111A us
to

thu pritotical workinge o

th.::ir hank and of

(:!ar.man

nystan.
„
Th.° central bk5 of 4 ::use cmintries aro 4.11 private
,
ril...s; that is, the

rrcvermlents

have no ownership or

intrest in their :13: itres.
Tho prcAPi si one ror ti-7.t3 control and .r.mnagt..art,:nt, of the
rospuotive bar.:s (13 ff'u
of

L:1nd is in

ncLctod 1:

vidtiy.

'ila.nds of twenty-four dirootors,

frail :aero1,4r1t,6 1 no ban.1:urn boina ulicible
thu covornor

for th(-.1 position; alt.
Luld duiratj ;::orurnor :slactUd

on muibur,

Tho managemont of t.2.113

vu oc,ntrol of

by

:ArQotors

from their

u 13, .talnaso of 1,116) :sank.
.




ar17 or

trd to

rroTJntly

boon asked why ao.cli an inatJt,Iltion (sorvi
a limited territor;j,

(0431

f a EI:LA,11

island) s?,ould riJuire ono 1=dred millionn of capital; and
Why tho suce,Jsz of tilat, bank should be construed as a
. uarantse of the succesz of similar 1.):nka upon a large
:
scale?
think tht answer ja dyvious:

Tot only does the

Bank of 741r:1and sustain the orudit amd hall the reserves
.
,
of tho banti and the people of 14;nraand, but it is the
center of the financial synt4m of the entiro TIvitish Empire, with it3 400,000,000 of population, and with connections and affiliations extending ftround the world.
7:ot only this, but the friends of thk; Bank of England nay
(and s I =at Gonfor33

vd ti

;rot truth) that t,

LU

Angland is toda: tf!lo floamoial canter of the world.
know that sterling bills drawn on London are

nk

of

'No

ti11 the

hiF,hest form of corr,orci,,1 crudlt.

In Pari, in

in Amsterdam, and in -JV

bills cull at a

:1;AC,

botter rate (t11,,L;,i, t 1o7k:r rate) t1lan any ocur form
of cotriercial credit.
So the Bank of hriland roaches

lr,
!er territory




-16-

o'; 1,1r institntion in th:. world, exd :lorver,

t* an

which. art; (..!xcoodod inici.,,ortanct: kind . ., alef.Ant
till by those of

only, L

kiLltud ritaton.

id to deputy..governorn of thu Bank of

Thu

France art: a,pointed by the Chief of f!tat.

The e:ove•-nor

of the Bank of Pranct; tiiruoto thTaren.i policy of
`ti two iv,r,dred 1..trgust, silarQh.oldurn
rorunhs 44nct etan2oru,

.irrhtuen

ho 1ste f-ncti,ain of limited import-

i3

sistin7 or

lct,

7:4,n:eci

by tht; diructoriur., con-

..1-prunident, and seven directorn
yvrsidunt,, vic,

ap )(Anted by the 4::r:peror.

The Itockhcidors elect a cen-

tral contlittee of riftc,,n maLthere, Ath limited advisory
po-ers.

The control of' the

.‘i4D7'

R

committed to the Tm-

perial C cinc.:11or;

1%!..1 momership, the

7Iank

i on.

Fi in ;3:Mc'.

a rovornnt innti t

.
o,Arnr-s of 1 ..!:4so Ilaunks ar
thcc.i trtera of

not:xo,=ivo.

As

• institutions ho..vu boon ren,lwed from

tine Lo time, cerAitions htiore betm impos,:d with Clio pur4
poS.1: of b2in, ;nt. iibou ,; a restriction of ,,mfits or a
:
Iloro siitisfa.cLor;, divialon wt
aft,Jr
holders,

ru

the :lt,t.te.

In Genaany,

end ona-:aitif i)er-o,mt, in .,)01.1d to LI:J
-ovcmlaunt rucei-ven tILrue-quo.rtera of the




net earnings; so tt thi.• not incomo in divided betvrcun th3
State iind

p-,opricitors of the bank.

Neither th'..1

of Ti:n33.0.n1 nor tile 1.
.,ank. of Franco in recrdrod to directly
divi',W its profits witA

rlt,to; but t an w

shall sc., an

indirect division takes
There is a -:rtiat varia%_!on in t
to t:Io tlifferont,

=cunt of va. nents
-

.,-dents by t0 banks for francld sae

and for taxes, priv11or.;03, or 0..h3rwise.

The Bank of

Fancland pays anntw.11i fort•!'1 ,:so puri)onu s
.
in additcn to t.,Eio uoual taxes.
npeoi1

In Prano

action for various .oarposos i
.

intricatu

b.

tt.. -7

Ut

th

1 1 200 1000

eneral ;Ind

lovied by an

ri7qros ffrrishod to us diaaw that

it amounts to pr4e!Aca11y ono-t:ciird of

!,).A

net earrinrn of

bank, anti this has boon trlw for a norltm

or

years.

In

aer-any about two-1.:Ards of the aetl.. 1 profJts 7o to the
,Andor the division to 1-:.10:1 I "11:.tve referred.
In 1207 thu Girman i
:Tgirernnt rooeived, an ita portion
Of ts, 1,rofits, about ;6,600,000.
All of thc)

bn:a ilAVU

C102

their respaotiva -:;overn.f.Asnts.

fiscal rela
ac

vPith

banl... in ;14.(iut-1 nolo
.

dupository of r;ovornment f:Andsi 64nd ki.1.1 pa:xients of -,1.tiolic
er anountri

for ordinar.; exp•:nclitltras or




-18-

•ro.r. irterant on
Tl:

.ublic debt,

arks.

irud to rurder furViier rservl os to 1;:la

..tr.: alno r
t

Vi:rouji ti

i1

!, j

attttrdin:: to

,.4.c.,..11!,13

t rart.3%

discount. o
.

or

o ' the Vari 614B depair",:.onts,
,Jnt

;nds from p1.40,1 to
.

treasur; 1i 11f, etc.
;
.

In tho min it

be said that tho rulat 1 on of LIK:se insti tut ions to 'tile
ions of their respective r!,overniaents in
:31r41166r to the posl tion of the 'United States Treasury
;711.'.1

on to our roveriJnt.

ud in Li
I I it:

.:hese services aru ronder1

cant; o•C Prance and Germany wi tKout con,),; sat 1 on

tho tTovernnont bual

z

i f. 1. ran site

(1 :in i,o

ho so

casov.l tliovit any direct coripun sat I on.
a.01-1 of these inst tut
c•f banks.

nn is in a 3m.rco si..1nne a

About n 1 xtrsfive per-cont of tha Visi nes!! of the

chtibanl- cohies throllr,11 the other banks.
Ifirance receives About sev,..tnty por-cont of
st; fro: ot;tor bankin t.; inst tut I one.
•4,i,y13: of

nk;land does not furni

bj uct.

ts entire blzsi

Tiu statement of the

tAny info n.lat 1 on 1;- )(Al
;

As a tw...t Luz' of f...ot • as I lioxe 4141 roadyr)i.
.

YLtuyrb;.tolncezi

eu:.1..;t1 from t..

thIpoui
ho,lsop

Thu Bank of

banks to tile flan?: of

s
Lid,
ij

i,teco -alt a s 00:44413 tArc,u!h the di :;co ant
..

(.4.nd not (iirc:ct•

if




-19-

;Also clIffor pot 1a.1.1..,v- in tho avurao c anolInt
.
.

or

their at:posits, tAncl in tho a/ao-L.nit
ncountin and loans.

the eJntral har1:

i

c
.‘.3.ra,ctclr

Tit direct comriereL,1
eomparativulf -Lai

,:ir

'truss of 'Ail

ant
.

The ba.nks 4,13o diffur as to tile ol:Arri,etur of coramoroia.1 p.Apur or bills of uxu'zianc.
euiic
co-int.

t11.0,y accopt, for dis-

or :;:lanclitnd req.kirus at least two c,00d

Rish nwaus, of

onu must 'pc; tho acceptor.

The

ank

of Yrance reviree L:rtia solvont nttaios, of vf_joi".. two
bo rusidunts of Frunce.

TEA: iu

ibk revirus tho names

of t4L.fo solvent 1)arsons or oorporat one.

In Franco collo.tor-

al is ttccupted in .)1cc of tho third al :7nature.
1
npea,kinr ,
.
;
and not bo

Clonerally

bills must .
i..*t.lpros.:nt :ict.ua3. trammel; ors,
r

t a Ir".'

f i;.-Anco or acco:Imod,a,A...ai on bills.

The ii,verarrp durati on of bills di acounted in "%nraand
Is frori forty to fifty day; in Prance
Germany, thirty-t7.:v dais.

thirty days; in

Tie ma.zirvirz duration of hills

neolxntod in ..!..:m:L.A.nd is four montIrs, in excupti()nal citsos
six months', in Franco t?iruo months, '1t
in excptiona1 CLUZSU

Gurmany

n.ru

i.

osrlibld rc.:r.owal

tionths,

ron,mal

.)
in cas, of fi:uri...ars.
nogionci;.i.ti,in:: for pu.p‘vr of tills I:1ml is

nru-




ly airforent from o.
Jrs.

They to not

in thir barHnr, transactii- ns.
,
,

IISJ

In ca!! or a

nunufaoturar or meroant, on crudit or
nr4kos

dratt or

or,' rotes

pro

b:," a

iw, thfl sullur

f/Ire..,asor upon toms ,i7reed upon

(usually on tiirty, sixty, or ninety days' time), wld Liu
purchaser accpts the draft.
dmwstio bill of excnani;G, or
uuually cAlled.

A ban

T:lis axcoptancc bocomen a
1
,4a=st„ic bill,

Llay arran,;e with a mcrc :t c - an

operator to accept his billc

co,zai r.I on.

This

cL.,Aanc,3 becomes a pri:le bill, Lult is dincounted at tte
1ow

4k, 1.te

ot_or

A.U. drztfts

11,q)n or 1).' foriL:n houses or banks i,,ru known

4S

Tra.du bills cover ordinary corvaercial trains ctionvi,

f1ra..!,c0 bills cclrlr aocorncdal,lon loans.
answur the recroirortsI liTtv

i)oLlestic billn
of

named

ctra1 ban1713 axo knoim an bankable bills, as thoy

aro acct:1—cd for rodiscont under proper conditions.
'orlo of

crItral inst:P,utions are oor1:-.:)rc1al

bans in th‘; ordinary Bens!) of 1,:ic word; and usar:e is
brinjjni:

1)(plt a furter dullifitation of their i,owors in

res;puot.

on

of

interest on thuir deposits.

T;,tay :416o not in any genoral sanse condol. ,ors with the




btAmko of discont

aeposit.

cuntral inotitutions

T;i0121j

slwcie resJrvuz of all tLu b.alkz And othe
r fin,inci,11 in-s
sti. ,utions of tliuir respeotivo co!ultri
:
els.

The Bank of

::aulds on an avera.c,e a reservo of about
forty-five
p4.:r-ount of its c:nt,ira ILI:1)111141.3s.
holds about

li

froi forty to fifty pore

2vAndred

Bank of Pr,..unoo

034tenty-fivi: per-ocnt of its de:-.-te.nd (4)1:U7:at
:ion:I

in specie; 4nd the

urn.

T.

of i

puc

rL:survQ uf

currtnt depoc:1

lwith en winual 1.7old prodlActi on approxina,ine four
tillion dolla.re s and tho constant incr
eane in the

world's stocl: o
crease

i'.•ld s

ure is a Laarkod ti..ndenoy to in-

7ori•Jrvt.:3 of all the groat banks of the
we owl/skier tho rapid crowt*:.1 of tho

b-93intasc s rtrid the extort of tho bankinc
transactions bas:d
upon L:..a.h; runerver.,

roccw;ity for their proteotion uid

!alder all circH....13tancos becmies apparent
.
Thi

reat differ-mc: 17,;;twt.1,:n

or own in roi.mci in ti1

hankinc, systems

conc..;ntration and nobilization

Of rosurves t

is tlie diotinctiv‘t feal.urki of the

Yguropuitn systo.A3.

C:onfidGnce that the :.1.4nacuLlent of

thoau

cuntral banks will ;#t

ll tilaos o in prosperity




.00.
iroha

and in advursity, raaintn rtIsurves a1oquat4 to protect
inturests of c1.11 of td4L:ir veoplo .And to sustain public
and

crod11., ;7',ives to for4i;.:71 s;•rati;v1:-..i irapruiTablo
;

strelit-Lh.
In t :is connoc,.ion Au is important to examine t?zu
muthodn axlc. tud
ccrve

and
1
;.L•

t•

4,1.0

t()

c.:11tral 1),%nks to protect 1;hr re-

irenlatio

:yaann
0313

u1ly

7' 1101

othJr countries.

riecessilry.

'01d

rd succ.7.ssfully r:] hid - Ton for

1st w7:loncver neoessa,v 1

1nk rate of discount hi

O1
1

LO

,-(ivanco the

enougil to cttract

rooj

fron

As in the ease of Goimnoditiess, fold

follows tile lax of supply and deuo:nd; and if •In7,1and bids
more for 6uld

..t'rteinea or Curan; she socres it.
v7,

)0r t,;;,c,u41),1,; I in 14)7 t:1Q Bank of 7.ng.14nd ralidly raised
Ito ratu of discount frou fur

o sev-n pur-cLalt.

Campbell, the governor of the B;Ank of

told us

that thm reult wz4n that gold came into th,; vaulty of thm
bank from twart.
;y-four diMrunt countries,
or thre.J colonies.
I think Vin i

nclwtinr two

cribled the Bank of :
.ingland (and

a strikinf; statomont) to protect its re-

cmrven und to ryJn1 to tho Unitod States eirlity to ninuty
million doll;Arl of read.

T:Js ran true notwitstandinr the




-23
-

tilt; svocio rosrves of the flank of ingland do

fact

not uo,zcUly exceed one hAmdred iLnd twunty millions of
dolL-Ars.

toc.W.ior, "rzlAt would hve hapduned

I aol.Qd

if tu sevun por-cnt rate: hiA rot boon effoctivu?"
ancwer was:

fil

Esould have put %ho rate up to ter

1
j
cent; 471, tar por-oert voul4 brir7 cfold from

oartbi"

(Lar4tor.)
The anew!' was intended, of course, raeraly as an
qication of th:i power of a country that has credit and
Ilnlimitad resources to brirc rold to its coffers.
In recent years --- certainly for nearly half a cent:Jr

--- there h413 been no failure of this zItethod to pro-

tect :41-al ircroaso te cold resarvus of tha great Ellropoan
bitnYs.

It is tr.i;

flounces.

1. 1 i now

Ao

of collateral inf L110 cent-al baffl-s to

holdfrt-timm forJ11.:. bills to a conniderablu

rammt;

and this custom has bt3en .4%•ziel very hulpfll in aLriorconcios
to protoct

ol(1 roskIrvs.

Thu central banks also allow

intarost on :old in trz:anzit, from Aistant points.
main rliarco has alwa:A3 been upon a

- 11At L114

advarcci of the

t,:nd thin method ha n boen found uniformly rmecessfia in modern tilles.

Thti polic:; of chare1n(7 a )r=ium




or
fu: :01,1, or of rdfusin

to pay cold on do_litnd b

inAirect

1)!; effctivJ oeans, Jo no longer def.Jnded by f1rc1;:i.ss
(

voice:

"Good!").

1
In 1,1:7 conrectjon we should also considur the pni.c',1c,;
uf the jodnt-stock bunko with rofaronck; to reserves.
The (11),A3tion of thd c'laractor and extent of

y

Oft

servos of thuse banks, an woll an those of th(: central
banIzs,

13

left to the jud;;Ant and Clincrotion of

iaanagers of thuso instiLut,ions; and no att,.1pL Jc made by
lo7islatJon to exercise any cntrol over tAls important
feature of bankin
The join:G-soc
the basInesL; of

practicu.
very largo proportion of

banks do

13evural colAntrius.

The 'ank of

for (*v..42.:1, hold8 Lt ,:1.3,0U0,000 in discounted papor
and socrim

11. kinuu.

WI= we conslder how snal1

a 1;roportion t:Arl lo of ,he vast business of

:igland, we

sh11 reaplize i..:qat the large commercial joint-stock banks
do irtcticllj

hu ,:n%ire business of that groat %ingdom.

The jo:In!.-sLock banl7s hold prctically no specie
ronorve.

Tn .1.a.Hrr statamonts

or

%hair conlitlon, Vie

sjoin.-toc1 barYs of the several courtrien report the
amount of t2".31r "cash In hand and 1.t.

bank" in on

itoms




which 1%11)re:sent's 3.1..v only can_, recorven
laci Union and Smith

Axoept in one casu (that of

tons.

1344,n',: of London) thu cash in ia;A.nci Jo nevr stated sL:paratuly; and no

Crr

14;
rau.lbers of L,

pers:Izzion that

Commiselon could ,Atie would inducts them to augre7a.1.0 thee°
ii.mounts.

An

tter of fact, all of those banks hold in

toir own va,t1ts only that v.:: wwtli call *till money"; and
frua rarJly exeds thrut; or four per-cent of th,Ar
daposit libilitios.
assort

/1.!,

a orddit at

better for their pur oiie
luone:1/ in their own

who manage the instiL;tions
J central bank is safer and
4han a corresponding azioart of

p003t1051011.

We were told that it it,

;labit of th:; large banl.:s to make an ustiLiato of the
amount of mont:y Lhat will be required for icsir ordinary
,
transactions from duy to day; 4 ,Jr,
from

A.oun .- 4 is wi',hdrawn

..1k; c,intral bank, and consLitutes praotioallj thu

,
only ario. 4.nt. of cash on hand in any of the instimtione.
Thu anount of "cumh in hand and at Lic: bank", takinr; the
two tucoi;:itir, itveracon about fuurtcon or firtatm per-cont
of the currnt liabilities of uU London clua:i

-71Gusu

barko which make their raports once ft month.
Tho joint-ntoc17 bar.ks, how vor,
rosorv

secondary

jr "mane' At call and at short notice."

In

k




London this monQy is lowiod to ulsco:z.t houses on bankablu Maar!,
acnd otr

to morchttnts and others on ;1,ock-excane
li.rscurities.

Thu barlYs hol

on an :tver-

age about fiftn to twenty per-cont of their liabilities
in thit, secondary T%Iserva.

In addition, the T]nrlish banks
.

usually hold for investment purposes r:ovurrmort securities
to - .21; extort of thir citpit1 ,ird surplus.

Th:s rule

does not apply to foroicn banks, however.
All th.:. joint-stock braPs hold a ver:7 imortant
resrvJ in.

j o.rtf, lios of short-time bitn1zal.)1::: bills.
.

The fact that they can always b, usud for rodiscount, or
dt
that when hLld

huytlr,J unuct.ily paid at vlaturity, f7,1vos

to thoza thc rruatost possible value as an availablo rcserve.

In fact, una:74'; him.1 71v, to them alarlost a lerAl.In

tunder qualit;;.
It is

policy or t1-1

joint-stool- bi.t.nks in tius
:

or strums to strangthun their reserves by increasir(7
their balances at the central bank.

Min in uslzally

donu by a (iirect or indirect rodscot.Int of their bankable
bills.
one

By t1J

).Teocess they aro onithled to transform at

into a resrvu an assEtt

in this correction.

othoris) -10.s no vrCI

The 3/Istitions aro tlyp fl-;thlad




to exttInd credit to desrvin

custo.urs to the extont of

four to tr tiris thu amount added to their reserves.
number of the foruiEr joirt-ritock banks have

A

it abolAt one-

eihth of their total :Libiflfmier, in resurven of any 17ind.
This doccripior o

flrnctions ard tho procosses

of the :11.ropoour. emtra.1 and joint-stock banT7s will um.ble
us to Arrive at a buttur understandinr, of thQ lauteho...1.3 :)mployed by thcst ,. int,qit-Itions to furnish rulief wlion finncil troo.b1

is iippruhanded, or panicky conitIons

exist.
Thu ctiiunt IaLA now About t.o ::!,71 is tIte crux of
.L; vr.ol

matter:

T.ecw- c:ra.1 policy adopted in timos of appre.I.orsion
or distress

for the central instjt.)tion to strengthn

reni:rve's by the us' of the muthodu I
and at

described,

sa.,:o time to extend crJdit lflerLdly to

person or institution whose solvurcy and condition untiLlQs
him to ruc(livu it.
It in this simultanuoqs str,:ngtheninr of reserves
rind .;:ctencilon or crcsdits which

ivos potuncy and effect

to tc modern q7stum of dealln:: mit:1 ,c1Y.'o -Is or distrnst.
The fact that in modern times .

me:tns I h;vo dencrib*4




SO 2801

havo not nidlud to atfurd
to res'....ort

alia;"

t

con ridonc:: o.nd credit ir tir%or.)o

real troubL: iut ere at' z p ro

t.,7- r‘:a.ti ..:r,Qd or
,

d ipr2ton .:tpon aal
.

.
who are horentl.: twukin7 a solution of our ilonatary problems.
In thin country Wei hvt.) adopted precisely the oppo;
For inutarcu,

policy.

WO

11wo a law governing national

banks vAch requires, in certral ronervu cities, a lawf •1money reserve of twenty-five per-cont of ot;;tandir7 deposit liabilitius.

Althou

assle that LQ rue'

serve is created for eler:
..
:ency pupo2s, w:ien
;,trisE; cAmi a bank wishes to tAts
do so.

(Laup,itor.)

n.o;:A.er 17.rncy

its reserve it. must not

Under no circuustanoos

its reserve below twenty-five par-cent.

44 it ruduce

If the reservL: is

twenty-four and a half per-cmit, not only can t1.1
us

bark not

it, but it musL stop all discounts, all .;:KtJ,11:3;ons of

credit.

It rna3.:en no difference how nuch a man needs a
crodi .t.
',711() 3.

n:tv
at, onn,
for t.

o

hi

J

ay 1-y;

or
blu;:

him collttral nay be.
7..1 r3. vat
..!..7

pO.i)1ltd.

It raa.y 1.-ro

;tale.

i

1n2

ion:3 of Runor<-thnolut;

o *:iav: a cortain.7.+ivio'znt of Lionoy

C8lty

t th:tt very




Bt if the b. nkls vcsurvt; is twunty-four and a half
-A
per cr1t, or lous, even though tIleru is a condition of affairn

abolutuly necessary the une of part of

the resorve, it cannot be logally uced.
it is not nocesnary for m to cn14rge upon

thin

the abourdity of this nystum.
countries are based upon -9,?1

The systems of 7uropean
policy of usin,7 ruservs

promptly and rully in case of an omorglincy.
case of the ...)ank or

Tf.ke the

It ::,..Aters not IN:nether thu

usu sugGested is in Canada, in :Arillindhaus In Liverpool,
or in Australia, thu reservats car b.; drawn upon us water
Is drawn frum a [:reat rL;srvoi
It IlivoN.us

a

bk;
ocean.

eciaacyat:Ion,

CAL

n t.LL;

uolesn an .ouhI
1

¶iu

a

fire before

1.1oitton of wt,G:2
.

wore poured into thQ

urotiean bankc takJ thJse matters ut their'

incion; And by Lieans of a concontration of ruservus
tl-wv art; roa&T it

ny minutJ to furninh the necessary

nenri 4nd the necessary credits to prevunt disastern
!:, ono from
.

slich

:)1(3)1 w&

ch we h.Ari been nufforing, and

thli. oontinue to suffcr uniQns wt do cam-

L,

-r orga.riztJ wld to strerrIthun our financial
.

eynten.

(Great applause.)

k




Tho question of the isrme of notoss the nanntar of their
isuo, and their use in the extension of crudits wl!. to
uot3t unlAsual demands, is an important ono in t'As cornection.

The Bank of Eland issues notes againnt governmnt

securities to the extant of ,92,500,000.

Any further issue

must be covered by specie.

The note-is

variod but little fro m 184

down to thu presort time.

While the bulthless of

land has

rflitnd •,r1(1 of thaBritish FJapire

has doubled i:Lnci qoAdruplQ

,
nd niaLlplidI do not know

how m4ny fold in that LIau, th
ruiaainod s.lbsta.ntially

of

t i1(4

ro.)nt of !A)tu-issues ha.s
of checks

Sakile•

and other inatant...w.itri of °rad:it s to yr...lc:. L.

.01au of
•,..

Aivland are acchstomed, ta3 us th:.; plaou of notes.

In Vranc,;

notes are isnued v2t:L01;t, any rostriotion excep^!, as to
amount.
Pranc

Dut -under

--- and I call

i- olicy and practic:: of the

Jarll: of

:::tto;ntlon to t:As statonunt

Its notes are practically coin curtificatos.
For the tn years endinr ir
.
:

non

tho BanY of 7ranoo

Held in specie an avorace of ole- tylreo and three-tcnths
per-con

of thJ olltstanlinc, not-infmo.

Againmt an uns»

covored issue of, say, tro hundred millions, the Tlank of
'2ranc,,1 hold, in rollrld

t:-.ree hundred and sixty
.

I
S




odd millior:;
PU

iap

,
13:111) ablo bills.
:
:,
,
Icotf.

sa:: in passinr what you already

that tlwre aru a row hankm in :nrland

knor7

retainud the ri&ht of issue since 2.1/1./%
toun

ever,

issues of tn

to but a frcl.ctiGn of on
i3.k of :!4:11[;13.nd.

Their rotos, how-

pr cent of the total

Toro an; also curtain of
th4 .:;al.k of Bavaria, thu

.1!tato bc:unks of (le!72aany
iink of Saxon, and two othors

.
t,t 1vo retained the

.
of itielJL: clvent.vJ1% under t;.L'; bank t•A•ct of 1375.

But

Lu outatandinc notes of all those banks wmount to only
tilrtiw and t half pur-oent of thu total notu-isuuu of 'the
Ibpiru.
'211c1 - olcilsbnk is authorizud to itv:uo untaxed notes,
,,
firEt, 1;o L,11 arimznt urpal to the &mount
C,OVermaent notes It hOldei

ecord s

Of 2)(iCI3 arid

to the amount of an

arbitrary ackni known a.n Lhu continnt, which is fixed by
recent ley151ation at ono hundred and thirty-oirt milljor:71
or dollrs.

Tls 1ur,islation wan adopted upon tho moon-

mondation of the hank inquir,y ca:Imisaion, which wa

oni of

the abluut col-1:113:31Gna over apointed to JnvontiAQ
or 4 similar sl.),Oct.

The report of 1:1,1 coission reOom-

laJnded an lneruao of the contingent from . 113,000,000 to




4110

1.311 0000,000, with a flIrtIlar incroa5,

AL„,

LA)

-,1n8,000,000 on settlx:ent-da's

t: L.

jioiint,

of

,:nci of quarters,

these bein!.: the times w*17.en the larcest amounts of notes
at%: rocuAred.

(You will observe thi:4t the amount of this

continent is only

2 per caita of th

a rather inconsiderable s.um
capita th
nots is3ued in

UXCOV5 of

c.rac

rea

of five )(Jr-c:mt.

or

thu notes wre

lugal prorvioions ln thu caso of all of

b:Inka.

the nonopoly

Any

)
1::st; i,':uounts are ta..xed b; the

.nd .17(loti.abil:It;,'

suci.od 0
1
th

n you think of tlw 435 or

havu in the United ltatus.)

,
E overnent at ti.; rtt
.
i'h

i)eople of Gerwany

In each of t:L

countris we fond that

notc:-issue by a cntral bank mautr; with

practically universal approval from all classes.
thin

Wier,: can "b'.: no dissent fro: thin statunant.
-1

Amonc the recent diocuncns upon the subject were thosc
that 1,00k pl:cc in fAirtany and In Belgium at the time of
tho last extunsicn of

charters of the banks of those

courtri ,
:s, 11:.
,en all oimmun
and all

01 MO OP

Gocialists, agrarians,

clo,82oe in each of the :;tatue, and so rar

as I know in over

:tato

of having notics is:Taed onl,

fully approved of ;,lw policy
Gnu c,:ntral buniz.




Thu uverar;o fluctuations in

;In(unf7, of notes

out stax.di nr77 from time to time differ consideraH: in the
throo court 7.1 co.

Those fluctlat I ons crcw out or diffor-

ences in tIle seasonal demands for currency.
'there the vollu.r.,e

rr.ot

Ir England,

nro.xeri 1 ri pract call: comstunt,

the element of (.:144.w,icit:' o. innno, which in .';..- 11-1:any and
f
.
I 8 ;Aot

by euerv;v:. unlk%rgoents kind contracticms

In the voilt..; of notes, luLlut by chAnr-tus in t'
,10 volume
of checks 4And other crodi

instrunts, and the amount of

cr d di to i!:ivon by the: ..,zati; of ..,
:nrla>nd :And Lie o thor b.4rkin iflt.i UuUone.
To recur to 4 ,:ne Twat i on of note-I stitao:
.

it is apdarunt

if vv. are to profit by *la eX:)CriUflCe of othor
;
co int-f.*71 us, If

sKnyi..
.Linf, , in thi.:137 7letho1s that may
,

be of 0.(1vntaf-e to us, then) are only two systems to be
considered
Nryler

one, t'lle systtta of note- issue by a central
rnrient control or restricti ons, ttnd

otllor the Scotch system, the main features of
Atlso been

.dOi)tCd

in Otautda.

uni forni
of

of opinion w t;h :referunce to the wi Eldon

unifI cat on of

bainkors Por t I think,

mule n In not 3harocl by tho root ch
Scotch;.un in r:cno
.

TI.!os.:: who

k




bellevo in a ctultral bank or ins,Ae l howevor, in91ct that
:n hundred branchthe. FIcotcl systo:1 of elf7ht bar17n "iti. cluv,
es is not ada.pted to th.1 warts of a great corrierclal co- tritry;
that it is of necaeslty a provirci'd syntem,

The eirit
ThLI rattraiNrs

banks of ''dootland Rrt; pr,A,ctically ono bank.

7,dinboro' or rilas7ow,

of the principal ba.nkl;,

consult each other, and fix the rato of (I ftecyont for loans
,
and the dziont of interest 1 ..o be :1.1lowed on deposits.
pr..xticular of irril ortance in ban:Lin: oporation4 or With referL1

informal

ence to note-issues

of

organization for defense and ixoteotion.

The Scotc. banks

depend Ison the ,3a.nk of England for t,1r specie and for
slipport in tines of trouble as Pally a.6 do the :;la.1ish
banks.

London sndi; t.o

cotland periodically a connideroft11 held tiler,: only long

able arao:Int of Cold,

onouL;11. to enter into the accountrlo

tho

catch banks, and

tun returned to Londor, 1.1.any tines In thL: or1inu1 paclrairen.
:
Thu Scotc- i not.; issuo is

prost;nt based, first, upon

a fixed taount of uncovered no-%us, which in equal to t.1.-;.0
outstandinc issw.:13 of the bulks in 1845.
of

1.1ncovered

ro

The total arimmt

t presont is about two million

z:,:ncirod thousand polinds, or .1.7C put. capita --- not
sevn .
.dpoint, v th a
a largo or iza;.,ortant amcurt fro::1 our sta:-




00.A0d*

per ois.vita circula.

ntA,cs

on in

or

,Chollt

M.

to law drovidas

Beyond this lirbited ircovureJ

all emissions a:11 be covJrod by specie.
suceas of the :lcotc... c

It Is conceded 'Ll.44U

laborate syritu.11 of bruncb.s, which

dep nds largely uvon an

la not applicablc to tie United Ctatus.

I do not moan to

.
underrate t.:Iu merits of 4 11u Scotch bankinG system.

It has

been impreasod upon liJJ thtit there aru no butter bunkers in
TIluy have an adialrablo lndI

the world than the scotch.

vi or in expression and
dou3

cLion.

personal equation tiand ror more.

owhoro

Aside from the

;LA.:171,:r

of not

the iistinraishAnos feW,uro of their

systu

As a nol;:lod of

Chr3:1

credits, by •rLich a farmer or

mull' trader in any part of

cotland, Trrith one or tv1) of

:is neighbors as ;12.ran':;ors, cs,dn ostablin:1 a 1ral(in(7 credit
for :A. fixed win.

'211c bank honors his drafts for any amount
1;,; customer pays interest onl: upon

the cuLdo ,Lot1Li1ly drawn.
thisyst,
coLuauniies of

There can btl no question but what

r1 of benefil,, in ,I.oveloping the r1;bra1
cd,1,And.

Li
M

041, howcLuv,:lop unt has 1)

ever, along lines quitc; unlik

(1.nd tat wuula appoal tc,

tilt.' restless American spirit.

Thu

rL‘tus of interest




oh4trgd by t,flu ;:coL,
;_ bapnks

11

ono-hAlf or on

1

cent hicher thAn tor equivalont sJrvic
considerable portion of th

in l',;11::nd..

A

1;A.rger Scotch comaerclua arid

industril housus koup thcir aocol.ints in London.
f.lcotc

pur-

The

b.,4nks also 2v.i.v, ; brallc:-Ies in Lon.
,

But

.7,cotch 21uLilod3, !hild aAnirablQ in thoir uurroundings,
littlo of v:11u4; in com-Adurin

the requircLauntr, of

this -17:3at, contry.
The (anadiur bankinp: systxa, which is largoly barFld
upon Scotch ideas,

:luny intelligent and pernistunt ad-

vocatas in to United ntatus.
our careftl cornidertAtion.

syntia Esotild roccivo

Llombors of thu CamNinsion

made personl invostications in f;ay.14ft.
,

nese havd been

supplenented by extended arid Vt

uab1

tained in Jidtu

ci An our lit of publica-

L!ons.

roforrod

info

CamA,da h;lia twenty-nine 1) 4.ril.:o s w
.

thousand branches.

cortain durinito functions.

.
1, t1ized institution with
c,ntrol or

not alwi4ys under ‘;.tt..!orit

k.6w, of uvon by

about two

These z4x%1 prz.4.ctica11y controlled by

the 13anl:eral Association,

howuv,;,', i

ation s con-

Jariks,

conferred

1
4.,

•,
V.,

conntition aro: by-14wn of

by lgreumunts for mutual protocAon, which
aro ovally offoctivu.

Throur:h this ofrAcj(dn

bunus




arrarigament t1u 11q.1.nks of Canada are controlled as thorou6hly as the Scotch bankers cont:.-ol
Scotland.

Canada har, an

olJtside of Alaska.
ar

bnT:ing systum of

oquzyd to

United States,

Out of hr twenty-ninu banYs, nineteen

locd in Toronto and Aontrcal; and the whole synLom

is controlled by tho bankurs of tht:se cities.

The Dan]: of

:Jontreal, with its largrl capital and aalirable nanareurt,
J8

practically the certral bark of Canada.
There art: but three banks, and these quite unimportant,

In the vast country wint of Ontario.

Think what tho

American synten woltid bo, and how it wcpad bo regarded, if
we had but throo banks west of Buffalo, and if the bankers
of Nuw York and Boston, pe.rhiips, should decide upon the
policy and the rates of disco:zit of tho whole oyster:, of the
jnited 3tatost

And yet Lhore 4re certain paoplu who think

the Canadian sistzm coqld be adapted to

Unitud States.

The Canadi,..r banks habitually carry L,»rce balances in
row York and London, and in ties of diffiolt
support upon .1-lerse creat financial centers.
autoritics basu the cucoiino or
their oxtun3iv

rely for

(oLipetent

Canadian system upon

use of brizto:les.

Of course I re:tliza that 7..)lere ar:';' in tlAs country




-38-

i.y int ellLent man who thi nl:

a 7.re at

t

a sy E;tor )ranch-b ank. nrr, like the Cndt
But urle sr., I r,roat 1:: ilsta1.7e
people, that will ntiv--.r
sy vt
nize

Po a5

iLaporti.unt ttleuent
borrow frora

Uri -t e

d E7.:1ant,

Y

ry nut Tee o g-

Stiii,tQs.

vo..a

Of c c.;1.ir se

min in everything else, the

in busineu

ne I ,ibur
[
-

e air-)re el

Laid. fri

i(in of the I r wants
-

The :
..ten who
-

banks in the

W1Ghiivc; bt:en iii,causLoned

thin 1.(;3: ,uct,
:

con

trgt.sctIons.

bunics, of

3:18.11

tons

will

c

ri can

tin Yaust alwa:, s remain one of the zn.ost
,
on

porson4.1 u

pa hu

j

I n de pendun cu of thu twen

,
ri ; ht a and.

rw-1,11zu that in boxiki n,L;

lrt

.

n

thoAsi4,nd sepa.rate banks :in
yo

rsyturn.

Oil ...ract Jr of the k

af.to

'oh Ich

:reave

dezain7 in
,
Who 11-v

‘;.7111 not b:.;

t. to lt3c-.1 slat on tilo.t shall au .Lho ri ;Pie
,-

di npL...c j.nr. of mc:1 bank
,

ap7c:rit s sent from tho bank r,

of '.!::ew York or of (dc -:o to conduct the Iva ine as in
these nra;•43.).or col:mum i ties
(I

ii.13tlrnot t;pted to Say•

be Lo u;.t.rri

nen whose fi rat i nt ere at
whoa,: onl. interect
f

:lost monoy they could for t:(-1(;*.hrs pr 1 rc 1.pals

and

n.;%1;, 7rally would het.ve b.; it littlt, If any, con corn
.

for

tuvlo

of the co:.launi Iu s in which thuy were
-




063940

So I 1,.;in

I cr4.

or organizdatiun
exicLin

ay

cartaintj that any syztau

wmaL: a.dop:; ;;Air;

condit]ons.

W

be engrafted upon

c:Annot Lap- 1r tnt; liciefulneen of

bwiku t or tuk,. uwai
:

of

.
flnctions.

If

wu ar,& to h,„v:: an organization otnidi of t,j11. 6tnd oatsido
t:Au prn1 orc;aniz4tion of eldarAng-housus t Imust 1- );
.
ond that will -1)

servant and not tha raapstr of exist-

in: ornizations,
corlit,ione.

en1 th.tll h:ve to consider existing

WTatst

tht after all, monetary

scljrco in rot ex exact science.

Politic41 economy has

no lawn t.:t can be applied to every corammity inder all
circ!InntancL)3.

n;tt syst.::m is bost for any co;Antry whjoh

bust ronpon:ls to ti nuods and requiroments of its pooplo.
,
(At

pa :t r:unator Aldrich paustld and look.ed at

watch, aridd crhla of:

Stutson ha
nun;
I

r I

Lwo

talk etbGut

"Go on!", and groaL ‹t_ii)LuIzzu.)

allLided to I hu fd.ot thut he Is not
.
.
pl,Ln or not.
littlJ

I A(ofe a. plan, which
(Laughtur.)

But at

prnt I naL, sAy tliat the Cornission have not /Jt takn
up or considorvld

Twstion an to t:lu proper plcol Lo bu

adopted Iv th,J United rIttos;

they will not take up




ow.40wis.

or conaldar that k-43tl1n until mh,; case is fully presntod
to tlie Aorican

ci.11 secure tlItAr

and co-oporation in
trust will bt

idoption of scita

plan 7thich wo

for tho bianafit of all thu country.

(Applausu.)

I have had occasion to say on a nurabor of occanions
duriru- thc lant two wuu1s3 that so far as I am concerned, if
I wure f7ivra a blank sheet of paper, '71th absolute authority
to write upon it thu toms and conditions of a bnlAng and
currcmcy bill that I thought mtc:It to be adopted by tho
Unitod f7tatos, I could not do it.

Mf7;hteen months ago

thollt I had 15() knowladgc of the subjklet.
ntudyinc thwse

sostionn for thirty yars.

I had boon

But tho

iubjeot

Is so vast, and involvos so many colli.tercti queoltions that
aru intricate and complex in their ollaract,,,:r, thi.t.t it
would not be possiblkl for M4 or any ()tiler
careful study than Ihi:tir

witholzt more

yet been ablo to Ove the ques-

tion, 1.o determine what plan should be Rdoptad.
approac}lod this question with an absolut,;1
l'now I

I llame

open mind; and

p:mk for ovory member or „.:lu Commission whun

say Mlat each of them has approached it in the Da
I hAvo only on

pirit.

request to nake of the thouc:htful people of

t":11.1JTLitSCI r7tites, and that 18 tIlat they keep their minds




open unAl
I

u casu can 1): fully prtJfirted to them.
bn !TulA,t1," rraAfjed by the fact that on

every .land thour!htful Lien hv

efrained frau expressiono

Of opinion upon this subjeot; that so far as I know tht17 ;o70
unifonlly

to await thc examination of the infor-

mation we nhall clvo you in the literature described in the
list that hn boon i3u1)m1tted to you toniht; and that rhen
this inforaation han ban looked into tho

will take up

with uo tAs groat subjoct, carefully J,Ild '7;ith open minds,
ready to cornlaur the question of a practical plan and. Its
actual operation.
I realize, perhaps more filly than amy of yc.
;

thc

difClculti4s tha6 will confront us in the conr;tructon of
a L)lan.

I know that thiJr

is sometilinc in the human

incl

appal%ally makes men like to think and talk abot
craJsOons of

kind.

I think it was :10(aoud who 841d

that the stua: of tb.0 monotary q.;ostion wan °ilk; of tho
i
r:reat oausos or insanity.

(.7tur.)

be confronted with all cl-Lsni;r2 or
nalL; up their minds prompn.7 and off
';?i:

id.

who

itro confronted

darnor /*roll t-o classes --- oro class of :-;11 1./c) aro

cooks
,17-0 that they know now Just what n;int,!m s::0,11d or




42'

3].C;1

not be ,:;.(optedi i.nct.,..no1,:t1k.:;.- class co:apor.;..•:d

cogue,

o

attroct

.
by their f.;t;-.-4..t.a.: ,;nts,

:u1):1 I c

w1

tt

ion to tliulasalves

xpr, .,15n1y for ntilf-exploitation.
.

realizu fully tat these vextiors of ncreta-: re_
form natilrally move slorly.

A wholu generation elapsed

between the report of the bullion committee in 1U0 and
the adoption of thJ Peel Act in 1344.

The b:Anker Yic

beun referred to, Bacehot, in his ci,tssic;t1 -ork "Lombard
Strut", 1.Q.cor2 to the fact tl.at in 1873 --- twey-five
years, or let 3 L:Ltal a cw,eration, i:ater the Act of 1344
W43

pe.ssed

cc nd t i ono 1,4d so caned that tho

4Lnd statomcmts upon
any force,

en
rentn

6.ot Was bmwd had no longpr

Wo are now a generation 4w: froi.1 Jr. Bagehot,

who has had no smntIssor.

Nothinc, ha bc.en writton upon

the practical side of finartolaa systums zd "bri..nking operations since BaOhotts work Was publin:Iod.

But dtring

tiLat time a !
.ondorful work of dowloprient has cone on, ard
a

I hitlr

iAdready stated,

conditions of todv arc as

unlike those of 1. 117 a,r; car posIllbly he imAcinod.
We shall be confrortf.3d wIth peopl(! who will Insist
that the subject I:1 no

ruttLd.nd no vast

v7a ca- no', do

xlythinc witil it; that we mutt tsit don and meekly :lubmit




1.:"
'" 2 0

to wtuver resiat mity rollow.

But I rTeatl: Llif3ta .a the
pcople if the lo-

temper ard into1117onco of

cisiGn and sotticont of this vosti(,n ciAr be lonr delayed.
vital interest to

too

it meana too p.ich --- it

for delay to be

.
every person in the Unitad Stat.30
possible.
It is said that we 31'1411 not be

ii;

8e1ve thu

f
problem on account of differoucon with re- emme° to lcclItiea s or dn.:Judie:1s az; betweun Vow York and

1Lic

.o,

or botweon Chicoo and the great, cities of

.4%7 in3L:7.0c,

the ,Issinsippi Valley.

Bl.t t:lis question Will never be

settled satisfii.corily until it is settled from a national
standpoint.

(Appla,use.)

I beAuve full.,; in the solidtions and all the iieople

arity of interetit bctiwoJn all
of thu Uni td

()not, "41ve drosperity In rev/

ttio.

York and adversity in Ch1caT7o.

WQ cannot ilavu prosperit;;

in Chicarla ;.trd adversity in ''uw York.

Wht, affoct2 ono

seotion nocessarily affects othors.
I Said I had a plan:

I li.a.vo one

a plan which 1-111 milco

.
by tht! Am. NAmoador froL;
',Tnitad `7,taten
(Appl'Ailec.)

o ti

was n•Irrr•oritt:d

rinanciva canter Or the world.
pocition t

United rta.ton

ti .ld by virtm; of her ru;-ource13 and :nmr

on-




iø44

of present and .,:rospaci;iv
.
Wt

It is said

ctll

rccokntr political cilzst)ons;

that any orga.niz:ttior we may sment will be defeated on
account of the political pr:judicus of the past or of the
present; and criticias are made of the First and Second
Banks of the United States.

I know of no person who would

think for a moment of suggesting a systum or J.11 organization sirallar in wly respect to L:it21Jr t:te First or the
Second ::001k of te United
c:1.4nud fl 1C

L,i101r

Yorlk, and zcorea of

tates.

Conditions

entirely

T11,:ro 4..r.c1 a dozen banks in nvii
An various other parta of thu

mAntry, thAt aru more important in thoir operations and
th(Ar charactr than either of those banks.

But I have

the utnost confidenco in CI,: intellir:ence :nd 7ood judment
of thu American people.

(AppLtusc.)

And.. bc.i.:ve that

if it W.lolad be tLourht wisi) by Youo by the Coruni ss i on, by
thu corsensIls of intellimmt opinion of tha people of tilt:
JnitudF/tates; to actopt any n:stuu; neither tho political
prj ,
iicas of '%;.,; pAot nor th,; gllost of Andrew Jackson (who
died ;,AAny years aLo) will stand in thc way of the adoption
of a pl.;%n tt

71J

all 1:K11.1v

of 1.11.; puoplJ of ti United

bu for

best interests




Nonu of thi

barko to which I.1t,VL: alluded h:4vt:

ever been influrced in t:1(,I1r actiGn by any poliLical
part:; or by any Tavurn:iert.
Franco, for example:

Takc the case of the Tlarl

of

The Bank of 7rance wan orr7anizod

under the direction of tho first 7:-apoloon.

A provizion

was put into its great chdertr tit its governor
appointed by the Chief of .r.ltate

41110016410

hold be

not by the. 7,1mperor,

not by the Icing, not by the Prer;ident, but by the ,ef of
State.
Villen I was in Paris last year I

ot

he crardaon of

of 14'po3eonts great marshals, who was thn inventiating the early history of the Bank of FrKrco.

He had

An hJs por.vaunt)jn a dispatch sent by -4.
1)olon from 1,:'It;
field of Austal.litz just aftor the battle, An whIc:1 he
called the attention of tht; rupresontative of th

Btflk of

Franco to the fixet that in his opinion tho traccosr, and
ptclnanoe of that institution were of mor

orIFILctnce to

the people of 7rarot: than the victorios he wan aolevirr7.
(Applallno.)
1;a, day to this the 13ark
bin the ;Jank of 7ranc

indeed

or

T r.inco has alw3.ys
,

the banh of the ieopls

of Frc,.!, uoldin_ her credit and 1(1.7- honor.

No ministry,

no party, could afford to ie;nort; for a moN:11t this [Teat




fact.

Di mil seal and dishonor

or p;so7t,7

rt Wee any

iri rtry

it endeavored for a moment to in fllienc

action of th, t groat
-A

n et tut i on,

Thu Banle, of 7racJ has ir.r.one on uncle r ompurors, under
,
kings, under revoiuti

covornments, and under tha

public, a1wAy6'o“.2. of th
0
peoplu of FrLI,riou.

..N;Tun

tYie bt4nk of Lho

Inc the t lila of tho Commune

the notos of Lhu Bank of lilnxice v,
are o!Irrunt, and the
premium upon 7o14 it Parlz wao
;old in '..7cw YorL. in 1907.
oliaractr of t hi

le BC t han

42;112 s':._OV/P3

treat in st

the hurt or

i on

tho premium upon
thc

VW:tat ;Arig Of

c"-1 has a plci.cu in

th.ThY1 t'Li.E.t A s

hBoIuteiy sucuro.

To onc! of the great banks ever hars been or t- ver col ad be
control:1:dd by any poli
The tas?': beforu you and bafore us neann t co
has too far-reachinfr, penults, for

arid

to .%)*inl- for a

ont,

tho.t any plan t. wolild be the football. o-t' poli t cs could
or would bc adopted.

I r...] ze

airead:: I t

is soucht, by 1:10e:t710 of vo1i'LiG1 lpfluancuss to di8crkJ;dit
an: action of the ColiAJAI u on.
fess i una.1 wri turn are erect Jrr

tit

1reacid pro..

f ii.fruds ant'.

t c:1011

s groat fluid of d sc1.4.9E1 on (I wax bruucht up on a
farm, v-i'lere I 1.,,(1 to con IStrUCt

130;_c.rOCTOWS,

• for




.4174.

the purpose of pulling them limb -fron limb, and calling
attention to the fact that aftdr all thy are not mem of
Aft) and of action.
We 01)4.11 meet ali thus,.; (.:1H,3303 of

, ople.
l

But we

shall, of courso, expect criticien of any plan we may
recommend.

Eoneflt cri,icism is thu best thing we can

posAbly h,N6 if w
rfl confident

ert

to

c&r

wi

ruslts.

And

wl,;r1 we do reach a cunc;insior

w1lich

I/
cannot be for :An: morts yet --- we sh,L1/ hi‘v%.; ,,hc 00operat An. of th

conomir.itsai.1 thci bominestin of this

great financil cantor.

If w;: do not have it, it will

3
J ,
not be lo, c; .une we shall no
your assistance in L

appaal earnestly, ai I do now.
olutIon of tLis great problem.

That is t,ht: orly word an to plans or as to the future that
thQ ./letar:: (:o;Inis!lion has to utter tonight.

And

,)olud f f yo•s;r rezpons!J is not
shall ba greatly dinap.
alonc the linet of a patriotic doinion.
(Great applause, followed by throe cbiura and a
vote

:ianYs.)


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102