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M onetary e m i s s i o n

NELSON ALDRICH




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.ihe question for Congress to decide is whether it is worth while

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to provide, at inconsiderable cost, a

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s

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arid safe measure of

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relief which may save the country in J/^es of peril from destructive
losses.
.

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V
The bill does not impose impp^slfible conditions upon the banks.

j f vOn^ress should fail
.

take some action to provide against

\/

emergencies, such as that throi^'which we have passed,

it would a

/
.
sume a grave responsibility,.;;" one\in which the Committee on Finance
declines to share.

Its enactment would furnish evl^e/nce that Congress is not
unmindful of its serious responsibi^ities.

The Constitution commits the whole Question of currency issues

to the control of Congress.

The Congress is clearly ansv/erable for

any defects or omissions which it is




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power to remedy.

0*

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A133

ASSEBSKP

VALUATION.

-of theTAThS. COUNTIKS> ClTlhS AM) TOWhS W.tTL A P0?U7ATI0K or OV:. aQ,ph
R
-in theU 1; I T h J>

B X A T K S.

In the following parses As presented:

\
(1)

A table showing the “
bonded debt of ever

statet the

counties in each state, and also that of cities and towns which,
accordin'* to latest estimates, show a population of over h O fOQO.
Sinking funds have been ell iiiuvtod, and the statistics ^iven do
not include floating debt*
(*0

This record is followed

hy:

A recapitulation, which shows, in addition, the total as­

sessed valuation of each state, county, cit.v or town, and the
proportion between this and the funded < ebt*
The total bonded debt and assessed valuation of states
and municipalities heroin contained is as follows:




Dcfr f «
c

Vali at Ion.

States..........

406, 6 7b, 475.
‘

i-ab, 027,339,634.

Counties.......

149,612,043.

17,546,143,062.

Citi<53, eta.... 1,410,530,700.

22,41b,621,279.

Of the various states and mi nicipalities, 516 have a per­
centage of "bonded debt to assessed valuation of 3 # or under,
626 are within oX» &nd in 676 cases, the proportion does not
exceed ??>» the limit allowed by the savings bank law of the
State of hew York.

The total debt and valuation in each case

is as follows:D ebt •

Valuation.
£42,719,601,621.
49,765,321,472.
54,202,925,519.

It will th< s be soon that in the majority of cases such
percentage is of a decidedly conservative character, and well
within the requirements of even the most stringent restrictions
imposed




banking laws of the several states.

That the provisions of existing law which authorize hanks in

reserve c itie s to deposit one-half of their lawful money reserve in
hanks of the central reserve c it ie s , as provided in section f i f t y one hundred and ninety-five of the Revised Statutes, are hereby

amended so as to authorize such hanks in reserve c itie s at their

discretion to hold one-third of this amount in the securities enumer­

ated in section two of this Act.




f' )

The present National Bank Act is an evolution from nearly three quarters of a century of unsatis­
factory bank conditions.
The best features of the evolution were adopted in our present National Bank Act from the most
satisfactory results of the older systems after long- years of experience. As a result the present law has
required the best security obtainable, and that in ample volume to more than protect the peoples’
bank notes.
As a result of that protection the Government has promptly on the failure of a National Bank,
received the cash for every bank note issued by the failing- institution that had not been redeemed; and
further, in every case an important surplus to turn over to the suffering creditors of the broken bank.
If borrowers desire the use of the peoples’ money that the Government is expected to protect, why
not follow the long and satisfactory precedent of the past, and require whatever banks act in such bor­
rowing to put up security that there is no question will prove as reliable as government bonds, and
require it in more than ample volume.
What the people will insist on maintaining is what they now have, the best standard of the world,
made intrinsically valuable by the labor of the miner, and will in the end look with little favor on
opening the door to any principle that easily paves the way to the standard of the printing press; a
money that costs little to produce and the more issued, the more wanted, and the less satisfying the
need. We don’t have to go far back to see the tendency of such legislation.
The greenback issues of the Government, the money of the printing press, was originally con­
sidered by many sanguine people as good or better than gold, and for a time it was so. A wealthy gov­
ernment, a legal tender, a million or more of soldiers in the field, and receiving their pay in such notes,
it is said would see, if necessary, with their bayonets that they should be maintained in value, the equal
of any money in the world. Yet many of those soldiers enlisted when the country was on a specie basis
and afterwards accepted them at par, when they were worth less than forty cents on the dollar, measured
by the standard of the world, in power to purchase anything the soldier desired to eat, drink or wear,
the prime necessities of life.
The danger hinted at will not appear if the law insists on good security and in a dearth of Gov­
ernment bonds, no more natural security can be found for a temporary currency than clearing house cer­
tificates. They have proved their value and reliability in panic times. The Clearing House Associa­
tions are in close touch with the activities and necessities of the people, and if guarded by a government
tax of two and a half per cent, per annum on the issue, and real valnes in special securities in ample
volume, and forcing banks that do not meet their obligations into liquidation, the notes will accomplish
their purpose, retire the circulation, or cause to retire from business stich institutions as have reached a
point where they are not valuable to the people.
A different course, simply issuing notes against general assets is likely to whet the appetite for
more and re-introduce the principle of fiat money, that in the past was so demoralizing to business
and prosperity.




f

J

A

B I L L

To authorize the issue o f N ational Bank currency secured by Clearing House certificates o f reserve cities
and to force its prom pt retirement.
I. Be it enacted by the Senate and House of Representatives of the Untted States of America in
Congress assembled, that any Clearing House Asssociation organized under State or National laws for
the settlement of money transactions by effecting clearances between banks and for doing other business
for and between banks not inconsistent with the provisions of this act, having been in continuous
and successful operation under its present or former organization more than five years, and the banks so
united in such Clearing House Association having a combined capital, surplus and undivided earnings of
more than $5,000,000 effecting bank clearings of over $ 150,000,000 per annum that are situated in cities
that have been approved by the Comptroller of the Currency as reserve cities for National Banks. The
certificates of such institutions shall be received at ninety cents on the dollar as security for National
Bank notes to the extent of the capital stock of any National Bank presenting them to procure circula­
tion, and this authorization to be in addition to the National Bank Circulation which has heretofore been
authorized against deposits of United States government bonds.
II. That any Clearing House issuing such certificates shall require the note of the bank applying
for the loan of such certificates and in addition thereto collateral security consisting of storage receipts
for products of agriculture, of mines and manufactures, commercial assets, promissory notes, bills of
exchange, convertible bonds and stock and other evidences of debt and no collateral to be accepted at
more than eighty per cent, of the market value, and to be approved in writing unanimously by the loan
committees of the Clearing House issuing them, and so witnessed by the written signature of each
member of such committee, before the issue of such certificates, the said certificates to be the absolute
obligations of the Clearing House issuing them and so enforcable by the government against the Clear­
ing Houses issuing them.
III. Any Clearing House issuing certificates under this act is hereby authorized to assess losses,
if any, against the borrowing banks pro rata on the capital, surplus and undivided earnings of such
institutions in the proportion of such certificates received by the borrowing banks. The rate of interest
charged not to be in excess of the legal rate authorized in the States where the issuing Clearing House is
located, and a reasonable charge authorized to be made for its services and responsibility, and also the
power to promptly close out any loan where the security has depreciated and not at once been made
good by the borrowing bank on notice.
IV . At any time a Clearing House desires to take advantage of this act, it shall so declare by
resolution reciting the special cause for so doing and certify the same to the Comptroller of the Currency
and before the issue of any currency in such case the applying bank must first file its articles of asso­
ciation with the Comptroller of the Currency and have his approval therefor.
V. That the tax on such emergency circulation issued under this act shall be two and one half
per cent, per annum, payable semi-annually, and any bank not paying its loan to the Clearing House
from which the same is received in time to enable said Clearing House to retire its certificates by the de­
posit of gold coin in the United States Treasury within twelve months from the first issue to said bank,
shall forfeit its charter and the Clearing House be required to at once apply for a receiver and cause said
bank to go into liquidation and retire from business.
V I. That the currency issued under this law shall be uniform with the regular National Bank
currency and that all laws applicable to the latter shall likewise apply to the former, and the Comptroller
of the Currency is authorized to always have on hand in blank the volume of currency authorized
by this act.
VII. That all laws that conflict with this act are hereby repealed.
V III. That this act shall take effect immediately on its passage.




/
,•
/

COITITERATIONS RESPECTING D C M N A Y REPRINTS O M IS Y AN BANKING 3Y T '. M N T R
OU ETR
R OE
D
IC O E A Y

. 'The Timber o f Congressional documents respecting money and banking i s very groat;
th o ir importance an a ffe ctin g any h isto r ic a l view o f the development o f banking and cur­
rency le g is la tio n in the United States is admitted. They are used, however, with d i f f i ­
cu lty , being scattered , as they are, through the document sots o f the various Congresses.
Many o f thorn aro p r a c tic a lly lo s t in a sheep-bound obscurity. Certain o f th is documentary
m atorial rela tin g to money and banking has boon reprinted. Among reprints to bo notod
aro the following:
American State Papers. Finance. 5 v o ls. F olio.

The documents embraced cover tho period

April 11, 1789-iIay 16, 1828.
Reports o f tho Secretary o f tho Treasury, 1801-1849. 7 v o ls . Washington, 1827-1851. This
reprint containd Hamilton’ s reports on public cr ed it, a national bank, manufactures, and
the establishment o f a mint.
M St. Clair Clarke and D. A. H all’ s ’’L eg isla tiv e ahd documentary h isto ry o f the Bank
.
o f the Unite! S ta te s ,” Washington, 1022. Tho latoot Congressional documents in th is
compilation aro House and Senate reports made in 1820 on tho Bank of tho United States
and the currency. The le g is la tiv e and documentary m aterial growing out o f the la te r ao^ octi
o f the bank war and the removal o f the d ep osits, consequently, is not included.
Jonathan E l l i o t ’ o ’’Funding system o f tho united Statos and Croat, B r ita in ,” Washington,
1845. This compilation includes extracts from various documents or documents printoc'
complete, some 155 in number, regarding the funding system of the United S tates.
"Documentary h isto ry of the coinage act of Feb. 12, 1872," printed in tho Roport o f the
Director o f the I>!int, 1896, p. 461-572.
P o s s ib ilit ie s regarding reprints at the present time include the following:
I. A se le c tio n o f documents, to inoludo ouch papers as Hamilton’ s reports; G a lla tin ’s re­
ports; Crawford on tho currency, 1820;
A




Ingham’ s

report, 1630; Taney, on the removal of

the d ep o sits, 1833; Taney on deposit Panics, 1034; 7,'oodbury, on public money, 1834; Senate
4

and House reports respecting the Bank o f the United s ta te s , the Independent treasury,
the National Bonk Aot, currency and the coinage.
The d if f ic u lt y in making a compilation of th is kind i s , of course, to be s u ffic ie n tly
comprehensive and yet keop within lim its . There i s always the danger o f sin s o f both
co m issio n and omission.
II. A se r ie s o f voTines, as comprehensive as p o ssib le, issued under such heads as the
following:
7
Coinage.
v " - Gurronoy.
■
F irst and Second Banks of the United S ta tes.
Independent treasury.
National banking system.
State bonking before the c i v i l war.

I II.

A

reprint o f Clarlco and Mall’s '"Legislative and documentary h isto ry o f the Bank of the

United States,!* supplemented by the m aterial which came into existen ce a fte r the publi­
cation o f the orig in a l volume in 10 32.
IV. A continuation o f the Financo volumes of tho
publishing o f th is great

work

American

sta te papers. The

compiling

and

was a huge undertaking. The se r ie s as i t now stands com­

p rises 38 volumes, divided as follow s:
Foreign r e la tio n s, 6 v o ls.
Indian a f f a ir s , 2 v o ls.
Finance, 5 v o ls.
Commerce and navigation, Z v o le.
M ilitary a ffa ir s , 7 v o ls.
Naval a ffa ir s , 4 v o ls.
Post O ffice department, 1 vol.
Public lands, 0 v o ls.
Claims, 1 a o l.
M iscellaneous, Z v o ls.

/

Twenty-one volumes were prepared under act o f March 2, 1831, and Joint resolu tion o f March
2v 1833; 17 volumes under act o f June 12, 1858. Tho la s t named act provided ^340,000 for
the continuat'on of the work to March 4 , 1059. Tho sura, apparently, was not s u ffic ie n t,
for tho volumes in tho various q^/sses under which the papers wore printed conoludo
with documents muoh e a r lie r than th is dato, those in tho Finance vo lumens coming down
only to 1028.




.

.>

«
■

.

3

There a r o 4 a id to be 2,464 documents in the en tire c o lle c tio n . Of th ese, 924 are in
the fiv e vo uines on fin a n ce, each volume comprising about 1000 f o lio pages, xiany o f the
fin a n cia l documents, of cour30, have to do with rovcnuos, taxation , e t c ., but they are
lik ew ise in clu siv e of those on banicing and currency from 1789 to 1G2Q. Documents are
reprinted in oxtonao. A sin g le document o f 1324, givin g correspondence rela tin g to
public d ep osits, occupies nearly 60 > pages, or over h a lf o f one o f these buUcy f o lio
volumes.
inhere arc errors in th is com pilation, probably not many o f a oorioun nature. There
arc a lso om&acions, more e sp e c ia lly a t to the early Congresses. It might be a qxiestion
M other, In bringing together documents on money and banicing, those papers on these
subjects should be extract©! from the present compilation and placed in the now ono, or
whethor the new undertaking should coimor.eo at the date at which the old one l e f t o f f .
The co ra ittee o f h is to r ic a l e v e r t s which reported in 1909 on the documentary h is to r ic a l
publications of the United States dovernnent ©cpooially recommended the continuation of
the /jjnerican State Aiper3, and advised the in c lu si on o f departmental correspondence, s t i l l
remaining in manuscript, with sp ecial re fer no© to the le t t e r s exchanged with the Pro314
dent, the lie ado of Departments, and the chairmen of the c h ie f 00Mnittee 3 of Congress
Papei s by Jackson, VanBuren, PoLe,^Corwin, Chase, and others, ar© in tho Library o f Cong­
ress , whil^tho papers in the Treasury Department include a f i l e o f le tt e r s from the Jo*rotary of the Treasury to the President.
These fa c ts arc set forth in tho report o f tho c o m itte o on documentary h is to r ic a l
pub lication s which has boon referred to . A copy o f th is report, with passages marked, i s
annexed to th is memorandum.
t

In one place in the report(p. 11) tho coot i s given o f certain o f the Government's
h is to r ic a l p u b lication s, among thorn the following#
O ffic ia l Records o f the ./ar o f the Rebellion
O ffic ia l Records o f the .7ar . Naval,
Messages and papers o f the Presidents, 10 v o ls.
Moore's D igest o f International Law, 8 v o ls.




$1, 801,
205,
257,
56,

021
314
099
181

V
An estim ate

o f tho cost o f p rinting and binding a volume o f 1000 pages o f quarto

sizefth e resu lt would bo a volumo o f about tho slxo o f a Comerce and Navigation Re­
port )io furnished by the Public Prlntor^as follow s:
For 1000 copies
2000

»

3000

"

■J9.068. 58
10,751.72
11,704.27

S T S n S ® * " , can not ’ d°
b© necessary, * I 0' C0Urf ° say. n0t lnClude th0 ooet o f oocvlUae. How many volumes would
>
"
Of the various suggestions in t h is memorandum, the one respecting a new ed ition
o f tho

L eg isla tiv e end documentary h isto ry o f tho Bank o f tho united S tates," inclu­

ding tho m aterial n ecessa rily omitted in tho o rig in a l issu e , uppers to be quite fe a sib le .
Tho continuation, or revision and continuation o f the American sta te Papers, so far as
tho subjects o f money and anking are concerned, would be at a very groat co st. It
would likew ise be a notable undertaking, and o f very great service to studonts o f thoso
subjects with vdiich the volwaos would deal.




Hoopoot f u lly siibraittod*

j i




CHARACTER OF THE REFORM DEMANDED.

To secure a wise and comprehensive reform of our bank­
ing and monetary system, we require :
.
,
1. An efficient banking organization by which bank sus­
pensions and financial crises with their evil results can be
avoided.
2. Means to secure a concentration of cash leseives o
banks and their mobilization for use whenever and wherever
needed in times of trouble. In times of stress, scattered re­
serves of banks have been found useless, either for defense or
protection. The scramble of 25,000 banks in 1907, each to
take care of its own interests and to increase its own cash
reserves, contributed very largely to the panicky conditions
W1 tn general disaster.
effective means for replenishing their reserves and increasing
their loaning power at times when the need for credit expan­
sion is imperative.
3. The general cooperation of banks must be secured to
protect their own or the public interests when these are
menaced and when individual or local efforts are ineffectual to
prevent the paralysis of business and domestic exchanges.
4. An organization must be provided that can deal effect­
ively with conditions which imperil the credit and status of
the United States as one of the great financial powers of the
world. In times of threatened trouble or actual panic, the
power to control the movements of gold and the course of
foreign exchange through raising the rates of discount or
otherwise is essential, both from a national and an inter­
national standpoint.
5. We must have au organization whose influence can be
made effective by an advance in discount rates or otherwise in
preventing an undue expansion or dangerous inflation of bank
credits.
6. A currency should be provided that, in character and
volume, in contraction as well as in expansion, will be respon­
sive to normal or unusual demands. Seasonal or unusual
demands for currency or credit for crop moving or other pur­
poses have at times produced very unsatisfactory conditions
in the money market owing to the inelastic and unscientific
character of our monetary system.
7. A broad discount market must be created with recog­
nized and legalized standards of commercial paper. Recent
conditions also impose unnecessary burdens upon business
and production, and hinder the natural development of certaiu
sections of the country. These evil results are felt more keenly
in new and undeveloped communities. The lack of such a
discount market leads banks in all sections to send surplus
money to New York to be loaned there on stock exchange
securities.

l.Y V .a

MONEY IN THE COUNTRY AND CURRENCY LEGISLATION.
The s to c k o f money in th e U n ite d S t a t e s a t th e b egin n in g

of

A p r il was $ 3 ,3 9 8 ,3 9 0 ,4 3 0 , com posed o f $ 1 ,6 4 2 ,5 6 5 ,6 1 4 g o ld c o in
and b u l l i o n in

th e T r e a su r y ,

s u b s id ia r y s i l v e r ,

$ 3 5 1 ,9 2 1 ,0 1 6 U .S . n o t e s , and

n a t i o n a l bank n o t e s .
sto c k i s as fo llo w s :

$ 7 0 7 ,4 9 6 ,4 4 5 s i l v e r d o l l a t s and

In p r o p o r t io n s th e c o m p o s itio n o f the
Gold 4 6 .3 ^ , s i l v e r 2 0 .8 ^ , U .S , n o t e s 1 0 .4 ^

and n a t i o n a l bank n o t e s 2 0 .5 ^ .
sto c k i s

$ 6 9 6 ,4 0 7 ,3 5 5

In o th e r w o rd s, ov er 6 9 o f th e

in s p e c i e , w h ich i n c l u d e s $ 1 5 0 ,0 0 0 ,0 0 0 s e t a p a r t by th e

Act o f ’ a rch 1 4 , 1 9 0 0 , fo r th e red em p tio n o f l e g a l te n d e r n o t e s .
Of th e n a t i o n a l bank n o t e s $ 6 2 8 ,8 3 4 ,3 3 6 a re c o v e r e d by bonds
h e ld by th e T r e a su r e r in t r u s t and $ 6 7 ,5 7 3 ,0 1 9 by a l i k e amount
o f la w f u l money d e p o s it e d w ith th e T r e a su r e r f o r t h e i r r e d e m p tio n .
In June l a s t , th e d a te o f th e l a t e s t i n v e s t i g a t i o n made by
th e T rea su ry D ep artm en t r e l a t i v e

to th e l o c a t i o n o f th e money

s t o c k , 35 \/z % was shown to be h e ld by n a t i o n a l , s t a t e and
p r i v a t e b an k s; 11^ in th e T rea su ry a s a s s e t s , l e a v i n g 53 \/Z%
n o t in th e r e p o r t in g banks and T r e a su r y , b u t in g e n e r a l c i r ­
c u l a t i o n or h o a rd ed .
O ther s t a i s t i e s c o m p ile d by th e M int B ureau show t h a t the
money s t o c k o f th e U n ite d S t a t e s i s g r e a t e r th an th a t o f any o th e r
c o u n tr y and a l s o t h a t i t

i s g r e a t e r p er c a p i t a than th a t o f any

o f th e p r i n c i p a l n a t i o n s o f th e w o r ld , w ith th e e x c e p t io n o f
P r a n c e , where s p e c i e i s u se d to an u n u su a l e x t e n t in l i e u
c h e c k s , d r a f t s and o th e r in s tr u m e n ts o f c r e d i t .

of

I t w ould th u s

appear t h a t th e volum e o f th e c i r c u l a t i n g medium i s o r d i n a r i l y
a m p le.




2-

In tim e o f f i n a n c i a l d i s t r e s s , a s in 1 9 0 7 , th e r e i s su ch a
s e q u e s t r a t io n o f c u r r e n c y th a t b u s in e s s o f a l l k in d s i s g r e a t l y
ham pered and in many i n s t a n c e s su sp e n d e d , and i t

i s c la im e d t h a t

i f th en th e banks w ere a b le to su p p lem en t th e norm al s t o c k by
an em ergency i s s u e o f c i r c u l a t i n g medium th e s t r i n g e n c y w ould be
m a te r ia lly a lle v ia t e d .

That em ergency i s s u e s w ould r e l i e v e

th e s i t u a t i o n t o a la r g e e x t e n t i s e v id e n c e d by th e r e l i e f a f ­
fo r d e d by th e i s s u e o f C le a r in g House lo a n c e r t i f i c a t e s by th e
>Tew York and o th e r C le a r in g H ouse /V s s o c ia tio n s in th e f a l l o f
1 9 0 7 , th e volum e o f t h e s e i s s u e s h a v in g b een e s t im a t e d a t
# 2 0 0 ,0 0 0 ,0 0 0 .
p o r t s io n

The s i t u a t i o n was f u r t h e r r e l i e v e d by th e im­

o f a b ou t # 1 0 0 ,0 0 0 ,0 0 0 o f g o ld and th e a c t io n o f the

S e c r e t a r y o f th e T rea su ry in in c r e a s in g p u b lic d e p o s i t s w ith
d e p o s it a r y b a n k s, b etw een August and th e end o f th e y e a r ,
e x t e n t o f o v er # 1 0 0 ,0 0 0 ,0 0 0 .

to th e

D u rin g t h i s p e r io d n a t i o n a l bank

c i r c u l a t i o n was in c r e a s e d to th e e x t e n t o f some # 5 0 ,0 0 0 ,0 0 0 .
T h is e v id e n c e s an addi t i o n to th e a v a i l a b l e c u r r e n c y fu n d s o f
over # 4 5 0 ,0 0 0 ,0 0 0 .
W h ile v a r io u s p r o p o s i t i o n s have been b ro u g h t forw ard to
m eet e m e r g e n c ie s b u t tw o, in p r i n c i p l e , h a v e had e x t e n s i v e su p ­
p o r t , one f o r th e p e r p e t u a t io n o f th e b o n d -s e c u r e d n o te s y ste m ,
and th e o th e r a r a d i c a l d e p a r tu r e from t h a t sy stem by a u t h o r i z ­
in g th e i s s u e o f n o t e s b a sed on g e n e r a l a s s e t s , a p r a c t i c a l r e ­
v i v a l o f th e S u f f o lk p la n .




j j

-3-

Por n e a r ly h a l f a c e n tu r y th e c o u n tr y h a s had a bank c i r c u ­
l a t i o n c u r r e n t a t par th r o u g h o u t th e le n g t h and b r e a d th o f th e
la n d , r e g a r d l e s s o f th e s ta n d in g o f th e i s s u i n g b ank, th e n o t e s
is s u e d by e v e r y b ank , w h eth er in a c t i v e o p e r a t io n or c l o s e d by
v o lu n t a r y l i q u i d a t i o n or f a i l u r e , b e in g redeem ed in la w f u l money
on p r e s e n t a t i o n fct th e T rea su ry o f th e U n ite d S t a t e s .
ih o t i t l e

o f th e law o f 1 864 r e a d s w
An a c t t o p r o v id e

a n a t i o n a l c u r r e n c y s e c u r e d by a p le d g e o f U n ite d S t a t e s bonds
and to p r o v id e f o r th e c i r c u l a t i o n and re d e m p tio n t h e r e o f ”.

T h is

la w e n a b le d th e Government to borrow money a t th e e x tr e m e ly
low r a t e o f

_and th e m arket p r i c e o f t h e s e bonds i s c o n s t a n t l y

ab ove p a r , a s o u r c e o f g r e a t s a t i s f a c t i o n b o th to th e a d m in is tr a
t i o n o f th e Government and to th e p u b l i c in g e n e r a l.
ih e i n t e r e s t - b e a r i n g bonded d eb t o f th e Government i s
$ 8 8 2 ,6 6 7 ,4 9 0 , and a s $ 6 2 6 ,8 3 4 ,3 3 6 o f th e b ond s a re h e ld in
r -a t ov th e T r e a su r e r t o s e c u r e a l i k e amount o f c i r c u l a t i o n
t h e r e m ig h t be a f u r t h e r e n la rg em en t o f t h e n o t e i s s u e s o f
$ 2 5 4 ,0 3 3 ,1 5 0 , or a t o t a l i s s u e o f $ 8 8 2 ,6 6 7 ,4 9 0 .

T h is in c r e a s e

w ould r e p r e s e n t n e a r l y so ft o f th e e x t r a o r d in a r y in c r e a a e in
a v a i l a b l e c i r c u l a t i o n d u r in g th e c l o s i n g m onths o f 1 9 0 7 .
As a com prom ise and e x p e r im e n ta l p la n , e v e r y n a t i o n a l bank
h a v in g an u n im p a ired c a p i t a l and a 20/e s u r p lu s , w ith U ,S . bond**
secu red c ir c u la t io n

to th e e x t e n t o f

of i t s c a p ita l,

th e

management o f th e bank b e in g known to be c o n s e r v a t i v e , and s u c ­
c e s s f u l , m ig h t be p e r m it t e d , under c o n d i t i o n s w h ich , in th e




j i

judgm ent o f a co m m ittee c o n s i s t i n g o f th e S e c r e t a r y o f th e
T r e a s u r y , C o m p tr o lle r o f th e C u rren cy, and T rea su re r o f th e U .S .
w a rran t an in c r e a s e in th e c i r c u l a t i n g medium, t o r e c e i v e and
i s s u e c i r c u l a t i o n n o t e s t o th e e x t e n t o f 125^ o f i t s bond d e ­
p o s it,

th e amount i s s u e d ir. e x c e s s o f par o f th e bond d e p o s it

t o be s u b j e c t e d to a m o n th ly t a x o f o n e - h a lf p e r c e n t , and th e
e x c e s s redeem ed by d e p o s it o f la w f u l m oney, as noVK provided by
la w , w ith in a d e f i n i t e p e r i o d - - t h r e e , s i x , or n in e m o n th s --th e
p e r io d to be d e te r m in e d by th e C o m p tr o lle r w ith th e a p p r o v a l o f
th e S e c r e t a r y o f th e T r e a su r y .

T h is ta x sh o u ld be in l i e u

of

a l l o th e r t a x e s on su ch i s s u e s and th e p r o c e e d s o f th e t a x s e t
a s i d e in th e T r e a su r y as a s p e c i a l fu n d f o r th e re d em p tio n o f
the u n c o v e r e d n o t e s o f banks w h ich m igh t f a i l .

On th e e x i s t ­

in g bond d e p o s i t , m a t e r i a l l y in e x c e s s o f 50^ o f th e c a p i t a l
o f banks in th e a g g r e g a t e , about { 1 5 0 ,0 0 0 ,0 0 0 a d d i t i o n a l c i r c u ­
l a t i o n m ig h t bo i s s u e d .
k e p t in c i r c u l a t i o n

Assum ing th a t t h i s amount w ould be

f o r o n ly t h r e e m onths a red em p tion fu n d

o f { 2 ,2 5 0 ,0 0 0 w ould be c r e a t e d .

Up to and in c lu d in g O ctob er 3 1 ,

1 9 0 7 , th e r e had been p la c e d in ch arge o f r e c e i v e r s b u t 475
n a t i o n a l b a n k s, a y e a r l y a v e r a g e o f about 1 0 , th e a v era g e c a p i t a l
b e in g { 1 6 0 ,0 0 0 .

The a v e r a g e c a p i t a l o f n a t i o n a l banks in

oxAs ta n c e a t p r e s e n t i s a p p r o x im a te ly $ 1 4 0 ,0 0 0 , and assu m ing
10 oanks o f ''hat c a p i t a l sh o u ld f a i l , h a v in g an a g g r e g a te
c i r c u l a t i o n o f 125fi on { 1 ,4 0 0 ,0 0 0 bonds or $ 1 ,7 5 0 ,0 0 0 n o t e s







-5-

o u t s t a n d in g ($ 3 5 0 ,0 0 0 u n c o v e r e d ) , th e red em p tio n fu n d w ould
he more than ample to redeem e v e r y n o t e , r e g a r d le s s o f th e
bond d e p o s i t .

D e d u c tin g th e b o n d -se c u r e d n o t e s ,

th e redem p­

t i o n fund w ould be s u f f i c i e n t to redeem th e $ 3 5 0 ,0 0 0 u n c o v ere d
n o t e s s i x tim e s o v e r .

The law c o n f e r s a u t h o r i t y upon th e

C o m p tr o lle r to a p p o in t a r e c e i v e r fo r a n a t i o n a l bank fo r f a i l ­
u re to redeem i t s n o t e s and assu m ing t h a t h o ld e r s o f th e s e
u n co v ered n o t e s were g e n e r a l and n o t p r e f e r r e d c r e d i t o r s and
b a s in g an e s t im a t e on th e e x p e r ie n c e o f th e D epartm ent fo r o v e r
40 y e a r s , a l o s s o f l e s s than 20$, or ab ou t $ 7 0 ,0 0 0 , w ould be
s u s ta in e d ,

th a t amount o n ly b e in g n e c e s s a r y to ch a rg e t o th e

red em p tio n fu n d .

The f o r e g o in g would appear to p ro v e th a t th e

i s s u e o f u n c o v ere d bank c u r r e n c y , in th e manner and to th e
e x t e n t i n d i c a t e d , a t l e a s t , m igh t be p e r m it te d w ith o u t q u e s tio n
o f r e d e m p tio n .




PBQCSEDIJTGS

•? THE NATIONAL MONETARY COACaSSIOlI.

H o te l P l a t a , Hew York C it y ,
A ugust 1 7 , I t O l.

A subcommittee of the national Honetaxy Commission, con­
sisting of senators Ale rich (Chairman),
. 0 resentalives Vreeland and weeks,

Burrows,

uni ; r. Bonynge,
r

session at The Hotel Plaza, Hew York Citj, in

a fte r n o o n of

bn d a f , August 1 6 ,
c

and Lariiol,

and i n

were in

-he morning and

th e m o r n in p of lues la y ,

A urust 1 7 .
P r o f e s s o r A. P. Andrew s u b m itte d in p r o o f f o m

th e f a l ­

low i nr: p a p e r s and d ocu m en ts, which h a v e b een u n d er ^.^repara­
t i o n s i n c e th e l a s t m e e tin g o f th e O o n n issr o n .
v'o *o ex a minee and discussed bp

the suboommi t o e ,

These pa ers

uu

th e S e c -

re a r y ./as d i r e c t e d to f u r n i s h a s e t o f t h e s e d ocu m en ts in
pr of to each member o f th e covr a is s io n ,

f id e n t ia l u n til

to b e r e g a r d e d a s con­

p u b lish e d in f i n a l form b„ th e co m m issio n .

The list is as follows:

PUBLIC AT IOHS CT' TT -: :*ATI OPAL f0 ■I ’TAKi C . ' TSSIOH.
L
O
I - HISCELLANEOUS
I n t e r v ie w s on th e Banking anc C urrency sy ste m s o f L n g la d ,
"’r e c c e , cerm any and S w it z e r la n d .
(4 3 0 pa^rca)
The P u b lic ^ o b ts o f C roat B r i t a i n , Germany and P r a n c e , by
P r a n c is b. H i r s t .
(G u lle y p r o o f , I t p .^ c s )
A r t i c l e s : The d i s c o u n t System in E urope, by P au l
. Warburg.
(43 p a r e s )
•ank A c c e p ta n c e s , bt L aw rence e r t o n J a c o b s .
(I S p a r e s )




2 .

II

M

®

STATES

S t a t i s t i c s f o r the United states, 1 8 6 7 -1 9 0 9 .

(2 5 0 p a g e s )

hipest of State Banking L a w s , by S. A. Welldon* (Galley
proof -- uaye a )
A r t i c l e : History of the "ation . ank Currency, hy Alexander
1
T ana Koye3* (Galley proof, 6 pages)
III - CAJTADA

The History of banking in Canada, Ty Poland Vorton Preckenridge.

(310 pages)

The E n g lis h banking fh stem , .vith a c h a p te r on th e London
S to c k ‘ x c h a n g e , by h a r t l e y h i t h e r e . (1 5 0 p a g e s)
S t a t i s t i c s f o r G reat B r i t a i n , 1 8 6 7 -1 9 0 8 . P rep a red by h . ■ •
I n g l i s ^ a lg r a v e . L I ’ . 0 . , and "The E c o n o m ist. * ( O a lle \
.
»
p r o o f , 67 p a g e s )
V -

r P Jih C L

i v o l u t i o n o f C r e d it and ‘hanks i n P r a n c e , f r o n th e fo u n d in g o f
th e Panic o f P ran ce v m t i ! th e p r e s e n t t i n e , by Andre
L ie s s e .
(2 7 1 p a g e s )
The Lank o f P ran ce i n i t s r e l a t i o n s to N a t io n a l and I n t e r n a ­
t i o n a l C r e d it , by a n r ic e M atron.
( G a lle y o r o o f , 54 p a g e s)
S t a t i s t i c s f o r F r a n c e , fu r n is h e d by th e C r e d it L y o n n a is . (G al­
l e y p r o o f , 26 p a g e s)
The T s t o r y and e th o d s o f th e P a r is C o u rse, b y E. V i d a l .
r
( G a lle y p r o o f , 65 p a g es)
VI - IlKLGlUlf
The N a tio n a l

ank

»f

ie lg iu m , by C h a r le s A. C onant.

(23c p a g e s )

V II - GERTAhY
The G reat German kinks and t h e i r C o n c e n tr a tio n in c o n n e c t io n
with th e E conom ic d ev elo p m en t o f Germany, by T)r. J .
P ie s s o r .
( G a lle y u r o o f ? 68 >ages)
The h eich .sh a n k , 1 8 7 6 -1 * 0 0 .
( J u b ila u m s s c h r if t )
(3.6,: >agcc)
C t a t i s t i c B f o r Germany.
(G a lle y p r o o f , oO p a g e s )
German .Ih’ r i a l Konkin f* Laws, e d i t e d by Hr. h . K och. ( G a lle y
.ot
p r o o f , 72 p a g e s)
i s c e l l a r c o n s A r t i c l e s on ^ormar a n k in g .
(C o v e rin g th e organ ­
i s a t i o n o f c r e d i t , d i r e c t o r s 1 f e e s , th e land m o rtg a g e a s s o ­
c i a t i o n s . th e s a v in g s b a n k s, th e c o -o n e r & tir e s o c i e t i e s ,
e t c .)
( G a lle y p r o o f , 93 p a g e s)

3.

In Re: Renewal o f R eich sb a n k C harter* ( I n c lu d in g a r t i c l e s
c o v e r in g th e ren ew a l o f th e c h a r t e r and d i s c u s s i o n s o f
t h i s s u b j e c t in b a n k e r s 1 c o n v e n t io n s and e ls e w h e r e ,
w ith a d r a f t o f th e b i l l ) *
( G a lle y p r o o f , 83 > g e s )
a
The Bank I n q u ir y o f 1 9 0 8 : S te n o g r a p h ic R ep ort a.
(A bout y> 0
p ages)
S e l e c t e d Roc tune t o on B ou rse L e g i s l a t i o n * (G a lle y p r o o f ,
33 p a g e s )
V III - 8WI1A3IBJLAIU)
T h S w i s s Banking Law, by R r. J u l i u s Landnann. (238 p a r e s )

R oveloprient o f 1 he 'k r ia j: Banking s y s te m , b y R obert ^ranz*
(0 ; 11 ey p r o o f , 33 pare s )
■

A s e t o f 24 g r a p h ic c h a r t s , p rep ared u n d er th e d i r e c t i o n
o f P r o f e s s o r A. ? • Andrew.

A fte r a f u l l d i s c u s s i o n o f p la n s f o r th e p r o s e ­
c u t io n o f th e work by th e Con:. i i on i o n , th e f o l l o w i n g a c t i o n was
to k e n :
A sub commit t e e , c o n s i s t i n g o f hr* V reelarc! (C h a irm a n ),
S e n a to r s Burrows rind R a n ie l, J.e r e s e n t a t i v e Weeks and Rr*
R onynge, v/ere a p p o in te d to v i s i t

Czrndda some t i n e d u r in g th e

month o f Poptem ber to make a p e r s o n a l i n v e s t i g a t i o n o f such
f e a t u r e s o f th e Canadian sy stem a s had n o t a lr e a d y b een c o v ­
ered by th e i n v e s t i g a t i o n s o f th e C om m ission.
I t was d e c id e d th a t a m e e tin g o f th e f u l l C om m ission
sh o u ld be h o ld in W ash in gton ab ou t th e m id d le o f O c to b e r ,th e
e x a c t d a te to bo f i x e d by th e Chui mar, and t h a t a t t h i s m e e t­
in g th e su b co m m ittee would recorm cnd that, th e C om m ission s h o u ld




>




r
■f i
. 4 .

>

hold meetings and conduct hearings in different sections of
this country during the late fall and winter.
The following statement of the proceedings of the ses­
sions of the subcommittee was prepared by the C h a i m a n and
given to the press:
A sub con :it too of the AationkL :' ' n t ary Commission have
.oe
been in session at The ~‘
otel Dlasa for tv/o days.
The meeting
was for the purpose of arranging for the work of the Members
of the Commission during the summer prior to the general meetin.- of the Commission, which will take place „n A s h i n g ton
about the middle of October.
A large number of papers and
statistics, vdfleh have been prepared urn or the direction of
Professor A • ?• Andrew, were submitted to the Commission in
proof.
It is expoctoe that the rc orts and statistics with
reference to the monetary systems which are under investiga­
tion by the Commission will bo completed and ready for pub­
lication at h e October meeting.
A subcommittee was ap. o in ted to make a personal examina­
tion in Canada of such features of the Canadian ays tom as
<V1C
have not already been cover d A, the invest gallons
C om m ission . The subcom ni tee w i l l c o n s i s t o f
Vreeland
(Chairman), collators duivo m and Daniel, Rep rc sen tat ive V* eks
/
and
r. B onynge.
The subcommittee will visit Canada some tin
during the month of roptember.
The chaii'.'ian of the Commission, who is to sail for Eu­
rope next week, will complete a rungemonts heretofore made
with reference to the monetary system of Italy, and ...III ar­
range for additional info m
-ion relating to European sy s­
tems in cases where the statements already sub ut t o d to the
Commission fail to coyer oil the information required.
It is the purpose of the commission to visit different
sections of thio country <h ring the late fall art! .inter to
continue its investigations.

At 12 o'clock, noon, on Tuesday, August 17, 1909,
nubcomma toe adjourned.

p

the




)

PROCEEDINGS OF THE NATIONAL MONETARY COITUS SI ON.

Hotel Plaza, New York City,
August 17, 1909.

A subcommittee of the National Monetary Commission,

con­

sisting of senators Aldrich (Chairman), T3urrows, and Daniel,
Representatives Vreeland and weeks,

and Mr. Bonynge,

were in

session at The Hotel Plaza, New Tork City, in the morning and
afternoon of Monday, August 16, and in the morning of Tuesday,
August 17.
Professor A. ?. Andrew submitted in proof form the fol­
lowing papers and documents, which have been under prepara­
tion since the last meeting of the Commission.
were examined and discussed by the subcommittee,

These papers
and the Sec­

retary was directed to furnish a set of these documents in
proof to each member of the Commission,

to be regarded as con­

fidential until published in final f o m by the commission.
The list is as follows:

PUBLICATIONS OP THE NATIONAL MONETAPY COMMISSION.
I - M I S CELLANEOUS
Interviews on the Banking and Currency systems of Engla d,
France, Germany and Switzerland.
(430 pages)
The Public Debts of Great Britain, Germany and France, by
Francis W. Hirst.
(Galley proof, 19 pages)
Articles: The discount System in Europe, by Paul M. Warburg.
(43 pages)
Bank Acceptances, by Lawrence Merton Jacobs.
(18 pages)

2.

/

IT - UKITKD STATES
Statistics for the United States,
Digest of State Banking Laws, by
proof -- pages)
Article: History of the National
Dana Hoyes.
(Galley proof,

1867-1909.
(250 pages)
S. A. V/elldon. (Galley
Bank Currency, Toy Alexander
6 pages)

III - CANADA
The history of Banking in Canada, "by Doland Morton Breckenridge.
(310 pages)
IV - ENGLAND
The English Banking System, with a chapter on the London
Stock Exchange, by Hartley Withers. (150 pages)
Statistics for Great Britain, 1867-1908. Prepared by R. H.
Inglis Palgrave. P.R.S., and "The Economist."
(Galley
proof, 67 pages)

V - DJRAUCE
Evolution of Credit and Banks in Prance, from the founding of
the Bank of Prance until the present time, by Andre
Liesse.
(271 pages)
The Bank of Prance in its relations to Rational and Interna­
tional Credit, by Maurice Patron.
(Galley proof,54 pages)
Statistics for Prance, furnished by the Credit Lyonnais. (Gal­
ley proof, 26 pages)
The History and Methods of the Paris Bourse, by E. Vidal.
(Galley proof, 65 pages)

VI - BELGIUM
The Rational Bank of Belgium, by Charles A. Conant. (238 pages)

V II - GERMANY
The Great German Banks and their Concentration in connection
with the Economic Development of Germany, by Dr. J.
Riesser.
(Galley proof, 68 pages)
The Reichsbank, 1876-1900.
(Jubiiaumsschrift) (355 pages)
Statistics for Germany.
(Galley proof, 56 pages)
German Imperial Banking Laws, edited by Dr. R. Koch. (Galley
proof, 72 pages)
Miscellaneous Articles on German Banking.
(Covering the organ­
ization of credit, directors* fees, the land mortgage asso
ciations, the savings banks, the co-operative societies,
etc.)
(Galley proof, 93 pages)




/

3.

In Re: Renewal o f R eich sb a n k C h a r te r . ( I n c lu d in g a r t i c l e s
c o v e r in g th e ren ew a l o f th e c h a r t e r and d i s c u s s i o n s o f
t h i s s u b j e c t in h ank ers* c o n v e n t io n s and e ls e w h e r e ,
w ith a d r a f t o f th e h i l l ) .
( C a lle y p r o o f , 83 p a g e s )
The Bank I n q u ir y o f 1 9 0 8 : S te n o g r a p h ic R e p o r ts .
(A bout 900
p ages)
S e l e c t e d D ocum ents on B ou rse L e g i s l a t i o n . (G a lle y p r o o f ,
33 p a g e s)
V III - SWITZERLAND
The S w is s B anking Law, by D r. J u l i u s Landmann. (2 3 8 p a g e s )

D evelopm en t o f th e German B anking sy ste m , b y R obert F r a n z .
( G a l l e y p r o o f , 33 p a g e s )

A s e t o f 24 g r a p h ic c h a r t s , p rep ared u n d er th e d i r e c t i o n
o f P r o f e s s o r A. P . Andrew.

A f t e r a f u l l d i s c u s s i o n o f p la n s f o r th e p r o s e ­
c u t io n o f th e work by th e C o m m issio n ,th e f o l l o w i n g a c t i o n was
ta k e n :
A su b c o m m itte e , c o n s i s t i n g o f h r . V reela n d (C h a irm a n ),
S e n a to r s Burrows and D a n ie l, R e p r e s e n t a t iv e Weeks and Mr.
B onynge, were a p p o in te d to v i s i t

Canada some tim e d u r in g th e

month o f S ep tem b er to make a p e r s o n a l i n v e s t i g a t i o n o f such
f e a t u r e s o f th e Canadian sy s te m a s had n o t a lr e a d y b een c o v ­
ered by th e i n v e s t i g a t i o n s o f t h e C om m ission.
I t was d e c id e d th a t a m e e tin g o f th e f u l l C om m ission
sh o u ld be h e ld in W ash in gton ab ou t th e m id d le o f O c to b e r ,th e
e x a c t d a te to be f i x e d by th e Chairm an,

and t h a t a t t h i s m e e t­

in g th e su b co m m ittee would recommend t h a t th e C om m ission sh o u ld




J

/




4.

h o ld m e e tin g s and con d u ct h e a r in g s in d i f f e r e n t s e c t i o n s o f
t h i s c o u n tr y d u r in g th e l a t e f a l l and w in t e r .
The f o llo w in g s ta te m e n t o f th e p r o c e e d in g s o f th e s e s ­
s i o n s o f th e su b com m ittee was p rep ared by th e Chairman and
g iv e n to th e p r e s s :
A su b co m m ittee of* th e .. a t i o n a l

’ o n e ta r y Com m ission have
b een in s e s s i o n a t The H o te l P la z a f o r two d a y s .
The m e e tin g
was f o r th e p u rp ose o f a r r a n g in g f o r th e work o f th e m em bers'
o f th e Com m ission d u r in g th e summer p r i o r to th e g e n e r a l m e e t­
in g o f th e C om m ission, w h ich w i l l ta k e p l a c e in W ash in gton
a b ou t th e m id d le o f O c to b e r .
A la r g e number o f p a p e r s and
s t a t i s t i c s , which have b een p rep ared under th e d i r e c t i o n o f
P r o f e s s o r A. P. Andrew, were su b m itte d to th e Com m ission in
p r o o f.
I t i s e x p e c te d t h a t th e r e p o r t s and s t a t i s t i c s w ith
r e f e r e n c e to tn e m o n eta ry sy stem s w h ich a re under i n v e s t i g a ­
t i o n by th e Com m ission w i l l be co m p leted and r e a d y f o r pub­
l i c a t i o n a t th e O cto b er m e e tin g .
A su b co m m ittee was a p p o in te d to make a p erson a], exam ina­
t i o n in Canada o f su ch f e a t u r e s o f th e Canadian sy ste m as
h a v e n o t a lr e a d y been c o v e r e d by th e i n v e s t i g a t i o n s o f th e
C om m ission. The su b com m ittee w i l l c o n s i s t o f Hr. V re ela n d
(C h airm an ), S e n a to r s Burrows and D a n ie l, R e p r e s e n t a t iv e Weeks
and Mr. B onynge.
The su bcom m ittee v / i l l v i s i t Canada some tim e
d u r in g th e month o f S ep tem b er.
The Chairman o f th e C om m ission, who i s to s a i l f o r Lurop e n e x t w eek, w i l l co m p le te arran gem en ts h e r e t o f o r e made
w ith r e f e r e n c e to th e m on etary sy stem o f I t a l y , and w i l l a r ­
ra n g e ^f o r a d d i t i o n a l in f o r m a t io n r e l a t i n g to E uropean s y s t e n s i n c a s e s where th e s ta t e m e n t s a lr e a d y su b m itte d to th e
Com m ission f a i l to c o v e r a l l th e in fo r m a t io n r e q u ir e d .
I t i s tb e p u rp o se o f th e com m ission to v i s i t d i f f e r e n t
s e c t i o n s o f t h i s c o u n tr y d u r in g th e l a t e f a l l and w in t e r to
c o n tin u e i t s i n v e s t i g a t i o n s .
At 12 o ' c l o c k , n oon, on T uesday, A ugust 1 7 , 1 9 0 9 , th e
subcommit t e e a d jo u m e d .

f




Sec. 9.

That a National Clearing House A ssociation

may be formed under th is Act in any City in which i s an
A ssistant Treasurer of the United States) tnat such Asso­
cia tio n may be formed upon p e titio n to the Conptroller of
th e Currency of a majority in number (or amount of ca p ita l)
of National Banks doing busine33 in such City; that such
Clearing House sh a ll be known as ’’National Clearing House
Assocation of________ __.___________ _________ } n ■h&ll be
governed by Directors or Trustees* not le s s than fiv e (5)*
to be elected by the Members of such A ssociation, a majority
of whom sh a ll be elected by the f u ll mem bors of such Asso­
c ia tio n , and such o ffic e r s as the Directors or Trustees may
s e le c t; that 3 uch A ssociation sh a ll have power to sue and bo
sued, to have a corporate se a l, to trai^ict the ordinary ous—
in ess of a Clearing House, to issu e Clearing House c e r t i f i c a t e
with which to. adjust balances between, and which may circu la te
among i t s members, and which Y/hon issuod to , may be used to se­
cure the circu la tio n o f, i t s f u ll members by depositing the
same with the Treasurer of the United S tates, or une A ssistant
Treasuror of the United States in the City in whicn sucn Clear­
ing House i s located; Provided such Clearing House c e r tific a te s
sh a ll be issued only against cash, or commercial paper a ctu a lly
deposited with such A ssociation, and i f against commercial pa­
per at not to exceed seven ty-five (75) per cent, of i t s face
value;

that any banking a sso cia tio n organised under the laws <
f

the United States or any State th ereof, doing business in such
City sh a ll be e lig ib le to membership therein;

that members sh a ll

be of two c l a s s e s ------f u l l members and associate members;

th at

f u l l members sh a ll be held to guarantee the payment of and be
jo in tly lia b le on a l l such clearing house c e r tific a te s issuod
by such association s as may bo deposited by

it3

nenoers wit.i t.io

Treasurer, or any A ssistant Treasurer of the United States to
secure cicr u la tio n , under the provisions of th is Act; that aoso-

j*




c ia te members sh a ll not bo so lia b le ; that a l l members organ­
ized under the National Bank Act sh a ll bo held and ara hereby
declared to be f u ll members* and that a l l other members are
hereby declared to be a ssociate members; that as amongst thornselv es f u ll members sh a ll be lia b le in the proportion tho capital
and surplus of each fu ll member boars to the to ta l cap ital and
surplus of a l l f u ll members; that such a sso cia tio n may, subject
to the approval of tho Comptroller of the Currency, adopt rules
for the government of the a sso cia tio n , and the d isc ip lin e of i t s
members; that such assocation sh a ll report to and be subject to
examination by the Comptroller of tho Currency at such times as
th e Comptroller of the Currency may prescribe; and that the
Comptroller of the Currency sh a ll have the same authority over
and control of such association a3 he has ovor national Banks,
organized under th is Act*
Sec* 10.

That Section 5242 of tho Revised Statutes be

amended so as to read as follow s:
"No attachment, injunction or execution sh a ll be issued
against any National Bank or National Clearing Houso A ssociation
or i t s or th e ir property before fin a l jud^ynont in any s u it ,
action ot^proceeding in any Federal, S tate, County or Municipal
Court/
Sec. 11.

It i s hereby declared to be unlawful for any

Clearing House A ssociation not organized under th is Act to use
the word "National*, in i t s t i t l e , and any v io la tio n of th is
prohibition sh a ll subject the party chargeable therewith to a
penalty of f i f t y d ollars ($50.00) for each day during which it
i s committed or repeated; such penalty to be recovered by su it
in stitu te d by tho Attorney G-eneral of the United States for that
purpose#

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C itie s

Capital

Surplus

Total c.

$17,986,000
2,200,000
32,135,000
28,885,000
7,105,000
3,570,000
350,000
3,060,000
1,080,000
1,400,000
135,000
1,370,000
552,000
364,700
2 ,2 4 7 ,16 7
6,340,000
3,800,000
1,137,0 0 0
2,360,000
1,470,000
2,560,000
4,352,0 83
2,265,000
240,000
400,000
130,000
2,950,000
410,000
240,000
1,000,000
625,000
326,000
1,740,000
370,000
1,200,000
1,450,000
2,255,000
8,930,000
511,30 0
2,350,000

"44,036,000
4,300,000
5 4 ,440,000

Reserve C i t i e s ,. $210,867,700

$ 15 1,8 5 1,2 5 0

$362,718,950

114,580,000
27,650,000
19.100.000

109,768,050
17,057,000
1 1 .4 3 1 * 1 5 8

224,348,050
44,707,000
3 0 ,5 3 1.15 8

5161,330,000

? 13 8 ,2 5 6 ,208

5290,585,208

$210,867,700

$ 15 1,8 5 1,2 5 0

$362,718,950

161.330.000

138.256,20 8

299.586.208

T otal,

$372,197,70 0

$290,107,458

$662,305,158

United States,

$89 6 ,46 1,314

$488,303,602

$ 1,3 5 4 ,7 5 4 ,9 16

$26,050,000
22,305,000
12,740,700
6,026,000
13,300,000
13,800,000
114,580,000
27,650,000
19.100.000
$266,550,700

$17,986,000
32,135,0 0 0
7,105,000
3,060,000
6,340,000
8,930,000
109,768,050
17,057,000
1 1 .4 3 1 .1 5 8
$ 2 13 ,8 12 ,2 0 8

$44,030,000
54,440,000
19,846,700
9,085,000
19,640,000
22,730,000
224,348,050
44,707,000
3 0 .6 3 1,15 8

$26,060,000
**— Boston
2,100,000
Albany
22,305,000
•
Philadelphia
29,100,000
Pittsburg
12,740,700
* — Baltimore
6,150,000
Washington
750,000
Savannah
6,025,000
*«■ » Hew Orleans
2,400,000
Dallas
1,925,000
Port Worth
425,000
Galveston
2,500,000
Houston
2,300,000
San Antonio
800,000
Waoo
Louisville
4,948,000
13,300,000
*— Cincinnati
9,350,000
Cleveland
3,550,000
Columbus
5,100,000
Indianapolis
4,750,000
Detroit
5,750,000
Milwaukee
5,700,000
Minneapolis
4,100,000
S t. Paul
400,000
Cedar Rapids
800,000
Des Moines
600,000
Dubuque
3,300,000
Kansas C ity , Mo.
900,000
S t. Joseph,
650,000
Lincoln
2,800,000
Omaha
1,000,000
Kansas C ity, Kas.
660,000
Wiohita
3,200,000
Denver
500,000
Pueblo
1,750,000
Seattle
1,250,000
Portland
6,500,000 ■
Los Angeles
13,800,000
•^ S a n Franoisco
1,200,000
Salt Lake City
1,602,000
Brooklyn

H York
ew
Chioago
S t. Louis

Reserve C itie s ,
Central Reserve^,

•

5 7, 9 0 6 ,0 0 0

19,845,700
8,720,000
1 ,1 0 0 ,0 0 0

0,085,000
3,480,000
3,325,000
560,000
3,870,000
2,852,000
1,164,7QC .
7 ,19 2 ,16 7
19,640,000
13,150,000
4,687,000
7,460,000
6,220,000
8,310,000
10,052,083
6,365,000
640,000
1,200,000
730,000
6,250,000
1,310,0 00
890,000
3,800,000
1,625,000
826,000
4,940,000
870,000
2,950,000
2,700,000
7,755,000
22,730,000
1,7 11,3 0 0
3,952,000

Sub-Treasury
C ities*
Boston,
Philadelphia,
Baltimore,
Hew Orleans,
Cincinnati,
Seal Franoisco,
Hew York,
Chioago,
S t. Louis,




$469,362,908




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In treating the finances of a country we must not confuse
the CURRENCY PRINCIPLE with its INSTRUMENTAIITY ,- the BANKING SYSTEM*
The former may he scientific and sound and the BANKING SYSTEM had,
and vice versa*

The American currency principle must he revolution­

ized and the banking system reformed.

A hank note currency may be

divided into two classes,- SECURED and UNSECURED or asset currency.
In effect there is no difference between a SECURED bank note curren­
cy and pure fiat money issued by government authority, for both are
•'ft ‘
v ■

•'
>

/inflexible and unresponsive to the demands of trade.
t;

<

THE r- - — ■-i
CURRENCY PRINCIPLE
~
“

They inflate

credit, being an attempt to rake money out of

AND'THE BANKING SYSTEM paper, when the only way to do that is by COINING
4
'i.
SHOULD NOT BE CONFUSED. GOLD- a right delegated by the Constitution to
Congress alone.
* *•

,

-

.

.

*

C, A. Conant, in hi3 MODERN BANKS OP ISSUE, has
'

this so plain that we will quote him.

He says:

•Miy " y
•
"Bank notes are
; 'not money but are a form of credit of substantially the same nature
as bills of exchange, promissory notes and checks.
They are the
.proper instruments of commercial transactions because they are the
creatures of commercial needs and are adapted in volume to the com­
mercial necessities.
In this respect they differ from government
paper money, which is regulated wholly by the necessities of gov­
ernments and not by the convenience of trade.
Bank notes are not,
a3 government paper money usually i3, pieces of paper created out
of nothing to represent value.
They are simply the paper representat­
ives of a great mass of commercial transactions".




-1 -




■

I am aware th a t the

„

« '

/

••

estimates I *have su b m itte d have

some elements of uncertainty,

and I may he asked what would

■

"

■ •■ ■ ; • ' -A• '
,y
‘■'js " \ '

v

It

9

*
jfc

■

>

happen if it should he found that I have hee$ |y^r-sanguine
or wholly inaccurate in m y statements of probable conditions
and results.

What shall we do if the revenues actually

re­

ceived are less than those I have anticipated, and large de­
v
ficiencies are threatened?

I answer with emphasis that it

*• -»

is

*

>

then the imperative .duty of congress to reduce ex endi-

turec and make them conform to actual revenue conditions,
and not to impose new and onerous taxes.

The legislative

■A .

power of Congfess over the revenues and expenditures will
V’

*

,

not end wi£h the adoption of the pending hill.

will he in session again in December,
* „>£
>

year.

Congress

and again the fb llowing

t

The President has the power to call us in special ses%

sion at any time.

**

The pending hill will, if enacted into

law,- provide all the necessary revenues required for p u b lic
expenses upon a liberal scale.

No further additional taxes
,

are needed.

‘The imposition of
’Vi-v i- t i-y ,

♦

<

other taxes under these con-

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