View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Collection Title

Series/Volume

Shelf/Accession No.
LC

77-38 (1/70)







•

Monetary

•

niPitv""f!'"1
aii1•1114•44.

MAR

nta

V.

P
( d
°




L-

t

/

.2=z4-t4e,
2v1 aoit

g.•

oiN
L

vr`

•

og

.
1.00

0-61

o•iL?-g,1

c-9

Board over FiderAl Reserve banks and their members, in fact over

the entire banking business of the country, are vastly greater

than any vAttiodancemsp4m-exercised by any central bank in existence.
f
/r






/

rrr-c‘,.;

(Lt..
,

ask.,.‘..

4

1#.64

./

eL,

A

0

sck

kigg.t.....1

1

,
0

c8

/-011

o- .
-of the act
-

A

I

Q:1

,
I-ItEtve---a-kready---4464.41r-trhot

-bn

e establishment of the

Federal Reserve Board Congress would create a Government central

The Board istaass444tOmod a bank of issue, as all—af the

bank.
k

4 i

j miilie=oreft are issued by it.
Government notes authorized liai t

It is

a bank of discounts Vals4, because it 1s....0.4444er-iee4--4-e-make1$laans

..)cy.L...0...,..

,CA, ,::\
i-.
based ,ou-Geriperinstont-notise to Federal Reserve banks;

„,,, .......‘.. .., ..,,,e:

' ,:ls,
'..

...1;;.
;'.4 . • 1 ' . a,,,:•;$;.

se-Gefidv---bay l
,

,
."4.4.1011421.1110111.,..11.
at

•

.
-have .-retTted
juLtate-pr."4-tritrtrir-wtith--I

_.•Y• k11
,

t
., •:#
,4
,

irtees- .41-

-lits.zantirei -Wee.

c

Fe4Leral Reserve bank9 is practically managed and dia

,

rected---br trre Federal Reserve- Board.

The

Itibihiazrzatigral

Reserve

banks and their offices scattered throughout the country are imr
G,

-e:

P

(-•si
}

f

(tAgga-m.Ooly branches of the central
, .
••
,i...********“.

RA0AMOie

Board, se-they

' s.
4%1A,1
reenarki, 4 .754,.6411g4
•.
.
11410044

„

•
/01
,
•a A
's.

f

2

c\-

''ir 1/..

pse_r_tarm..alfirokfrILUaliona under fits direction.
•
4




•
•4

•

;•

The powers granted and authority given the Federal Reserve

ge
"

;
.
)
,

1.

1;ational banks

/X _-&
f
r

-.1

X <

aticnal Banks to subscribe t

h ckpel
Ara

f r

,t

0

cA.

to the stock of the Federal Reservt Banks
t--

7
<

CA.

e-

,
eposit with t-i.re-6 e banks a‹.Lar..t.c.in portion of their reserves*

tis.c penalty of dissolution in case of failure or refusal/
It <2

,
-:f
A'

/KZ

t is hardly necessary for me to reft!.r to the circumstances

surrounding the creation of the national banking system. The

national banks were established during the civil war to provide

a safe and uniform currency for the country and to strengthen its
credit by furnishing a large and profitable market for its bonds.

Both of these purposes were successfully accom2lished.

fect in our system of bank note issues is not due to

ty or uniformity.

Any de-

kot

of safe-

The success of the various refunding, acts by

which the interest on the public debt has been reduced from six

to two per cent and vast sums r;aved to the people has been owing




i,v.41 e 4.14A)

National banks

2

to the use by the national banks of a considerable portion of out

AL
standing bonds.

T,h44 use has been practically enforced by legis-

lative provisions.

The banks are now actlOunder charters gran-

&4.4.4;144,

ted for a fixed

•

w444-certsin definite conditions which have

,
lott A.A.64-10 4011L4.4 011.6A..nr,..c

6...
0
AJ

been faithfully lived up to with the result that 1eoweis-4e de,

t
Na;

positors and shareholders had been infinitesimal.
"




zC<AL
12-4.-d

it,ra

7

y
I submit that it is not fair to impose upon these insti- 41
1

National banks

5

al to the state system would end in a financial panic such as we
‘
OA
have never seen in this country.

r
4=44; -zic.ft*LA
thte

can

however be d4.4p6-1.144 by makine the participation of the ilational

banks in the scheme voluntary, or by aereeinE to some safe method

by which the transfer to the state system can be carried out with-

out danEerous contraction or imposing a ruinous loss on the banks

on account of their holdinEs of 2 per cent bonds'




4

0
-74A-C-3.---

(2,
Gt,‘A-4

)'
2
1

,L--

ikt,t




/6.

As,

/AeVi

A
•

(
7
--Ocr

It-1
1-%

)

CA-

e'ZIA4r.S.

4=P?

t

_2

4e.
•;
4

5.-thousa44.-.134,41Sati44.440x.e •
•
,

a-4

It is, of course, problematical what

„

portion of this vast amount could, by an
insistent demand for

money or by a desire on the part of the
Reserve banks to increase

--irn -4ir

L4
'

their profits, be made available as
security for loans of notes

from the Board.

firr m
:
If five per cent of this amount could
be used

we should then have a thousand millio
ns of additional currency.
4

CL

2
1,5L.A3-eily-

C
-en

The lai..11_11xes_Aa—r-a-tre —et
L

- f inters-et—on
f

7t

,01 im-1-1.
-

A-4

a-

ovt-A

laaas—e-f---mefiey-4nacle to the banks.

If a bank could hire money

eric"/

0

at eo and loan 2/3 of it to its custom
ers

of 5% or 6%, the

business would certainly be a profitabl
e one, and if the notes
47 4c4.—
cem4d be kept in circulation indefinit
ely, as they probably

Iwould be und-er—Ciipw-oixeratioa,44,tba Gre
sham law, the amount of

kta
itoOd

tme2"-

loans aoteed be increased indefinit
ely.
px-fm,e,d




t\

It ie-difficUlt t'á' Eitherthe aut
hova_of the plan con-

•
.

)

4

,7c42fri-eAvz

44, 41-

1"

fr-e

the chairman of theo
r own Board of Director
s and kept in laa
itI
'vault on their own pr
emises., .elle-415-ernr-k
Ck.q.--4
20




e

4- Jet47 r‘

?to
-6C;

m-eiternred----ert-emr-ttme

I






e

gil
oe, (o
t )

0-4

77&

C

a_

9

0

ot-

a-6

another form of currency would be added to the seven already in

existence, and if the provisions in regard to the use of letters

and serial numbers to distinguish notes which are to be ultimately

redeemed by particular banks, should give a greater value to some

,
(L, Afr1 1 trc
,

C 42A_

7ellr2L1

tAi

notes than other, we should have twelve additional forms of cur-

rency.



a-5

w

soon as

e-e-e-aa-sion for the-IT use has passed,
-

t
t
o it-r,.„e z_,,e_f2 7

60-- CI

nc),

1;6—

LAr,,, /fa

y

J14,--(0-=;K2
_-wAeer—the4-8.r_e_11444aded t become a permanent addition to the
-e-

currency of the country.

Whatever may be the, intention of the

autd4orer it is safe to assume that currency of this character,

A,04=
once issued, will
.44L
A

hn:L/t

190414T

be retired, and that i a amount will con-

"
a‘( . 4-4---•-4-4-1-12-Z4:
16-4-4-c'

stantly increase.

Each one of the Federal Reserve banks, by

the provisions of the bill, are forbidden to pay out the nOtes of

any other Federal Reserve bank, the purpose being, I suppose,

secure their prompt redemption.

But no such prohibition applies

to the twenty-fire thousand other banks in the country, or to th

business men and people in whose possessioa the notes would be

found.




With the-pevehiter use of the new notes,

a-8

IA

\7cF

s)
\

/14Aat

t!4+

It will -be said that the bill places the obligation for
re

demption upon the banks and requires that they should hold re-

serves, and establishes a lien upon all the assets of the
banks
'e eflvt
rte f,tt t

(11
tor security.
I

A

CA--e

/07-f1 t;_:;(-e_f
44

,

7t-04.t.

But----suriagase-agalit-the eondttfons vf -rata-T, of what

A_ k_ct

ayadl would be a collection of miscellaneous paper held by
the

Federal Reserve board)
.

disposed of.

The collateral certainly could not be

It is impossible to say from the reading of the

bill whether the title to the collateral is to be in the
Federal
•

Reserve Board or in the 42reasury of the United States.
i
r

1T Ww
;

The
SI

G?'FQ4444444 4fb th4 United State-L-18241es_ ilre-ebligationewut-the/1-t--ce.C-- .14
Abi-s-g4
t-,
leCollateral is in the howl-s- of an agent of the Federal
Reserve

Board.

The same uncertainty exists as to the lien upon th

assets of the banks.

to enforce it.




How is the lien to be enforced, and who is

Does it exist in behalf of the United Stlites or

the bill holders?

It is difficult to understand why, if the

Government notes issued are to be redeemed and their safety in-

sured by Federal Reserve banks, the United States should engage

in the business of loaning money, when the obligations of the

banks could be made as safe and as valuable as those of the Unitdd

States, and all responsibility of the country and all danger of

the possibility of suspension would be avoided.

Heretofore in legislation looking to the regulation of cur-

rency or to the issue of Government obligations Congress has sur-

rounded their authorization with every possible precaution

against fraud.

Issues of currency are made through the appropti-

ate bureau of the Treasury Department, and k4s—character and de-

jkominations are fixed by Congress itself.

In the case of the

pending bill the Federal Reserve Board are authorized to Lssue




a-10
,f
1"-cct_
aatoamounts, to

obligations of the United StaIei

fix their character, form, and tenor.

The transfer of this im-

portant function of G6vernment to a Board whose acts are not

subject to the supervision of any Department of the Government,

with no requirement for reports or publicity of transactions,

with no power on the part of any representative of the Govern-

ment to digIsts detect or punish a flagrant abuse of power, has

no precedent in the history of this or any other country.

the

If the Board should

ex-hrt-tmg-4ritte-of"etzalay-ar--iii-Za4=-44 the notes which they
IOWA-

7

'fi".->-

0,
4 - c.

47:it

frV-

10
(

have authority to issue they might easily, by providing for the

issue of the new notes in small denominations of onPs, twos and
f
'
ekAA-C)

fives, drive out of oneireenoe silver certificates and United

in
States notes of equivalent denominations and give t?re field ire-




•

(3
.
unlitr-rted.
, ' ;./014.retmiTfSe so,
• ,,,

tha

In considering the elan-

cerous character et government Lote issue we must not lose sight

49N7 oiC e

/
of the ifet, that wirirr-t
---igsue

4 7

AG,

tcdtliC4.,--,
strict-

ly limited in amount and _urrounded by safecuerds and restrictions

for the purpose of riving permanence to the value of the notes and

insuring their circulation and convertibility, exixarie-e has-siteer

o,
sl;a5suL that in every case limitations, safeguards and restrictio
ns



6
.
have been, one after

t t 4:2-4
'

t

nother, removed or modified.

dr-e-

krz.

In this case

1-1

r4*-4.-4*,e—ettite1r
,
—th-cre i-e—nio practical limitation upon the initka

i

rt-4-4--tr71-1
issue ai %
1
—can

' that no ConEress will be able

to reset the popular demand for the remcval of all impediments.




(
-17'?

6c r`
-

/
e_

A- 4
4

c

a-11

1.11,111 new form of ,Government-

EZE

The Supreme Court of the United States in the last legal ter*

der case, affirmed the right of Congress to issue all obligations

of the United States in such form and to impress upon them such

qualities as currency for the purchase of merchandise and the

payment of debts as accorded with the use of sovereign govern-

ments, and under the power to borrow money on the credit of the

United States and to issue circulating notes for the money bcr-

rowed, its power to define the quality and force of those notes

as currency is as broad as the like power over a metallic cur-

rency under the power to coin money and regulate the value there-

of.

The issue of the Government notes under the bill under con-

sideration is not for the purchase of merchandise or the payment




,
"
4;1." ........,..,- •'"'"''.,,,
.
..,e

a-12
-N,,,,..„...„...„--

of debts, nor can they be said to be issued under the power to

borrow money for present or prospective needs of the Government.

Notes are issued for the sole purpose of making advances to Fed-

eral Reserve banks as definitely expressed in the measure.

In

other words, to enable a Board to exercise a purely banking

function of loaning money on collateral, loaning the credit of the

Government to private corporations.

Grave questions may well

arise as to whether Congress has the power to issue obligations

of the United States, 44k,3 if it has the power, wilother it ire ex-

pedient or wise to exercise it in the manner provided in the bill.




•

52.

The greenback sentiment in both parties Was strong enough

to secure the passage of an act in is)

United States notes in circulation.

increasing the limit of

The veto of this measure

by General Grant was an effective check to the first a .donly post

bell= attempt prior to 1913 to inflation through the increased ,

le

•

use of government money.
/14-1 ,.While tile opponents of resumption and the friends of further

inflation and of the free coinage of silvtx included members of

both political parties, they were not strong enough in the early

stags to induce either of the great parties to openly espouse

their cause in national platforms.

/The democratic platform of

1872 contained an emphatic declaration in favor of a return to

specie payments and a ,Aaintenance of the public credit,and de-

nounced repudiation in every for



and guise.

The &tilure of

53.

the friends of inflation to secure the formal support of either

of the great parties to their peculiar views led to the formation,

successively, of the greenback, people's, and populist parties.




6.
The letter was written to a member of the Committee upon the eve 6

of the Democratic caucus.up4a the bill and amendrrlents . While this
,

frank and courageous declaration of Mr. Bryan's had 'Ile expected

result of solidifying his followers in the support of the bill ,

,e.
k.441

4,

t

.

i

it s1124414 open the eyes of that numerous portion of the American

public which is not and never has been in sympathy with his pecul4

iar views, t. the dangerous character of 14441 proposals.

The Bryan proposition as now made gagese.Wrifotot.seartioAsintorv.
AAA_

ô

oci

OL.0

tfr•

, (

-

whioh hee-ever-been"""suredsttd In' the natafe••
0
(
1
C ovitzwationt
.

.. '
e s

,ez.
• 4

a

A
•

r

Tb.e..-ang....abtaal.e....343.1c1..hakkAulatalow4,4.64—in-4114o-way of
a,

40 1
4
-.2
ci•-•
the_fijAgt,1041.441
°
,•••••••*LAv
,

'1N").*
'34.!

c"-

•;.11' .'
• 4 ‘ Ct..
vd
:
-

/ 1
4,

°
'
fel

•i

."

#

wh,teir-nataix-aoula be-clistributad.

41„..t1
.

C.

Mr. Bryan himself has not alwap

t

ttiA. 1

been clear upon this point.

(

In a speech aade by him, he says:--

"If it is said that we must institute banks of issue in
order to put money into circulation, I answer that there is a
better way.



•,•

greenback thebries has 'beau 'te0-4.ind-o4m4-lay
"th-rfa-646-7c

....t.rwervotw,

C.1
7

The issue of money by the Government directly

the

8
.
danger of the placing so great a power, that is the power to loan

money, in the hands of a dominant party.

It would seem that Mr.

Bryan's ideas upon the subject are progressive Awl

could no

/(

have anticipated in 1894 that it would be possible for

him to secure the adoption of a plan of distribution more compre-

hensive and radical in its character than he at that time thought

wise to advocate.

Mr. Bryan in his letter to which I have re-

ferred reiterates with increasing emphasis the statement that a

government issue of notes through a Board of government officials

waea distinct triumph for the people.

If the method of distribu46

tion by loaning notes to a class of banks is a triumph, why not

make the triumph more definite and beneficial by loans to all

banks or, b.ettea..443.1 1 to all individuals or corporations doing

" FL, L
A

wordt.

business or directly to all the people.

If the tile...caj,g4 .9gi48
t
.

•
^e
.

•_.-

(
afftractIteit'aki cr




e

L

q

ADA are really in the interests of the

9.
people, why not make them comprehensiv
e and include all the

people rather than a certain privileged
class

9

It is not
-„

surprising that Mr. Bryan and his follower
s should be but little ,

concerned as to the other details of the
bill when they have

achieved a victory

of such transcendent importance.

I have

no disposition to detract from the cred
it which Mr. Bryan

entitled to for the victory he has atta
ined but I think we have

A

4

Nkb ,

a right to ask that the American peop
le should, be given an oppordg„
it 4
tunity, under the circumstances,
%
7.
for a full hearing an.a-question , 54

before judgment is rendered adverse
to their highest interests.

There can be found no precedent for
thds

41)

remarkable
el.•

so'

delegation of authority.




-4t:h

4‘9"0K7eAdvs.4

Lk4v

.z&
ir--e-- C 0(..,‘ c L-l - >

t

.1

14 t. 6- l.
7
,.....

I-

/ -.) \
4

t..- • ile".

L

it t i

I

C--.2,- 7-- .. L_L:-.1 /
c-‘,%
Cti-ka.A
,
i )
t /,

eI

i

A

‘44

t

/ 1/
4
4&)..'

(2C

..1.-c , 1---4--/

frk o-ve J

S;L

CA

4L

p.. C

'
14k.

+.0

,

.
s-.

i

(
t
tjLtA,.

0•.0 r•-•

(,) 644.(

. L,

•

e

st-4.ay-

r•

•
EN

/' 0 1

ti

/

•

atL.c

4

‘
,4
e

J-k-V- I

_

C 5
--t

A.A.'6. A- 4•••

•

1




/?
t 31 eq.4::-•
4

t 4- c•--4.- •... L.,.

1,

0 .1N.1 teuk....-0
0

I -p-

ic,f‘ t., . ,

f
i ,\.,t, ,./

.,.4 ot.- r\
-t

S
.

4
)
•

eA.4..,..‘,1

7'2-

cro
ct,L. ,e, 0,,.4 d
c)

04.4.. (,) 60
/
1
4

,
, e,, ,- a—, : a
,• /

.11.111110.1non

("
L-t
tw-v

t. C ei A

11
r07

.r4

6‘.

-4 2 a..
.
itge

'
errm

'

4

-r ,•
je

•40

-d;

,

1
7

4

iteN-14_v

41

--"j , 115‘"-° • 7
'

e

,
r

e

•

c

;
..,
-.7-Y1)
7

,,
14/
;/.
-"\
77 14;" "v- 747
,
1

4 1 .)
.

17/

-,--vy*y

_47
001

1-741

(2•)

'
1 14—
°

illoiitiCV

it Ill,

•. 1
0
0
N'4

do. /,' V • '

4 -)

1 2- to

evv1:2

2,71_42

toV4.-Af

_51 ,
--)1

-,••

‘"?-, C-1

'7'
1
1
1

.1-17
117
-

----,/'"11 k,ir

7
ci

1 1 t1

'II-N.4 \

/
1 A
4




-"."4,„/
,
/

•
•

"Vy

i
/ -v4-4

n,,, ,,,,,v),„,4_,,,-vvt,....,4, --i-r.Y.0

1.4

4

-3-1,
7,0 7

/
l

sq.

I
;
2 17--0

fr

'y24/1 • p ji
, ›1-1-41
/
(

0






40)1.4 7
,
r—trt

-r

if

44/
1,„(1

c.,

mtt,

)1
6
1.• frt.-"k,

.

4

Cos
co*„tt,ti

t

,

7 ,
-L.,‘,

Ai- 3

,

t
10" '
.

. 0,
7
c

•

eryh ecia;;ZZ
-

agie,

r4t9

a2-to
CA. v,c 4.
,
(
4

O

C

7

4.41/6

0
,
#4 CYt;' VA:17:{
4-1- \

//2etio%;
Cfa

A

it
.4
10^e•Z.z,ewete
71
1

-

oe

t_ -e_

lc
1,

/(.4„.e

1
1

•




.

S

4
4r7y7
i‘4

cc3,-1.

4 )t,,Xta,

-111




?-i
--t Tflf 1 0'1C,




r„,...,.... 4.0 7 1,4
9 1
11 '
c") 77
N

1

,
711/39
117

JI
t7-.1
.
7

5 4-Va"
V11)
l

Lor
.1!

Cl i'Ma_s0
o
jl

- <4
0
7
4

r

••••••••,,

kA

IV

i
f




.,

I
"

--,----A.,e

,

"<tL

/ 1-esie
4
,
r
17 9
7-A
•

4-f ek(

to

1,a_ 1

•




2
4fai4v
taL d-4
4
Cf

Igio
terryfirf"
4
4.1e-Acif

I1

-

•
.1
Mvtetis




•

•
•

4




,
t- 6.44.sivw, TI

at,

7
de-t-4.-A 4_ A

sjek

gy-

/tt.,

'
4 )f

I
i

Creee.,/,

„._
fr7, ercero
war

I

I

C7
1

a)1

it-C°a_




7
g1
/9( --

V\1

7
"

)0\A„\AiaiNkr

it-

4.0

0

1•*1/
ed

4/
rY $

/
0
a
60e4/ 4:b
\I ‘ °0
\
44
6

r
v




\\k4\ 1j
11
0

\U

0/,0
CA
11k- eV
/
4

)10-PetL )4,(y --ErL

t
,
.
• 'a,




•

;f.

/

1Y.°

.)
/t -a....)1/ ..

Litig

7

......wawoo•••••••••avartwiem,

lez-41
-1.-12-----Q. c

it.
e s

C

-)

I
L'i

%re/T..- 0 ""
'

I
f ,
,
*

6c4ce)g.)
t
t

71

cv

et-44;-




;
(2 24.

y

1.4
( CL-k

.

4.,
t

"."4 It

f

0
etc C -c.
, '

a-

ate, I

.

Nr

CA— 4.-

A.

0 (#-\,

CA""

14
,

ti

If-At-LC.44

1-et1e,t,
40

et-4.4

7.6

0-h-()

?A_ 0- Cz17)

r er

C"

91k.

Ck.4 1.11 c•

-

1c

f

irt—er

F.

It

-4

tk.

,

O

111 ckast

'
1
-L4a

Orlf 1
4;i,

0,4f
I._ALL 111.'
71

diAo

-0 1? is"iv
'1117 *1.,
41




,oz_z 4rvi.c4
et-ee_ee;z_
t

c--Lb.toe

/la-2 D
o

4 f."-/-zav
/0
tt.

eize
.(:17 g

I k

kt-4
,

r,
?1"

46e

7 e'

r7,0--/ it
444_ IT
4'4

/c,
/2.-r

L

es,

/

cLie„,_e_c
10 C_
\4
I/X_




/evt-t-ticr
t-4-_

1_,7/

_

de-e/t
I /- /; z

.1

rv;
I
•1 :„
.„ .

f

4.„ t

I

,
se

4/-7

.

1

ti

'

"
l"'
e
•

44'
de
,

r 0

di:. , to,0,4)
(....t




i,.

. . .,
i
f'
k... :'

t
,

CrY''1144.--r

'
11 . N.r•Ar

„

7-

.., f..• c.

15 i

A
r.**4.•";`

‘O
f

.....„.,...
/./.4 Nk .•,.....
7
kli
e

A
t. .I 4

• k.

,
4 t./

41
tgairos

Ae

Lt..- 45

•Iil,
r-r

..
,
' t.
N , %•‘,..41 ...e"‘

e

0

;

"e/ 4 . t
;, t *

'
:
tf
i 40' 1 4' '

t

... - -b,,.

A.

V

I\
(

(;1.

r_.)

••,,
tAit• sP L' V.I
k 1-)

0- is Ci )
'
'
4
- -

i

g

,
\C
b

Gt,-0 t.
--

z
( --ae-2..
1

/‘- C ,?: /
r'
4

II-a.' 2.S.., 11-- .0-1,.,.e."?

-L
CIA -4,4-4)

.........--•
C t-&
-

t, 1
)

1/ `" - a. 11 .•*.
$
.
..
.N ::A. i /

s
/114,44.
1-

„„•••••••. ,
4- • ‘1 L • /,

7 w
-C„

''' Lle.-..}....e.

.• , 4.1. c4 d

(2p . t
. i
e z

tot_

04. ti;
‹.t.k_se)
‘
d*/

)

"(At
C

e




4.00:rium.

-

€

4„t

Oa'j04

.-`4
,1

,4
4

)
f




41:

kit c_

$

cr-1,

4-4
••"lei%

77
-

e-es,

•

111
Irr4-9 Of sc
•
e --a-"\rvo
(

I

c4c#
.

....11 114
)
7
.

L-Yner
plvrt,/,:t1,(JrD
ivle?

2/,

•"An40

)-7

0




W

AL

7%-e-

E4

9

OCLCA.
Gt.A,

ed_A-72

cov*Ae'
#1,,
II°

?,1
;to

/

a

,
Is




Je /

1
/$ /- 1 Al
'i
l' (,, a , i
3 4
Cp ‘
/

0

a c4

y-4
other hand, the banks should take advantage as many of them

would be sure to do, of the reduction of legal cash reserves

from la to 6 % and extend their ciredits on this basis, the
1

general effect of the loan would/be a large inflation of credits/

vp.

It is quite impossible to say p44ecisely what the effect of their"
(.

iv".

a/ The immediate effect would be

s wOuld

t,')1
at-44r4t-tg contract credits

-41wrio-Ptsres AGA' the necessary ad-

T

justments and transfers would certainly lead to great confusion/

After the first effects are over, whether the-rolite.14-omom44-be

contraction or inflation depends upon the policy the national




a-13
‘
thit litliFitt,000
ui

C
'

two meth ds of relief, botatip.444,1.

/
ineffectjye.

That the Central Board shall

It_ia—piceia4aad;(1

require one reserv,

bank to discount the paper of another.

It

is not clear whether this requirement means that the paper should

be the direct obligation of the borrowing bank or that it should

be a rediscount of the commercial paper held by such bank/.

In

any event, it would be almost i.dpossible to put tiommossolvoimory ofti/
0<.

.

be pre

relief into operation.

suppose an intimate knowledge, on the part of the central board,

of each of the

of the financial condition and loan

„
i4A t:. to, X7
reserve banks otherwise the transacticn. worun ,of itself, pre-

cipitate a crisis.

The other method by which it is proposed to afford relief
1/
to communities ort2110=Pme in trouble,




•

transfer zovernment

a-14

deposits from one reserve bank to another.

equally peri]ous with the other.

This

ci. would be

/
Tille.o.e /(yansactions woula appear

the weekly reports r-e-quized.-.4-1.t.k..-11 and the
knowledge that

t( 1

banks in any section of the country were in-4o
eteeft
-wouldabmtrost
LL

'

car_tainly cause a run upon the suspeoted
institutions and the
`; 1.
attempt to relieve w.o.44,14" not only prove futile
uut d-a-rtEeratte.
I-

,„.

rct oil

t

k....Govgrnment-spoidief,eas efficaciou6 in 1907 to rest
ore confidence
'.... ,
t• ,
,-..0 ..- ,. 1 -0....v
/
I'
,
but Li that case the money was taken from
the Treasury. 1.4i-tt
cei

COA.d

tia,...14,en withdrawn from one bank t(

deposit in another, the

•
beneficial effects would have been lost
.

Lf-r,
The antZn of these 444.4pc-e-e.....tmake the
resources of,ti

relCa,
'441

1

we-! *-

ti e. reserve uank at,I)Lgig...Y.Ax.k, available

for the

relief of, a--1144alc..,.ix. 01ailorna, disclose
s the inherent weakness of t

/.,,,,
e,

•

3

1

A-c-t.ei.A. 0 t‘

the 44944.eme. / the capital and
resources of each reserve banks




a-15
id be concentrated in one organizat
ion, its name is unimportant,

of which ,the seve:ral reserve banks wou
ld be rose47 branches, an

organization under the joint contro
l of the government and its

stock holders, an organization wit
h the authority and means to

promptly afford liper instinted pro
tection and support whenever
)6'4"

VIndsmv

needed, such an institution would
command confidence at home
•
..,
j- • ,f
6
and ebroad.r1.46.-p-14Ale4.19.-ietr-of an
institution of this kind, in
••••'

/the scheme we are considering,
with carefully limited powers and
strictly defined functions wou
ld furnish an easy solution of

all the problems that disturb
us.




1

;

.s legislation as aAnouneed
EY
by its friends t i

.....t.44----t-4--.41e.a.pla.c..olilx..3.1
ame4w

—
crre n—ithe:±oska ad banking
-

r,,. iJa
,
PiT

V.

riterests of the country bri-41moweseaCis- )t,. .12
f

CAA 7
"
,
kistrrtri

04)

taw Pedetal Reserve Board,

(IA
1441---e-e-€*4+d , to prevent the

concentration of 'Lite money of—tbilkty in I:ew York and other

great financii-d centres by the crtation of tLe federal reser
ve

.
banks.

) 01, A.A.- 0,

The banks are

4 4, 472
74

1.s.1

AAA,

hold the reserves now held in reserve

and central reserve batiks, with a view of weakening, if not
of

destroying, the supremacy of the money power, or of the money

trust, as it is sometimes @Ailed.

To aid in the accomplis1-

44.'
ment of this purpose a new system of reserves is propose(.

Keeping these 1:urposes in mind it is desirarle to exami
ne some-

what in c.etail the methods

for their accomplishment.

Fifty-nine per cent of the national banking capital of the



Lit

7 tor

••••• ;

t

Otr

' .
'
'
'ANie
)7

LJ

el
'r

• Ze't-71 1.1
-1

9-2 -7 .014

A t,1

a-2

1'v1-1
r

,

country is located in 13 States, classified in the Comptroller's

report as Eastern and Middleestern States, while the other 36

States have 41,1: of the capital.

The ]3 States have 675 of the

bankinE resources of the country, while the other 36 have 33% of

these resouroei3.

The capital of the federal reserve Ganks is

fixed by percentaEe of the capitalization of the national banks

0f-44esporca46Q4exio•

It follows that 59;': of the capital or these

banks will be located in the 13 States.
11,

e)

The deposits of theoe

.

reserve banks, outside of government deposits, will be 67',

those of tne country.

States will have

A

of

If we asoulae that the banks in these

-

- potential voice in the management of the

. 4
'
reserve banks 4iat....1.1i4 friends of the measure claim t001

Y-oftre7 the supremacy of the money power of the country will be
OA,t-•44 .

Jo/
etrenther1ed rather than weakened by the1.4.-4p04544*Ilon 110 • rt•

cv t.

%




es. '

efr""ti

e /
•

°^-

t

'4

•-• •
1
,.•/.

"

-•

.
A te,

CIV1L- 4
"" """

A...a.... it

•••.•

t-3

the promoters and advocates of the plan.
fC/ Kly
'
1
4

4g,the terms of the bill national banks are obliged to fur)
;
;
nish the capital and the deposits of the Pedt;ral Reserve banks,

the only other depositor being the United States.

They are

obliged to invest a part of their funds and di-nrtree—of—it much
4y,

f

•

4
61:
1

w

I

4,

t

f •
'

V 4'

•

/*/

Large-r part of their resources i.414.-44...1.21,....zaw_ag. to submit to p-

t--

nftjo

business.

ation of their eialimireieproperty and

).,
e,
This leurree-vrrt44)44-4,f,--t-litetr- e-apital --anti res-ourevera-Pie,
;
ri
p

t .

/7

-

stated,

rk

,e

1
1

1f7
(

as_

Jo'

f\

frr

laced under the-contlul,

baLJL,,memagocei—br political appointees, the Itajority of whom cannot

have knowledge or experience to qualify them for the important
4A,, tr. tse:

.
f

,

-tarok a.oxacia-tte41--44---th.e.i.r..chargie.
et/

(.„

:
•

Tha aaonal banks,41Auirigg..Ween forced into the position of

stockholders and principal creditors of the Reserve banks, in


/

,

•

"
if..tr1

•

•

/;;

C

ctt
.

1.
4 e't
f

ele-

ce

A

t

k

,

_

sr'
) •
,
,
A14-

•

- It 4 , •..•4" . %
' TN
.„ .4 )1,

r.

t'

%., ..,,, .11 -'.14,
..
.

,
4
.
"..'"...''''.. '
: -

LA

4\

i-'1,-. ek,..6-4
-1

4IA

..e. 4.. '

/

'
a)-"Y‘' CL.
t4

iiE11•41.

•••••
•4 '-•
1,8

ei?

)h
,

4

.4 •

1,-k
-

...ii ,

•

k.

41

t

/ ,
4.411*"11•„
•
C
.-1-'1', (17

d c 6 / ..A-




/
'V" k *Okik,,,..,-‘,0
.1

P , ......,
1(.k - „..,,, 1
te. ,

AN..4.. ,......

%
11lI/ 4,-

i\-4
7
,..4.,

ill 4
,

7
Cs t
'
0 ' Pt.,4 • t A
”i ,
l
,

I

ir. f
i

•

rc%t - t

t,

•

f
I

••••%-ti'6.

41.

are AAA.
-

—

tt
permitted to

in the 4nagement of
"

ic

I
'
' .4
4
6
1 Atsa VW 4

T

t.

tile-Reserve banks"' and national banks
r

, „.

4

7 ,

,

i' _ .;,

lc7 . :,. ,. ", ,
,

;,,,t
r

iii

generally, furniishe9 t4 only reason for .the creation and exis,
.L4 kl
-,.. .s..,
.L.. ,
, ,.„.„0, ,
._
/ „.,,._...&0„..--.....r.r.,,..

•

•

/°
1/
1

tence of the central Bard.

'question whether the
it
f

cDntrol of this central Board shall be given to the banks, but

ether they shall have any voice whatever in the management of




property.

•

popular control.

The f'.,1ntions of the Board are exercised in

provision
secret and there is no padiricity for publicity of any kind r
.4. • ,I • I
,
\

#
There can be no review of their opinions and no appeal from their

deoisions.

It is doubtful whether they could be impeached for

flaErant abuse of power.

They are creatures of the President and

responsible only to him for the mariner in which they discharge

Al

their duties.

ey are- te4a zg.a tOTOPartJto_thc,fippaker of the
._
. .
,

House Of 1enre4entatt'rez
In the pract42941 management of a great bankint system ques;

tions affectini important interests are constantly un/er consider/
L
c.k
-44.-attoa.

411-121 attempt to givc to a political olizarchy the power‘e'''''-.4

to :o tr-ol-the Iltrreet—butinees •intrreists of the country at their
/
discretion, without restrain and with no means of preventi: - or

4r
)trw
)

r

4,.•

punishing abuses, is-contemporaneoua
,
t4

t•-•



-

y thea4A4
•

,

t-17

104
,
identAir

ethe power to dominate his party and to dictate to Con-

ore2s 1 if he was at the same time a.ribitious for tile succession,
_
might be tempted to use an organization whose influenc(/would be

irresistible to accomplish his purpose.

0

row''

1 0400,4tpe
14

A
. \ c --- ..., /
. 4 LI,C;1 14,f-vi,
)
,

i

ir
(




rL,

,
%OA._

t -v

'•

)'

4

P

ce)

,

L.
.

'CI 0

•

1

Rxtracts from Tucker on Money and Banks.

Page 266 2

et seq.

In times of great party excitement, that course of favoritism by which pecuniary consideration would be made to
yield to political, andwhich the stockholders of a bank would
be sure to discountenance, might meet with favor rather than
censure from the governiaent.

If party zeal is sometimes a

screen for moral delinquency, we might suppose it would prove
a coat of mail for mere imprudence.

As public officers then

would have neither the means of doing right, nor the checks
against doing wrong, which we might expect in the directors of
joint stock banks, their banking operations might prove a
source of loss to the public, instead of gain.
.1x1--tykte—rtext place,

.
t




Tucker--4

of the public revenue, though men of hit character for
probity, have not been able to resist the applications of
their friends for temporary loans, until the practice became habitual, and terminated in their own ruin and the
public loss;

which loss, their character, by preventing

stopicion and delaying detection, served but to aggravate.




t-16

•
IA

yy-ty-e--0,.

/I4,4 (

ctu.

,
vtt-t„-;
7/1.

r4reaeatativ4._of thc

ame_party, to secure legislative

action vthri-041. will destroy monopolies and repeal all grants of
-

special privilege .



1/

No ert44147-of mo nopol:r or spe;:ial privilege

But it may be urged that while the Governme
nt would be
unfit to manage a bank of discount, it might
safely supply
the country with a paper currency, by issuing
notes, redeemable at the treasury and its offices, in paym
ent of its
debts;

and that in thus supplying the nation with a circ
u-

lation which would have a solidity that the
paper of no jointstock bank could possess, they might hake a
correspondent profit in aid of the revenue.




#

••

(
,

.44

*r1
0

r

..-1-114
,

2
•

•

Agoo
,

changes in Germany, which were made by the _Government tkpork the

r,

report of a commission thet.-44, had considered the matter exhaus•
,
I

tively from an economic and practical standpoint and Med heard

the views of representative men

tA

all classes.

It seemttMOS•

V

•

/(

sill-Lept cons

ve that_in autocirtitic 4 ermany t1a3r7otould excilite
t

/
0.V? r
1

froi4
/

VI

e C,61Siderat
i

;

A
......v question e*eryone whof)e views did

/

11

with tiliose of the ruling powers.
In no country of
,.
i!
111
i
,
Europe couldlegislation of this 4ort be enacted without opportun4
nOtqC0iVQide

tics for public discussion in advance of a partisan or executive

decree from which no appeal would be permitted.

In the preparation of the bill we have under consideration,

the democratic members rf the house Committee on Banking and air/
rency called before them parties oX-4.4044 -erti-ev+e, 44
,
e

who we7

//
;144- qua.644-erretrW'reeg.rd to the plan *which they tho1rrht should




k
if.. )/1.(a.(crT"

-

AAA

The first declaration in 6.41go ty platform in favor bf a
t

further issue of United States notes was made by the greenback

convention of 1876, which declared for a United States note issue

directly by the Government, and convertible on demand into United

States obligations.

The democratic platform of 186811,0e declared

in favor of the paymentjof United States bonds in a depreciated
i
greehback currency, Vut in 1872 the
i
i
declaraticn in f v

i
i
/
elocrats made an emphatic

f
!
f a return to sliecie payments and td the
'

maintenance of the public credit, an

denounced repudiation in

every form and guise.

In 1875 the democrats of Ohio demanded that the policy of

contracticn should be abandoned, that the resumpton law should be
;
s
repealed, and that the volume of currency and United States notes
otkiji

fia-qc
?'

ei

fritk

(3 r)

should be made and kept equal to the wants of trade.

The not-

able campaign in Ohio in this year between General Thomas Ewing




2
A
e"I

•

and President Hayes resulted in the cLov-t-ke*—trfit.gyes.

In the

following national campaign the democrats repudiated the Ohio

idea and nominated Mr. Tilden for President on a platform
which

declared that reform wao necessary to establish a sound curre
ncy,

restore the public credit, and maintain the national honor.

Notwithstanding the fact

hat thar-e-ireAr-elyrrelderatle

7. t
t4on throughout the country in favor of enlarged coinage of
sil-

ver, resultix

in the passage of the Bland-Allison act of 1878,
el

(1(

the resumption of specie payments la 1879 140

(

& democrats

in

their platform in 1880 te. re-affirm the declaration of 1876 and

declarCfor honest money and strict maintenance of public

faith.

The greenback platform of tit-is year declared that all

money, whether metallic or paper, should be issued and its
volume

controlled by the Government and not through or by banking cor-




4
I;

fluctuating currency,

-reeermi•ottied—tinre—reperal

of-----the—tevr 71—
- 11 etirt—rerWr'Sfrate""intnir-tirsue8.

The farmers' alliance convention of 1690 Wimi declared for

the abolition of nOdonal banks and the substitution of legal

tender treas4ry noes in lieu of national bank notes in suffi-

cient volume to do the business dlf the country.

The populist

or national peeples' party at' 1892 demanded a national currency,

sufficient, sound and flexible, issued by the general Government

only, without the use of banking corporations, and for a just,

equitable and efficient distribution direct to the people.

The socialist labor convention of the same year declaried that
,
i
11
/
l
/
/
the United States shoOld have the exclusive right to issue money.

t.
The democrats, in the national convention of 1896, which
it‘

•

49s
#

nominated Mr. Bryan for the presidency, for the first time a4ftptet




14



J.! 41-`

k • 74.

I. 4,,

r

AAer
,




,

2t

A/i,(2Lt
/5c
c

C
./
C

"
s)•,t7 3




1-1

ci
/
1
4

e

-e

Jogusloni ioa

(

Ot.

tJ

"
r - T4L
),

TREASURY DEPARTMENT,
Orricz OF THE SECRETARY,
Diviaion of Loans and Currency.
Forum 1028.— Ed. Oct. 2-13-2,600.

IBC ULA_TION STATEMENT-October 1, 191
GENERAL STOCK OF MONEY IN THE
UNITED STATES.
September 2, 1913.

Gold coin (including bullion in Treasury)_ _ _ _

October 1, 1913.

$1,881,440,176

$1,895,438,245

Treasury Notes of 1890
United States Notes
National Bank Notes
Total

MONEY

THE GOV ERN M ENT.

September 2, 1913.

October 1, 1913.

September 2, 1913.

October 1,

565,666,263

175,645,870

175,617,585

$174,031,112

$193,697,046

$605,566,895

$610,735

61,178,010

1,006,0,19,229

1,029,828

5,276,262

2,214,733

710,758
\

3,284

16,056,827

565,649,020

Silver Certificates b
Subsidiary Silver

allimp IN TREASURY AS ASSETS OF

95,822,940

Gold Certificates b
Standard Silver Dollars

Olt.%

-

11,429,278

471,796,173

478,735

19,493,192

17,829,718

156,152,678,
'

-1

N30

157,787

•

2,629,000

2,607,000

3,195

4,250

2,625,805

346,681,016

:346,681,016

7,436,157

6,854,562

339,244,859

339,826

761,720,029

759,030,694

49,789,651

49,353,596

711,930,378

709,677

3,733,765,111

3,745,040,803

367,909,336

342,563,233

3,365,855,775

3,402,477

2,602,

Population of continental United States. October 1, 1913,
estimated at 97,759,000; circulation per capita, $34.Sk

a This statement of money held in the Treasury SS assets of the Government
does not include deposits of public money in National Bank Depositaries to the credit of the'Treasurer of
t
For a full statement of assets see Public Debt statement.
bFor redemption of outstanding certificates an exact equivalent in amount of the
appropriate kinds of money is held in the Treasury, and is not included in the account of money held
c Includes $33,190,000 Cmirrenv Certificates, Act June 8, 1872.




-CVA

—4
Z°

"

,

-11*

Nr414, %3
,„-•.-4 4 , 16M

NJ

c"
.
;

•

Ik
'26 1
%V

S* _•••:
.

CULA_TION STATEMENT-October 1,1:916.
—....

'----

GENERAL STOCK OF MONEY IN THE
UNITED STATES.
September 2, 1913.

October 1, 1913.

$1,881,440,176

$1,895,438,245

a HELD

IN TREASURY AS ASSETS OF

NIONEY IN CIRCULATION.

THE GOVERNMENT.

September 2, 1913.

September 2, 1913.
•

October 1, 1913.

October 1, 1913.

October 1, 1912.

January 1;4879.

_

565,649,020

565,666,263

$174,031,112

$193,697,046

$605,566,895

$610,735,030

$609,910,326

$96,262,850

95,822,940

_

61,178,010

1,006,019,229

1 029,828,159

946,242,270

21,189,280

r

3,284,490

68,975,061

5,790,721

,../

5,276,2622,2(4,7'3

72,6'10,758

16,056,827
_

ir
•

11,429,278

471,796,173 4

478,735,722

482,367,666

413,360

156,152,678 —..., 157,787,867
1-. slb
2,602,750
.,625,805

144,147,954

67,982,601

175,645,870

175,617,585

19,493,192

17,829,718

2,629,000

2,607,000

3,195

4,250

_

346,681,016

346,681,016

7,436,157

6,854,562

339,244,859

339,826,154

341,385,059

c 310,288,511

-

761,720,029

759,030,694

49,789,651

49,353,596

711,930,378

709,677,098

711,009,328

314,339,398

.

3,733,765,111

3,745,040,803

367,909,336

342,563,233

3,365,855,775

3,402,477,570

3,306,883,924

816,266,721

.

-

2,846,260 ---------------.

.1
0
tober 1, 1913, estimated at 97,759,000; circulation per capita, $34.8tk

of the Government does not include deposits of public money in National Bank Depositaries to the credit cf the'Treasurer of the United states, amounting to $78,259,089.10.
ment.
valent in amount of the appropriate kinds of money is held in the Treasury, and is not included in the account of money held as.s4catets of the Government.
1872.




...111( •

44k
'

.411.

•

4111i.,3

•

C




t e_
r

-

c=.-1 z-)- 2 L_q




44:
ac-aAL

.
et

al

C

<

17
4-

/11)

t0 1-

1--•

&_1)

ca)Cch

4

0/7
4 a1
ti\




t
/
c>)

.friaui

R

4-L cI
1

e42...t

et-

kbt-

eL-t-

,607.
/

9..v 4,1

4
kLi 1-t
,

7e

4

,
1- •-

÷z




oLX

IA_„. /3
L
)
V-

a.tet

01

Occ, e6.,
7

`4".




SENATE CHAMBER
WASHINGTON.

di

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