View PDF

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

77‘1104--4.-777rti. 0,-t7e
t"ea.L.a4:

CfLiL

144

&etAg.

4.
--.9 -




LI

•

-

c-c_

t_42—

'
erY-

"
rc
4 .- 2-

-c -c_

fry r
z
6
45:1 - 1cc_it ,

1

6•Z
. a.




""
c1
"

71•-e

,6_64.7
1
• 1_

l ;‘,7
o f 1

e
.
t

c t_

1
11 4
1C 1 -A._

Cta -44-e

"P
- et-

e

,L

t.1

&X-ee-L
9h

c

,

-t-

'

phfr:Ai.) (Zai
ty-(-

1;
1
LI ‘,4-Le.

lAtAAJ

Cilt

fry-

--da.4 --pc=> •

•

.31

,04-7-1e0;„4
.
I4(

de/C,

1
,7
1

Ae-o

blkeVC-(f_
L—ccor

4:2%

014




-•weA;L__—ALD

d"

•

po"

bz>r-.0 z

AcecLic,„




•

t
I-OPerese to call your attee\ ion-somewirat ift—fietail to' the
methods employed, the practices adopted, in the monetary
legislation and usages of the gre t countries whose business conditions and,itrettmde are analo us to ours,-laseakeii.4 believe
that the experience of these cou ries, covering centuries of discussion and experiment, must haiye the greatest practical value
for us in the construction of an plan for monetary/reform for
the United States. The more inpportant elements for the necessary solution of the problem arI the same in every commercial
country. It Aieen be safely sai that the leading European
countries, after many and cos ly experiments, have found
satisfactory solutions for the monetary problems which confront us—solutions theoretical itnd practical that have the
....------hearty approval alike of economists and bankers.
While the essential governingrinciples of all he European
systems, great and small, are the same, there are 'differences iii
the details of their application, owing out of different conditions in the various countries, these different.conditions are
found in the business habits an customs of their people and
their general financial requirem its. Differences in the relative use of other credit instru ents affects measurably the
relative character and importan of note issues. Differences
in the form of government and tent of territory have necessitated difference in the chara ter of organization. These
differences have been recognize fully and provided for in the
monetary legislation as well as in the banking methods adopted
in the different countries. This adjustment has not, however,
impaired the vital force of the und economic doctrine upon
which these various systems art based, or disturbed the provisions for a wise and effective' administration which are the
distinctive characteristics of all
There is a general agreement among students of monetary
problems that it would not be possible for us to adopt any of
the great European banking ystems without adjustment or
revision to meet our condition4, but we cannot afford to ignore
European experience. We hate to contend with ancient prejudices in the fact that we hav to contend with ancient prejuI believe the American people
dices in the United States,
have a right to insist that all those who seek to influence the
determination of this great Iuestion should be free from bias
am aware that there are to be
or prejudice of any kind.
found in every community pieople who object to anything that
is foreign, but this prejudice iS, I believe, fast disappearing, and,
in the long run, public opition in the United States will be
influenced by knowledge ark intelligence.

k

aAA-




40.6.01:).••,.••••••••••••..•

CRITICISM OF THE BILL.

In considering the character of the remedies proposed by the
bill which recently passed the House of Representatives I am
not unmindful of the fact that it is much easier to criticise than
to construct, and I certainly do not intend by any criticism
I may make to increase the difficulties of legislators charged
with serious responsibilities, but rather to call attention to
changes which, it seems to me, must be made in the plan in
the interest of wise and permanent legislation. The authors
of the bill having in a majority of cases accepted remedies and
adopted ideas based on experience of other countries, and'on
sound economic Principles, it is all the more to be regretted that
in some of the most important provisions of the bill the lessons
of universal experience have been ignored.
My suggestions with reference to certain provisions of the bill
are made with the hope that they may prove of service to those
who have the bill in charge, in their difficult task of perfecting
the measure. With- th‘ assurance from responsible sources
•thetwe are to have legislatkin ia the near future it is certainly
desirable that the American people, whose highest interests are
to be affected favorably or unfavorably by Congressional
action, should have as clear an understanding as possible of
the nature of the proposals. Serious mistakes cannot be corrected after legislative action.
i
1
The two features of the bill whielv violate all sound economic
principles and which are open to the most serious objection are,
first, the provisions which authorize the unlimited issue, by
iewn----7—Yr—hgeilts, of government notes to be circulated as
money and loaned on collateral security to the federal reserve
banks created by the bill second, the provisions which create a
government central bank of the most objectionable type, and
which, by compulsory methods, seek to place the entire banking capital and resources of the country under the control of an
inexperienced and unregulated organization, acting' without
capital or financial resources.

4.
drawn from European experience.

The National Mo:.etary Commis-

sion, in the plan which they reported to Congress, sought to

present a workable scheme based on sound economic principles,

seeking to adapt to existing conditions in the United States

the methods and practices which have

experience.




been found wisest in 4

h-7

States notes for the purpose of loaning them to Federal Reserve

banks, under the conditions which I have already described.

This outline of some of the salient features of the two plans

discloses their radical difference in character and methods.




.

h-1
11
,

I have been frequently reminded that there is a marked simi-

larity between the plan proposed by the National Monetary Com-

mission and that of the bill reported from the House Committee

on Banking and Currency.

It is true that the plan reported

seems to recognize the defecte .n existing conditions which the

Commission sought by its plan to remedy, and while the plan of

the Committee follows in many respects that of the Commission,

in many important respects the remedies proposed are essentially

unlike.

The plan of the bill follows that of the Com.,Assion in re-

cognition of the necessity of an organization with power to re-

diecount the notes and bills of exChange of existing banking

institutions for the purpose of maintaining requisite reservee,

and the further fact of the necessity of concentrating and mo-




h-2

bilizing reserves for the benefit of contributing members.

The

methods by which these two objects E,re to be accomplished are

fundamentally different.

The Commission plan provides, first, for a voluntary associa-

tion of State and national banks into local and district organi-

zations, and, second, for a central organization with a large

capital, in the management of which the Government has a poten-

tial voice.

The local and district associations, which are under

local management, rediscount the paper of contributing banks.

The central organization controls the concentrated reserves, with

power to use these and other resources at its command for the pro-

tection of the public interests and those of the banks in differ-

ent sections.

Under the bill, national banks are forced to con-

tribute to the capital stock of Federnl Reserve banks within a




h-3

year, upon penalty of dissolution.

They are obliged to maintain

deposits with the Federal Reserve banks of not less that
5% of tk

their outstanding liabilities.

All the functions of the Federal

Reserve banks, including discount, are controlled practicall
y by

the Federal Reserve Board, an organization without
capital and

without financial responsibility, and in the management
of which

the banks have no voice.

Under the Commission plan, the local,

district, and :Ational organizations are forbidden to
do any bus-

iness except with contributing members and the Government
of the

United States.

Under the plan of the bill, in addition to their

business in connection with their member banks and the
Govern-

ment, trie Federal Reserve banks are authorized, under
the pro-

visions of open market purchases, to practically carry on
a gen-

eral banking business in competition with other banks.




They

h-4

are authorized to purchase in the open market commercial paper

from corporations, firms, or individuals.

The provisions of

the bill confining the discount powers of the banks to members

is rendered nugatory by these provisions.

A large part of the investment business of banks today is

done through the purchase of paper from brokers.

These are not

technically discount transactions, but they have the same prac-

tical effect, and open wide the door for the possibility of pur-

chase on account of favoritism or to secure political influence.

It was transactions of this nature which largely furnished the

basis of the attacks made by General Jackson and his followers

upon the Second Bank of the United States, and which, to a very

great extent, was responsible for the creation of a very strong
1

(t-et,t_ciL
publc sentiment againF.t. the .b4±1.




h-5

The Commission were unwillirg to give to Reserve Association's

the power to compete for ordinary business of the banks of the

country.

The Commission sought to interfere as little as pos-

sible with the business of banks and bankers, while the bill

proposes that the Government, through the Federal Reserve Board,

by provisions which I have elsewhere described, with reference to

reserves and currency, shall take control not only of Federal Re-

serve banks but of the entire banking business of the country.

The Commission sought to create an organization which, as the in-

strument of the allied banks and under their control, could ren-

der efficient assistance and service to the public and the banks

at all times, while the bill creates a political board with au-

thority to control the business and dominate the policy of all the

banks which can be forced into submission to its control.




(

3.

CI

and individuals prosperotie_by' the unlimited use of their-cmill

obligations circulating as money.

The depreciation and disasters

which have, on every occasion, followed the adoption of this a1lur-

2

,A)

eCilar_

trig policy have, unfortunately, not deterred theorists in succeed-

ing generations from reopening the discussion and seekin6 to in-

CAA-s-

4
;0-ir4)

'

,

/74
:47

cite a popular belief that the govern nent can create value and
.

insure perpetual prosperity by an unlimited use of government pro-

mises to pay.

(Pa
//

o beginning "I need hardly r, ount in this presence, fttc.

Insert . after "significant"




fr

U.

It can hardly be necessary for me to recount in this pres-

ence the disastrous results which have inevitably followed the

issue of paper money by governments or states.

I need only re-

mind you of our own colonial and continental experiences.

1

1
11 t

.A‘

That

t

of France at the time of th-e-R4-te.4014y and French Revolution is

equally significant.

In exceptional cases'. where continuous de-

preciation has not ended in absolute worthlessness of issues,

like our own experience with United States notes, the losses

arising from the use of a depreciated currency have greatly ex-

ceeded any possible financial belefits to the_g_pulatT7 which have

resulted from thtviolation of economic laws.

Competent authorities estimate the greater cost of our civil

war, owing to the use of depreciated currency, at




q,uote Mitchell and Horace White.

2

iv-.1

,•••

In all cases of government issues the resulting expansion
11
r7 te
r

and inflation, bringkfig about instability of conditions and

values, those dependent upon wages and salaries and engaged in

agriculture and other production have been the principal suffer-

ers, while the capitalists and speculators who could take advant-

age of constantly changing conditions have been the only classes

who have been benefited.

This condition has never been better

Daniel
characterised than by,1110‘ Webster, who said:
(2:2




I

3--

,6(/
S7-1-x--,
)
,
e‘-J-,w-icA&72
t<r7 "
1

<71t
'

e

- , •
‘. ,,„ ,",4
irc
-"-r

• --&
29

1/

_C
&1
7
^P;q-6e




It

The emitting of paper money by the authority of Governmenti,

is wisely prohibited to the individual States by the national
constitution, and the spirit of that prohibition ought not to be
disregarded by the Government of the United States.

Though

paper emissions, under a general authority, miEht have some advantages not applicable, and be free from some disadvantages
which are applicable to the like emissions by the States, separately, yet they are of a nature so liable to abuse---and, it
may even be affirmed, so certain of being abused---that the Wisdom of the Government will be shown, in never trusting itself

4

with the use of so seducing and dangerous an expedient.
(7'1

tt.r4,A

p&5

It is true that in the pertoifrom lt14 to 1861 Con'gress

had _authorized the issue of Treasury notes in limited- amount-yr




4

Peletiah Webster, writing in 1781, after the total volume

of Continental paper money had become worthless, said:

We have suffered more from this than from any other cause
of calamity;

it has killed more men, pervaded and corrupted thq

choicest interests of our country more, and done more injustice;
than even the arms and artifices of our enemies.

ZIGB-4acp4m4-ef1ee—of—Alle- wox1i, the- unanimous °pinton—of

eading economists an.47 financiers and statesmen of every
,e
11
tt Kg_

. 0- E)It

7

% )
-1

shade of political belief, condemn the use of the obligations

or notes of states

as a

circulating medium.
.•^'

a
tAx plevor q-u r41-4
l
The—eihiga-frorr of H. D. Macleod,

4).
„01

bri

banking and currency

qtt,ot;t3,

the'Leading authority

ke_
adwza4448

•
tik
crally acquiesced in.'

k• (
:
4

view theet
/
1

4.)

He says:

Governments snd states should never issues paper money
themselves.

When states and governments once begin to issue

Paper money, they never can resist the temptation to issue it
in boundless quantities, so that it soon begins to depreciate.
They have no power to redeem it and the depredation is unavoidable.



11

)
7




ofZ et-ct•
i
"kve

, •te
ftr
e
ch-4

0-47e-fs
21

,e-41L.L__cLeN‹,

II...441—Atirttr-wtha4 President Jackson
Lad, on several occa-

444
;

(.
41

sions, suggested tile......JC.Zt
alion of a Government Bank, but tht
s
-A
,
suggestion was always more or
less vague and he never committed

himself in detail to any defini
te plan.

His opponentsphowever,

claimed that General Jackson int
ended , by these indefinite sug
,0(
gestions to 0.41~4is4u4e a Govern
ment Central l'iank under political

control,end that the effect wou
ld be to place the whole banking

power of the country at the
mercy of the president.

I think it

may be spid thet this cls.im
did not fairly repreeent General

.
44 44

r ;\

tA.

t IA
•
4

t'

tA-4- 4./1

C
.

•
It
.
err-1.4
Jackson's views. The quotation
—
which I have already made rom
I
,
A

' I)
t
his letters to Lewis are confir
ned in this respect by a stRtee
,

ment made in his farewell add
ress which was as fol]ows;--




'

17.
course of this report, the following statement was made.-But the patronage resulting from the appointment, the-annual appointment, of these agents, great ai it would floubtless
be, would be insignifipant and harmless,'hen compared to that
,
which would result from the dispensation/of bank accommodations
to the standing amount of at least fifty millions of dollars:
The mind almost instinctively shrinks trom the contemplation of
an idea so ominoue to the purity of tile Government', and the
liberties of the:people.

No government of which, the committee.

1
have any knowlqa

except, perhaps, the despotiam of Russia, /ge,

I

was ever inveeted with a patronage at once so prodigious in its /
,
/
I
influence, aiid so dangerous in i4s character.
,In the most/des!
/
perate fin.Ocial extremities, n4 other European government has !
,
/
ever ventlired upon an experim4it so perilous. / If the whole
i
i
patron
of the English montirchy were concentrated in the hande
.
.,
,,
of thelAmerican Executive, fit may be well doubted whether the
/
publif liberty would be soy much endangered by it, as it would

br

,

this. vast pecuniary machine, which would place in the hands of ,
,,
#
every administration f0'ty millions of dollars, as a fund for
rewarding political partizans.



t
11,A C*11 ,
,

ii

c

Nothing that has not happened can be more certain, than
'that every favorable vicissitude in trade, every period of commercial distress and embarrassment, would give rise to importunate and clamorous calls for indulgence, and for an injudicious
extension of discounts, which no administration would have the
i4
firmness to resist.'
the Government would have scarcely any faculty of resistance, when appeals for indulgence should come from all quarters of the Union, sustained by the strong plea of public distress
and embarrassment.




2
.

(
circulated as money and loaned on tollateral security to the

federal reserve banks created by the bill.

Second,-the provisions

which create a Government Central Bank of the most objectionable
,72

C7
type, seek

6o2

to place the control of the entire banking resources
/‘•
A.

of the country in the hands of

n inexperienced and unregulated

organization, acting without capital or financial resources.

These proposals are so radical and revolutionary in their charac-

ter, so at variance with all the accepted canons of economic law04

that it seems incredible that their adoption should be seriously

proposed.

The theories of government upon which they are based

and the doctrines which they embody have been repeatedly and em-

phatically condemned by the American people.

I am aware that,

in spite of the verdict of history and the teachings of all

accepted authorities, there has been periodical assertio

the theory that the government could make communities



of




t, 114.6A/v.A..
,

' t 'r 1PlarAk,

e
- --f
6. , oh-, , t ,., e,
,
( ri 4..,./
0
i

_.
i
tki,
. OS.
.../
/ 0 ;:i,

e

i"
, , ,..c.

6

.,. , if. .4..

v

at._,,

fit; .
-A .
,- c"1.. t

-"T • ,
(

,. . ., ,t:,
/

4 "11
(4 • 4

ot t

/

/fr''"

•P"

,. ir

. /

c.c.,.

itfir.

1

14

10'. 4
4,. 1

c.c.,. c..„.-,-u,
, ,-- -

41/4.

f.
C

4 e.,4. i

frkel--4, 'f:•-.

7(
eky- Oet,40.,4,....747.1%. -1-7- 1
.,
,

44%., 0)

I,

iierk

Th 4.4
Cat-a" Gr r I. -V.

erdpplc. -,d i.v..--141N-71.-ft

/4_ A:e•‹)
7e
-ea

()v,_0t1 z

C-7-tr-2-

r?
2 --

/4,e

/ 4
1
4

if




/

C9

L' „
4
l-fr 2

' 1(A14V- 42 e
- t—et-j
-

tr—>s

•

cac

4tino 07

.

•

1

V

A-2
e.•••e
411.4110.0

_
r>1
Z r Ct

"

4

—t
-a




4-11%---74
ey (
e"
c

4
4,

etilLt„

2&

) 17

,
'
4E
e 1`
2

„
ry

ei,ozi A(49 4. ;64--e---vN2-,

,
cg 4-574

-# t-75 c e ‘-f
1,5
'

4L,

A

ta_l.t oe
„

__

ft-a2-1

, esk4emp,-

c15

41A7
.-X-t




A of 7

.r/e,gz.„_ .
E42 71-7'
7-7
4.
1,0
A•4.4-‘-&
g

•
wdr

X?

AP

-44-14"
,

/itt

0... ce_
44-J14: 1
4

Ikt_rscap,,,,i
e--€
Ac

tA,

i leeft.>
l
.

At-- 2 >eP
4 4

_=46-di 1
0

,
ZE

C--

cr•--‘1.-e---4-- -4

("7 et_
t

/_4L-6tAe 04(--e4t_j

17




.*
4
1

1
• "
-1

1

/

e7
4122L4g

d
4e4

elgr7M
‘7Z:
7

07-

zc.C.,sea.

,
A A.wte--3

Of

I-.

Pit-t
‘
z
-r
of

L.8-nt

fezAV74_,e-

2°7't
Xd'eohl
#Pa"4

#
'1.17

•

4CW"OL.
-

-e2

446Peef..

4446"-

X e'
-e

7
4 41

SI

L4Q.e
,

4>--ted

62

i
"71 cr51 0

eALO

91'

C‘se ft)
/4-

•s
.



Speeches of William J. Bryan.

Vol. I.

Page 222.

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

The issue of money by the Government directly to the peopke

gives us a safer money and saves to the people as a whole the
profit arising from its issue.

When a bank issues money you must

pay the market rate of interest in order to get it, but when the
Government issues money the people save the interest, if the
money is afterward called in, and they save the principal also if
the money is kept in circulation.

Numerous plans have been sug-

gested for putting this money into circulation.

Some have an

Idea that a Government issue can only be put forth by loaninE it
to the people, either directly or through the agency of banks.
There are, in my judgment, other and better ways.

If a

limited amount is issued, and of course the amount must be
strictly limited, and it is loaned to the people, partiality
will be shown in its distribution, for only a few, relatively
speaking, can be accommodated.
But aside from the danger of placing so great a power in
the hands of a dominant party, there are plans more just and
equitable than that of loaning.

The money can be used to pay

the expenses of the Government, as the greenbacks now in circulation were used to pay the expenses of war.

If Congress de-

cides to increase the currency a certain amount annually, say
for illustration fifty millions a year, it can reduce the tax
levy to that extent and the people will receive the benefit of
the issue just in proportion as they pay taxes, for they will
save to that extent the taxes which they would otherwise pay.



In a recent letter to a member of the
Banking and Currency

Committee of the House of Representati
ves, Mr. Bryan makes the

following statement:

The provision in regard to the Governmen
t issue of notes to
be issued by the banks is the first
triumph of the people in connention with currency legislation in
a generation.
It is hard
to overestimate the value of this fea
ture of the bill.
In the second place the bill pro
vides for Government contr&l,
of the issue of this money---that
is, control through a board
composed of Govt:rnment officials
selected by the President with
the approval of the Senate.
This is another distinct triumph
for Vie people, one without which
the Government issue of the
money would be largely a barren
victory.
The third provision of the bill,
which I regard as of the
first importance, is the one permit
ting State banka to share
with national banks the advantages of
the currency system proposed.
These three provisions are, to my
ruing, of such transcendent
importance that I am relatively very
little concerned as to the
details of the bill.

This frank and courageous declarati
on of Mr. Bryan's is sig-

nificant.




President Cleveland, in his nessage to Congress,
August 8, 1893.

The people of the United States are entitled to
a sound and
stable currency and to money recognized as such on
every exchange
and in every market of the world.

Their Government has nc

right to injury them by financial experiments oppo
sed to the
policy and practice of other civilized states,
nor is it justified in permitting an exaggerated and unreason
able reliance on
our national strength and ability to jeop
ardize the soundness of
the people's money.




1

4\\



16
0-1,a--ce-A-- 40X

e

the commercial world to one general monetary policy.
IL

- -ea-C1I of thEWe
The central aa4 caliag_ALIdee-d1=-Tor-te (5T

The- char ete ter --trf
etJAA,

,akirx.t. vi -yr

AL

the duties and recognized functions
i%

f, these central banks, wheth-

er prescribed by statute or exacted by public opinion, ha vi been

es.tah14.4h-e-4-4491.-eh a process of evolution covering generations

of practical experience.

It has not been found possible to se-

cure an effective credit or6anizaticn in any country without this
0.
1tt1
c..44-f4-r144-1-414g factor.

For my present purpose a i mere outline of

eCt.tAs't

the characteristics and methods of these institutions is suffi/

cient.

1.

Each of these institutions is essentially t bank of

banks, and is looked upon by all the financial institutions of the



17

country asser6 unfailing

remiource

for assistance and support in

time of trouble.
2.

They are given by law the sole right of note issue.

The expiring remnants of ancient grants furnish the only excep-

tion to this rule, and these are insignificant in character.

3.

They hold a very large part of the sa4ta11ic reserves of
tt_

Ike' Acit
)
their respective countries, and hav-e

ample power,

tiQx4u6L-4144-ir

5/
..
ctaalautut---co.s, to increase their holdings indefinite-

_ALA..- 4-17ly.

These reserves form a central reservoir wich is

vailable

trk

st all times car- protection or assistance pt required.
,

This fund

-

is looked upon by the public as a substantial guaranty loy--‘he=tmadri.

of the convertibility of it41 ncte issues and of

iAis

ability to

meet at all times its obligations.

The central banks are the fiscal agents of their respective




15

within our reach.

While we have suffered greatly in almost

every decade of our history from the evil eff
ects of financial

crises, the people of the great commercia
l countries of Europe

have, for nearly half a centuryl
kbeen entirely free/from disas

trous losses arising from this cause.

This exemption may be

said to be due solely to the character and
efficacy of their

credit and banking organization.

The experience of England and

France, and later of Germany, in this
respect, has led all the

important commercial nations of the worl
d except the United

States, in the essential features of the
ir credit organization

and banking systems

countries.

o follo

in the footsteps of these great

The adoption within a few years by Sweden
, Switzer-

land, and Japan of rammbseq banking org
anization along the lines

of the countries I hav
e referred to,
completes the adh
erence of



S

6,1

/4,/

t

- is"
Mdig
00eleROPE
—1
-at/t4.-- CT
4/1-`'C'
1 \ '-/%0
e
4




Atio0
, 614 fOCI.45L
,

(-

)

14

'point of view of sound banking, to the highest credit.

66714.1.

c

)We have now no meanie of preventing, through a general
a9d

\t
e

A

4

/
I
,

/7

effective raise in the 4iscount rite or othvrwi,ffle, a
4angerOus
t
/
;
over-expansion of credit

Aside from these recognized defects in our banking syste
m

there is no one of the elements of our varied forms
of currency

that is responsive, either in expansion or contractio
n, to nor-

mal or unusual demands.

While there is very general agreement among students and

,
bankers as to the nature of thAefects of our monetary syste
m

there is unfortunately no such accord as to the character of
the

remedies that should be applied.

This is to ue regretted, as

it seems certain from the experience of other nations
that simple

and effective remedies for the defects I have named are



13

cry
exchange issued or drawn fPom agricultural, commercial, or in-

dustrial purposes, have only a narrow, local market for discount

t t0 sc,,,,Az gay iii_ te,,,_
7
-4.4_4Lcv

i-et t t,(4_ ,-, Q cc
(2--ex-4.-4--4---e f-

rl-c-e•

12

purposes, and we have no provisions of law creating standards
,,,, tr-v- (f (-1 /- e---z (4
l
ily:ci rtr,--7, ,LLe te-.I 1,
whi-e.h—wete-14—he
11.14e—tteme-epobene.e, and no organization of credit

which would secure to these obligations a wider market through

rediscount.

The result has been that our farmers and others en-

gaged in productive industries have been obliged to pay higher

rates for their loans and have been placed At a great disadvan-

tage in securing the credit which they have required and to which

they are fairly entitled, for the growth, retention, and distri-

bution of their products, and our bankers at the same time have

been deprived of an opportunity to invest their funds in a class
t 1

JqL

ot cute

.1- 14,

of securitie!1 whichin every other country, La.—G-Q-ffe41.4erttel the
,
ri

grerr—itighwert—renk—ryf—±nrertmnr, and which is entitled, from the







:1101'TETARY

bureau of Engrav inr, and

Tinting.

See "TREASURY."

wirer.11

qp

•

4‹:

Cit

to2c'

174

ol

..e a

Vcri0
d swe

vi) cr-- 406fZ

#

q L., R. a c
„,4
,

c
)

,
I.

it. 4
;

4

/..%:)i,k.,.) ‘

R ,
etA.

00
.

\,..4.)

el#

j,

4,1
44on k /-. 9k 06 C.4,

•

att
t1-

CLC




,•••••

•

/i
..
t

f .I

e,-1\

/

[
17,

.

:*4

6ork..L

J'(

C--tr)
, - ,ILeA•

A.

cv

c

'?:."

7")
•—•-wer,

At•tvi9

2J

-v)

1•) ,
. "Y\t/V
4

.2,71v

,
- s~110

\te,

a2

°
-Yb
,
-

I

AD

7*-7/7

•••10.
. 4

F9t.,

In)

.-11
)

-1%01 eY7tyvbci4'
11/

r-rrN4,...6

"
e

1/ n -.1-p t.6
wv 5
2

11
(

2.44




oo

•

(
0
1•
N-

4 1'
,

,1
2
7

'%7
1
0

•

rc,

"d0
'

.-,••••••••••.-

•
•
•

(rr
n‘•




04

tk tk- fi.--7
,

4y-y-

Ce,

eCte

t

,
t A--1-L mi--6a.
•

f
,A.At..
C

it? CIL 4-- A,

y

iF

OrY1
-1

"

-

PAAw
k
jirr)
1,1

C.)-tt

0 4A tjt‘-%
1 ,
1
•

'"
1
. 1A0111
'

t14... Y V
1

eer.r

t/t4,,`

Pb?

cfril•
4,

. •.
..11••• „

KL,
I7/-1
1"1

et
2A.

fir‘.

LA-4, (C) 0./11 f•IN
- -t-‘ -

vtxi—

trry-

el
L
o-)

A-4

zkz.„
o, m at.
ç

-

•0--tie,..a

A

gl Vh.,
i

„ct.,

Ct-ti
.7
17:t7)

44-40

(4
?

0)

C"-

•

e

91'1 I
C

11
-))g

1-14 t )

kk.

/AO

(104°
1.4•1N-4A4./
0
(
4

A GEAA-A-y
,
•

11

>7)

()

Lti

ct.

2.A. gst-t. 1‘
4
4. .

tAtti_tot:"/"(t.---

9.41Zeel

Lt„

01A-4

444
Cy-

L.

f;1--

?a_

la CA




k-v r PIAA;v6 0 1-1/1
e

faitA

a,5.
s
6

2

CL,FL‘L_
ItA4 ot-to-,-vt,,vi"_0("n
. IC cr-,./2
1.1-1

7

1 1
/<

A A

ci IAA t.4,1

It

w ..
)

cl ci 4/

4




6-04
6:-

j

I.

if i \>•::
t:

etc i;

(it

et-Licc..4)
etA-Ikt0

11 r
,
Cis( .4:

'"I'vec.eressallillarlek"

4- I- Cril"- 4

p

4-/

b

i
VN
t cg tk
N

1 %
7
\ 4
\

t

o Q\t)c ,4
A ii\

\







-

ai

(7' C7.c—
er
oceit
c72 ?

t

_

7
4,1c

Az
C tAA 4

•t.44

fA 44

;, ,-47
•,

4 "
-1

e vv‘a
-11

..4-7

/„.10

-

1

/

•3 "0/ p

.t.
e N1,10

apt
,
-P10
trZ C'T

C YV
)

1y/
.

'VA

frld Ae"

00
j$

"

f

I7
•

)--re

0-9

1. ,7
4 4
17,,it atipp f
r i

I

--V•If
(
)--)/en12,9
-""

7

, / 1*
2

.J.
,

I -.? -0 .4,-, - r -- rz,
1
e

y,,, t- -ThQ- 0

-1\- i)

i -1* % 1 1
i , '

i

l

•\,:1-1--

1
'

P\
,

*

-4
7-

,




7 4
,1)
ti

°a'
'-ts1"4Tt

'

0

,t,0 e/

f---Tru4

111/

0 •i?

c_-

.A4

)
4

-`r.v1r17

1

:
4




r.\-d

0-4 i
-T-A
/7-

/4_1,,t4: .7

0 4)
0.
.

.C
4, A C.,,4

•

4
/2

,O......1•411.stv I. MO.
P.
,

•

'

c's

v.le: L.

doec

A

cat-

en.

g-/

1
42

h- 4

cLtL

;,.

Cr

L.t.,4._
(Jo 4-c, tiv'sV•L ,
(.‘,/t.•

Let-

cr.

'

aL.

/14—
eete*.

6astrt_t_./C.- L

t

t.

4-

11,
—4

4-k-e

-

cae.".7

)
4
4-i
;

4,....

7;'46'
Aisumamea.

D

'X'tt
'

1-

41•4A.-- 4
0

J
//i//')e




VIA

f
a-t

t •"(

1. t_

A

q44-0)

i
<

Ok/A1

A1 /

t ff

.

jcc

e. 0 i• kt-t-

6-_o_r/t7

6Ay

t
- /AA
4

0

.1

ent

,(//)

(./

)/

-e

j
-'1\
--C4,144--------7)-4
\
..-et—e-/C-4_4_ A•

/

cv)

-.Err




44- 1- 1"/
'

e''".'

C

a_. y.....t....e...-.4..,t.,,Z4

i

"•

ti

1, / /Cm




GQC;

etrioz_• Log74;v) .
,

6c-k^c..t_ K ittA_ti&„f
sa,_e_c;._

IL
7
fl^ gi.ACe1442,4.

A

C
,
‘

essZe,,c

6
•

a




0
.1111r,

• 4"

L-GcAr

4f,f

t

J.-tt
(

eh-Ler
--7,

cy---LLL c,

j

It

t4...1

9'11 Ct L ,

40
0
(
tl

•

/7

1.

t"-tiA-e
The Federal Reserve Board ige—ao4-4a4-414*on

•

eet,c4...-thRn-7

paisier.....14..issue government notes w44‘414,4411.4-tr.

The authority

is granted without any of the safegUards to prevent fraudulent

or unauthorized issues or eny proviiion

for records or reports

of their proceedings tro-4e available to the public or to the

banks which form their constituency:
ckat,

There is no plaelristion

e

fpr appeal or review

any flagrant abuse of the enormous
£(4
rkz
:
1- )4y11 '
i /
c91 t!, tt)2 -/?A7t-tfires. 4-.voirehc4
.44AeL 4ity(ste..4,
4
power placed in their hands. Thii14tWer extends over the form

eLf

and denomination of the- notes, )1 power over denominationSWill

e4;we-soe-as

-1F
t141.4 4 )
"
enable them to control the. cmeaLlaa of government notes at their

I

pleasure, aa4..p=a4=444—...244ftvatteir—or other issues of currency

now in use.

Heretofore, government obligations have been issued

by the government direct through its officials .

Bureau of Issue in the Treasury

We have a

i

e It through which all certifi)

cates and notes of the United States and National banks are



'issued, the terms, conditions, and cha
racter of the obligations

have been carefully set forth.in the act
s authop izing the issue.
4

To illustrate my meaning, Congress, by
law, pr4vides for their

ioeue in small denominations g4oPeli.-4.--pni
ewbot—e-er4i-firee, =0 et

placia-mia4eh insures their status as a per
manent part of our
X

circulating medium witIa414-431e liabil
ity of their being pre-

sented for redemption in large quantitie
s.

The friends of the

House bill apparently are not able t

admit that the authority

given to the Federal Reserve Board
i

unlimited power. They

cite the provision that notes can onl
y be issued upon the application of Federal Reserve banks , the
Board reserving the right

to decline any application.

The deimand for
T

actual

cur-

1
i

rency under ordinary circumstances

as shown , by universta

experience , is insatiable and rar ly
resisted, but in

t

times

of trouble t#e necessity for increased
issues becomes imperative.



il

rom
m
ily be / ade f
r could read
acte
similar char
ations of a
Cit
,
clf 1-L L4nA4

If

mispubt*manz
triive- leading
tterances of
the public u
e
11-812117

y, ft=tot
of every part
c-ea.coiLAit,t,„

es

representativ
4LA,L?
at15-

81

ar.

t—the_cix44—w

e_la
up.La—the-41m

1
c
49.c.„

CI5e

7

c/C°‘

et,c_

4
4.

(




2--1--

1
_

•

'4air

41

6

Professor Woodrow Wi son, iTrirlrer-threttrry—ae Itm710111ted
/1

ILZ

4
a eitrelh

1G<J7r1Pie‘4.
g-1 At.'
1114'4"--

kiLLet

1A.1

0e7-%

hes40=#>,

It (the constitution) absolutely forbade the States to
issue bills of credit, did not give the federal government power
to do so, and was meant practically to prohibit the use of any
currency which was not at least based directly upon gold and
silver.




p.46.

5

Our own experience prior to the adoption of the constitu-

tion led the framers of that instrument torforbicl, expressly the

states from emitting bills of credit, and the doctrine that the

issue of lesper-immity,by the Government of the United States wells
.
1
6

00..1/
r-

o

,
tA/“: ‘-jA

ffrt ij,

not authorized by the constitution found aniTeraal acceptance.




"j
i

lei A
IAA
11
hOrisfObV:Ww .0, ti
."7: ,

AL.

11_4v
LT•

xtrsillk-Olf-leritO, said:
i
I.

t
,44/r741L4,49
vkik44)

kzz;w&-- 7704

ata




";-424,L-AL)

/
1

4

/X

.0C-e-ec,'

dee,
Ct,e_

4

o4ee7

to 1861 Congress
It. 4.6..1.rue-than In the pericd from 1814

\
nts,
the issue of treery totes in limited amou
411610Vnuthorized
4J

7.)

ness on account of
which were in every case evidences of indebted

nue or expenses
money borrowed to meet deficiencies in reve

growing out of wars.




These treasury notes were receivable for

public dues and were, with few exceptions, payable at a fixed

time with interest, and were usually 90f denominations that pre-

cluded their use as currency.

The power given Congress by the constitution to borrow

money clearly involves the right of issue of securities of such

character and in such form as Congress might determine, and the

right of the Government to issue obligations of this nature ligLiral

ng.t seriously questioned in any quarter.,

The first issues of

c.'i., .:
United States notes with full legal tender qualities was made

during the civil war and grew out of the urgent necessities of the

Government at that time.

The plea of necessity wE,s the only

justification urged for this radical departure from the policies

and doctrines of the founders of the Republic.

Excessive is-

sues of these notes and the repeal of the right to exchange the




C
Ciii
00.04
/(

8

4

tsv *
,

notes for interest bearing obligations of the United States,
•

•,

'
- '4 4°
'•

••C,

•,:••

•

•

'

kie
,

produced the usual result of depreciation and discredit.

The

efforts of the friends of sound money to secure the resumption

of specie payments and their insistence that the public credit

could only be sustained by the payment of all Government obliga4
tions according to their tenor in standard coin, led to the for-

O f;i L#4,

rc.

mation of a party who were opposed to resumption and demanded the
t

,
1

1 I.
,

Cletk

::..,

payment of Government bonds in a depreciated currency an4---the

, Kar;:„,. . . k.sk..6

tytic.....

/
"
4

atitAiti-en -of United States notes for- national bank notes.
4ubi

Simultaneously with this greenback movement the agitation for

the r;reater use of silver and its free coinage was inaugurated.

lutr

Free silvIr advocat

were strong enough to/secure the adoption of the coinage

act of 1E348, which requir'ed the issue of silver certificates
\rsii4
(pk -14 .
.V v'
/
based upon a limited coinage of silver dol3fars.
The greenback
I



:
4
Di.

4

The reasons for this general condemnation are not difficult

to understand.

No government has yet L.een found strong enough

to resist the pressure for enlarged issues in times of real or

imaginary stress, or to meet some real or fancied exigency in its

own affairs, or a popular demand for more money.

In every case

44-rts issues were limited in amount, eurrounded by safeguards as

to exchangeability and convertibility, with ample provisions for
X-421

dfft,,"1iA

ultimate safety, but in every case these safeguards have been

one after another ignored or removed, mit Us 830'11/malign wkiskx

restrictions as to amounts of issue have been modified or re-

moved, and the exhilaration which has followed the initial is

,

7
'7
' A t ‘ 0 v-z.L.%,,. / .4i .0,.L .. 0 r •
mit.c...i.) 4:ey. . . 4 ....................... -0
sues has been-aucaaeded by 'continuous inflation4iiii 0a necessary

A
destruction of values, progressive depreciation, and general

bankruptcy.




4T
t
n

4.
that ip—th-is case, as in—all—thers prior to_the_ane—we ha
-ire now

un er c-orm-tfterattzn, a-44m4-t

•

••

4. 3

c44-41.0
France had juo4 confiscated the real property of the French

churtt

etki
Yh4Q4

consisted of valuable estates from town and country, forming

about 1/3 of the real property and

ociAxi1i44—value to/about
-

four

4

thousand millions of francs and iieaded a yearly income of about
Iff TANI
CL;
7
*OLA
The first issue wcal made in 1790 and was '
it -f

two hundred millions.

ebit-t-Aof-‘-'
based upon a pledge of this

f*-wMc-h
74.

Arg4-4A

,) t- 74:
-




A

,1--

,
N

v
ikt-

ci,Qe•-if.
i
4.- ?-.., i
-4-.1--4-.—-'
•"7
-

401r

el_

4

kYrAir

.4-

4f ore

z
<




•

Acer

*go Lb-

44-4_ de9

ArNc4-,
1

1

‘404 4

LV't

szt

It

-

e7
1-1Z---G4V
.

e
-e7

-4C;(1:11---4 awl

?
4
.

r.
?

d---..„,
-e„.4,•4-e“p

-,`-/

4.A0202,,e4,4_44
4
,
-art.'0' --‘.. :A-- 4/ -4
£4C4-alt .017 it_..
4
.,
it.„..
7 --r"",
:h 4Wfr•--4-R-1C°°"'"'7 01't-el''

pc
A

IL

er

*xi_ 44
c7i 44....,...g..-Laz tt.
it,. a.,...t; 4,4) &
.
'-"1..,.,-,,,_ -L.c.„..,c 7 et-Li— — i 4,„..

r"
...e.

.

t
I

7 4.!

"-A_ a-Lc_

7 A7

I

ro.e%e->‘-01

a-

•

A. .
D




re rI. at

tft-Orley

ddi.
7

4

No pape: currency ever had what seemed to be
a more

practical guarantee for its security and value.

It was based

711
7-.

ttr- ct

7

tay•

IC 11,1,

upon what woulci-e,elled the highest form
of security , a

mortgage on productive real estate of unquesti
oned value. Thevir
tti"zt_
notes bore interest at a rate of 3 per cent

it was claimed,
27,071,..4)

-4.77--t
/ 41 4
C V1 ;
4
-

INPILA-A
LO'4.t..-•

ILQ..:L.LL-jaisu=-e—tv+ttrtr-Wt"t'+tdrtrvrft1-trer prevent excessive issues.

0
-471.
-t-Ac-.04<_

It was

claimed by the advocates of the assignat
s and mandats which followkt.ct et-r

ed that they were

pgApiammcagud-and-mrte

as good as gold by the

bt-cubt

var.444.14—pars.1.34.1.a.Loas

"FL

44=
-44A-4--

•

freA, 1A-L-7ck-

C3
9g,jr06.-.,0

71,,t4t7

:

L4

•
Nv i',




act_

L.

'
•

1

a-1

t
,

i

All Government notes issued under the provisions of the

bill are redeemable on demand at the Treasury of the United

States or at any of the Federal Reserve banks in gold or lawful

money.

The notes are issued by the Federal Reserve Board and

loaned to the Federal Reserve banks.

The banks are required to

deposit with the agent of the Federal Reserve Bobrd with their

application for notes, commercial paper and bills of exchange

equal in amount to the notes applied for.

not

Whe'lever any of the

receivel by the Federal Reserve bank shall be paid out,

the bank is required to segregat, fro:a its legal reserves held
.!

against outstanding obligations an amount in gold or lawful money

w i.:11 shall be equal to 33 1,/3%of the notes paid out, which ,
iddr"
amownt is held for the redemption of the notes.

The notes

which are issued to any Federal Reserve bank are made a first






al

IA_ ci

a_

z_)

A..t.•
4
Z
'

d

/22 <

Aoti
4

a-2

lien upon all the assets of such bank.

These elaborate provisions feP,Ao44-Art--777
,
i .-amt smftty-e+-44-gle
-

ffective in ordianry times when

A
there was no call for redemption 04 the notes, bu-4-4ft-t-imen o--e-

Take a condition of affairs like that

t'

lia%.4u44.444.erlit in

1907, when Frkf the banks of the country suspended payment.
f

cJe-a 11c1

C k_c
t-

--Z111.

nite

olal-kged to redeem

9

710-Fil-mmomm-/th-u notev-.

But the Treasury would have no gold or other law..

ful money in its possession,
cf/4Ask.a'
,
..-tey- 4‘ t—t47
A-

e

- f‘Z-•
I

c).

the me-atryT new La. 7 general fund of the Treas,Ary, which inhe
2

cludes its gold coin and bullion, would be deposited in the sus-

pended banks, and there would be no alternative but Government

discredit and repudiation of its obligations.




a-3

Ect_er

Reserve banks,
the Federal

responsible only
to make it
made
notwithstanding an attempt is
be
practically, and it might
would be
to it,
for notes issued
issue, as,
wAriireracnf of the total
for the
actually, responsible
distinction*
notes without
is concerned, all
far as the public
so
at any
entitled to redemption
are isfiued, are
as to whom they
ttrei

Reserve banks.
one of the

The lbri- ia-Ae-tier4i banks -are required by the bill to keep a
i
11 -• AAA_
-

4100,

reserve of

3I/3

in got& 'or lawful money o41---fitrI4---therir---uutwhimd.

-1.3,
4:artri-firks;' and the obligation to redeem Goliernment notes is

azi...ahligation....wilizIvAppli-ett-,
--stintter 'the' brti‘;--t-trttm-to-tyikl- ,isSAWA •

For instance, if a thousand millions were issued, any one of the

banks would be required to redeem the whole or any part of this

on demand, and this would apply to a Federal Reserve bank to whom

nc

notes m4104144teme been issued by the Board.




1:4116b-ltgaiion

to redeem the full amount would be the same as that of a. bank

whtph. had applied for the largest amount.

It must be, I think,

n
apparent that with any considerable amount of IlMeptstandig,
,
lc
t7erI
in—t-imes—o-f---atrtn3s all of-the Federai Reserve lottiRi- Tuia the
///,
v ./?

/2 e

6 -4 ----A- 7
-1:;4 -A

t

Treasury of the United States m4lig444—wwwily find themselves in a

position where they would be unable to meet their obligations.

The epoe-te. redemption of the United States notes which were
/t.2_

issued during the war, was only possible after the accumulation

A
of one hundred millions of sold coin secured by the iasaws of
.
cit,4-44,411 ?
Government bonds, and the continuous redemption is sa4usuoldloy

one hundred and fifty millions of gold now held in the Treasury as
(A,t_
a trust fund.

We now have a proposition to issue an unlimited

dr

amount of United States notes withou, any Government reserves of

any kind.




shotIld be borne in mind that there

is no limit to the issue of these notes.

Is limited by

the amount of posuible is

It ma

be said that

e amount

OA.

paper

in the hands of the Re erve banks avails.

cve44y4-- This is t ue, but the enti e amount of

of exchange hel

neighborhood

by the banks of

he United

otes add bills

tates is in the

f 15 thousand illione of dollars, and the amount
/
2

of all securities which might be available for this purpose is




C)

r)

_

-b9

.11p5p...--...11MOCAMB

;

221"4"1"2111P—T
•
hi",-1-7`

7

rly
---12-4:

•

')7-7 ;11 -

11

r r-V
"---v- -

•

471"v-12
-.-10

"7"4"

-49

•'/P

-P ft/7
P:

r
or77rLee
c) • ar...-4.0r31( fr---7

_

"
31--C-1- W
4
gM971-v°)tV

%
P.t4Pr7"1

7

j
v

e147
I'124:%r
,

,fro

—'1112P%°

"P"''4PY

e7.11r"ge.4.tc)1Z.
-?-‘4

/64° "'e
'

24/
-

371
--cod
1

I
I 97: ----

1"

1
79
Y'
%*

,

rr-

.

"r
`7' -1

y-vz_ft

.
-1
76

1
)'19
"41‘Ae°6

-71,

--•7




!
-7 Piv

6"---

vi4r j

- ,
•" ?-e16
-D-7a2

(1-7

72

2dc

Cfr
2

e_
giZ

/1

e

4ft




feit41;14:11;)
17C
--

e7-4:1-esi

/kg,
4
-12-

°
Y _12—.
/
1
4
2

Lt

di at,1-7L_c_

AZ
-e-

,
e{e,e

A n-r-

/

j1L c'




_JC

J‘
-,
1

cVe-)7 e..

./

C

ecrz_
>

er---fet




'

t

1t

Z=S

4-2,CStz

1.

c
r4
0-14LL

I have calle

your attentiqh

charter of the
dcA,AJoi
,

great central banks I f Europe

contrast their

organization and 'unctions w&th 4h

lor-the bill which

has passed the House of R*54entativesifor a Governme
nt Central

Bank.

In vnter-ing- upun arv'-exanin-a.tion of
-the leoislation pro/

2.4sQA bY the House %Ix" I am not unmindful of the fact that
,
cto 7
4
.0 404
,

/1_,c7CIAA-444

it is much easier to criticise than to construct
and any criti-

cism that I may make is.cmat_imtwad-e4 to-4betre
,
eto.thv
-prib- 444
0

or increase the difficulties of tile legislators char
ged with

serious responsibilities, but rather w4.444-e-Af

0C-.44 gR4e4444g
,
,

changes which, it seems to me, trAm,the-wtor4AAIttr
titlence .aust
'

be made in the interesti. of wise and permanen
t leF,islation .
'-,,th n f 1, (4------,--...•
y)

,

rihe two features of the bill which are open to the
most

serious objection are;- First, the provisions whic
h authorize the

unlimited issue, by irresponsible aGente, of ( o\
- ,
erment notes to be






a

-4
7

•

A

°'711I




dr---an
/
e
l
t
(

G4-.01

/

C

-;-;e
-

4in

L (o 7‘H„
‘.

C-et_c(

r- t
k

/str-vtel

z

1421L

1.

In the 4.r.4o44-eirref a Federal Reserve Board, the

committee-• which prepAred the House bill evidently followed

ine4561,—merift—fraturvs eaplan sublpitted by President Tyler to

Congress in 1641 for the creation of an Exchequer Board. Presi'c-4ft-AS A-0 Jc
"

dent Tyler,

whi4;h

Vitt6

avine vttutd two
-bill

to establish a fiscal agency

another name for va.-iwn.ie-4ef—dtirrr—trrtrrmtr 777TZ:.1,
ler•-•

I et

-N.

artrrer

CIL--

Q-1/

that he wouldplan f‘..* a Board of Control f'a—take the
..
L

4 c

zEL 444

AY
-

I

nc,icns which he

.

t

45
zmg....^m-dicAt

4.4.4.4.41
CA-4-0 1%.4„2 11..04-", 0
0
/ 11
1
4

nAL-7

cuues ion 114e

4.N.

,
cretary o.„ the TrOrvf l.try, -r

t 1,
(
Forward, suLmitted to Ccialgress, Dec.21, 1841, a plan for the

crevtion of an Exchequer Board, tho—Reme-ef the Btrard—havinc -been
401LA
changed from. a Board of Control.

'A.

The b44-1 provided that thia.--

Exchequer Board was to be composed of the aecretary of the treas-

ury for the time being, the treasurer of the United Stakes for the



r,-

I,
time being, and three commissioners to be appointed by the presi-

dent witil the advice and consent of the senate; one of the mid

commissioners first appointed, to be appointed for two years, one

for four years, and one for six years, and vacancies subsequently

occurring, to be at filled as-that one Tracanty- shall regularily

s_pater at the end of eviv period of two years.

aut

11414.-Reerd-wes

parts of the coun-

,
4ze,c_P 4v-et-atry
-f

44,;/404:4_414:7

trwriWiFTT0371- .
7
717;77"71754Tffrww—mmt to_dlizect

to be

• —

E,1,44

prepared

treasury notes of a denominaticn of not less than

five dollars or more than one thousand dollars which were to

circulate as money.

silver on demand

These notes were redeemable in gold or

IV)

ere issued a
- •

1

prav-4410 ithat atates SO issued ahould
7l

of dollars unless otherwice provided by law.

They were made re-

ceivable for all dues to the United States and it was provide
d



3.
that the Central Board and all of its several agencies should

keep on hand at all times an-amou-nt af gold and silver which

should equal 0 of the amount of outstanding notes.
‘&4,

The Bigtrd

3 P-4
'
L
""'" qt ( *"‘ 674441
.
‘•
"
1
44.01V

was also authorized to purchase and sell domestic bills of ex- ‘,

change whIril-w.er-e payable e4+4-tlf-m state tJi which they were

drawn.

ti trerA-4
The purpose of this provision ims to facilitate domes21
lfg,

exchanges which for some time had been in a most urrs-ftt-i-vfnrtvr7

condition, tivesz being dependent upon State banks in different

parts of the country, most of whom had suspended specie payments
•
i

and whose were at a v

discount freer

•

2 ow--46- ,CA6
/4 /4244.t
2'p%

It irjaLbe 6614.4hat thir-plan of President Tyler 16.44effttenT--"
OL

ft4-

Alor"."-4"1

wi

n except that the amount of

nt 1-e- 4
"" "
7

the notes to be issued was limited to fifteen millions ot dollars
•
,AA_sPeAccA_4....-/i7( a_op-7-&14)4J%-e-t---

4
.-

A_AL

.
41'
'
4 41-4

"1
1 • 4
7 .7 •
4

(,
- 40
7 01.4.

si,s to-the-character- of reserves, aaa the

rmous powers granted
ar724171

pA
the Federal Reserve Board aerie



found rfyler plan.
.
e:4..

41. . 4
44
4

4
.
' This plan was presented to Congress at the beginning of the

December session in 1841.

It WAS discussed at the same length

in both houses and finally referred toe / comrnitteedin each house,
,
/
"

r,--, 4

try-7

r en
'

C
L

Ar4e,

OCC.10142.---t-

he

Etez_

,

matter was referred are very illuminating. The Damorraft who
.
,
L-4 4- /4..7 vir 7 Xe= o611„.16-1::."1—...-77
0'4!"

j-o-iike4-in the discussion in the senate timpineded James Buchanan,

41-17.,
4

/

/4....etrv.

Thomas H. Benton, John C. Calhoun, Levi Woodbury and Rober
t J.

Walker, posigiptpiewal- men whose right to speak for their party

was not then doubted and 42.4uld not now be called in quest
ion

n, by the friends of the modified Tyler plan which we ere now

considering.

It was apparent upon presentation of President

Tyler's plan that it had no friends or even apologists in
either

house, in the form in which it was presented.

The principal

discussion occurred before thellekferenc,e of the bill to committees



Aittali-mo

5
.
n
-a4

t

In the s(-nc.te, Cannen and Benton took the lorm.dirIE pa1:14-111-0pp°t!"-k%-1

eitior to the measure.

4
(-Z; ,
1
"1 7"'v1 '-t "4
/
•

Senator Buchanan in his speech of Dec.29,

1841 said that he had viewed the plan suggested by the committee

in every aspect and he could see :othinE in it but a great Govern-

ment bank.

Board ?

He went on to say, "What was the next function of this

They were to put in circulation a Government paper currem

cy nct exceeding

1.5,000,000 in notes of a denomination not lower

than ftve nor higher than one thosand dollars and they were (-xpressly Euthorized , according to the rules of banking, to issue
three paper dollars for every gold and silver dollar ir their
pcssession.
discount?

Then it was a bank of issue. Was it also a bank of
buy a
Could any man doubt it? ### Whether the Board should 1 .

bill of exchange or discount a promissory nol,e, it came to the
same thing;
loan.

it was neither more nor less than an accommodatic ;
And it was a loan subject to all those risks to which ,

banks, brokers, and speculators could expose it.

No prudent

man would ever be willing to put his own money into such hands.\
Yr. B. therefore took it for granted that it could not and woul
not be denied that this Exchequer Board was a bank.

#

#

#

How could it possibly be supposed that any honorable Senator
belonging to the party with which it was Mr. B.'s happiness to
act could ever adopt a plan of this description.
What would the President become, according to this plan?
He was already the great fountain of political patronage;

and

he was to become the head of an immense moneyed institution.



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