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NELSON ALDRICH




MISCELLANY

PARIS,FRATICF, Ata.gust 2f), 1.

rwriatv rm. VITIMMIr 'HON.
DANIEL;

NDWA:I a)

7•
1

VIZEIC
IA?

AND HON. J7ISSE

-ItY.C,

, SR7TO

tral

OF THE l'Afi'IO.t.TAL

-.;ONETAf .Y. CO1tIII:31 I0r, AND BLEON BRIVCAT.M, AD.INISTRATOR
3
OP TIM CRIMIT LYOTP7A.r."4 ,
.

In opening the int.t;rvtow,
the subcommittee, asked t
-lent of the Credit Lyonnais.

quson

Vreeland, on behalf of
copy of the 1,1,e8t state-

The Iial
.on f.;x -riahed the

mbars

the tvlaconnLttoe with l*cir last statement (that for 71)ne JO)
190P), which in as folias:




ASSRTS:
I. Specie in bk.i.liks and other specie
2. Coliunercial paper and public seCurities (municipal)

Pr.

16v,047,0'./0.

1,212,691,67.J0

;$. Advances upon collateral

34V,709005b.9v

4. Overdrawn accounts

49t. 1 286,76:.9l
,

5.

Stocks and b onds kept for sale

6. Real estate
.
7 Everything else - stamps, rents
paid in advanoe,stationer,supplies,etc.

61 745,242.0'..
,
j5,000,00.00

4b,439 390.27
;
i.`aft),769,67K.Ti

LIABILITIS:
on Income

1. Deposits of people

.

2. Business accounts, government accounts, 4nd all account:3

24,91)0,484'.W)

3. Acceptances on coritle.r
rcia1
4. londs f;ivon to
time deposits
5. Fiver

10

51,64. 9,576.86
/

liabilUy not included abov

79,489,502.35
125,000,000•0

7. Capital

In

462,409.52

i,()VIC 1'0 c

Reserve (;.iurplus)

64

75':',00'66Vt •41

250 0001000 00
.
,
.
Yfic(I,-tC7-6

interview which fellowzi, the :uotiions

LL.1-c

all

Vrecli&nd une the rosponues by Aron Brincard.
0. It; tM:i

ich

. .*.
4 i.,,Ltf.I'll`.1"11

publishc;d

A.

R. Is

tt

juz, submitted to U.S

YOU*

rei4•1rement of law?

A. No, it is a require-

ment of our win bylaas.
Q.

How often does thc

overnment rtquire ,ou to publish a

sttement of the conellion of
Q.
ere?

bank:

A. Once

year.

Do ,etk publish these monthl, tistihtemnts in Lhc

ao-

A. Yes, but on our own ve„ onsibilita.
Q.

an ::c); lot uo h-ve, ftr tI t O use of our oomaission, one

of , our last annual

8 tAc714:nts,

i:ch au lo required by law'

A. oer-

tainlj.




(Note: garon 3rincard furnished a co ,,, of th,- steAtinu)Its
)
referred to, as requested. This st,itement is in
French, and was filed with other papers of the
(em.isoion, to be translated).

Is

•

A.

onk

At thi, Loner

noctInsi ',1niQh Jo held 6Jvc,r,

staiament. lu 1
.6.4.41
1 16 r..
7.

utatwAent 2ub1ishf)d in
.
At 7,yonn that

the 014..reheidors„ and it la 41..

mazi,
Woad J our 'Itlard

DArectro have authorit:;

thc:, fern of the nionthLi statanruit If thoy
Our

of Adninistration has

ver;i dirvc

?art in the nanagemont of the bark.
resollAion, however, sciaJudik

iuved to-

A.

:41t3 u ver

Yes.
c4tivY!.

It never takec

withiat the conourrcr:cA of iAlkr

71maident.
C.

Thu firat item of Ulla, month1;y st„,tunont 1; 16V 1')00,:i0

francs in your bankkAnd in other Wiliks.
ae:ainc

deposits?

As

Is

ha.t :our Gaish rewarve

Yea, that is our 044,zh :03nrire for savory
.
might cz1.1.1

In

it oasind t. t tllo sum wouli not
oncAl take pit —r out of t
::T.4:41CC

ff.

rf-AnCe

ullfrioivnt, we vi:11(

mixt /ton and nomi It

the la-k of

And get ewth•
Me iou keep

of iranoe?

portion of ,:,tAiir caa, reserve in
;

1411k

10 ilmerkilv lay in tY,41 dek. before thkl.t 1ft think
'

will be noccouar:; for tho businosa of 1,ho fcfloin
an account current at the lialk of Frnco, in which
t;Ain sums t:h4t we do not .1mecl.

3id4L., 11
(
We

keep cor-

Ay far the ! reatest litantit
.

in

the fire, item is in our own btinks and agencies.
's. •

"Oath in othor biatilks" -

ffth:
!orl

r

thckt deposited by J our bank

it nowt,tt•td.c.i. .0e cUici

h_o.o

the crodit of u.v ucc,t1An,* ft;.




Wats

, Ott frx4n thera, but

It 10 .:one.yr Which we keo • there to
whilre

,or

aft.n.d th.o. racrle;:,, 114

,T .6

t.

vdi tire the tntra-

baZ

a.at ion in yerforue.d.
Wo1.11(1

akio from the 'ht.:Lk of Yroe necclanaril.,„ be

in tr
ileele%

A.

The 3ank of *,-'rztnae in oblit ;00,
•
:

a:tacit:), bw. (.:L.ktito.se in gold or silver.
note 3, ,
:eO Y,1 d ti:e;-44nd the
f t

Iter,

.1Lt. 1.n
A.
‘tak of.
r

We

Vk

riu

aza0Un t

,
inatuaori notes.

/41. in one b
:

ifr.uods

orltivt.z

t

Theri.tn *Aeho

We call tL

th ts

delivcra

iXk

no

t

'N
.

11(1 :3

C111

3 igna

“. hill of ezerwe oald
aknd the :Ian who

on be,

13. lit tl

rtrzin t

and he Oiacounts

r4Or0

in detLl

public Beautifies zsentiomd in t.lie 3ccond 0;e.
-t.
A.

inf. of

fur in throv. rtionthas and ,cr,:*-

first. ono take:4 it lo•

,Vrencb rants*?

And

ince, fradizlivere to cinether

411,4.ch .‘re tv b

We Iv Oii

Pi.a we do in

civUlty," but wo do not. cunrider that

:oott! for tho :out

'41CCC t1

Wc found

oursAarci.j. oa..9$::r or

"paper of politertotir,U

• ood paper.

.00mikaroial p uper•
"

:have co:rz:ercild. p

yr

„ives no

1,11,

.t.4 016 on, the note13.

Nisistq ts t

the,

If

.1o, *ilk treasur, bunda.
;

but thm

thuse include
Thoc. „km like , ew

y revenue bw ,cia.
Rave

A.

*t! 11

actually in ;.hia ver, itiAn.:
i

Yee; 4 1:‘
4

ven;. f.1, repayithif

1..ro tporary 1)onde in

in one or tw4; menthe.

ICtao

OW Yo. 1.: revf,...)nutt
1
ion of rehav, treasiox:,
o

t)onds of ?foreign re5,,rtr Les.
What 1,oroportIon of the second it,c.ia co. ••.:erc:..41
A.




•

rt Le almost , ut.l.relj ocvercial piLtcer.
f
.Lt 10 always ver,›

The k;roportior

q. It

3',4..
'
iv net, I belie, tar. polic:i of ,;..1..tr bank to 1 ;

343
long-tor:2 oublic zacurILI, In .t.rge amovnts?

tir that wri oar get. 'Mut 10 our

is t.;:l buy A.1.1 thu corarKrrei
business.

Y J

paper ly'cw!cc

'trial

.

At !Irenent

Yr

1rôt iii34)0:.,i.1131.b1c. to -c,t

cl)f:v

tho:(!fee,

IS

rxd ouy tro43

ed to i.;.o oitte4da

A. No; our

bonflu.

ii rIti n not, own nuch govoxuamt dt bttl?
,

fr*, *

1ro;

Incauded In the .,00.,)10:..)0 finot; 0;

all the bonciti, (Ite„
flf01

Q. wad
time Qf fled?

no
A.

Oats c14ea of 6eouritiwis bo a quick abet In
r;o; on thm contrary, Ulf: rtr3t tfic, Acr:in of
be obligfW to p;*y 1,‘, n 4ny

liabilities are at nixht, and ve

mint h::Ame a, ,w.a an Hticll '40 can

day; theroforo s

Tho .0"Jople here lre Imry !Iervoo41;)
tImy mxwt',:no4 that

01-;

when te't..>

coU..c110 I

t a

rjhouic, :

good

"c!t

nley

dangct

time

co for them..

to zs11,

In Eng/

co ft a n ex;ount of ukontl

111-

,15"

bank haz p1tnt

other bnu woiJ

ell, and that qould thrw4 then on Ui

nzat

consols, bu

.11.17o t4;

th*

t1-11.1,], 4.41..c oblige()
-

c.„14407
.
invt.lt

vra k:;1,:keider thci.t 1a. n:ost
/
4

system.
qut there tbc ,alligc; do not

tu tU IiUztZ

..-Aftlet •.o .4o11 l.hl311, boat to

1.4fltLA4:1(.! rot LzY-actoztm C. an?

the Nngiith are vor.i 1iffer3r.:, fr.= crir pcoole.

.

: rn":1M

A.

Yes, but

Our pcop10 arc

vvr:, norvuu6 ond mouic not Istmnd that (sort Lir' thing.




ifk

etoexis and bonds vto You'd have to :soil

If IsrP.

}-1.61.yet

V#1

We

‘441c tc 1hem to :)1t: .,4.1Lic of 1, .6.11ce, but
'.1

the

night fall.

- avo to ses

Tho two 5

torus

t. ot411, 4tireflt.

86.34.4060-frzatftreterlfeea.,......444LaL.akiwakk
1-Acit4ies t
--tr"Pratnes,

A•

too- midisr tiomorarrAitatiti

t,...,4,1...44-414pentittett-es.4.1.14rts

to no

EA a y:rP at
.

Pro'noh

1joc .

ib1keAn :ost of thi- Pronc"n rent?

Ye a, ate.nd no t the banks.
tow rAzoh. ”tinv

tines two c;s' thrrm

O7

At) bun i18 t•io

u

r

7,..;13.11.a71 ( 011;4.ra.
4
.

..r.c1

in "Aorcirico

7

Upon Cod. ..t.t:r.a.

what is

, taLiS stiado up of'?
A. f;ov
tr A bonds, ra4.1.road a to elf.:a, gold
/
/ *AMP0, Tranavaal at,) 4# (t '. 1,:, ) ctt Ca We advariCa ..•aorao..; on irtre.a.•.,i
.-. oi
.
,
Mort

Of • ", C:

th La

irn t(td in this
errwtont

riu‘

orti,:t

seaurit lc:a band on

us in

whereas the liank of
arloo I
ti—et
inr able to ilfrirr,wv on 7. ronab
0

A 3 c:.; .•••11

;:v.1,n or

s','rench railroads.

inn t itutior.

to ;gill oh

at tent ion to that th.t, n t
,
Q.

tho




it

railroad hol. (1" •
:

ev con t.; it dependu u..t4u tht:
.

ar cent.

That is t.h e rlargln that is

he ;lank of

'Wag

•

the

The, betior t :41 ,ilvic11.4161

\Mat claa.. of pot)• -le borrot,i on th a%

Q,.

:cad

A.

his col ii4to nil• tilt: lona .4argin La :....sked; but se
-

Lbrive require at intket 40
imposed on

The •.1kiart Wline with

couti.

thdividltai to ohon 4 1tc loan is 71adc.
,
aW thi-;: better

ov-

londirtr.

How .faUk dr: maxgain do ,:iou require on

T.11 rt • to forty

very

Jekbrokonl
Do

indilri(1•00.18

A. .hto •

11.1rtne, on Vic
riv;Ac

oti loem to a mak brokers gnue rkily

A. A great

Onl

the! aoverAL

cf.an[7,(t.

.4

oro4:ers riho halm

f the stoc!..

u. .1(114:).1 etentdc:.0.t.c.:41

„: . • r,

for the dolnAA's of all the rest..
for

r: ,',.).;:;•.! •

,

A

•

bt,..10

an0 not beinr able to prky in oath, bornorfa none:i fr0m

ote

;:ese brokirrri t ktne

0.advr,kale,tt

r..tone

rOizrr cones here and pia..ys)

to this

case vet lene t<s tlto bre-

Ar t but the 'broker

C.1.1 *'0•4

!lit)

1,he

its "Ow,rdrftwn A004 unt0,0 Ytbc
,

fr1cts.

Will

!.:0:*; 000I000

/Inou hc...Try of givinc ,our customers :Li. crod,

it on Hrtir books, to bc drawh AvNinat whenow..)r they with?
.

You

dL not fit:14ra intnront ou thee accountas

arc :ket1:43.1.1,, era. n armAnzt?
q
•

7/ innt:tnao l
41
4
.:r

t trarle

'-- Y1 francs; t.J1114.t i
)

A.

No, of 0014ree not.

74111

credit c,.f

Md g e

oltercst on :,11#. own .1e act44.11,
.
1

A .:ereat ;art of those ,ccountre, are iwainst colt tormi
e.
That kind of securities?

bontth 1.3‘1.).1
r.
•

14.•

(.../Lte ISt

to hir credit for hisi to draw :41.--..anrAt?

?nu, b-' !tottIl onl. uwe
eXamti.

A. ills.

A.

Only marketable etc

azd

.r4.:

A 1.4.rge pruportien (If thio awl

:•040111
,

f.?).1 colia.t.cretl?

Nhut claam of peoplo borrow on th0.1. iten?

A.

A. Yes.

'ankers

and bustnam Poorle.
C'.

fil.71,4rftetl.rerts-

A,

Cz

rn the Cittio A" pew: to qr. Kilwev ircr,
corit,
,
,.

In the case of othr&

3Intro

" b

r '41 it1.

mc'...1 we i„:1Ye credIL without

e-

re tieztiAnd Seaurit.:t) but to ;,! ople
.
:

think Ire!j of xle do not • .41.(ait: crilcitt uncter
auk, cIrcurza.
stance's.




Q.

LI 5CQ 10')0 francs

1A14 limit to on

tnolvicwal or firs

on crodlt
A

lorehant in whom

Iny4..
:8tiratcL

,nd

,,11 t;tvc confictence comes to you, you

:r •ut he its k:.clivew ,And remponsiblet
.

lene: hin on tl-ia &tom?

4t
,
ip

of

,
):ad 0.vr. him

A.

You

Yost if we thourht writi enough

crtidi( wiLholA soevaiity, but if not

we w . ulA deriand :merity.

r7tLi‘. cl .;;15 of loana occurs only for a

short Uam. during the b usinesr: seauon.

illeory is that evqry

merchant ought to have enll oik.ltal to go on
by himself in norimte, but there
four :Ionthe - *hen he

Units un

buts

ue.fon

ill flood mar*

three o. .
z

apd then lw comes to

‘is and we lend hlm mOne,,y vnder thia item
.
What kinds of bankn arc tiv!se that
oraI?

A.

Wald.

biulks; for Inatkiace l banks in ';e0.1 Or-

loans dlwing the cw,ton caisson.

colmtry under this iton, but to
It ia

o1 lend tv on cuiliam

Ile Co not lend to bilne in this
c,reat TAark

.'ranch merc_eints.

or intorost to len() to Ii'ruLch biwks.

We lend olon-

ey to fornign bw.qui avd to Prendh nerohunta, but rove
r to

lel-ot,taltb or to 21-enoh banks.

siis never lend

is the businoun of thf f'redit vgaglo

its ion.

L'ezci

.
• A

r.
t`k
1

0'

..recixi

by Issuing luni—term bond', of 40 or 60 joiLe .0, _nc

fore they oar loan on real eat,i.te hr:04

13(1 'L,hc, do not balm to

mQflY quiel,.
.

ilia fire, it

of

-

le fosite

poople liv-

inr on income; these *re ds,osits of 4 sepi,t
.
th,




t‘,

ono; on deposit. a long tarte kuld receive intiool,
;
liv'on thou

•k::cume and are not in bussineow.

A.

that *4

Lowrie
?etple

the r.ionc,z, 3.n their (;v4-11 houairi, the;
)
,
)
414

draw agairtht .

eviecica.

Do jou pA6
i

Thr:146

•,,bit IL here

kas..r0

t,

tin aid,4ch tixt 44tzecyartt7

o rift der cent; but the

The lower 'Li.!

dep0sitri .
1411

reiv.

ro.

t

iutr4

nakct

filacto t int 15

.

: t
7
91
'WC 11

.,, 1.it

t, OflJ

flL

jai:qui,

CO TI

vit4 ,th

110

Atn haVe

inter

xt.y

r

t

,

A. r!.a, . hc. t-.!/

I. vs?

but we

ndac on,
,

cif Par A.

at $:.51.d.s to

ex) r truatticirtg
Is tnter-st :411 on

le ptty
all the

iittic 841

L

f

i. .1

ItiBint

upon ou:r

fe

Cult,

the

rate

70 r,•••
,

ver.,

E144 iu th:Ast we! dorivo

profits.

cred."

inG more LII 1. rc t
bout 0110 iAalc, onu h,JJ,1

ite

otAnt

drew intoreat

irwifer cent

A.

:icls;

interoac.s who .tre ,_,.ccustorted

odirr, ining and '...4)4) arc activon1:,. en•ed in 'hunt/Inns.

rjust wife,r8

It cdende

13f,owur,t) t.11,
3se accottnta bui(inc to
...,

• LI.fl treti.zondtAla

014.36 of

•

of oiacount of the '4n1 of LTAnoe.

•Then :.-tost of those
r

':.vut 0/4 ratc Tarlea.
,

A nerchiwnt with

avero i

i

he ,Lcountss Izleicied in

scow tt, or Lila 73/121k of Is-Trance anci ...a 00 on
,

oucin depositor.




FS t

the

fa •

• Tb

)"

t.is

ou ntoari by "governrailni, accovnts?*

:Foretigovc

1:7

.

o 01)011

13
it

En rtes

s

lc of

3.,
•larii) than :AL. other 06-

tabilahmont in 'Yranec to ;-,Ett
:A.

C CO 14Tit a•

A. Om

can draw it •out whene ye r I"mt..,

LIn

1...rge,st dfi

et :A.V.

,i-ofit..15 In one wi

Or

itnothur

A.rwther rcrAthi3

wheremo front nosit privi.A.te ,Aceotints sn ;t

C.

Do 3.11:, of e_lio

inde,eridont
,,

lizeep accounte with .,okA?
aanotint.

The little

A

Very rank; hurdl.!
dia1.1.1-...:3 ust '000

bar, 3

in thc: count.r.v

se '41.4!

*t.kr

r

0.10111

every•tv'hore,
Take .,:our
t.,.acteerricat th

incia

lttti

s

vLiia.ii:oof,;:s:A;

for a. bill of ;ode in n't:L..rLi-fi.
d1

b al!

t

the,

sale r here

C.

How

to

Row vitlad that check
checi: if th•e. 'ba!).1'.
.
.

ci

it ret

?ft Uld

a

n one of t,hego

check'

th

300 ul

charge him w1;.at

writ

rycalclu hi.

.
1 0
7
1 CI

A.

be

int r,
1.

rfrun the countr,

A.

Through our brunch in that towl;.
'.

SuQrse,.
,ou

)1:alto, a CV%

rotary

t.hri chock an

had i'!4:)

0
ff

draw

t

Al

he

theam.

A.

in th:.

We
viho

one,y and depovi,
:,

Ut

robtr.bly

OLlt:14sent

In our neartist

brr.:3101).
'osie of these b.:‘rs_ti votad keop
,
4.!1Pircr we feel there

the :Least olianco of

este.t.tlich & bro.
1.s' ict

6.0 btibincl
.

fteri

d.rt.ovr by

41:9 zloro.:416rtt, tx

r -Cw

on ;.:.t.ra.
cr

'Alp! Cott
1 1,
)

O1Jti'S Co t

I •••*. b„)

(3.

,Afith our broanch

A.

Core.lerc

MieXt to

hiara

..

0:r

1.

What .1.6

b

has sold hi r ,.. r7N-.)e.s.

If

rrench midalufis‘cturor, heill

iu .41-ii.‘t we c,1„:1 CeK:„:tercial paper.

We t7.L•ve i.wo ports

casei credit, which. cusi.umere draw out Kt onco, a:7dit. rd

credit which the.,;,, draw 6.,-ainat,.



Th.a: cn...storn tr,

"AcceptAnces on Cormarclii.1 ?‘....pctr."
.

ti'cc.);.i.4-.1reL!aabl .aper?
.

A. Yro,

ro-

.n.sy the o4A4/11r., puople to if,o to th4.
4
,

1

i-LJA

bri..441ch in ;',a1.:1?

-11Item no.4

"lionds 114ven to ThztoratIrs; A-o.inst Ting: De-

'That sort or bonds L.re thew!

/%.

14ne, fiY4 :eux

cc;[tIfica.tets Lor ciopc•oit due in a nt.Ad
y

r cnnt Intrest.

ndo Ciav 0;.Lt, at A -,onm

••

no auch Interoc0,?
,

IMMO-

let ..z5;

A.

Yez.

1.ttctt.; .•

;.

f

• !)i.t.tikvs th.1t .OU c•
‘,‘

A.

toand lahola .t,(4

1

1.

C

'

r

r4'

joint cl,oc.1: bu.)1)c.:1

A. Stryttn.

'trot

r-•

v

‘k.

ti,zt
Qyer

poratiors„ or Alth.t We call "
i41'jily):1011115
Uhl!,t

C C147
)

Ott.

taan., individuals tlUnt

•*

sjic

LINt. ,o, ,;.11 3iei.

C

ty " 1:11,18

Ct4P`tilI

co

`sow

f

persors.
Ie.
V, minivan

ht t.

of capit.:).1

Morn inminimum, but at le.ar.t.on

.
:17,..1.2- th or:!..11.;:i

rec1.2(,'. by .Law to be Aotu.awitiy paid
f

71-.0 t}ieL

p

up 4.11 thc:

pende on 01-Cum8Lancou.
11.0'4

arc!

S

Co•raptoir
CI,
•

h.c* 1)54:: b 1:6 of Pi.tri?
,

ovr Azatitution

Becorapta

Tfow .Lt(An, lax
:

brYlchezs

A.

joln

-1,ock 114n3co are there that have

throe - tha Credit Tiyonnaiss the Comptoir

A.

d' racontptn, talai the Societe r:mnf,rald.We conuidor ,hat it
vt.

Istitter for i. he4.4- ,k
4

t Li ca. J. al. paid

in case '..11* falllAru it Ls vor
tly:re

.)V
t.

offtee A....4 the •31;her cities
the coigintr, ?




•

N .

bicrd

n

• boom.v.se

In thcumpAid crwiLtd.

r ;L.-Teat bailks haTilla.' the
1b 1:4`.rterics

zL4t

Y• Ebr:Jincliod LI.Lirot4;13.

o_.
1.11

T(cri thore
-f

reet1.1„,

hiti .ind?

Riat o

1t's2(';

,
1 ';4: 43144)
. 1

Joit.

Yes.

A.

1/1:4t. 1th the 116.bility of ztocAtholttere
aett.u.0.1,, •
CI.

A.

"that

blatA,S

011.1

hit

.
joiA Ce

A. tho

c'rf. cor of
-k

'Pre:snide& of ,.he 4w,ouncii. vf
.
,,-ou IlL:,..rct a Vice

•:*C t)

ressitit.t.
)

A.

Witt

tfO vice

av

txt FJ.
•

rh; the- 1.;-„10.1ctiy
d

pf.trit in the z- .fruira
;

Yea.
In 0,b-'1*,'.k tior.

thc;

'And. tvil.) Vlee 'ret:nt,$
)

!ourtci.1 of Aeraniutrution?
Of ho' Maly nvambe re do

th A

A.

Yee.

co n *1. tit I?

A.

0t r ,Y:sent

•'elancil of Aduini:ltration ctonaint:'; ,/r to:yea/to nte:lbers t hut, wh,
fteon.
lithat i Li `.h

f: r : of office O

h& "rea dent?

A.

One

,;etito•.
,b4h

‘. 1.,.t he clout 1

names !line ActAtrintrc.ttesr,

-11(

A. 1.3y the

tomeil.

Th

the Atirtirtiutratvre

ouncil

.,ne of

the. sunivvis i'Ten.Aent.
(re, elect.nd
A.

thc sharoholdeira:

Li; I 1.410/
1
4
)21 the ; Cr) ;Cr! at ttrn of the t!c/..niell of o'at:inicitr:).:rit>...
-ft
That ie the ter, or office of *.h<!! •,crabere of LY!,
.
..

of Actiinistration?




A. lokirc

3.13i re—i.).rd to or org4.14zation frtr..1
I

caz; rret 1;.:1 of
oamphlot

nt

(floto: The plamb..let. :gort-3 ,..reci to(.....,nt.,rat.,
.
i....: 1/.4
ssiktion and 13:i1aws ().1.* :.ho t,3roti.t, Ivonnskia. It
is
'Tench, and
,
ftiet ,vith Lhe papers of
thetvp3: t.1.1(3:
.
,...„, tk) bt. trttrul.A.ed).

I

NIP 140*

H07;r
,

Does t11(:!,

0;.•

ntep6 to ot".7

A. The notary. (it

rth of Ln •

do not have in the United

oort4nt govermlen!,
arid

4t.:HM, at leant

la

'::tot

-Ind of °frit:1W, ..ftlich

:0';nt,„;e

oaty

• n on v.

finazicil411y•
-

Ail of

theso

attArteid in a not,:y, 1 LoffiCe l kAnd he it responsi-

bi' f

,=4,1 being act144.1,v paid in.
tili of the, cz4f..uits
ovormaent

'00t8

-,
nent,
•
rune t

'110

01

-.41trther
1

bar:4k baSciu

:How lunç,does

111 quir

,
t tention to 4 :.he

441itniu..l

re

t?

.
,
•t. ta. eh Liter run; is it perpeiL. ..4.?
s

A.

A. It

Vi60.
•

re:shOi dere

:y
I it#, 7.1
is the

t

have ,

e..

4.. 1- 4.1fty tot

aharc,

of

eri0 utz

.1.Ve hunered
A. 1

r. frar a on the ot0okacC ;..„nce.

and they are worth 710%; twc1y

tit tth ore wri: restrict:tar. (mder lAbfr or tanler iota° bylaws
Oc! to (iirectetra or officorll of Cho bank?

,
es to Irsh.:!:,

thcre in none; but, ;‘,a

ax the

but f

A. SO fax

it ter of fact s

no dirocti) . of off.a.cor would cyor oL4, ft:re a loa.rt.

They could

nevor do.
z,vin

C.

OV

Adnini titrtt.t.

the rounc U

Ve aui t;.1.Cet.' 8 01 ..4014 ,ttra

thf!e.:.,:tit(.0,ton was ft3.-nded.
.

(
,
nee "ornIsidant, has :.! '4I in

ninee 187V.

The

Other admit-A3tn,..

twri are !.4sually old 'nettthes of depart Tonta.
Q.

In rt

,cosits - do
branehes?

rr i

°IL c::A.1 •
A.

of

'reamnt 'vr3ident 4as

beeT: emplogyed here




Q.

oaah reutortmsi.ich J OU

C ar ry

Lo

af U. owl in ;your own ba7k or in ito
:

'Se oi.t.fr.,- it,

_II ourn4;ivcs.

-14
-

in Gash

u 1.rttette to coary

our repo bite d

afars

,

Villa

to

.

wt"Yanice. or in other bs

the. In

eight ,Atr cent.
er cant in this atateraet,t7
,

You have got abo Ut ten
That is too ?II lob.

per ow tt

only from six tv Sight
Q,.

.
Toet utt go back for a !lame ,

Th

mono:. f'n

t
t

re i4a.

aptr and.

:

10

f

1a

:011

coivA get the
:
4 tanked)].e;

rut

cre.1...te7 isot.rt

f VrOø?

A..

1.1. not
,

and

atti.re

a

:1'0 C't

e4

r

4
.

at a,re thtrequ,ir omen t

•
lk

t. of 34t
A g00

A.

ever; thin

thc2

ono a

coe

ite.raofAnne t s

public øecrt tea tarn t on (•:1 isn th '
could.to afl,y

We in tend toerr

onee!:d

That tsi more than

A.

:f3ank of 3rmce taka

vo t.cle paper ac

tt.

a2c r

It law)t 174:: cotano rot
to run.

ye."' 1;..11,rue

fr.ucta1

pteti

ttth 'Oa re el

oetirc
t

or, bt 1114:v do

t.ce ver;

ritter..
.

rdcr to 174Taw tho monc.pj
cit,)1

A. In

c.n.Ldtnr ,%.1„1 or that i ten ;141 a ; ue

rion

pitor::, who want T

6t:

.;.)e r con'tef thc second item w Iziet

1"

A great cart of the thlrd itca

avall.1.ble.
.
1.7;uttediate1y.

*rtver;ithina,-

c.J•11:,•

is called Pre.-,ort" conea

e Ve

„V; days.
•

Suppose 7t

.ftnk of 'f'r
ow!)
in

aboul,!_ 31.41pend
would

14.1..7r.sti I

blamed f(.1 r

and th,r:

oon t !me to 'Lw-

ecin

..;ut.t.t.ifiod with 'tlle nxtes
tlict 'oreuking kAlt of

A.
w -




ropeall war ;71101d brou

V usp en

ngIii th

aile

t .
of :711on
.

*ar t the

iNatuk o,Add nt% t be
e

Ilk cif

ano

-15-

'Olen the 'kink of

.„:ud•

)tcyt.eis

terder.
•

Area

they leirA

.t.:nctor now'?

No; but 1.1.0
,

A.

rreatl. ,srefer to havtl bailk notes bocause the:, know thtk, aru
)
realizable, b1.a t&o. .4re not ltwal tendey.
•

In ease

the. t. ank nuspendine payment, they
)

lar

rW4;'n fo;• nO Inerci'd .,H,
cr, and tllase note's would
be

legal L'Inder for 7,7kylm-

a law a“thorlzing

11) Ir,twe4u10::. ;f

ender.

the' YlOtfin

deoollitra?

Tb:.anitt

A.

There wo),J1(, bO

piki,,ents, and raking
0n

ct

:

Plf)N.4 war with
.

without tsuspendi;:r.
Q.
A.

VhAt partion of V:01W long-,
„

The prOptIrton

WO

in at ar:7 given

Q.

Are not the overdrawn

•-.41).1.1.c.

coo,:.nta

44,yuble on ticia.11V

ow.Irdrave

La that pytt

n;':

, roportion

zr.7:;Ow

11,1 1.

uall, we give the right
;
.

'„bsGta ,re ()all lean*?

ntonth or two.
A.

Yflp

41Wavas

itude as to time to butinnst !yeo l:la in t 1.
haw

tho richt to ca:ti in °Jou,
of raict.,

f:14ti.er

"

Let us

tie
4.

0.

.0!t4IIS *
1

up the ,4 :tton of dt.col(nt

big banks follow the qounk of -r:nce rate?
ritts

n

r

ction,
s} tip

aS

a

not.

tw

(,4,11,

iAliON1
'

ce - that

.z(lUe0.

hAve two din-

c ,41.n.k of Franco, which in the

officii4.1 one, ttnd then the mite4.
..1,teiclo 17;f the '':ark of '`revlee.
At th#1 present :-Icr.- 1(..t, o..r
fielal nYt0! bnin
noes the
A.



taccnint, rate I.;!

(1 :or Gent; u.

n'14;ut thrse der cctilt.
%avic of 1,
Taneo over loan below ita ,A:blitOled rate.

No, it never &Ape.

41141,14 t,t,
• ,
OL

•

f' chc. i used in „.:ol.,4.r
- that i, by-

.
1 tc.,6f

;n ,noric;.*. or )h(74,1z4mnd.

r

our ho....sohole

p

Aiwilkie in r.111!:3a,it 11•

A.

e to C

hund.re‹. f-r -lices in i‘A.at.: ,111

carry more

yOu caxuio t. •

iaron, for dr.,..4700(ta,

dO yOU pay yQUY

O.
for

Toot

I hardi

onoj with me.
0J:>ne,

'
at proportion or *...110 lyctia.5 of 'i, :rance i

C.
Checks and

anc.' rwti

I untie

•

'
LQttk 1.'10)141a -Y

by

to: on

(Inc'ri4

.76'v.! , :03 no I..

of c

ti:y.

A. Al-

I clo nut knot,.

A.

,,041.,Liants .:iii

r the. fix. xtru o

A.

checks?

trad4MMT1

How about

t

na

ariall

t.:(!,11 t:.11

octor axle lawyer ,:krt0 nrefosoional :.an - wouid they draw

and t Yv".

cash?

the mOney out and :)ay th.oir

4, now

A.

cortaAnl,
A.

about the pa:irolln

Al Vaky

in uentity.

4. Huw

do

, ?ranee obliged b
J.1*

is tha

Q.

In rIonc:,.

otni

pay
.

bzi.nicabie bU1

of othor banks?

1.- w or b
4
A.

c(Astort

Thev arz. not oblAgsd

by 1.4.-e, but that itz, their business, and there wootaet i
for tii

xiistence Lf they did not.

n.,;. reason

The,, have the dower to ro-

f1.13e, but. they ni”Art/ 44 do if the :);Att'Por in coced.




what in

te:: Or/

of Why ihe 141611k of '-*.l.a.nett

.::)10111X ii•4:10cin reaervo on htaidT
;

Litteh

Is it not ver) tan'orofit..ible?

reaurin is that - .hc ...00ple do nut. woexat,
.
c)Ctg,

The:

for it.
deponit. An spi

rercr tt.e have it In the

of ?rano* anc got

.clet on
:
The ':. Ank hao to .Lest.0 nota• fur 44.1.1 the p
anount of cold arrives in Promo 41. store than

4.17in any othot

Prance

on i_Tid ci.ttr!py thtl notes in silver.

O&u

rLotOS

iit

The more pulnr

be-

Ourroney

. /
com%s poptar, th9 .:..:-hore the e:c10.z 4..;.:.: a in the 'Au.! of

Q.
it

Tko ,your

hoard 7:14:tned. auci

in nnw the ouretm to dut

.
0. G the: `..ept. .LbAs
4g

in the hanks.

r10 Fle

A.

de .)ositore '

var,

Y00.
on

of

ropor t.../ on , of -our own
.
- 11.11 -roportien.

r

,
,
big bank ft. iire in tbot 609s!

yLerLt1.s

bo

'but ti

r.oxt

xe ait.de i

a on ,,'our brLt.nc e
A.

'Ea have never

Vrt, n.'ashf the Union Oerter‘ac.
..scorapte 'rent to snaa.slis th

Lt.

void

Tha ::(topic prefer no ,c14.

Halm .-oo aver bad

Orr

bnt

the Unlon c•onortilc.

4.! 4.4. rf$

rt a
A

*Jr:VI C.11°`

Several titian, :kir-t..1.cu.i.e.r.,14 'ethen ther. wile

smash hr'

A.

:14..ett3

yOU Olte ar had an,:,ruu

;AV

Thirty yetll.;

;at horla

Thin peopla aro housrtiln,:;
.
08 i:::rtlel3e :

71-ri„ , usat2 to, but

A.

ince tho
4 a rIln since

yo.h,13n the C'..m.Ak. ir di

peoplo drew out elghty millionE fro,
...1
Vhey brought bsuck.

:taxi ton-

071t. h LIMA

ty
,,ou thinx
outuide
A.

r 1.);Ltika in 1)0ctittise

One crr

ai.fraiu

rettsons irs tat, .c.;•4:01.k.t

.
no 1.)4nice newt the..
rtion

colcl th.t.

'
f h
ai

ot:wr count r".? that d ,t. enn4A,

to pLt it in
CGiuntr,

ch1ef rcazo Y1

k.)mnOf

,
.1' 1)arilui in A,,!;riou Is Lie inch

_cep

nurfl Onor.:-Lok,ti

roisallte

iAlCctIVut1;.e

• 10

•

r vh0
i

3.

4.1 t

ro.44 Lb,
/

,t
.:

Oovaltry people in Prance.
0.

How -bout liostal 0,tvings 1)004.i.a,

'ably redueed




A.

The.; htom.; c-naid-

he eLmaunt of mom., V at AL huardQd; but tht. chffi-

tfloa .uf L116

of gettinc th

Oultlf

ti auvingvbar...00 0 to

'riling andi.wa.r.c i4:.otdair.iitii!:.4.08, in

; rlore

LA:4

enerni visa 04C
POW
•

ULU:. braohes

!low

•.)1.
4telde?

yo:J have ln Parts'
A.

El) It9'

tivnivc.

Two •11.4adre1 4.t.nt

tho total :umber 41 br,Aroh(olit InclAing Ptocic,
b.uale.rod

NU6O

fourteen.
altoguther?

omploplvti 1 R.vre
,

P.

ot,rtr!!on

the;,0t4no.
•

Do ,o

cov!:tr„,)
•

bwy up many u

.ndepOnfion

bx.
-,Ica1h•ci

~h the

.1.41• Itever.
Mitt bocoews crt
C.:te

y

4

hiCh

zt,Ktftrunr. 'r,ttre

1
0.143, of itit Lhe fo.ilures in
cAnnot.

v;;.., toutert
begid

rte of

!3otat fail,

A.

glycol th,f.$

ort j ; t

numbol aud

for 4.4, number of :,,ears.

We

:;ou, :q,tcautc4o it in confidentia,

to

exAcii';:e it Itero

am,re
t L4.

our C!orvaluaton an

, deniers.

L1vr10

•

•

Pten you aus.a.olish a brnah &n

find a loc,o.
with ‘.01A .?

dent bunk there.
A.

vii ioT4O,gmulreklagy

Can thib loc,1 ),Jk caradote

T''ore arei certuAn plawts veatre

yivate bank*

.4fig, 1:#t. the :,,,ndency As for thn private ba:!ker t()
have lc, t440
dImai,peur.

;44:11
,40.-'114-4e..110.N.-4141 w-lu

SUMAS and have uvneru,4 br,.;(tahiin.

of %)-v ;
Iteblxo.

•,,11, -.CakAirarttay.
:
:e t

n evcr;" ura-11 dopoalt

One greuwt elutinotAon As that Vhc

aiwu,y* In the hands of ;#.4.teiiy.

tako srui,1.1

rivzite bunk is

A man vtliornij,

tmrts a

t.,rtivAe bo.nic ma, be a good bb.nicer t4nd fimmoicar .4.11c buE5inents man,
but 1). doer; not adw11 follow tet hi:,;onwho
will inYmrit



in ull Likelihood)

bus:a-plan, 1$111 bet capable of runni-.r it. Thes0

oint stock belnks dc.) not go from fh Cher to son

but are Lti. way

•.%tier Ft!ooti
Do you

no ,o -

Q.

/3. 10 1

• strr,

A

A.

io c;. 1

joint stook . larks in the
:
not

ntrh to keteunt

vo ITIt.11 lot Ian •0r cl it

Tt-mro trtme. in

arse:1,10u and one. in

al 1

:ions

i.e.,

wh ch. !14%6 t 14en
It, I

TV Quo
.L.rtest

othe r

tr.ial arid

brchas Ande ighty

ii1ion friAxica

oap-

tr:tte.r:, tn in

.oh

de.,oni.to? .
7* you tnow

9

t 4.he aize

.ark of prance in0_0

•

nth trig.

but 0 !.
.1,,

t•here ...re no bri.vo•Th•4.he
one 4 ...1.:o4e maned is the Orecilt, i
.

c

tor?

A.

Linee

:yen( aQd
vw

tin

ct

• f

i(.3 d to eni.ab i

Ixnchett are

c.:f f.)-14

C

stabi I tsh cci tn

br;Inch

ccorclance . ,!‘
0

but oaoh t vae

•

+„)1t;: ic..)v(31- Jr-Int
.
:1

•

e char-

k
,h

t

e

f;:t 1,31.4`;
(i
!

iwor
P..

f

•

,
br . L!4;1102 4

p.0 'Ult.: poople ot4trste of 'Chi: "rw.c1nbusInoco ,
towns

th

crohu.nt.
raft"r t1t

t wo is ent •i ,r(..!i
4')

ixv.,;420 14t.
•
A.

10041

d,tffe rent.

Purni t‘Irc $ ,
a;

tl,q3

,o,.,'(1 rnikrzur,cttirers

.

4/

Th

A.

r1Tt

favor tht

ritAnch btank.6

Thr.te f (21d co•r:::rod h.the

fliM

'Ye will not lend o

1 rt ft
n

01 1:37

0 i\ t
4
1

in not

.
"no

oil axtd now Ca•iteLl

}:on

o I: put in ncw

-41 Owe?

We t 1.rod ouz capita in 1v00 fr(,ra 20),000,000 t

2601 0001 nm) fromes $ but Lb Is was on account L f .-ene riLl. bur,
7).no not an




e.

Arbr

of brr;dhos.
f..11e ..1,..nakfrers

ediatit loc--ltt, in

, tr brwich

kat usually pile from

Lho broach is situated, Sr do ,„•ou

41:1n ther

z- 1 te
;31
rorn

as iaanago re
th 14 In

;lace

,
0Vic

In neve r buy

A. Seal Na,

11 t

1.

tia:e otr otapl oyees

cab. the. Isyrr.4-101 i

itte d

sthr

r

loy4111.
'Jew

h.rt

:eat j ui

titoG.k. bi3 cooperate 111

3 of d i sc..° ca.kt: or do t hok,t h ,v(t
,

,
fer of 1

0,ret.iitIing abo
ahoh other

Lich

tere?

Lialy 'Nay
tore 1her.

llot co n

They
Ore!re

rv.!or3ent or tai-e•

they nit.7
n vor.ç•o

aro

3 T10

r cu.U1

tth

..erts,
.

do

PeOre it onr 4.4t t.3 S of cr,. noottv t

Tht • '.v. re ftlet of coittpet it ton compel x.; each of ih4Z3, to eo th':' .)e et
$
1
buzilnesit they can
•.

Would th..: se Joint stock barticr
,
:
.

au(' th t thfr.: 'Quad zoi)
)
world.

Thc,, think

r,r-w;1Z1 On ill by

?

A.

o,t f

t7 in the

;;:41, the zi,-y t crn of no Le it;aue b .

t'H: bt.. f0

Is f,11,

co

alert t

tx.nd ri,•\ not de:s'iro

.

nd hwo to accoflu°da t,e

.

ri

ttl

.0.11.y 1Intl 1.'1')

pl,b110 44.p roc1 ate .0:%xceee.', ing3.:" the

the

zt r.y•

'.e.1..1kjirti
.

in yo %Jr hki, 3jtm

for e

fiht of noi,c Lu-

Wig e
A.

None *4410'4/v1r.

The

1-,11, bunks and their s:,:s 1,tree

The jI.)

t 3t n: bw .kt; w-ore c .catne.
,

adjust th

iv)"ire is to, 1..he.

e ci

p 1)91 of 'Pran on.
•

of

.
it ti,

Do you kc 0::
r

amo

t. a of non e:y. in .

iky to by Axe, the

ut brunches, or

fron tHi briv)e}tes to Pariis?

ono-rw..rth of -.11 our oLush
•
';

tar,t. do rabzfA, '.fi1.4 *.

their own rir4..eonib'..lit:1'
4:1,eto 1itUe

cti

uNix loans

vor,.. one tif 01'

k in 1tac.t,

and the :a.m.:lagers 40 not oo. sz.:V.



A.

br

rulatio,m
-Lain 'hank.

its own
They

'RVC?L

lisraTIR4
.1 *

6 r4.11,Srr 0
\r'4."TC art) OI?
.

ilo)rnAmc coicapsioN.
010

Ar

' '18.111CATM

rTc. Cri.0

Zn apeninp. 1.ho

onnain.




40.

..)r-

3.3t.,ittt n L1,tenteml
-

The 'aron :,!Imitifticd the -.1ambrn ?-4" the
-

!
,
1116-ico?..znittee, alth thf:ir 'Last&

4•
t

1"

ilik/1 1
/1
A oh
it..J..

•

•
. I
v. a
a.

•

i. Specie in twAnku And otbmr apecze
•

ADV.4.111!,
"7MATOR

V4id, on beituUf Of Vrte

arti, ..ed
.

d t

AT10 AL

T
•

1.1.1e.t

•

vpjczAjz)., grfArsol:

f0' • 7.7IWAPT4 15

T.AITIRL I AIM if

Sgut

Colartorolal awiT
iublic an:
ouritien (nunicipal)

S. Advances u,.ion oollateral
•

Overdrawn acoountri

•

ntocle and bonds ko0 for salt

6. nem.' onttos
thirir a.Liu - st,Ari
eAdvaince atekt,i(rnor.

3 ran ts paid
nu., I tes t etc.

f01 1 cw% :
.

ITI'i,„?`‘.
t,it3 jiy&r.'

Deposit.0 ce

•

• iuo,u

,
kce;` %all,
3f

oovalt7.A t

•

'Olt)4'440

rrnr\V tri
•
t

Co 1 gi I

11131

titiL 00- 0 d•

1/-4 15--o 41810

.
AC"

acicto;u1lin,
I 0& 431.

-f.5214

Aocaptan000 on ccvamoro1a1 oapwr
• 4ondts gLven. t< oustorturs
t kme dodoolt
I, i

i

uLti

not

31 nti C7‘.qt.

iit

,J4,
q 4gqSV 2- • 3ti.;.1
113- coo 000.00
/25,06o,Ooo
-z5 ôoo
•
°°°.°°
2 115- 161

U:1:,0170

P.etise rye (Burp:Lilo)

•

'7.

Ltis qi+

-,
vrefil,4Ae, and

-.2 on

111
1.

r;tokt;.:7:t

-. Ix

IL I.)'14.t
fli
.
ctt.

1!(//

ars .

rimirenent of law?

1
1,1 1

,
No, It 1.1

A.

require-

b:ilams.

1tun does

on to

c;overyttriont
c r b,,nk?

p'.4.

1 all

WIC()

*

Do you i;(1kb,1 tshthe niOthAjatiltcmont8 in 4.110 1.
A.

Y.tlut bItt

las

On

our 2101) rels, onsibi1tt;
,
4

t IHS 'h".4747,• 170r t h

Can
of

IY.td to

Ys•

-1 t,r tho 4.;;.nda,t, Lo?,1 or
c..

czt.re.'•

tie by. .ron
•

ihioh .ou halm tjA;“ :.;u1)
A.

-vontft?

)f.:n

„

11. .
,fmv ticivy 1- , ch f

In t.ti

K.

u*e

nmi,on • ono
la+py

ev,01 as in rel tree. b

A. ear-

teo.nly.




(Not., tiaron lir ten card fty.rn 1 illnd a oor of ' .,
:
r•forred 104• sa relive o ted. This x tiaarannt in ik.n
Yrienoh, And wt8 filfttl wi th othar ;i4t,i'era ij** 1,`„.• 0
COMINIi OS1On 1 to be tnimarklatrid).
41V
•

4

LONMON,ENGLAND, August 20,1908.

STATEMENT OF MR. LEON RUEFF, MANAGING DIRECTOR OF THE
LONDON BRA= OF THE SWISS BANK, BEFORE A SUBCOMMITTEE
OF THE NATIONAL MONETARY COMMISSION.

Present: Senator Aldrich (Chairman), Senator Hale, Senator
Daniel, Representatives Vreeland, Overstreet,Burton, and Padgett.

Present also, Mr. H. P. Davis-

on, of New York, and Mr. George M. Reynolds, of
Chicago.

Mr. RUM?:
Ye have in Switzerland 22 Cantons, which are absolute States.

They are all autonomous and have their awn special

arrangements, and nearly all have cantonal banks.

Part of these

banks had the capital given by the Canton, either in the form
of
cash or in the form of securities or bonds of that
Canton.
A
Canton Zurich has a cantonal bank Which haaripit" its capital

thr:eugh the State issuing a fixed loan and handing over the proceeds to the bank as its initial capital.

This was done for the

purpose of issuing bank notes, and the law was for a long
time
that they had to have a capital of their own - what they
called
guaranteed capital - actually allotted Lo the bank; and accor
ding
to law they 0,111d issue a certain ratio of notes, Which notes
, however, had to be covered by 40 per centum in gold and lega
l temer

(5 franc pieces, etc.).

The other 60 per cent had to be

in

liquid assets.




In those liquid assets, as long as the cantonal bank existed,

were included bills with two well-known signa:ures, either Swiss
or foreign, cash in hand, and adNrances on rlwiss government securities or cantonal securities.
Agitation has been going on for 20 :ears to end that monopoly
in the hands of the Federal Government.

Vs have the referendum.

We started to lerl.slate, and a popular vote was asked for on Article 39 of the Constitution, which gives the exclusive right of
issuing bank notes to the Federal flovernment, which had the right
to hand it over to a hank.

After this was rejected by the people

13r a popular vote, another attempt was made in 10 years.

Article

39 remained in the Constitution, .ut was a dead-lett r on account
of not being able to come to an understanding Whether they would
have a state bank or an absolutely private

bank Which w,Juld be

free of the influence of the State, with frioney belonging to shareholders and with the right of control by the government, like the
banks of Prance and of Germany.
Two years ago they passed a law which was accepted.
referendum was asked, and it passed on October 6, 1905.
was published October 11, 1905.

Another
The law

It was dela.':ed by opposi'ion un-

til the 9th of 7anuary, 1906, but the opposition did not succeed
in getting together the necessary 30,000 signutures, and it
came a law on l'anuary 91 1906.

e-

Some interests were op-osed to it,

but nevertheless it bccame a law on Tanuary 9 1 1906.
This law provides (Article 1):

The Federation gives the ex-

clusive right to issue bank notes to a central issuing insti'ution
crea'd in cnformity with the provi.,ions of this lam, unaei
name of "Swiss National Bank."




This bank has all the rights of a

civil person, and is administered with
the consent and under the
supervision of the Ped(ration.
The national bank has for its principal
object to serve the
Swiss r,tovernment, to reulate the ,Tioncta
ry market, and to facilitate operations of payments. Beside
s thic, 'i'cy will underta'Ke l
without any cost, to serve the Treasur;
y of the PeOeration as far
as this senrice s-all be delegated to
them.
I have here an article from the Tondon
Financial Times of
November 21 19r)5, on the Swiss Yational
Pank, which I will read:
"The bank has a capital of 50,000,000
francs. There are
100,000 shares of 500 francs each. Two
-fifths of this anaunt will
be subscribed by the Cantons, one-fifth
by the existing banks of
issue, and two-fifths by the public.
Only Swiss citizens or corporations domiciled in Switzerland car
'e shareholders."
State banks and private banks lunder

ie limitations which ex-

isted at that time, issued notes, but the
re was no State or cantonal currency. Everybody had the
right themselves, if they conformed to certain conditions, to issue not
es.
necessary to specially apply for this ript
ht.

Later on it was made
You had to have a

minimum capital of so much, and your iss
ue was limited to a certain
proportion of your capital. The notes,
however, iad to he covered
by 40 per cent in gold or legal tender,
and the other 60 per cent
had to be in quic assets. That was the
former arrangement, but
it has been changed many tines. It .h.as
eon made eo stringent t7lat
banks crvild find no profit in it, on acc
ount of rates and advances
to the 'Federal lovernment and Can
tons.
"Tile operations of the bank will be
strictly 1iiiited to 1. The issue of notes.
2. The discoun;ing of three months' bil
ls b•arinf; two
signatures.
3. The sale nr purchase of foreign bil
ls or clIcks
payable in specie.




4. Advances for three months upon the security of
bonds, but, not upon shares.
5. Transfers and money orders.
6. Purchases for its own at:mount, blit only
as a temporary transaction, of the bonds of the Federal
or
CanLonal Covernment Of of foreign SLaLes, i
)rovided they are payable to bearer and of easy
realization.
7. Purchase and sale of gold and silver specie and
bullion, and advances upon the saitie.
8. Issuing of gold and silver certificates."
They can get on deposit gold or silver bars
or foreign coin
at a certain ratio and issue their notes agai
nst it.
be delivered in 20 kilogram
ation.

Coins should

lots or pieces of the saAe denomin-

Advances are made on t.ae 'oasis of 3,000 fran
cs on the :Kilo-

gram of gold, nine-tenths fine.
"9. Interest-bearing and non-interest-bearing
deposit
accounts."
They cannot give any interest to anybody bu
This is to prevene the naIiGnal

an

the FederaU.on.

from colapeting with other

banks.
"10. The safe keeping of scrip and o:jects
of value.
11. Subscription on commission of a thir
d party to Federal and Cantonal loan issues, but wit'
-lout participation in the same."
They cannot take part in any underwri
ting syndicate.
"The bank will publish its 1.an and discount
rates at rerrular
intervals, and will issue 1.)ank 11:7; of
the denominaion of 50
francs, 100 francs, 500 francs, and 1,000 fran
cs. Its note issue
will have -!,o be balanced to its fill amount
by a 40 per cent acecie reserve and 60 per cent bills I discounted
at home or abroad. It
will also be obliged to hid a reserve to
'balance all of its shortterm engagements - all that are terminated in
10 days.
The distribution of profits is minutely prov
ided for. Ten
per cent of the profits go to the reserve fund
; 40 per cent Ire the
maximum dividend payable ipon shares; the Lurp
lus will be hanc..ed
over to the Federal Treasury, to be deposited to
the credit of the
varius Cantons, upon a special scheme."
The Swiss National Bank has no tax to pay upon
their issue, add
the private l'anks have to pay taxes.




"All Cantons in
naral will receive for the firkA 15 yearS
an indemnity of 30 centimes per capita, while Cantons which draw
profits from theif cantonal banks will recc:iN:e a apt_cial diribution. After the first 15 years, every Canton will receive 80 centimes =Raper capia l and in ca the s,trpluki in and finanuida
year is insufficient to meet these payments, the Federal Council
will advance the E31416 ileosary o pay
indemniies."
This is

olake the place of

from the taxs on privat..: banks.

4ounts fJr.-aerltz
The P.edai G vernmfint hh.s all

import duaLdes and cue-Gums with which to pay idlitise amoY:TAT,;s if the
bank should not makc sufficient profit.
rigo, of direu
p1u8 is to h

Thz Governmen

has no

axation, but they have same iuonopolies.

1'h

ur-

used for the payment of the bond isse, aid part of

the surplus f7oes L ,
he Cantons -cecause they had to give up the
taxes.
The ,Zate

acqired the railroads, and the transacLlon

should be comp16ted in 3 years.
institution.
State.

The revenue does not go into the generi fund of tJ- e
!

Out of

and tei have

They are an absolutelj Liepaxate

ie

urplus tIle, have to provide, firs, Lhe loans,

o laa.4- e provisions for payment of all the debts out-

standing, While the cther sur-pluc remains as a .ceserve fund.
I will now give you some of Lihe princi.al

Love:fl-

ing the conduct of the Lank.
The shares arc Oiil

L.L.nnsft.i
.alc by endofaemont, and

transfer must le approvd by the committec of the bank.
approval
gives

its

IL nok

n wi

tplanimity, the

If t7le

cluncil of the bank

decision.

7Ye ne,Lion1

i

l'nund 4L;,

, ccept wits cu

rest, in all

its branches, payments for account of the p,
!deration and to make
all payments for their z.ccount equally, witb,ut any cost, but only




up to the credit T alance of the Pederptior with the bank; to re,
ceive any deposit, and, at 11-1,2 de-Tile-1i of the Federation, without
any cost, all securities whir'

elor

to it or which are placed

in its adclinietration (to cake for safe keeping all securities
which belong to the Pederal (loverrment, and all different funds,
like pension funds, etc.).
They have to pul7lish a E.,Rter.ent evry wJek, and I .ave
I.
brourrht you thc last, ore, dated t1e 15th of August, 19 8, and also
one of pli-ut a y-?ar ago, dated the 7t1" uf Aurrust, 1907.
ments are published in two lan'uarres
bank notes are in tore
73y, me of the

langJaces

otro 1 FS

'Trene,'1 and "ernar
,
,

All statebut the

erman, and Italian.

_
Stx y per 66tit, foreir-n and domestic

bills - what does that mea 1 9
,

Mr. Rueff: They Vitve no ripht to discount onder the official
rate.

There is no priirate ra1e.of•discouat.

because they 1

e ye

They cannot buy bills,

Ihe coTiretition of all the ot.z.;r

official rate nor is 3 lA per cent and the private rate je 3 1/8
per cent.
The first object of the hank is not to Take dividends or to
issi)e notes, but to rerrulate the noretary system.
Profits: Ten per cent will be taken for a reserve fund, but
there cannot he more than 500,000 francs in one year for this purpose.

This is 'o ilievent the committee of the hark from making

'A.fT reserves so that tlhe Cantons would "et less.

Aft- rware, 4

per rert Turimum dividend to the shareholders.
The only indemnity which has to , paid by the nationa1 Lank
e
to .t.e Pederation, and which is given up by the puderation to te




Cantons, is co;vosed of the following elements: 5() centies per
100 francs o!

it

authorized issu( on the 31st of Pecemiler, 1.2n4

on the territcry of each Canton,

3n

cetnti7cL.s per capita in ee).(111

Canton on ;he population az Givon hy tie la,st Pcderal census.
(Note:

uponded f!'IP rnaditv of
Trere L.r. Rue:
the law, saying that he would leave
a copy • j.th thersi vn .

The bank is the clearing house and for riving free transfrs
from on,: ci ,y to another.

They have accepted what the Reichsbank

did a few years ago - they hav

astked to open an accoun, wIGh

and to have all %hese facilities which they give, uhey tax ev,rybody a certain amount in proportion to their "turn-over
" uo tne
bank.
By—a,mambax_af_t414-4ommission: How many nranches

as Lhe cen-

tral lank?
Mt. huef: Eleiren.
Islow, as to Bci,r6 of ffanarTment

d ConLrol.

the p7eneral laeetinp: of the shareholders, then t
rlittee, of the -bank.

The local coretittees and

rIrbu l

council, or comhe control cum-

mission have the ii!:eneral management and the loc

manacemnt.

The council of the lank is namc:d for four , ears; 15 desic
:
ed

by the meeting of the shareholders and

.au-

5 by the Feewral Govern-

,
nent must be representatives of finance, commerce, indusGrs, arts,
etc.
The nomination of 40 members will be made in the foliuvAng
way: The Poderal Council nominates, in the first instance,
P•esident and Vice President.

e)

After that the ceneral mueving of

s} areholders nolinates 15 memb-rs and gives notice to the Feartral
,
Council of the nominations which they have made.



The Federal loun-

.8
Oil, after receiving t! at nomination, procd to tiv: nomination of
23 other Int,yrio,rs, of whicv. not .n.ore tllan L

:m
I? .11, ,, rs of tae

-E of
Federal chambers and not more than 5 be menaluL

choice of thuse 23 iwrabers, ar. equitable

of the Cantons.
2,:dresentation

nd

iii"no assur3d to the leading oankirvi; centers
AleiJurs

.incipal centra of colaercf: L4ad 1-1Gustry.
the p:
the Council ao

ovrnments

o , Aave to del:osit sharcs as qualification

f2:: faela

bership.
ae-

The rest ef the statute is taken
tails of how it i,
FlotA lon

Yr. 'verstrt.ct:

.
does t,"1-,e 7.reeid...at act aE President

after lwing deai7nated b, the council?
:acs.
. Rueff: Pour .),
Ti

1er:islatio;1 vcxa ciulIromize between

rad-

icals, %filo wanted state bans, and tic conuervatives, who wanted a
cent-al bank.

T1-13 "Federal '",(vernriell'. guarante, s

tain income for J:avin

taken awa. 'Ile taxes of their banks, bal

)
there is no guarantee of th, 4 pr ceri

dividend.

Aldrich: Was there much di.uLf3ic;r1 in
r. Fueff: A.

Cantons a cer-

Ir Parliamenf-,

has taken 20 37arsl fitting

reat deal; i

to ar;complish this
Pldrich: Is t ere

DT):1

way 0-10A lbe cap k.et the main fea-

tures of that discusFioni Lhat is, the el_ :ctes of the principal
people whr harr; ,a.l.en part in it an.r

th

b.rgunents used 17 both

sides?
MY. Ruoff: I have ro do.,b1

1.

car b. i,r( cored in rwitzerland.

W. Vreeland: It seems they were aL. in favor of some centralized authority of one kind or another.




What were the conditions of

the country 14hich led everybody to deLr::

csrLralization of

their llote issues and bankin7 power?
a .r. Ruoff: We have not
ihriati

one as far as , c7v , ric) excllange 1-)etwe2n
.
*

Berne and 7uricli, but so,
(teti:rief: it hex leen difficiat to

transfer mone) from one _,lace to

e ot

Those ',Inks were in-

dividual banks Which looked for profits and not for the int
reel of
the conmunity.

At certain

!es,

I t was Ter?, difficult t) aet
fer'red.

.1-1

They were afraid tb;-,
citite

sound.

as your crop-rnoving times,

notes and to get the i11OtjC
penaps one of these

trans-

institutions

This Tlas not liuppened, hut it (111}11.

Ilavc happened.
gr. Vreeland: Was ter(‘ any distrust of banks in on

Oanton

and rAnts of another riantr,ne)
Mr. Rueff: There was a verv rigid supervision 1)37
troi!er.
trusl;

Threfore, ts regards

deral comp-

rotc's, then- -Fes /-1) dip,

ur as repards the manarement of certain tanks E)t:

buf-iines:1, there was some distrust.

other

To preven' these difficull b ;

en the seva td ,, 8 or eighties wF: made a co cprdat of the di!ferent
:
.
banks, ).nd that association of t
many facilities as - pssi!le for
clearing house in 7uric.

diffe , ent iosuing banks gave as
'
transfers. It was a kind of

They did not want a central institution,

so the 1 anics pulled to72th3r and tried
,

This

was about 25 years ago 1111W, thIs was started.
This concordat was ci)mposed of i3suing Lans of rwitz.rla.,i
d,
and amounte.d +o 50 1.er wont of the lankin- ctrength of
rwilzerland.
+ if; net now in existence, but the cantonal ouluili ilavu ourt
ea a
new associa.ion to defend tl-eir interests.
be tliowly withdrawn, and they will no



Their bank not s will

havo tlw pull any more over

tl,c public, but they have nor rA. kind of deferisive orcanization so
ac Lc dircuss betweon t'-ief;eives the steps they shall take to continde in Liii;iness P.rd "vlw l;'uy will go on after r-Li this has been
set led.
we are mzitirJr er active ;rrpar anda in
,
of checks.

We havF3 0 orted
-

check transfer systetri.

Stbi

Ilivitzerland for

use

the

savinfrs bank and postal

Individual del'ts are paid mostl.v in bank

notes or coin, but they are trying now to avoid transfors of actual money and to

t thei to use cbecks for the oayment of their

df_ftts.
Padp:ett: If a mar goes te the hank and nerotiates a loan,
does he take the actual -Ioney awa

with him, or does ht: deposiL

in the hank and withdraw it, or does he take it in notes'
,
r. •

Rueff: If he is a stranger and has not had a bank account,

he wi'l tak

bank notes and will pay GhLse notes to the man to whom

he is indel;ted.
r. Padgett: How about regular cuatomers9
Rueff: The merchant will have an accoart and will as
a trans-rer to another account,

He will write cut a check.

use the pcstal transfer office for goods in a lit ie town.

for

He ;aav
They

have not used checks much in Switzerland.
71q.. Padgett: Supf.)ose 4 country mercan

a 1)111 of goods

from a wholesale merchant, payment for which ib due in 90 days, ant
at the end of 90 days he wants to remit, to him, does he send him
his check on some bank or does he u;et Lhe money and serd that by
express, c,r




ho w% (weenc

Mr. Rueff: I suppos

tr

bfer

1 ?

be wolild buy a draft on a bank

that

They
'they do not often send individual chec.Ks.

place.

e are trying to

introduc3 that system.
an,;

r. Aldrich: Is there in exisance in fer...nch
t;,JE1 acilL,ation and the final resAlt.s'

histor.

rl,os and articles.

iblefr: 'Yes

r. Aldrich: In one c)oo,i.
Mr. Ruoff: We will inqL;ire.
le :)66,a1 saving&

qt. Ovorst,ret. Row ion - has

an

lecn in

operation';
• .ueff:

W3

,fears.
u1,opular?

Overstre.A: Is

• Rueff: Very popular.

V.

re the agents for them here.

Mr. Overstrct: how are ,hc ceposits invested
r. huff: ihe:; inveb'

.nmctnt and State scariin (lova.:

.
ties, hut we are riot 1,Norougl-1y falailiar with ,1-, at reatt...r,J
qr.Overstreet: What int.:tvef;L io paid on deposits?
J?:Jr

Mr. Rueff: I think

,deral
. OTcrstreet: Does the lioney pc, into ti- e (7
vi'. Rueff: No, i

is a s:).lutely suarae.

Mr. Overstrett: Does

Gr

cent ml y,a1-11 have

supervision of the lkderal depubita?
Rueff: No, a_soluLi:. aono.
r. Davison: Are there ay !savings bans in •'4.;itzerland
Rueff: Y, ver

coo. t:ra'Aire banLE, pvivatc, LE-vings
0

ranks, statt Lavinge banks, benevolent saTingb barks,




.16Te

wIlere the wholu irofits arA distrilutee.
'fr. Davison: Do they pay a higher rate of interest than 2 tier cent?
Mr. Rueff: Yes.




SOCIETE ai7ERALE.
"eplies of Louis Dorizon, Directeur, to the Inquiries of
The ..ational lonetal.y Commission.

I.
The enclosed copy of our st.tutes furnishes all the desi-ed information with regard to the date of foundation of the
Y'ociet

rera1e, it

er7aations, its cal;ital, the form and

mode of transferring its shares.
Accordir- to

(Appendix 7o.1).

our request, ';:e supplement this Information

•tAh a table reproducing the averz).[,e quotations of our shares
from 1901 down to October, 1(:)OL
during the sa7ic

)eriod.

incl(ing the dividends paid

(Appendix No.2).

Every year at the end of 1ardh, the

rectors and the

council of administration present to the (:enerI :looting of
the stockholders a rn-ort containing the changes in the different operations of the Societe and the ')rofits for the preceding .,-ear.

I enclose herewith the reports of our last two

general meetings (Ai )endix *.o.3 and 3 his).
of the

In the course

ear the law requires no flirther publicit:
); neverthc-

les, the Journal Officiel de la Republ:que Francaise publishes per odically the monotwv balance sheet in th
is enclosed as An;)endix

o.4.

form ;hihich

Ths publication, conpulsory

under the law of 1fl66, has been maintaine(1 1 although it has
been voluntary since the Societe Cencrale was, in 187t, transformed into a joint-otock company, accordi!sr to the lawu of
July 241 1r67 1 aLd Alv,
13st 1, 1P93.




2
.

The me:flod of adrlinLstration, conditions of selecting,
advancing, and remunerating officials are ext)lained in Appendix No. 5.

The various pro-,-idtmt institu,icins for the employees

and

aents of the Socthe are explai::ed in docullents 6, 7 1 E l and 9.
Iv.
You selected one of our balance sheets, and have asked
certain explanations about the items and their amounts.

The

first item of the assets, "Caisse et '02'que," P5,600,000 francs
ineluts the specie in the vaults and the credit -i)alzJice of the
Societe at the Bank of Prance.

As regards the

)crce.tar7e bet-

ween liquid assets and liabilities, it would not be indicated
by the
the

apparent proportion of the item "C(1,if.;se et -1anque" and

mount of the deposits.

The Caisse finds a powerful sLp-

plement to its in ediate resources in the portfolio.
discount of paper at the Bank of

1
-.ance makes it

The 1.e-

Gssible to

avoid the maintenance in our vaults of an excesfAve amount of
cash.

The portfolio holds alwa:s in reserve in qif' form of

pap. r devices that can be i=ediately rediscounted, 75 to FO
millions of paper, taking account of the .,enral offic( in
Pars alone.
the morrin

On the other hand, the receipts effected dnrini

en the days of important maturity, the 1..th and

the Pnd of the month, balance the pay7lents made during
those
days and compensate ver;y appreciably for the withdrawals. The

cash ariol

th ou,:h (tiscount ol)erations is in

c;iple only momentary.

Thc. consequent immobilization of funds

can be easily reduced by ri!sidcounting.
this aay,

means of rediscount, cur

Lon('-time paper in

e t.;. nsferred into

short-time paper.
The item "Coupons a encaisser," 17,40(),000 francs, from
the point

view of the treasury, is an importat addition

to the account "Caisse et

Agi que."

variety :%; H elasticity

The

of the assets reenforcing our treasury re7iove any importance
from the rigorous maintenance of a fixed perce1ano in the




amour:, of cash held.
in case of

A3i(le

from the security that it affords

panic, resulting in a run of 6- ooit-

ors, the system !;racticed in Thcarce by the Credit SocIeties
permits the reuction to a flirimum of the amount of unproductive capital immobilized in the vaults.

The reemployment of

a
capital for short-time na- occur without the ca. ital's ceasing
to be a utilizable division of the item "Caisse et

,anque."

V.
The portfolio 5322 C0:J 000 francs embraces co
er of wh.,ch the maximum duration is 'JO days.

pap-

We make no dif-

ference f-om the point of view of our discount betwe, n note
to order and a draft.

In certa'n rer7ions our ar7ents offer to

farmers and landed proprietors bankinr: facilities under the
fo:Ti of LL, ricultural via 'ants and acoommodation paper.

This

paper runs three months and is discounted under two sir;natures at least, but it may be twice renewed.

s

(1- knew, our

4
.
branches also discount warrants and advL,nces upon merchandise.
You have asked t2le classification of our portfolio, and
we indicate here how the balance of 562,600,000 is subdivided:
217,200,000
270,100,000
44,000,000
k000,poo

francs
francs
francs
francs

of
of
of
of

paper
paper
paper
paper

-53
-2,600,075

on
on
on
on

Paris.
Provirces.
forei(;n countrics.
warrants.

All of these items ]:uve appreciably increased since the
date of the balance sl:-et which your inquiry reproduces (the
end of 1906).

This

()It

il± set: by comparinG the bal,nce

sheets enclosed for the , nd of August and the end of September, 190'.

"Bankable" paper enters into the total in a pro-

portion of about 70

er cent.

vi.
The item "Effets a l'encaissenent," 52,9001 000 francs, is
recruited from the laiLturinc, remittances, the dciay involved
-beinc, 5 days for Paris, 10 da,;-s for the bankable colintr;,:, and
15 days for elsewhere.

VII.
"Rentes & Actions, .3ons

Obligations, Avanccs sur T7ar-

antics, -larticipations 'Tinancieres."

Article 2 o

the stat-

utes shows that the Societe Cencirale is free to select the
kind and amount of erplo:nent for its funds.

In co- trast with

tr'.t and savings institutions and insurance companies, it is
under no obligation to invest in securities of a detcy ired
type an, uore tha




it

oblif.ed to accrire real crate.

5.
It is allowed to invest I:: "reports" (7L l t0.;2 000 f ac)
an(1 to obta_n in this way an - ,:)reciable

the aiC of

locLno for short time.
The "participations" are not lim_Lted to syndic, te operaThe Societe Gr. nerale can tae an interest in industrial an

co

al affairs.

intr: d -vce sec- rities

It is likewise our custom to

te :.-so..rket by way of sales at our

offices or at the Bourse.
"Avancea sur :aranties."
kin

Our sttutcs (Jo not define the

o: securities aamii3sible as collateral fo - loans

(172,530,000 francs).
be contracted for
value of the pledf:e.

sLate only Lhat these loans must
dks and to the extent of for-fifths the
jith the permission of the customers

and viith a profit from the reduction of (Tharr;e2, certain advances 71ade Hpon b.nkablc seurities may stUtlate permission
for the Societe to transfer this collateral to the Bank of
/

f
lorance in sup ,ort of operations riade by the :,ociete at that

institution.

This :lethod of liquifying a certain class of

securities is in practice little

-e.

It co- stitutes an ev-

entual resource of our treasury, and although the proceedinc7
Is perfectly regular, inasmuch as it is foreseen in precise
terms in the loan contract, its erlployment occurs especially
orl.

ir

eriods of exceptionally hirth

ore:: rates.

VIII.
"Real Estate" 25,900,000 fr,Lncs.
thLs item of our bz.dance sheet.

We

Iuu do uo

ake 'he

ask 1;s

iiittiativ

caLling :
;our attention to theIrogression 21ncc: sevcral ‘,eivt.s







6
.
in the amount of 1. bit; item, ''ec - 1tinr0 from

double procedure

of ,
11- council of administrtion - 1. To ins al our employees
in better hyclenic conU tions, reserving for them ventilated
and corafoitable

offices;

2. Offering to our customers con-

ditions appropriate to thfs. variety of our needs.

These ideas

have found nc:table a ;1 licat ion in the acquire-lent of a -;ons1(.1frable group c)f 'buildings near the Opera.

Important trans-

form. ions have likewise hem ma e in our branches in. Paris
:.nd in the -1;rovinces.

It will also .be noted that L11.,2 exi)r,r,se
,

irvolved in these improvements in our branches and aj.encis
is borne by the account "Genera..

.x.penses," and is not includ-

ed in the item in the balance sheet of
IS e:Kplained

"Real Estate."

This

the circumstances that the offices of our

agencies are almost always hired and not the

..roperty of the

Societe.
Ix.
Itomptes de

quo a i'nt

et :amptes

Divers," as the title indicates, incldes not

17rants
foreign

blances; it groups together su.ndry current accounts of our
of:iceo in Paris and the country.

You ask our motive for leav-

ing to our credit with our corespondents such important sums.
One must first of all takr

account or

he fact that in those

balances the foreign accounts do not amount 10 more than 30
millions to our debit, ;:i.nr, to about 15 millions to our credit.
Th s last sum itself is far from being altogether a demand account, and in constituted in part of bi11

ot ;et natured.




7.
For the pirpose OJ avdCing com15ion2 a,n( cost of exchanr7e
and other onerous losues, we do lot discount at Paris foreign
bills.

We remit our bil1:3 upon distant col,ntries for cllect-

ion a suffic:etL 1oi'lime

before their Llatlirity.

Our cor-

respondents credit us ,:ith the same at the moment of maturity.
The condition: of thcse accounts often contain the stipulation
of interest of 1 per cent below the -,-2.1 c of the T1,tIona1 Bank
„
for the credit account and 1 ,cr cent above that rate f(,r the
debil.

"Les comptes de cheques," 339,728,000 fra:scs.
ceive

in theory an interest of 1/2 per cent.

nese re—

A hicher rate

can -ae c-aned Ln consideration of withdrawal only upon ri›tice of L'n-

rati.on of thc: deposit.

item arise:, fro

As

ou can rie l this

ro)osits subject to .iJ,hdrawal by chedk.
XI.

"Les deoot3 a echeance fixe."
or certiricate (bon) of J. ]:.-th a
;,
Jo.10).

ociren i

rf,e re. uneration a!IJ I:

mo=1, on th:se certilicates
claar (A,))entilx

c.11).

These give rise to a note
enclo:.ced (A. - ,endix

:Cl.lowe(1 at -1,1-1

, resent

Ldicated in Lilo e :closed cir-

It varies Etccorinc to the flue ua-

Lion in tlic rate of discount an( the rate for advances by
of 7
1/lance and accordin- to the general condi'ion of
the )ion
XII.
"Effets a Pa—er " 13' 91 ,- n O .
-

Under this

are

8
.
grouped our acce,)tances.
operations iL; co
1/F per cent.

hC co

is6Lon charged for these

only 1 4 and 1 2 per cent - occa2iol.a1ly
/
/

These acceptances are granted in the

ftajority

of cases upon the iraporLation f:cui abroad of youl, coiLon,
leather, coffee, etc.
for 90 days; les

The coJ.respondinr7 drafts are

frequently for 60 da:s.

XIII.
"Profits et "3ertes" are presented in their totals,
expenses being; deducted.

From the totals for the branches

ave 1,)'1-1 deducted a sort of instalment corresponding to ;,heir
proportion of the expenses entaLled by directi(11 and adminsitrtion.
XIV.
In reply to :,our question concerninc the n1. Iber of our
branches in Daris and in the country, we enclose a list in the
form of a poster (Appendix

o.12).

We add to it an advertise-

ment (Appendix No.13) noting our principal ol)erations (t-d the
charge for safety deposit boxes (Appendix 2To.14).
Our branches are verd rarely created
local banks.

e abst)rption of

:Much more often they are opened after an inquiry

on the spot by the directors of neighboring branches and an
examination of the opportunities which the locality offcrs for
a bank.
XV.
You ask the amount and

ature of the different taxeu paid

by our establishment, ond we hand you herewith a study made
on the occasion of the last Universal ]xpositiOrl, entitled




"The Credit (.'ocieties an
This r7iVCS

the Tax System," (Appendix 77o.15).

figures considerably icao than the amount of the

fiscal carr,es levied aJs.,

resent upon the Societe.

of taxes levied has increased oroportionatel

The amount

to the progrc2s

in om:r opeationli 1ice L)00.
X1/1.
n77

We hand

also the rules and statute o of thc. Hlaring

Ho7)no. .)11 ?aria, (k; endix No.10, as well as statistics on the
amount per day of thc oration
No.17).

of

_t3 1. membcrs (ApHendix
6

The clearing hota;es in Prance are far from reaching

a development comparable to t:hat of the cLfarinc houses in
7f.land or the United

t.atcs.

It is not

of or financial nlarket in thii

hat the orGanization

olAntr.; is defective, but the
;

banks and thc plblic have not: accustom(' the7.1selves to ,
,
?t
makinr frequent use of it.
XVII.
You z -o without doubt in possession of the statutes and
rni7ulation:;

or

Lhe

3ak of France anti knaw the services vfrieh

it renders to the public, to the final:cial world, and
dustr,.

in-

We recall onli the useful support which it brings to

the credit societies from the re61scount of our pertfolios.
,Lt
rket.

1r

ho Li:x.le time the reculator o: the dIscount

conditions

T.3. or r2.".4% .

iscribcd in our documents ar(' lLtbelled

D:_scounLs and advances thui

follow al)tonatf4

ically the modifications of lie rate of the Bank of "ranee.




XVIII.
You ask us if we have undr,
T;one in :Prance Li ancial

10.
We recall the r.'e.eral cf_filts of 1882, that of 1E95,
especially upon .
1:h
of 1F9(2.

As

•ealinc:

r:old mlninf./, and the soczaled metal crisis

or thc monetary crises of 1907 ard th , first

ionths of 190F, it was on?:,' th
situation in foreign rlarkets.

fcebic x.ccussion uf the
It is to lie olmerved jIlat the

Bank of 'ranee in '1,1is last condition (id not raise its rate
of discount until after the 'ationia :anks of other c untries, and in

much lower degree.

Its coin resoLrces permit-

ted it LU put at the disposal of .vihc other countries a part
of its own 7:o1(:)_ suppl:;.
fected.

Ordinar:" discounts were in no way af-

Restrictions were onl; 0:-.derf'd

arc') to the ap-

ceWGuncesat the Bank of paper craLed abroad or drawn upon
forein countries an
of diocountin




domiciled ir prance for the oole Hurpose

at a mor

advanar;eous rate.




iIeccmiendation of Charles

Dawos, Comptroller of the

Currency, relative to "Limitation of Loans", contaiqed in his
Report to Congress for 1898.

One of the most iml'ortant reforms needed in the pres,:nt
nationul bankin: law, is a proper ,provision

the a:kunt

which can be loaned to any one individual or corporation, in
order to insure a general distribution of loans, and Ido preven
an improper concentration of a bank's funds in the hands of
a f.-crt borrowers.

The provision of the present national

banking law designed to carry into effect this important principal is as follows:
Sec. 527.0: The total liabilities to any association
or any person, or of any corAvany, corpofation, or firm,
for money borrowed, including in the liabilities of a
company or firm the li.tbilities of the several mtmbers
thereof, shall at no time exceed one-tenth part of the
amount of thc capital stock of such 4).:sociation actually
raid in.
But thn discount of bills of excl-ian,-e
in good fa]th arail,st actually existin values, and the
discount of commercial o business paper actually owned
by the pel-son negotiatin - the _Bu.e, shall not be consido r:',3 as _cney borrowed ."
Alu.rst as if in admission of the fact that this provision is unscientific, avid ill adapted to carry into practical
effect the :rat princip-xl of protection to depositors an
sharehold

-s, svbserved oy generally distributed and safe

loans, tne present law provides no specific peAulty against
i.idividuals which the Comptroller can apply for violations
of this section in the min

of excessive loans, where such

violations do not affect the solvency of the bank, nor justify the apo;nut of a receiver,
A United -tates cotxt, under the i-Alrei1 provisions of

he




-2

law providini: for the forfeiture of the franchises of a bank
for any violations of the hankin: act, might adjudicate the
question of fact us

o such viola_tions, but could apply no

othr reredy than forfeiture of franchise.
Sin,e

he institution of

he national banking syster:, thf_.

violation of this provizion has beet: comf on, and the Comptroller, though arowinT no kn

violatiun to escape his

writte:1 proest, finds c-r at pructial difficulty in his enieavors,o enfoice thi3 requi-ement.
On SeptHber 20,

898, the date of the las

call by the

,
Comptroller for statc rents of midi-Lon of national banks,
1,124 barlks, constitutin7 nearly one-third of the enti:-e nurrber of banks in the system, r - ported loans in excess of the
lindt alloJed

sect on 5200,

rtatut-s of the Unit d

';tates.
r2lie principles ,In(ierlyini, the
a.-e a

present provision of the

valuable to ,Atipositors and shJreholder in their

up,di.ation to the bank:i of the large coml.:unities, us to the
banks

of the smaller communities, but the. observance of this

provirdon, while not int.,:rferinu, with the current requirements
of either the bunks or the public in smaller comm.lities,
proves an almost insumzuntable obstruction to the business
of our larger cities.
The pr sent ned is for an amendeAt to this provision,
which, uhile compelling, under penalties, the safe and proper
distrib ton of loas of lar,:er banks, will enable the

to

ro:e nt.arly the :;ae.,e per ce.t of their total .,- ssets dhich
,




I:. this way

he pro ent provislon allows to small banks.
,
the 0:ricers of larp- er banks can su

ly the proper needs of

the largyr comalunities without disre(jardin7 the 1.Jw, and the
Comptroller can hold them lncler penalty to strict observance
.ard woul,:: indicate ireof the arleyC:-d law, which :rho,: disry
proper distritntion of loans, somethiii
the proJent provisions in th

',nfr.A:',ions of

case of riany banks do iOt neces

sarily indi,;ate.
,
The greater ratio borne by bailkin,, resourc s to bankcaldtal in tLe larger coral:unities, as compared w_th the
like ratio in sLialler COL

nities, is espon.dble for the

e-

fectIve and unequal workinL; of thc present provislon.
The average ratio of resources to the averat -e caital
of the 47 nat_onal banks in the city of New York is as 1[; is
to 1; of

he 17 national banks in Chi:aro as 10.2 is to 1;

of the 6 national banks in :It. Louis as 7.3 is to 1; of the
257 national banks in other resrve citit's as 6.6 is to 1;
ALle in 3,255 co,'Wury banks the ratio is but as 4.7 is to 1.
The law limitinr loans to 10 per cent of the capital,
when applied to the

3,255

of the smaller communitie:.; of

the coun'ry, as a -rhole would a1ior the loafl

f 2.14 per

cent of !heir total assets to one individual.

As compared

vith this, the banks of the city of hew York, cAl

he ay. rae,

could not loan over fifty-six one hundredths of 1 per cent
of their total a(3ts t(, one individual; the banks of Ghica, o
:
not over ninuti-eic,ht one hundredths per cent of their total
assets; ,,ne DE.us of St. Louis not over 1.4 per cent o:
total Lu3setJ; the banks of ot,-.:r e,serve cities not ovur 1.1




-4-

par cont of

heir total assets.

In other Jords, the proportion of their assets which the
country banks of the United itatescan loan, in strict compliance with section

520, to one individual, is -ixty-three

one hundredths of one per cent greater than in 257 reserve cities, seventy-four one hundredths of 1 per cent greater than
in St. Louis, over tvrice as great as ii Chicago, and nearly
four times as great as in the city of New Zork.
This provis.on as it starCs A present constitutes an
ince , tive to the making of loans the larger in proportion to
the total %ssets of banks in

mailer coraunities, whe:e, as a

rule, large loans which are safe arc the

ost difficult to

secu ,-e; ihi1e in A.he larger business cinters of 'he country,
whe-e commercial conditions or ate a certain de:'iand both from
bans and borrowers for large and safe loans, its effect is
the reverse to such an extent as to be injurious.
A bank with smaller loai,s, is not necessarily a bank with
the more distribut.,:d and safe low's.

A liuk aith 0.00,000

capital :_uld 400,000 deposits, the latter being lc, w-ted in the
maximum al!punts Lalowed ,y thu present provision (to-wit
to 10 individuals at 0.0,000 each) has not as well distributed loans as a bank of 4,000,000 capital and

(5,0)0,000 de-

posits, the latter being lotA.1 d to 50 people, at

of ;;100,000 each

he maximum

In the former case the loans are df..s-

tributea among only 10 people and in the lattr case riong 56
people, and yet in each case there is strict compliance with
the 10 p r cent restrictdon.
One of the objects eviently designed to be subserved by
the

.ent provis.on of the law, was the protection of the




-5-

capi -1_ of a br.t.k, as distinguished from other assets of Lhe
bank.
The franers of the section undoubtedly considered the
capital of a ba'.k as a greater safeguard for thr- depositors
against loss, when not over one-tenth part of it was loved
to a single individual or corpo-at_on .,, _thout, security.
;

They

recognized the fact, however, that whe.i outside sec'.rity was
had for loans, the capital did not need fol- its pretection
the 10 per ce,.t, restriction; and

hey provided accordingly for

the exemption from the restricti, :1 of a certain class of secured loanJ

follo.is:

"But, the ii.;count of bills of exchange drawn in Food
faith against act.tally existinr,
and the discount
r)f cor.imercial or business paper actuaLly ownyd by the
person ner,otiatilv, the sae, shall (lot be considered as
money liorroyed."
In the Lodification cf section 5200 , which vie will recomm-J2nd, we invoke the same principal of outside security for
the protection of the capital ac:ainst loss upon loans exceedin

10 per cot limit.
The size of a loan is of

its strength or weakness,
such as to be

undu

tself

no indicatLon either

f

If the size of a loan is i- ot

concentraton of the assets of a bankini
,

institution in the hands of one illdividual or corporation,
thus deprivin; its creditors and shareholders of the saf ty
-of the law of averar-e, it is not dse, either upon ecortomic
grounls or uY)-n groirils of public r,olicy to forbid i. b;
,
,
If, • o:Tever, the r:ize of a le.1:: is :3,1ch as to eau:3e su,.th
.
concerltratiott, it

prevention is justifiable on both




-6-

grounds.
RecoF,nizin,- these truths, it is the iasier to understand
why in riany instan'es a 2trict compliance with this provision
of the Low (section 5200, 7..S.U.S.)is consistent with all the
needs of the current business of a st,all con:unity and a proper protection to both banks and the public, yet in some larger commlnities it seriously interfers with the business requirements of both ba_ks and the piblic, and addsin no way
to the safety of .Le ,:epositor.
The lim.t of uhe al,e ,nt of sinFle loans to an arbitrary
percen - age of either the capital, or the
and surplus of a bank, does no

sum of the capital

insure a gr, ater or proper

di,tribution of loans in all cases,

Sin e, as stated

before, the size of a loan is rot, per se, velatd to its
safety, the more importa, t proportion to consiHer, when endeavoring to regulate the distribution of loans by law, is
that of the arieunt of the loan to thc.: total assets, rather
thrt. that of the loan to the amount of the capita'.
Croulvls of public policy suggest as advisable the largest liberty in loans, not inconsistent with the absolute safety of the depositor.
The _abitual jisrucard of the present provis-on by the
officers of so many banks, interfers with the proper supervision of the banks by te Comptr-lLer, and tends to create
indifference to the restritions of the national bunking laws
The failure of ,he present law
.

o provide the power to

apyl.; a personal penalty for the makirw of excessive loans,
sometimes embarrasses :he Comp. rolter in enjeavorin,- to check




-7-

tendencies toward 1.ecklessness in loaning, which poin
t to the
ultimate ruin of a bankini institution.
As before stated the prent provision, when properly
altered, should allow the banks of lari er coLirufdties
:
to have
more nearly the privilege of la. inf a
- :
.

ive

percent of theit

total assets to cue individual, which now belongs
under a
strict corivliance with the present provisirL, to the
bunks of
the smaller communities.

From this privilege they are

now debarrA by 1 v.
The :esired r, -3s.11ts can b- obtainr,d, in cur judi:me,t,
.
by -Iddiw_7, aftc.r the 'ords in 2ection 5220, "sha
ll at no time
exceed one-tenth part nf the a ount of the capi
tal stock of
su,:h association actually paid in" the foll
owi;I: words:
"Provided, Tat . he restriAion of this se..t
ion as
to the amount of total liabilities to any asoc
iation,of any
person, or of any coLipany, corporation, or firi
for money borrowed, shall not up,.ly where a loan in ex:;e
ss of one-tenth
part of the capital stock shall be less than
two per cent of
the total asets of said ank at the time of
makinr said loan.
Guch loan shall be at all times protected 10,,
collateral security equal to or Fr ater in value than he exce
ss in the
amount of said loan over one-tenth of the capi
tal stock."
A strict and p,--sonal

enalty

nfon .eahle by the Comp-

troller, should then be provided for infracti
ons of the asiended section by the officers of banks, to enab
le the Comptroller
to successfully enforce general and stri
ct compliance with
its terms.
The suggested amendment will make sect:on

:200

just an

equitable in itn rob tions to all national bank
s, and to all
communiti,.s of our country, large and stal
l, which is it not
at pre.;ent.




'-8-

gectiori 52no thus amenled will not interfere, as at present, with .he ri.-ht of the banks in the larger comrnAnities to
meet

he legitimate requirements of business in ti.ese commer-

cial centers.

It will enaL)le the Comptroller, by its en-

forcement, to prevent an undue concentration of loans and
conserve their L,eileral distribution .
Under the sect_Lon thus amelied the ,;L,pital of a bank
will be protected, inasmuch Lts .c) loan in excess of 10 per
cent can

he1. be :.ade, except upon proper collateral security.

-2he pe„alty clause will enalde the Comptroller not only
to limit ihe size, but to enforce the securing of excessive
loans.
The following table shows the inequality of the pre:;ent
law in its pr .ctical effects upon the banks of larger and
smaller comunities, so far
loans is concernt-A:

s

the i.ossihlo

:iiL;ti•ibution of

No. or
Banks
July 18,
1898.
Yorh City
Chi(;ar0
St. Louis

47
17
6

All central reserve cities 70
Other reserve cities
257
Country banks
3255
../lited States




3582

Avurage
Resources.

Average
Capital.

I:aximum
Ratio of
Average
average reloan 10 per sources to
cent of cap- average
ital•
capital.

48,598,379 4,036,170.
11,632,219 1,144,118
1°,257,586 1,400,0oo

Average naxinum
loan to average
rescurcos now
allowed by section 5200 U. S.
F. S.

1o3,c17.
114,411
14o,000

18
o 1
10.2 to 1

14.8 to 1
6.6 to 1

.68 of
1.51 pur cent
.14 Ler_ cent,
...

6.4 to 1

1..56 pur cent

16,191,676
3,909,561

1,093,571
591,343
12o 88t,

109,357

1,11°,462

173,60

17,365

59,134
12,0088

7.3 to 1

.56 of
.98 of
1.4 per cent

For the purpose of ascertaining the general re:ult
of the suFJ7ested ar.erdment to section 5200 U.S.R.S. an examination has been rade of the reports of condition of
the national banks of date July 14, 1898, and examiner's
reports for approximate dates near.st the -etc.

In the

foil ov.ring table is set forth the number of banks in reserv
e
cities named, total loans outstanding November 1, loans
in excess of th: le, al limit, loans wiicL would be excessive if allowed to the limit of 2 per cent of the total
resources, and number of banks in w ,iich loans equaling 10
per cent of their capital
of total assets, the loanii
limit would not increase.

ou'd ho Lrt,;:te2. than 2 per cent
1 ,ower of which tho proposed
The table also shows s_LnEu-

lar infornation relntive to one hundred banks selected
at randor: f ror, vario 5 sec tic s of the co;intry

-10-

Cities

New York
Chica-o
St. T,fluis.
Boston
Albany
Brooklyn
PhilndelpLia
Pittsbu:14
Baltiroore
ThshinF,ton
Savannah
Ne7 Orleans
Louisville
Hou.Aon
Cincinnati
Cleveland
Detroit
Lalwaukee
Desroines
St.Paul
Tanneapolis
Kansas City
? .Joseph
,t
Lincoln
Omaha
San Francisco
Total
Total all resPrIre
cities
Cc,
.int,ry




Total

Number of banks in
which loans equaling 10 per cent of
their capitul would
No. of
be greater tlJin 2
loans in per cent of total
excess of assets,the loaning
the propower of wlich the
posed 2
prcposed limit would
per cent not increase.
limit.

No. of
Banks.

Total No.
of loans
outstanding Nov.
1, 189E.

47
17
6
70

29,919
17,652
'LAIL
55,362

5o4
53
24
581

30
12
lo
52

52
43,123
6
4,326
2,510
5,
7725,134
30
2o,57o
2
-2
15,533
11
0,471
2
1,230
4,6o5
7
6
5,216
1,21
5
13
14,542
13
lo,211
6
5,600
5
6,353
4
2,969
r
2,788
)
6
2,951
3,911
5
n
,..
1,447
1,190
3
8
4,286
_ 4.
2,30
257
191,519

9
52
32
145
48
35
21
2
52
7
24
14
27
lo
6
2
4
14
31
21
3
8
6
573

1
17
4
38
14
11
5
o
2
2
1
5
12
2
1
0
2
2
9
4
0
1
......2.
135

246,881
.1_1.55.9_
1
298,431

1154
210.
14o4

187
E8
2,5

Y27
loo
427

No. of
excessive
loans under section 5200

2
2
4
28
1
lo
16
4
2
2
4
4
5
1
1
1
3
5
3
4
2
96

loo
154

MISCELLANEOUS DIVISION.
Form 40M.—Ed. Sept. 5-07-1.50i).

COPY, CERTIFICATE, CONSOLIDATED.

Certificate .1‘,/*(). 1 I

()
MISCELLANEOUS FISCAL OFFICERS.

wreasurn pr.')a'aincut,
OFFICE

OF THE

AUDITOR FOR THE STATE AND OTHER DEPARTMENTS.

Washington,'
c

, 190

ltricebti ccrtifg, That I have examined and settled the account of
a

aY-- ("3) ",...so_k 71_

"

with the United States,from

MOT y tO
5
-

LA-9

under his official bond dated
the United States of

,1.90

9

, 190 ?, and find a balance due
1•.\

.
dollars and

(Caz

Je'gr-,

_st

_

cents, under the several

appropriations and headings of account as stated above.
Please cause to issue the transfer and counter warrants scheduled on the reverse
hereof.

,L
Auditor.

By
lb the SECRETARY OF THE TREAS UR

,
eputy Auditor.

(Division of Bookkeeping and Warrants).

To the




,

cbJ

4r;V_A_A

The above is a true copy of the original.
Dep

udito

t=/

.•••

••••••••

•••••D

C'D

,••-•4••
-•

c=2.I

=
.
1

!Min

Total...

Title of Appropriation.

Charge by Transfer
Warrant.

8

Credit by Counter
Warrants.

Let warrants issue acljusting appropriations in the amounts followinsi.

o

X0

HILL
AO ISMOODV




CONGRESS

CLUB

•TfUY

4'111i.'AA,

OF KINGS COUNTY, NY.v YOF,

No. 5P6 Bedford Avenue,
Brooklyn, flew Yorl City.
,
February P6W.1009.

ME1ORIAL

AND

PETITION

TO THE CO/ HESS OF Till' UNITED STAT:
RELATIVE. TO I:0NETARY LEG ISLATI
•* * * *

Your Femorialiat, "The Congress Club of Lings
County", is a club incorrorated by the 7tdate of 'rew
York for :7ocial and Political purposes.
Itn rerbership consists of about one thousand
rale etizens of the United States, qualified to vote at
itr elections, inclu, irv the Sheriff of flings County,
many Congressmen, ntato renatorc, Anserblynen, Judgos,
Bankers, etc., etc.
The subject of tL

ionorial has ben before the

club in to form of addresses and debates for more than
a year and, at a rep;ular and duly aclvert4 ced and largely
attended rooting held in the club rooms February 18tE
inr,P, after a free disc71ss1or it was ordered, by a risin
••••••••••••knolp••••




4
"rawarifina.--+

.

---•-

...,•

•

•

.

ana uns'
inirrious vote, tiat t. io club should present the
l
natter to Congre3s, praying for its favorablo considr.
ration.
Realizing that your :Tonorable Body is full::
convercant wit

the history of financial legislation,

we shall refer only to such acts as seem
to lead up to
the one prayed for by your :'ornrialint.




noctio ,P of the Constitution of the Unitod
rtates declares tiat Congrees shall have power "to
borrow ;onoy on the credit of the unitod ; tes",
7ta
"to coin money, rot
-plate tho value thereof", etc., etc.
The Act of Congress, ipril 2nd 1792, authorized
the coinage of gold and oilvor, and fixod its value.
Ir an offIcial circular from tl-,o, Treasury
Departrent, dated July 1st 1P96, tfro lion. J. G. Carlthlo,
recretary, says (ra

).

"The first paper money ever isued by the
United rtaten Government, was autorized
by t!
-le Acts of July 17th and. August 5th
1E,G1, .t.h notes iosued woro callod
"derand notes" because they were payable
on demand........the demand notes were
paid in gold when presented for redemption,
and they were received for all public duos,
and these two qualities prevented tJleir
depreciation."
By Act of . arch 17th 1P62 these demand notes
wore made "legal tender" and remained at par with gold
at tires when all other forms of money curfcrod enormous
depreciation,
.
the so-called greenbacks falling to fortynine cents on tl,e dollar.

(roe page 52)

The National bank notes authorized by Congreco
in the year 1n03, though guaranteed by the Government,
have been subject to like depreciation relative to gold,
and nenator Aldrich, addressing tc) United rtatec renate,

February 11th 190P, said of them:
"To vlluo of to iational bank notes has
always been fixed in the minds of the
people by the certainty of Government
rederrtion. no cno ovor &tops to
enquire whethera National bank is
located in - aine or Texas, whether its
capital in great or small, or whether
Its financial condition is such as to
give credit to its notes."
•r. Aldrich also said - "In the rocent panic
there wa:- a general suspension of cash payrentn
by
Nattonal banks" an] that




.4;
to

"The 1.6ss fror injury to business amounted to
thousands of millions of dollars."
The Corptitution does not appear to give power
to any private body to issue circulating roney, and
wherever ouch power has been delegated to banks, it has
worked injury to the public.
In the year 1694 t.e Aritish Government gave
to the liank of England, a

part payent for a large

war loan, authority to 1.1c,ue circulating noney, and in
1863, under a like

7, treso of dire necessity, tho United

f7tates Congress delegated a sinilv,r rower tc the National
banks.
171-e if-qme of Circulating notes combined wth the
bankinE business proved to be a dangerous evil, oven •non
conducted by ouch a venerable and highly reopectale
institution as the Bank of England, and ;arlinnont, in
the year 11'44, "in an effort to make the notcs of the
Bank of !nrland socure, enacted that the bank should be
divided into two separate departronts, that the issue of
note -- should be by a dopartrent entirely separate and
independent from the one carrying on to business of
discount and deposits, and in all dealings with each
other, the two departments were made as independent as if
they belonged to distinct corporations."
Rererring to renato Docurient No. ^43 of the
rIxti.oth Congress, first session, we find that on January
1st 1flO

the total stock of roney in the United fltates

was

,340,223,3P0

dil!Ided n.2 foflnAs:
nilver and

1

7ational Bank Notes

r.

Nrftes

t2,659,092,4S5
690,130,n05

j

t.




OM

4

Tese furos show that eighty per oent oP our
money circulation is iosued direct to the people by the
Go7c‘rnment without the intrvention of any ban).
The National bank notes are issued by the
Government throull, the banks, and though comprisinc only
twenty per cent of our nonoLi supply, arc frightfully exp- nsivo, costinc th- Govcrnnent more than onc hundred and
fifty million dollars every year (Hon. ir. Fowler, Chairman of House Connittee on Banking and Currency).
The oighty per cent of our circulating money
which is issued lirect to the people costs nothing beyond
Its face value, except for prirtin

and preparation, and

goes on its daily rounds as quietly as day follows niLht,
while the National bank Issues - though but one-fifth of
the total circulation - are yet sufficiently lare to
control aid disturb the entire system; in fact, the
position of 'Ational brlak notes in our monetary system
is analoFous to that of a voracious

ie in a Trout pond,

and all attempts to shield the trout from its assaults
are tire and money wasted - the only true reredy I

to

RFCVL TUT PI', by rill means eliminate any and all bank
issues from our monetary system.
The stability of our currency is of such paramount importance that no experiments should be tried with
It, and only such changes made as experience warrants;
your lemorialist therefore proposes that the twenty per
cent which now goes through the National banks at suoh
unneoesoary cost and dangerous disturbance be eliminated
from our monetary syster:. and added to the eir- t.:; per cent
whioh is now issued by the Government direct, without
cost and with such signal success.




The issue of gold certificates in exchange for
that notal, hao roulted in a steady and ap-arently unnoticed accurulatior of gold, until the !tnount held in
tic United Niates in nearly two billion dollars.
At t!.e ileetin

of the club heretofore referred

to, viz., February 1c7th 19n, tme following was moved by
r. Theodore Cochou and seconded by

r. Charles F.

Franklin, and adoptea by a unanimous vote.
RESOLVED

\
That the Corgreso of the United f--taten be re-

titioned to enact

law directing the isnue of now

United Fitates !:otes, all to be "legal teer" in the
.

amount of three and a half billion dollars.
Of this amount, place in the hands of the
Comptroller of Currency, t(, be held as an enerEency

reserve, one billion dollars.
:16
r

bal-nce, two and a half billion dollars,

to 1)e urod to retire present issues, an follows:
,

1st.

Al 1

2nd.

All present gold certificates

t

I.

and National bank notes

3.,215o,noo,non
2,250,000,000
•••••••••••••11.41.0.

Tho circulation will then be -

United rtates notes
Golr! Coin

2,500,000,000

about

300,000,000

SI,Lvem

zgalcor

- Jiver Certificates

-

About

Total . About

700,000,000
,500,000,000

More is nothing experir7ontal about this proposition, or ni,w, except that the

,old now en

tiorare with

the Government and owned by everybody who happens
to hold
gold certificaten, will then bocone
the prflperty of the




Government, and with other cold to the total aiount of
one and one quarter billion dollars, should to held as
a reserve arAinst the (!nited States notes, being in the
proportion of fifty per cent, which proportion cannot be
equalled by any other nation in the .Norld.
Continuo the rocelpt cf gold and silver on
h
-- it as now, ;11.(1. will Increase the volure of
de7
crculation about equal to its natrally increasing needs.
To provide elasticity in seasons of unusual
derand, let it be enacted that
111TIFVER, in the julgment of the :resident and
:ency exists which
Secretary of U_e Treaury, an emeri
requires it
1st.

Any incorporated bank or tru2t company owning
or controlling flited states, or slitiofactory
ntate or City bonds, may deposit them in ours
not logs than ton thousand dollars with the
Comptroller of Currency and receive therefor
ninety per cont of their face value from the
billion dollar re2erve money.
The depositors of these bonds shall be entitled
to their return on demand, upon payment or the
ar'ount received by them, plus a tax equal to
vix per cent; the principal to to returned
to the reserve money and the tax put into a
fund for the purpose of renewing old notes.

PPovirrm

That bonds not redeemed within one year shall
be sold and the proceeds returned to the
reserve money.
Thus an ample emergency fund would be alaays

available to oavings banks and trust companies who are
able to deposit acceptable bonds, and every dollar of
ouch orergency money would be as secure as any oth r
dollar.
Our monetary system will then be placed upon
the solid roundation of the credit of the United States,
secured by the poopession of more lands, buildings, ships




7

and materials of all kinds, and the actual ownorship of
more gold and silvor than any bank or combinrItion of
banks, corporation or combination of corporations, in
t -le world,

will be SOUND, SLTLE, FLATIC and

ECOVOT:ICAL.

itns tie`'oes1 of the ,pongress

Official riplaturos thls

lub and our

&ty of

Frosident.
7ooretary.

1909.

.1,




The Richmond Chamber of Commerce

Richmond, Va., :lune 17, IyoS.
Dear Sir:
1 am directed to requey your attention to the subjoined copy of a Resolution adopted
by tisir Chamber and to earnestly solicit your valued influence in support of the suggestion contained in said Resolution.
I have the honor to be,
Very respectfully yours,
R. J. DUNLOP, Secretary.

Preamble and Resolutions, submitted by the Committee on Banks
and Currency of The Richmond Chamber of Commerce and
adopted by the Chamber June 11, 1908:
WHEREAS, The great shock to American industries by the currency panic of last fall
caused leading banking and business interests throughout the country to investigate carefully the
currency problem, and, subsequently, to condemn, almost unanimously, the bond secured provisions
of the Aldrich currency bill, and to endorse the principles of true credit currency; and
WHEREAS, Despite the overwhelming protests of the business interests of the country,
the Aldrich-Vreeland bill, which retained the bond secured provisions of the Aldrich bill, was passed
by Congress; and
WHEREAS, The adjustment of our currency system upon a permanently safe basis
which will be free from the domination of any favored interests; which will be absolutely fair to all
interests and to all localities; which, in its normal operations, will automatically prevent the
disasters and emergencies produced by our present defective system, and which will conserve the
prosperity of the country at large, is one of the most vital issues in the coming presidential campaign
because it directly affects the welfare of the largest number of people; and
WHEREAS, The business interests of the country do not want an emergency currency,
but they do demand a currency system which will prevent emergencies;




RESOLVED, That the Chamber of Commerce of the City of Richmond, Virginia,
respectfully urges upon the prospective presidential candidates, and also upon the committees on
resolution of both national political conventions, the importance of adopting a financial plank which
will definitely assure the large body of voters representing the general business interests of the country, that a true and sound system of credit currency will be promptly adopted after reasonable investigation and discussion; and we respectfully suggest the following as a basis for such a system:
A true currency system should, on the one hand, protect the national credit against the
danger of assault and the peril of repudiation, by limiting the financial transactions of the Government
to its constitutional functions, namely, the coining of money and regulating the value thereof, and to
the collection and disbursement of the revenues; and, on the other hand, it should further provide a
true credit currency, redeemable in gold, which would always respond and precisely adjust itself to
the ever varying needs of trade, just as checks and drafts do. It should be based upon the logical
principle that with adequate redemption facilities, there is no essential difference between a hank-book
credit and a bank-note credit, since the first is a bank credit subject to check, and the second is also
a bank credit which passes current until paid. Such currency should be secured by the general assets
of the bank, based upon the same reserve of lawful money which is required against deposits, and
should be made absolutely safe beyond all peradventure.
Such a credit currency would enable the farmer, the producer, the manufacturer and the
merchant to convert, through the agency of the banks, their commodities into currency, redeemable
by the banks in gold. It would tend to steady and avoid excessive rates throughout the United
States. It would also avert the financial catastrophes due to the inelastic features of our present bond
secured currency system, which system was devised for the primary purpose of creating a market for
bonds, and which system expands and contracts the volume of currency, not in accordance with the
normal demands of trade, but with the speculative price of bonds, thereby causing, at times a redundancy of currency when it is not needed by trade, and stimulating unhealthful speculation; and causing, at other times, a currency famine when the moving of crops and industrial needs require it, and
thereby causing excessive interest rates and serious interruption to the business interests of the country
at large.

THE RICHMOND CHAMBER OF COMMERCE,
By F. D. WILLIAMS, President.

Attest:
R. A. DUNLOP, Secretary.

FINAL EDITIo

••••••••••,111

Arabemll of Political iiriencr
In Or elitil of New Uock
Incorporated 1910

F(wooded 1884

Program of Second National
Conference on Currency
Reform
October 14-15, 1913

General Topic:

The Reform of the American Banking
System



FIRST SESSION
Tuesday, October 14, at Noon
THE FEDERAL RESERVE ACT
(New York Chamber of Commerce, 65 Liberty St.)

EXECUTIVE AND PROGRAM COMMITTEE

Henry P. Davison
A. Barton Hepburn
Joseph French Johnson
Alexander D. Noyes
George A. Plimpton
Henry R. Seager
E. R. A. Seligman
Theodore N. Vail
Paul M. Warburg
H. Parker Willis
SAMUEL MCCUNE LINDSAY, Chairman Ex-officio
E. W. KEMMERER, Secretary
EDWARD J. EULLWINKEL
DAVID M. HEYMAN
TII0MAS H. WATSON, JR.
Assistant Secretaries

PROCEEDINGS
The addresses, papers and a summary of the discussion
at the meeting will be published in a volume as part of the
proceedings of the Academy and distributed gratis to all
members.
Orders from non-members for this volume will he received and entered for delivery as soon as issued, if order is prepaid at the rate of $1.50 per copy in paper binding and $2.00 per copy in cloth binding.




2

SECOND SESSION
Tuesday, October 14, 3 p. m.
CENTRALIZATION OF BANKING AND
MOBILIZATION OF RESERVES
(New York Chamber of Commerce, 65 Liberty St.)

THE

THIRD SESSION
Wednesday, October 15, 10:30 a. m.
THE ELASTICITY OF CREDIT
(Earl Hall, Columbia University)
FOURTH SESSION
Wednesday, October IS, 230 p. m.
FOREIGN AND DOMESTIC EXCHANGE FUNCTIONS
OF THE REGIONAL BANKS
(Earl Hall, Columbia University)
FIFTH SESSION (BANQUET)
Wednesday, October IS, 7 p. m.
BANKING REFORM IN THE UNITED STATES
(Hotel Astor)
Earl Hall, Columbia University is near 116th St.
Station, Broadway Subway.
3

SECOND SESSION
TUESDAY. OCTOBER 14, 3 P. M.
NEW YORK CHAMBER OF COMMERCE, 65
LIBERTY

Subject: "The Centralization of Banking and
Mobilization of Reserve!."

FIRST SESSION

•••••••••••••1•1,0•1•1.106.1111........

TUESDAY. OCTOBER 14, AT NOON
NEW YORK CHAMBER OF COMMERCE. 65 LIBER
7f ST.

Presiding Officer
ALBERT SHAW
"Iteview of Reviews"

Subject: "The Federal Reserve Act"
I.
Presiding Officer
SAMUEL McCUNE LINDSAY
President of Academy of Political Science

Addresses (limited
1.

to 20 minutes each):
Score and 01 golizzation of the Propose,i
keytowt!
Banks
Parker Willis, The Journal of Comm. roe and
Commercial Bullet in
A. Barton Hepburn, Chase Nation:II Ihtd,
(), M. NV Sprague, Harvard University

Address of Welcome
John Cla11in, President of Chamber of Comme
rce
Speakers:
Hun. Robert L. ()wen, Chairman of
the U. S. Senate
witty(' on Ranking and Currency
Hon. Carter Glass, Ciairtnau of the House
( ommittec on llankit;g and Curre of R , prese”tancy
lion. Robert J. Rulkley, member of House
of Representittives,
Committee on Bunking and Currency.
ThH meeting will be follow d by an
tendered hy the Clrimher of Commerce informal luncheon
to those in at




T.

1.

The Mobilization of Reserves.
Arthur Reynolds, Des Moines National It

Discussion (under
•1

ten-minute rule):

I. N,

N 'w

THIRD SESSION
WEDNESDAY. OCTOBER 15. 10.30 A. M.
EARL HALL
COLUMBIA UNIVERSITY

Subject: "The Elasticity of Credit"
Presiding Officer
H. PARKER WILLIS
"Journal of Commerce and Commercial Bulletin"
4
5

iii

I. Addresses
1.

The Rediscount Functions of
Banks

2.

The Note Issue
Joseph French Johnson, New York University
E. W. Kemmerer, Princeton University

the Proposed Regional

Frank A. Vanderlip, National City Bank

II. Discussion

FIFTH SESSION

Edward L. Ilowc, Princeton, N. J.
Irving T. Bush, New York City
A. Platt Andrew, Gloucester, Mass.

WEDNESDAY.

OCTOBER

15. 7

BANQUET

P.M

HOTEL ASTOR

Subject: "Banking Reform in the United States"
FOURTH SESSION
WEDNESDAY. OCTOBER 15, 2.30 P.M.
EARL HALL

Presiding Officer

COLUMBIA UNIVERSITY

JOHN H. FINLEY
President of the College of the City of New York

Subject: "Foreign and Domestic Exchange Functions
of the Regional Banks"

Address by the HONORABLE NELSON W. ALDRICH
Presiding Officer
EDWIN R. A. SF.LIGINAN
Columbia University

Guests of Honor:
The Chairmen and members of the United States Senatt
Committee on Banking and Currency and the [louse of
Representatives Committee on Banking and Currency

A Symposium under the ten minute rule
,

I. Domestic Exchange Problems:
W. M. Van Deusen, National Newark Banking Company
Fred. I. Runt, Bankers' Trust Co.
Joseph T. Talbert, National City Bank

II. Foreign Exchange Problems:
John E. Gardin, National City Bank
.1. A. Neilson, Brown Brothers, New York




4.

GENERAL COMMITTEE
JOHN H. FINLEY,

Chairman

Frank B. Anderson, San Francisco, Cal.
A. Piatt Andrew, Jr., Boston, Mass.
Nicholas Muri ay Butler, New York City
John Claflin, New York City
Henry P. Davison, New York City
Davis R. Dewey, Boston, Mass.
Cleveland H. Dodge, New York City
Fred W. Fleming, Kansas City
A. Barton Hepburn, New York City
Henry L. ifigginstm, Boston, Mass.
Edmund J. James, Urbana, Ill.
Jeremiah W. Tenks,• New York City
Samuel McCune Lindsay, New York City
Robert J. Lowry, Atlanta, Ga.

Henry Morgenthau, New York City
John Perrin, Pasadena, Calif.
Lawrence C. Phipps, Denver, Colo.
Carl C. Plehn, Berkeley, Cal.

.Tnlins Rosenwald, Chicago, Ill.
Charles F. Scott, Iola, Kansas
Heni y R. Seager, New York City
E. R. A. Seligman, New York City
William F. Slocum, Colorado Springs, Colo.

Robert W. Speer, Denver, Colo.
James Speyer, New York City
Benjamin Strong, Jr., New York City
Frank Strong, Lawrence, Kansas
E. F. Swinney, Kansas City, Mo.
Frank W. Taussig, Cambridge, Mass.
Frank Trumbull, New York City
Theodore N. Vail, New York City
Frank A. Vanderlip, New York City
Henry Walters, New York City
Paul M. Warburg, New York City
Harry A. Wheeler, Chicago, Ill.
H. Parker Willis, New York City







CHAPTER 119.
An Act relating to Bills of Exchange, Cheques and
Promissory Notes.
SHORT TITLE.

1. This Act may be cited as the Bills of Exchange Act. Short
53 V., c. 33, S. 1.

title.

INTERPRETATION

2. In this Act, unless the context otherwise requires,— Definitions.
(a) 'acceptance' means an acceptance completed by delivery 'Acceptance:
or notification;
'Action.'
(b) 'action' includes counter-caaim and set off;
(c) 'bank' means an incorporated bank or savings bank 'Bank.'
carrying on business in Canada;
(d) 'bearer' means the person in possession of a bill or note Bearer.'
which is payable to bearer;
(e) 'bill' means bill of exchange, and' ' means pro- Bill,'
note
'note.'
missory note;
(f) delivery' means transfer of possession, actual or con- Delivery:
structive, from one person to another;
(g) 'holder' means the payee or endorsee of a bill or note Holder.'
who is in possession of it, or the bearer thereof;
(h)'
endorsement means an endorsement completed by'Endorse'
ment.'
delivery;
(i)'
issue means the first delivery of a bill or note, COM- 'Issue.'
'
plete in form, to a person who takes it as a holder;
(j) value' means valuable consideration;
Value.'
Delence.'
(k) 'defence' includes counter-claim;
(1) 'non-business days' means days directed by this Act Non-busines, s.'
to be observed as legal holidays or non-juridical days.
2. Any day other than as aforesaid is a business day. 53 V., 13"sin'ess
das.
c. 33, ss. 2 and 91.
PART I.
GENERAL.

3. A thing is deemed to be done in good faith, within the Thing done
meaning of this Act, where it is in fact done honestly whether' good faith.
it is done negligently or not. 53 V., c. 33, s. 89.
2143
4.
R.S., 190f1.

Chap. 119.

4

Non-compliance with
requisites.

ITneondi'onal order.

Bills of Exchange.

Part 11.

demand or at a fixed or determinable future time, a sum certain
in money to or to the order of a specified person, or to bearer.
2. An instrument which does not comply with the requisites
aforesaid, or which orders any act to be done in addition to the
payment of money, is not, except as hereinafter provided, a bill
of exchange.
3. An order to pay out of a particular fund is not unconditional within the meaning of this section: Provided that an
unqualified order to pay, coupled with,—
(a) an indication of a particular fund out of which the
drawee is to reimburse himself, or a particular account to
be debited with the amount; or,
(b) a statement of the transaction which gives rise to the
bill;
unconditional. 53 V., c. 33, s. 3.
is

18. An instrument expressed to be payable on a contingency
event does not cure the
cont i tegcney. is not a bill, and the happening of the
defect.
Addro,,,ed to 2. A bill may be addressed to two or more drawees, whether
t wt or more
they are partners or not but an order addressed to two drawees
.
Ira wees
(
in the alternative, or to two or more drawees in succession, is
not a bill of exchange. 53 V., c. 33, ss. 6 and 11.
Illstrir:!cnt
In

19. A bill may be drawn payable to, or to the order of, the
drawer; or it may be drawn payable to, or to the order of, the
drawee.
Two or more
2. A bill may be made payable to two or more payees jointly,
payees.
or it may be made payable in the alternative to one of two, or
one or some of several payees.
3. A bill may be made payable to the holder of an office for
holder of
office payee. the time being. 53 V., c. 33, ss. 5 and 7.
Payee,
drawer or
drawee.

Dra wee to
be named.

20. The drawee must be named or otherwise indicated in a
bill with reasonable certainty. 53 V•, c• 33 s• 6•

Tra nsfer
words.

21. When a bill contains words prohibiting transfer, or
indicating an intention that it should not be transferable, it is
valid as between the parties thereto, but it is not negotiable.
2. A negotiable bill may be payable either to order or to
bearer.
3. A bill is payable to bearer which is expressed to be so
payable, or on which the only or last endorsement is an endorsement in blank.
4. Where a bill is not payable to bearer, the payee must hznamed or otherwise indicated therein with reasonable certainty.
5. Where the payee is a fictitious or non-existing person. tip.
bill may be treated as payable to bcarer. 53 V., c. 33, ss.
and 8.
2146
22.

Nev:otiable
bill.
When payal de to
bearer.
Certainty of
payee.
Fict it ious
payee.

R.S., 1906.







Part 11.

Bills of Exchange.

Chap. 119.

5

22. A bill is payable to order which is expressed to be Bill payable.
so payable, or which is expressed to be uayable to a particular to en.
wh order
person, and does not contain words prohibiting transfer or
indicating an intention that it should not be transferable.
2. Where a bill, either originally or by endorsement, is ex- When paypressed to be payable to the order of a specified person, and
, odr-r.
c1 pe e
? r
not to him or his order, it is nevertheless payable to him or
his order, at his option. 53 V., c. 33, s. 8.
23. A bill is payable on demand,—
Payable on
(a) which is expressed to be payable on demand, or on pre- demand
when.
sentation ; or,
(1)) in which no time for payment is expressed.
2. Where a bill is accepted or endorsed when it is overdue,
Endorsed
it shall, as regards the acceptor who so accepts, or any end orser when overdue.
whi) •,i) endorses it, be deemed a bill payable on demand. 53
V.,
c. 33, s. 10.
24. A bill is payable at a determinable future time, within D..terminthe meaning of this Act, which is expressed to be payable,— able future
time.
(a) at sight or at a fixed period after date or sight;
(b) on or at a fixed period after the occurrence of a specified Sight.
event which is certain to happen, though the time of hap- Specified
pening is uncertain. 53 V., c. 33, s. 11; 54-55 V., c. 17, event.
S. 1.
25. An inland bill is a bill which is, or on the face of it Inland bill
defined.
purports to be,—
(a) both drawn and payable within Canada; or,
(b) drawn within Canada upon some person resident therein.
2. Any other bill is a foreign bill.
Other bills.
3. Unless the contrary appears on the face of the bill, the Presumption.
holder may treat it as an inland hill. 53 V., c. 33, s. 4.
26. Where in a bill drawer and drawee are the same person, Bill or note.
• •
or where the drawee is a fictitious person or a person not having, capacity to contract, the holder may treat the instrument, Option.
,
at hi option, either as a bill of exchange or as a promissory
note. 53 V., c. 33, s. 5.
27. A bill is not invalid by reason only,—
Valid bill.
(a) that it is not dated;
Not dated.
(1)) that it does not specify the value given, or that any
statement of
value has been given therefor;
value.
(e) that it does not specify the Olive where it is drawn or
Statement of
tile plaee where it is payable;
place.
((1) that it is antedated or postdated, or that it bears date on Irregular
a Sunday or other non-juridical day. 53 V., c. 33, ss. 3 date.
and 13.
2:1

2147

28.
I Z.S., 1 906.

6

Chap. 119.

Sum certain.

28. The sum payable by a bill is a sum certain within
the meaning of this Act, although it is required to be paid,—
(a) with interest;
(b) by stated instalments;
(c) by stated instalments, with a provision that upon default
in payment of any instalment the whole shall become due;
(d) according to an indicated rate of exchange or according
to a rate of exchange to be ascertained as directed by thG

Interest.
Instalments.
Default.
Exchange.

Figures
words.

and

With
interest.

Bills of Exchange.

Part 11.

2. Where the sum payable is expressed in words and also
in figures, and there is a discrepancy between the two, the sum
denoted by the words is the amount payable.
3. Where a bill is expressed to be payable with interest,
unless the instrument otherwise provides, interest runs from
the date of the bill, and if the bill is undated, from the issuc
thereof. 53 V., c. 33, s. 9.

True date
presumption.

29. Where a bill or an acceptance, or any endorsement
on
a bill, is dated, the date shall, unless the contrary is proved,
be deemed to be the true date of the drawing, acceptance or
endorsement, as the case may be. 53 V., c. 33, s. 13.

17ndated
bill payable
after (late.

30. Where a bill expressed to be payable at a fixed perio
d
after date is issued undated, or where the acceptance of
a bill
payable at sight or at a fixed period after sight is undated,
any
holder may insert therein the true date of issue or
acceptance,
and the bill shall be payable accordingly: Provided that
,—
(a) where the holder in good faith and by mistake
inserts
a wrong date; and,
(b) in every other case where a wrong date is inserted;
if the bill subsequently comes into the hands of a holde
r in due
course the bill shall not be voided thereby, but shall
operate
and be payable as if the date so inserted had been
the true
date. 53 V., c. 33, s. 12 54-55 V., c. 17, s. 2.

Inserting
wrong date.
Liability of
holder.

Perfecting
bill.

Ant hority.

31. Where a simple signature on a blank paper is
delivered
by the signer in order that it may be converted into
a bill, it
operates as a prima facie authority to fill it up as
a complete
bill for any amount, using the signature for that of
the drawer
or acceptor, or an endorser; and, in like manner,
when a bill
is wanting in any material particular, the person
in possession
ef it has a prima facie authority to fill up the omiss
ion in any
way he thinks fit. 53 V., c. 33, s. 20.

When to be
complete.

32. In order that any such instrument when completed
may
be enforceable against any person who became a party
thereto
prior to its completion, it must be filled up within
a reasonable time, and strictly in accordance with the authority
given
Provided that if any such instrument, after completion :
, is
negotiated to a holder in due course, it shall be valid
and effec2148
tual
R.S., 1906.




41

Part II.

Bills of Exchange.

Chap. 119.

7

tual for all purposes in his hands, and he may enforce it as
if it
had been filled up within a reasonable time and strictly
in
accordance with the authority given.
2. Reasonable time within the meaning of this section is
a Reasonable
question of fact. 53 V., c. 33, s. 20.
time.
33. The drawer of a bill and any endorser may insert Referee in
therein the name of a person, who shall be called the referee in case of need.
case of need, to whom the holder may resort in case of need,
that is to say, in case the bill is dishonoured by non-acceptance
or non-payment.
2. It is in the option of the holder to resort to the referee Option.
in case of need or not, as he thinks fit. 53 V., c. 33, s. 15.
34. The drawer of a bill, and any endorser, may insert stipulations,
therein an express stipulation,—
(a) negativing or limiting his own liability to the holder; Limiting.
(b) waiving, as regards himself, some or all of the holder's Waiving
rights.
duties. 53 V., c. 33, s. 16.
Acceptance and Interpretation.
35. The acceptance of a bill is the signification by the Acceptance
drawee of his assent to the order of the drawer.
defined.
2. Where in a bill the drawee is wrongly designated or hi, Drawee's
name is misspelt, he may accept the bill as therein described, name wroitg
adding, if he thinks fit, his proper signature, or he may accept
by his proper signature. 53 V., c. 33, s. 17.
36. An acceptance is invalid unless it complies with the Acceptance.
following conditions, namely:—
(a) It must be written on the bill and be signed by the On the bill.
drawee;
(b) It must not express that the drawee will perform his For money.
promise by any other means than the payment of money.
2. The mere signature of the drawee written on the bill with- Mere
out additional words is a sufficient acceptance. 53 V., c. 33, signature.
s. 17.
37. A bill may be accepted,—
Acceptance.
(a) before it has been signed by the drawer, or while other- Before cornpletion.
wise incomplete;
(h) when it is overdue, or after it has been dishonoured by a Overdue.
previous refusal to accept, or by non-payment.
2. When a bill payable at sight or after sight is dishonoured Acceptance
by non-acceptance, and the drawee subsequently accepts it, the after
honour.
holder, in the absence of any different agreement, is entitled to
have the bill accepted as of the date of first presentment to the
33, s. 18 54-55 V., c. 17,
drawee for acceptance. 53 V.
5. 3.
2149
38.
lt.S., 1906.







8

Chap. 119.

Kinds.

38. An acceptance is either,—
(a) general; or,
(b) qualified.
2. A general acceptance assents without qualification to the
order of the drawer.
3. A qualified acceptance in express terms varies the effect
of the bill as drawn and in particular, an acceptance is qualified
which is,—
(a) conditional, that is to say, which makes payment by the
acceptor dependent on the fulfilment of a condition therein
stated;
(b) partial, that is to say, an acceptance to pay part only of
the amount for which the bill is drawn;
(c) qualified as to time;
(d) the acceptance of some one or more of the drawees, but
not of all.
4. An acceptance to pay at a particular specified place is not
on that account conditional or qualified. 53 V., c. 33, s. 19.

General.
Qualified.

Conditional.

Partial.
Time.
Drawees.
Specified
place.

When
acceptance
complete.
Proviso.

Bills of Exchange.

Part II.

39. Every contract on a bill, whether it is the drawer's, the
acceptor's or an endorser's, is incomplete and revocable, until
delivery of the instrument in order to give effect thereto: Provided, that where an acceptance is written on a bill, and the
drawee gives notice to, or according to the directions of, the
person entitled to the bill that be has accepted it, the acceptance
then becomes complete and irrevocable. 53 V., c. 33, s. 21.
Delivery.

40. As between immediate parties, and as regards a remote
party, other than a holder in due course, the delivery,—
A ut hority.
(a) in order to be effectual must be made either by or under
the authority of the party drawing, accepting or endorsing.
as the case may be;
inditional.
(b) may be shown to have been conditional or for a special
purpose only, and not for the purpose of transferring the
property in the bill.
Presumption. 2. If the bill is in the hands of a holder in due course, a
valid
delivery of the bill by all parties prior to him, so as to make
them liable to him, is conclusively presumed. 53 V., e. 3:1,
S. 21.
1:equisites.

Part nic with
possession.

41. Where a bill is no longer in the possession of a party
who has signed it as drawer, acceptor or endorser, a valid and
unconditional delivery by him is presumed until the contrary
is proved. 53 V., c. 33, s. 21.

Computation of Time, non-juridical days and days of (7rare.
Computa42. Where a bill is not payable on demand, three days,
tion of tune.
ca lied days of grace, are, in every ease, where the bill itself
2150
(1.)e5
R.S., 1906.




Part II.

Bills of Exchange.

9

Chap. 119.

does not otherwise provide, added to the time of payment as
fixed by the bill, and the bill is due and payable on the last day
of grace: Provided that whenever the last day of grace falls
on a legal holiday or non-juridical day in the province where Last day
any such bill is payable, then the day next following, not being grace.
a legal holiday or non-juridical day in such province, shall be
the last day of grace. 53 V., c. 33, s. 14.

of

43. In all matters relating to bills of exchange, the fol- dical days.
lowing and no other days shall be observed as legal holidays
or non-juridical days:—
General.
n
(a) In all the provin c(iN Of Caada,
Sundays,
New Year's Day,
Good Friday,
Easter Monday,
Victoria Day,
Dominion Day,
Labour Day,
Christmas Day,
The birthday (or the day fixed by proclamation for the
celebration of the birthday) of the reigning sovereign;
Any day appointed by proclamation for a public holiday,
or for a general fast, or a general thanksgiving throughout Canada,
The day next following New Year's Day, Christmas Day,
Victoria Day, Dominion Day, and the birthday of the
reigning sovereign when such days respectively fall on
Sunday;
(b) In the province of Quebec in addition to the said days, Quebec.
The Epiphany,
The Ascension,
All Saints' Day,
Conception Day;
(e) In any one of the provinces of Canada, any day ap- Provineial
pointed by proclamation of the Lieutenant Governor of r.r"P.larna
nn
such province for a public holiday, or for a fast or thanksgiving within the same, and any non-juridical day by
virtue of a statute of such province. 53 V., e. 33, s. 14;
56 V., c. 30, s. 1; 57-58 V., c. 55, s. 2; 1 E. VII., c. 12,
SS. 2 and 4.
44. Where a bill is payable at sight, or at a fixed period after Time of
date, after sight, or after the happening of a specified event, pnyment.
the time of payment is determined by excluding the day from
which the time is to begin to run and by including the day of
payment. 53 V., c. 33, s. 14.
45. Where a bill is payable at sight or at a fixed period a fter Sight bill.
Si!zlit, the time begins to run from the date of the acceptanee if
th
2151
TLS., 1906.

10

Chap. 119.

Bills of Exchange.

Part IT.

the bill is accepted, and from the date of noting or protest if
the bill is noted or protested for non-acceptance, or for nondelivery. 53 V., c. 33, s. 14.
Due date.

Month.'

Capacity of
parties.
Corporations.

Effect of
disability on
holder.

46. Every bill which is made payable at a month or months
after date becomes due on the same numbered day of the month
in which it is made payable as the day on which it is dated,
unless there is no such (lay in the month in which it is made
payable, in which ease it becomes due on the last day of that
month, with the addition, in all cases, of the days of grace.
2. The term month' in a bill means the calendar month.
53 V., c. 33, s. 14.
Capacity and Authority of Parties.
47. Capacity to incur liability as a party to a bill is coextensive with capacity to contract: Provided that nothing
in this section shall enable a corporation to make itself liable as
drawer, acceptor or endorser, of a bill, unless it is competent
to it so to do under the law for the time being in force relating
to such corporation. 53 V., c. 33, s. 22.
48. Where a bill is drawn or endorsed by an infant, minor,
or corporation having no capacity or power to incur liability
on a bill, the drawing or endorsement entitles the holder to receive payment of the bill, and to enforce it against any other
party thereto. 53 V.. e. 33, s. 22.

Forgery.

49. Subject to the provisions of this Act, where a signature
on a bill is forged, or placed thereon without the authority of
the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to
retain the bill or to give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through
or under that signature, unless the party against whom it is
sought to retain or enforce payment of the bill is precluded
Estoppel.
from setting up the forgery or want of authority: Provided
that,—
Ratification.
(a) nothing in this section shall affect the ratification of an
unauthorized signature not amounting to a forgery;
Recovery of
(b) if a cheque payable to order is paid by the drawee upon
amount paid
a forged endorsement out of the funds of the drawer, or is
on forged
cheque.
so paid and charged to his account, the drawer Shall have
no right of action against the drawee for the recovery back
of the amount so paid, nor any defence to any claim made
by the drawee for the amount so paid, as the case may be,
unless he gives notice in writing of such forgery to the
drawee within one year after he has acquired notice of such
forgery.
fa
D. tilt of
2. Tn ease of failure by the drawer to give such notice 'vii h in
notice.
the said period, such cheque shall be held to have been pa id in
2152
R.S., 1906.




• i
P •
•
•

I111 11;111




Part II.

Bills of Exchange.

Chap. 116.

11

due course as respects every other party thereto or named
therein, who has not previously instituted proceedings for the
protection of his rights. 53 V., c. 33, s. 24.
Recovery of
50. If a bill bearing a forged or unauthorized endorsement amount paid
is paid in good faith and in the ordinary course of business, by on forged
or on behalf of the drawee or acceptor, the person by whom or endorsement.
on whose behalf such payment is made shall have the right to
recover the amount so paid from the person to whom it was so
paid or from any endorser who has endorsed the bill subse,quently to the forged or unauthorized endorsement if notice of
the endorsement being a forged or unauthorized endorsement is
given to each such subsequent endorser within the time and in
the manner in this section mentioned.
,
2. Any such person or endorser from whom said amount ha Rights over.
been recovered shall have the like right of recovery against any
prior endorser subsequent to the forged or unauthorized endorsement.
Notice of
3. Such notice of the endorsement being a forged or un- forgery.
authorized endorsement shall be given within a reasonable time
after the person seeking to recover the amount has acquired
notice that the endorsement is forged or unauthorized, and may
be given in the same manner, and if sent by post may be
addressed in the same way, as notice of protest or dishonour of
a bill may be given or addressed under this Act. 60-01 V.,
c. 10, s. 1.

51. A signature by procuration operates as notice that the Procurat ion
signatures.
agent has but a limited authority to sign, and the principal is
bound by such signature only if the agent in so signing was
acting within the actual limits of his authority. 53 V., c. 33,
s. 25.
52. Where a person signs a bill as drawer, endorser or Signing in
representaacceptor, and adds words to his signature indicating. that he tive capacity.
signs for or on behalf of a principal, or in a representative
character, he is not personally liable thereon ; but the mere
addition to his signature of words describing him as an agent,
or as filling a representative character, does not exempt him
from personal liability.
Rule for
2. In determining whether a signature on a bill is that of determining
the principal or that of the agent by whose hand it is written, capacity.
the construction most favourable to the validity of the instrument shall be adopted. 53 V., c. 33, s. 26.
Consideration.
53. Valuable consideration for a bill may be constituted Valuable.
by,—
(a) any consideration sufficient to 5111)111)rt a simple contract; Sufficiency.
Antecedvnt
(b) an antecedent debt or liability;
debt.
2.
9153
iZ.S.. P.106.

12

Chap. 119.

Form of bill.

2. Such a debt or liability is deemed valuable consideration,
whether the bill is payable on demand or at a future time. 53
V., c. 33, s. 27.

holder for
value.

54. Where value has, at any time, been given for a bill, the
holder is deemed to be a holder for value as regards the acceptor and all parties to the bill who became parties prior to
such time.
2. Where the holder of a bill has a lien on it, arising either
from contract or by implication of law, he is deemed to be a
holder for value to the extent of the sum for which he has a lien.
53 V., c. 33, s. 27.

In case of
lien.

Accommodation bill.

Liability of
party.

holder in
due course.
Not ice.

Good faith.

Title defective.

Right of
subsequent
holder.

Bills of Exchange.

Part 11.

I.

55. An accommodation party to a bill is a person who has
signed a bill as drawer, acceptor or endorser, without receiving
value therefor, and for the purpose of lending his name to some
other person.
2. An accommodation party is liable on the bill to a holder
for value; and it is immaterial whether, when such holder took
the bill, he knew such party to be an accommodation party or
not. 53 V., c. 33, s. 28.
56. A holder in due course is a holder who has taken a bill,
complete and regular on the face of it, under the following conditions, namely:—
(a) That he became the holder of it before it was overdue
and without notice that it had been previously dishonoured,
if such was the fact;
(b) That he took the bill in good faith and for value, and
that at the time the bill was negotiated to him he had no
notice of any defect in the title of the person who negotiated it.
2. In particular the title of a person who negotiates a bill is
defective within the meaning of this Act when he obtained the
bill, or the acceptance thereof, by fraud, duress or force and
fear, or other unlawful means, or for an illegal consideration,
or when he negotiates it in breach of faith, or under
such circumstances as amount to a fraud. 53 V., c. 33, s. 29.
57. A holder, whether for value or not, who derive
s his
title to a bill through a hold(Ir in due course, and who
is not
himself a party to any fraud or illegality affecting it,
has all
the rights of that holder in (Inc course as regards the
acceptor
and all parties to the bill prior to that holder. 53 V.,
c. 33,
s. 29.

Presumption of value.

58. Every party whose signature appears on a bill is
prima
facie deemed to have become a party thereto for value.
Due course.
2. Every holder of a bill is prima facie deemed to be a
holder
in due course; but if, in an action on a bill it is admit
ted or
2154
proved
R.'S., 1900.




A




Part H.

Bills of Exchange.

Chap. 119.

13

proved that the acceptance, issue or subsequent negotiation of
the bill is affected with fraud, duress or force and fear, or illegality, the burden of proof that he is such holder in due course Burden of
shall be on him, unless and until he proves that, subsequent to proof.
the alleged fraud or illegality, value has in good faith been
given for the hill by some other holder in due course. 53 V.,
C. 33, s. 30.
59. No bill, althouuh given for a usurious consideration or Usurious
upon a usurious contract, is void in the hands of a holder, unless consideration.
such holder had at the time of its transfer to him actual knowledge that it was originally given for a usurious consideration,
or upon a usurious contract. 53 V., c. 33, s. 30.
Negotiation.
60. A bill is negotiated when it is transferred from one By transfer.
person to another in such a manner as to constitute the transferee the holder of the bill.
By delivery.
2. A bill payable to bearer is negotiated by delivery.
3. A hill payable to order is negotiated by the endorsement By endorsement.
of the holder completed by delivery. 53 V., c. 33, s. 31.
61. Where the holder of a bill payable to his order transfers 'Without enit for value without endorsing it, the transfer gives the trans- dorsement.
feree such title as the transferrer had in the bill, and the transferee in addition acquires the right to have the endorsement of
the transferrer.
2. Where any person is under obligation to endorse a bill IZepresentain a representative capacity, he may endorse the bill in such t lye capacity.
terms as to negative personal liability. 53 V., e. 33, s. 31.
62. An endorsement in order to operate as a negotiation, Endorsing.
-(a) must be written on the bill itself and be signed by the Writing.
endorser
(b) must be an endorsement of the entire bin.
Entire bill.
2. An endorsement written on an allonge, or on a copy of Allonge.
a bill issued or negotiated in a country where copies are
recognized, is deemed to be written on the bill itself.
3. A partial endorsement, that is to say, an endorsement Partial enwhich purports to transfer to the endorsee a part only of the dorsement.
amount payable, or which purports to transfer the bill to two
or more endorsees severally, does not operate as a negotiation
of the bill. 53 V., c. 33, s. 32.
63. The simple signature of the endorser on the bill, with- Signature
out additional words, is a sufficient endorsement.
2. Where a bill is plyahle to the order of two or more payee' Two or more
,
or endorsees who are not partners, all must endorse, unless the payees.
one endorsint has authority to endorse for the others. 53 V
,
c. 33, s. 32.
9155
64.
R.S., 1906.

Bills of ExcliatIT'.

14

Chap. 119.

Misspelling
payee's name

64. Where, in a bill payable t.) order, the payee or endorsee
is wrongly designated, or his name is misspelt, he may endorse
the bill as therein (lescribed, adding his proper signature; or
he may endorse by his own proper signature. 53 V., c. 33,
s. 32.

Presumption
as to order
of endorsement.

65. Where there are two or more endorsements on a bill,
each endorsement is deemed to have been made in the order in
which it appears on the bill, until the contrary is proved. 53 V.,
c. 33, s. 32.

1)iregarding
Condit ion.

66. Where a bill purports to be endorsed conditionally, the
condition may be disregarded by the payer, and payment to the
endorsee is valid, whether the condition has been fulfilled or not.
53 V., c. 33, S. 33.

Endorsement in
bla nk.

67. An endorsement may be made in blank or special.
2. An endorsement in blank specifies no endorsee, and a
bill so endorsed becomes payable to bearer.
3. A special endorsement specifies the person to whom, or
to whose order, the bill is to be payable.
4. The provisions of this Act relating to a payee apply, with
the necessary modifications, to an endorsee under a special
endorsement.
5. Where a bill has been endorsed in blank, any holder may
convert the blank endorsement into a special endorsement by
writing above the endorser's signature a direction to pay the
bill to or to the order of himself or some other person. 53 V.,
e. 33, ss. 32 and 34.

Special endorsement.
Application
of Act to.

Conversion
of blank endorsement.

Rest rictive
endorsement.
What is.

Rights of
endorsee.

If furt her
transfer is
authorized.

Part 11.

68. An endorsement may also contain terms making it
restrictive.
2. An endorsement is restrictive which prohibits the further
negotiation of the bill, or which expresses that it is a mere
authority to deal with the bill as thereby directed, and not a
transfer of the ownership thereof, as, for example, if a bill
is endorsed Pay D only,' or Pay D for the account of X,'
or 'Pay D, or order, for collection.'
3. A restrictive endorsement gives the endorsee the right to
receive payment of the bill and to sue any party thereto that
his endorser could have sued, but gives him no power to transfer his rights as endorsee unless it expressly authoring him to
do so.
4. Where a restrictive endorsement authorizes further transfer, all subsequent endorsees take the bill with the same rights
and subject to the same liabilities as the first endorsee under
the restrictive endorsement. 53 V., c. 33, ss. 32 and 35.

69. Where a bill is negotiable in its origin, it continues to
be negotiable until it has been,
2156
(a)
R.S., 1906.

When negotiability ceases







Part III.

Bills of Exchange.

Chap. 119.

15

((1) restrictively endorsed; or,
(b) discharged by payment or otherwise. 53 V., c. 33, S. 36.
70. Where an overdue bill is negotiated, it can be negotiated Overdue bill.
only subject to any defect of title affecting it at its maturity,
and thenceforward no person who takes it can acquire or give a Equitk.s.
better title than that which had the person from whom he
took it.
2. A bill payable on demand is deemed to be overdue within Demand bill
the meaning and for the purposes of this section, when it when.
appears on the face of it to have been in circulation for an unreasonable length of time.
3. What is an unreasonable length of time for such purpose Time.
is a question of fact. 53 V., c. 33, s. 36.
71. Except where an endorsement bears date after the Presumpmaturity of the bill, every negotiation is prima facie deemed tion as to.
to have been effected before the bill was overdue. 53 V., c. 33,
s. 36.

72. Where a bill which is not overdue has been dishonoured, Taking bill
with notice
any person who takes it with notice of the dishonour takes it of dishonour.
subject to any defect of title attaching thereto at the time of
dishonour; but nothing in this section shall affect the rights of
a holder in due course. 53 V., e. 33, s. 36.
73. Where a bill is negotiated back to the drawer, or to a Re issue
prior endorser, or to the acceptor, such party may, subject to bill.
the provisions of this Act, re-issue and further negotiate the
bill, but he is not entitled to enforce the payment of the bill
against any intervening party to \lion' he was previously liable.
53 V., c. 33, s. 37.
74. The rights and powers of the holder of a bill are as Rights
follows:—

of

of

holder.

(a) lie may sue on the bill in his own name;
May sue.
(b) Where he is a holder in (Inc course, he holds the bill free Prior defects.
from any defect of title of prior parties, as well as from
mere personal defences available to prior parties among
themselves, and may enforce payment against all parties
liable on the bill;
(c) Where his title is defective, if he negotiates the bill to a Title from
holder in due course, that holder obtains a good and com- him.
plete title to the bill; and,
(d) Where his title is defective if he obtains payment of the Discharge
bill the person who pays him in due course gets a valid from him.
discharge for the bill. 53 V., c. 33, s. 38.
Presentment for Acceptance.
75. Where a bill is payable at sight or after sight, present- When
ment for acceptance is necessary in order to fix the maturity of necessary.
the instrument.
2157
2.
11.S., 1906.

Chap. 119.

16

Bills of Exchange.

Part II.

2. Where a bill expressly stipulates that it shall be presented
for acceptance, or where a bill is drawn payable elsewhere than
at the residence or place of business of the drawee, it must be
presented for acceptance before it can be presented for payment.
eases.
3. In no other case is presentment for acceptance necessary
in order to render liable any party to the bill. 53 V., c. 33,
s. 39.

Express
stipulation.

Other

Prese;it ment
excused.

76. Where the holder of a bill, drawn payable elsewhere
than at the place of business or residence of the drawee, has not
time, with the exercise of reasonable diligence, to present the
bill for acceptance before presenting it for payment on the day
that it falls due, the delay caused by presenting the bill for
acceptance before presenting it for payment is excused, and
does not discharge the drawer and endorsers. 53 V., c. 33,
s. 39.

Sight bill.

If not presented.
Reasonable
time.

Rules.
By holder
to drawee.

To all
drawees.

To personal
representat
Post office.

77. Subject to the provisions of this Act, when a bill payable
at sight or after sight is negotiated, the holder must either present it for acceptance or negotiate it within a reasonable time.
2. If he does not do so, the drawer and all endorsers prior to
that holder are discharged.
3. In determining what is a reasonable time within the
meaning of this section, regard shall be had to the nature of
the bill, the usage of trade with respect to similar bills, and the
facts of the particular case. 53 V., c. 33, s. 40 54-55 V., c. 17,
S. 5.
78. A bill is duly presented for acceptance which is presented in accordance with the following rules, namely
(a) The presentment must be made by or on behalf of the
holder to the drawee or to some person authorized to
accept or refuse acceptance on his behalf, at a reasonable
hour on a business day and before the bill is overdue;
(b) Where a bill is addressed to two or more drawees, who
are not partners, presentment must be made to them all,
unless one has authority to accept for all, when presentment may be made to him only;
(c) Where the drawee is dead, presentment may be made to
his personal representative;
(d) Whqre authorized by agreement or usage, a presentment
through the post office is sufficient. 53 V., e. 33, s. 41.

79. Presentment in accordance with the aforesaid rules is
excused, and a bill may be treated as dishonoured by non-acceptance,—
Drawee dead. (a) where the drawee is dead, or is a fictitious person or a
person not having capacity to contract by bill ;
(b) where, after the exercise of reasonable diligence, such
presentment cannot be effected ;
2158
(r)
R.S., 1906.
Excuses.







Part II.

Bills of Exchange.

Chap. 119.

17

(c) where although the presentment has been irregular, ac- Waiver.
ceptance has been refused on some other ground.
2. The fact that the holder has reason to believe that the bill, Excuse.
on presentment, will be dishonoured does not excuse presentment. 53 V., e. 33, s. 41; 54-55 V., e. 17, s.
80. The drawee may accept a bill on the day of its due pre- Time for
,
entment to him for acceptance, or at any time within two days acceptance.
thereafter.
2. When a bill is so duly presented for acceptance and is not Dishonour.
accepted within the time aforesaid, the person presenting it
must treat it as dishonoured by non-acceptance.
3. If he does not so treat the bill as dishonoured, the holder Loss of
shall lose his right of recourse against the drawer and en- rights.
dorsers.
4. In the case of a bill payable at sight or after sight, the Date of
acceptor may date his acceptance thereon as of any of the days acceptance.
aforesaid but not later than the day of his actual acceptance of
the bill.
5. If the acceptance is not so dated, the holder may refuse Refusing
to take the acceptance and may treat the bill as dishonoured by acceptance.
non-acceptance. 2 E. VII., c. 2, s. 1.
81. A bill is dishonoured by non-acceptance,—
Dishonour.
(a) when it is duly presented for acceptance, and such an Present rnent.
acceptance as is prescribed by this Act is refused or cannot
be obtained; or,
(b) when presentment for acceptance is excused and the bill Excuse.
is not accepted. 53 V., c. 33, s. 43.
82. Subject to the provisions of this Act, when a bill is dis- Recourse in
honoured by non-acceptance an immediate right of recourse such case.
against the drawer and endorsers accrues to the holder, and no
presentment for payment is necessary. 53 V., c. 33, s. 43.
83. The holder of a bill may refuse to take a qualified ac- Qualified
pptance, and if he does not obtain an unqualified acceptance acceptance.
may treat the bill as dishonoured by non-acceptance.
2. When the drawer or endorser of a bill receives notice of a Assent.
qualified acceptance, and does not within a reasonable time
express his dissent to the holder, he shall be deemed to have
assented thereto. 53 V., e. 33, s. 44.
84. Where a qualified acceptance is taken, and the drawer Qualified
or an endorser has not expressedly or impliedly authorized the accept a nee
Without
holder to take a qualified acceptance, or does not subsequently authority.
assent thereto, such drawer or endorser is discharged from hi,
liability on the bill: Provided that this section shall not apply l'art ia I
to a partial acceptance, whereof due notice has been given. 53 accept rice
V., c. 33, s. 44.
2159
Presentment
2
R.S., 1906.

18

Chap. 119.

Bills of Exchange.

Part

Presentment for Payment.
85. Subject to the provisions of this Act, a bill must be duly
presented for payment.
Result of
2. If it is not so presented, the drawer and endorsers shall be
none.
discharged,
Manner of.
3. Where the holder of a bill presents it for payment, he
shall exhibit the bill to the person from whom he demands payment. 53 V., c. 33, ss. 45 and 52.
Necessity.

Time for.

86. A bill is duly presented for -payment which is presented,—
Due date.
(a) when the bill is not payable on demand, on the day it
falls due;
Demand bill.
(b) when the bill is payable on demand, within a reasonable
time after its issue, in order to render the drawer liable,
and within a reasonable time after its endorsement, in
order to render the endorser liable.
Reasonable
2. In determining what is a reasonable time within the
I ime.
meaning of this section regard shall be had to the nature of the
bill, the usage of trade with regard to similar bills and the facts
of the particular case. 53 V., c. 33, s. 45.
By and to
whom.

Two accept ors.

Personal
representation.

87. Presentment must be made by the bolder or by some
person authorized to receive payment on his behalf, at the
proper place as hereinafter defined, and either to the person
designated by the bill as payer or to his representative or some
person authorized to pay or to refuse payment on his behalf, if,
with the exercise of reasonable diligence such person can there
be found.
2. When a bill is drawn upon, or accepted by two or more
persons who are not partners, and no place of payment is specified, presentment must be made to them all.
3. When the drawee or acceptor of a bill is dead, and no
place of payment is speeified, presentment must be made to a
personal representative if such there is, and with the exercise
of reasonable diligence, he can be found. 53 V., e. 33, s. 45.

Plaee of.
When
speei tied.
When not
sperifipd.

NV ben no
addresA S
given.

Other cases.

H.S., 1906.




88. A bill is presented at the proper place,—
(a) where a place of payment is specified in the bill or
acceptance, and the bill is there presented;
(b) where no place of payment is specified, but the addre ,s
,
of the drawee or acceptor is given in the bill, and the bill
is there presented;
(c) where no place of payment is specified and no address
given, and the bill is presented at the drawee's or :Receptor's place of business, if known, 011(1 if not at his ordinary
residence, if known;
((/) in any other case, if presented to the drawee or acceptor
wherever he 'an be found, 4,1e if presented at his last known
place of business or residence. 53 V., c. 33, s. 45.
2160
89.

Part II.

Bills of Exchange.

Chap. 119.

19

89. Where a bill is presented at the proper place as afore- Sufficient
said and after the exercise of reasonable diligence, no person presentauthorized to pay or refuse payment can there be found no ment.
further presentment to the drawee or acceptor is required. 53
V., c. 33, s. 45.
90. 'Where the place of payment specified in the bill or Pre ent,
acceptance is any city, town or village, and no place therein is ment at
specified, and the bill is presented at the drawee's or acceptor's office.
known place of business or known ordinary residence therein,
and if there is no such place of business or residence, the bill is
presented at the post office, or principal post office in such city,
town or village, such presentment is sufficient.
2. Where authorized by agreement or usage, a presentment Through
office.
through the post office is sufficient. 53 V., c. 33, s. 45.

post

post

91. Delay in making presentment for payment is excused Delay in
mc t.ittwhen the delay is caused by circumstances beyond the control prez
of the holder, and not imputable to his default, misconduct or
negligence.
2. When the cause of delay ceases to operate, presentment Diligence.
must be made with reasonable diligence. 53 V., c. 33, s. 46.
92. Presentment for payment is dispensed with,—
Dispcn,,e
(a) where, after the exercise of reasonable diligence, pre- with.
Impractisentment, as required by this Act, cannot be effected;
cable.
(b) where the drawee is a fictitious person;
Fictition,
(c) as regards the drawer, where the drawee or acceptor is drawee.
not bound, as between himself and the drawer, to accept or
pay the bill, and the drawer has no reason to believe that
the bill would be paid if presented;
(d) as regards an endorser, where the bill was accepted or Acconitno41.1made for the accommodation of that endorser, and he has tion
no reason to expect that the bill would be paid if presented;
(e) by waiver of presentment, express or implied.
Waivi.r.
9 The fact that the holder has reason to believe that the bill Not (h-Terise
.
will, on presentment, be dishonoured, does not dispense with with.
the necessity for presentment. 53 V., c. 33, s. 46.
93. When no place of payment is specified in the bill or pen
acceptance, presentment for payment is not necessary in order p
specitie:;(.)
to render the acceptor liable.
2. When a place of payment is specified in the bill or accept- If place
,
ance, the acceptor, in the absence of an express stipulation to zeciifletd
that effect, is not discharged by time omission to present the bill g
for payment on the day that it matures, but if any suit or action
be instituted thereon before presentation the costs thereof shall
be in the discretion of the court.
3. When a bill is paid the holder shall forthwith deliver it Delivery on
pament.
up to the party paying it. 53 V., v. 33, s. 52.
13G
2161
94.
R.S., 1906.







20

Chap. 119.

Time for presentiment.

94. Where the address of the acceptor for honour of a bill is
in the same place where the bill is protested for non-payment,
the bill must be presented to him not later than the day following its maturity.
2. Where the address of the acceptor for honour is in some
place other than the place where it is protested for n on-payment, the bill must be forwarded not later than the day following its maturity for presentment to him.
3. Delay in presentment or non-presentment is excused by
any circumstance which would in case of acceptance by a drawee
excuse delay in presentment for payment or non-presentment
for payment. 53 V., c. 33, s. 66.

Pn rt ies in
different
places.

Excuses for
delay.

Bills of Exchange.

Part IL

Dishonour.
Non-payment On
presentntent.
Excuse.
Recourse.

95. A bill is dishonoured by non-payment,
(a) when it is duly presented for payment and payment is
refused or cannot be obtained; or,
(b) when presentment is excused and the bill is overdue and
unpaid.
2. Subject to the provisions of this Act, when a bill is dishonoured by non-payment, an immediate right of recourse
against the drawer, acceptor and endorsers accrues to the bolder.
53 V.) e. 33 S. 47.
,

Notiee of
dishonour.

96. Subject to the provisions of this Act, when a bill has
been dishonoured by non-acceptance or by non-payment, notice
of dishonour must be given to the drawer, and each endorser,
and any drawer or endorser to whom such notice is not given
is discharged : Provided that,—
Subsequent
(a) where a bill is dishonoured by non-acceptance, and notice
bolder.
of dishonour is not given, the rights of a holder in due
course subsequent to the omission shall not be prejudiced
by the omission ;
Notice of
(b) where a bill is dishonoured by non-acceptance, and due
non-payment.
notice of dishonour is given, it shall not be necessary to
give notice of a subsequent dishonour by non-payment.
unless the bill shall in the meantime have been accepted.
Notice to
2. In order to render the acceptor of a bill liable it is not
acceptor.
necessary that notice of dishonour should be given to him. 53
V., c. 33, ss. 48 and 52.
97. Notice of dishonour in order to be valid and effectual
must be given,—
Time for.
(a) not later than the juridical or business day next following the dishonour of the bill;
By holder or
(b) by or on behalf of the holder, or by or on behalf of an
endorser.
endorser, who at the time of giving it, is himself liable on
the bill;
2162
(c)
B.S.,1906.
Notice.




Part II.

Bills of Exchange.

Chap. 119.

21

(c) in the case of the death, if known to the party giving Personal
. t
)
notice, of the drawer or endorser, to a personal representa- miet. n tative, if such there is and with the exercise of reasonable
diligence he can be found,
(d) in case of two or more drawers or endorsers who are
—rawees.
not partners, to each of them, unless one of them has
authority to receive notice for the others. 53 V., c. 33,
s. 49.
98. Notice of dishonour may be given,—
Notice.
(a) as soon as the bill is dishonoured
Earliest time.
(1)) to the party to whom the same is required to be given, To whom.
or to his agent in that behalf
(c) by an agent either in his own name or in the name of By agent.
any party entitled to give notice whether that party is his
principal or not
(d) in writing or by personal communication and in any Manner.
terms which identify the bill and intimate that the bill has
been dishonoured by non-acceptance or non-payment.
2. A misdescription of the bill shall not vitiate the notice Misdeserigunless the party to whom the notice is given is in fact misled tion•
thereby. 53 V., c. 33, s. 49.
99. In point of form,—
(a) the return of a dishonoured bill to the drawer or an
endorser is a sufficient notice of dishonour;
(b) a written notice need not be signed.
2. An insufficient written notice may be supplemented and
validated by verbal communication. 53 V., c. 33, s. 49.

Form.
Return of
bill.
Signature.
Verbal
supplement.

100. Where a bill when dishonoured is in the hands of an Nctiee to
agent he may himself give notice to the parties liable on the bill, agent.
or he may give notice to his prineipal, in which case the prin- Effect on
eipal upon receipt of the notice shall have the same time for principal.
giving notice as if the agent had been an independent holder.
2. If the agent gives notice to his principal he must do so Time for.
within the same time as if he were an independent holder. 53
s. 49.
V., e.
101. Where a party to a bill receives due notice of dishon- Notice to
('lit'('lit'he has, after the receipt of such notice, the same period ofant(edent
pattie,.
tittle for giving notice to antecedent parties that a holder has
after dishonour. 53 V., c. 33, s. 49.
102. A notice of dishonour enures for the benefit,—
Benefit
all subsequent holders and of all prior endorsers who enures
(a) of
'
have a right of recourse against the party to whom it is
given, where given on behalf of the holder;
2163
1361
'b)
R.S., 1906.




22
Parties to
W110111.

Sufficiency
of giving.

Sufficieney
of notice.

Death of
party.

Chap. 119.

Bills of Exchange.

Part IL

(b) of the holder and of all endorsers subsequent to the
party to whom notice is given, where given, by or on behalf
of an endorser entitled under this Part to give notice. 53
V., c. 33, s 49.
103. Notice of the dishonour of any bill payable in Canada
shall, notwithstanding anything in this Act contained be sufficiently given if it is addressed in due time to any party to such
bill entitled to such notice, at his customary address or place of
residence or at the place at which such bill is dated, unless any
such party has, under his signature designated another place,
in which case such notice shall be sufficiently given if addressed
to him in due time at such other place.
2. Such notice so addressed shall be sufficient, although the
place of residence of such party is other than either of the
places aforesaid, and shall be deemed to have been duly
served
and given for all purposes if it is deposited in any post office,
with the postage paid thereon, at any time during the day on
which presentment has been made, or on the next foll
owing
juridical or business day.
3. Such notice shall not be invalid by reason only
of the fact
that the party to whom it is addressed is dead. 53 V.,
c. 33,
5.49.

Miscarriage
in post
service.

104. Where a notice of dishonour is duly addr
essed and
posted, as provided in the last preceding section, the
send
deemed to have given due notice of dishonour, notwiths er is
tanding
any miscarriage by the post office. 53 V., c. 33, s. 49.

Ex( use for

105. Delay in giving notice of dishonour is
excused where
the delay is caused by circumstances beyond the
control of the
party giving notice, and not imputable
to his default, miscon(litet or negligence.
2. When the cause of delay ceases to operate
the notice must
be given with reasonable diligence. 53 V., c.
33, s. 50.
106. Notice of dishonour is dispensed with
,—
(a) when after the exercise of reasonable
diligence, notice as
required by this Act cannot be given to
or does not reach
the drawer or endorser sought to be charged;
(b) by waiver express or implied.
2. Notice of dishonour may be waiv
ed before the time of
giving notice has arrived, or after the
omission to give due
notive. 53 V., c. 33, s. 50.

Diligence.

Dispensed
with.
Reasonable
diligence.
Waiver.
Time of.

pikpenseil
with.

107. Notice of dishonour is dispensed
with as regard, the
drawer where,—
person. (a) the draw
er and drawee are the same pers
on;
Fictitious
(b) the drawee is a fictitious person
i,crson.
or a person not having
capacity to contract ;
2164
R.S., 1906.




Part II.

Bills of Exchange.

Chap. 119.

23

dresee ited
,r
(c) the drawer is the person to whom the bill is presented Praur. to
for payment
(d) the drawee or acceptor is, as between himself and the No obligadrawei, under no obligation to accept or pay the bill; tion.
AI er(e) the drawer has countermanded payment. 53 V., c. 332 Countermand.
d.
s. 50.
Dispensed
108. Notice of dishonour is dispensed with as regards the IN nsed
endorser where,—
(a) the drawee is a fictitious person or a person not having Fictitious
capacity to contract, and the endorser was aware of the person.
fact at the time he endorsed the bill;
(b) the endorser is the person to whom the bill is presented Presented to
endorser.
for payment
(c) the bill was accepted or made for his accommodation. Accommodation.
53 V., c. 33, s. 50.

Protest.
109. In order to render the acceptor of a bill liable it is not Necessity
necessary to protest it. 53 V., c. 33, s. 52.

of.

110. Protest is dispensed with by any circumstances which Dispensed
tn.
would dispense with notice of dishonour. 53 V., c. 33, s. 51. "
111. Delay in noting or protesting is excused by circum- Delay
stances beyond the control of the holder, and not imputable to excused.
his default, misconduct or negligence.
2. When the cause of delay ceases to operate, the bill must Diligence.
be noted or protested with reasonable diligence. 53 V., c. 33,
s. 51.

112. Where a foreign bill appearing on the face of it to be Foreign bill,
no -a
such has been dishonoured by non-acceptance it must be duly ance.cceptprotested for non-acceptance.
2. Where a foreign bill which has not been previously dis- Non-payhonoured by non-acceptance is dishonoured by non-payment, it rnent.
must be duly protested for non-payment.
3. Where a foreign bill has been accepted only as to part it Balance.
must be protested as to the balance.
4. 1' .1 foreign bill is not protested as by this section re- Tv
drawer and endorsers are discharged. 53 V., c. 33,
ss. 44 and 51.
Protest of
113. Where an inland bill has been dishonoured, it may, if inland bill.
the holder thinks fit, be noted and protested for non-acceptance
or non-payment as the case may he; but it shall not, except in
the province of Quebec, be necessary to note or protest an,in- Quebec.
land bill in order to have recourse against the drawer or
endorsers. 53 V., e. 33, s. 51.
114.
2165

IL S., 1906.

24

Chap. 119.

Discharge in
default of
protest.

114. In the case of an inland bill drawn upon any person in
the province of Quebec or payable or accepted at any place in
the said province the parties liable on the said bill other than
the acceptor are, in default of protest for non-acceptance or nonpayment as the case may be, and of notice thereof, discharged,
except in cases where the circumstances are such as would dispense with notice of dishonour.
2. Except as in this section provided, where a bill does not
on the face of it appear to be a foreign bill, protest thereof in
case of dishonour is unnecessary. 53 V., c. 33, s. 51.

Protest unnecessary.

Bills of Exchange.

Part II.

Subsequent
protest for
m m-payment.

115. A bill which has been protested for non-acceptance,
or a bill of which protest for non-acceptance has been waive
d,
may be subsequently protested for non-payment. 53 V., c.
33,
s. 51.

l'rotest for
better
security.

116. Where the acceptor of a bill suspends payment
before
it matures, the holder may cause the bill to be protested
for
better security against the drawer and endorsers. 53 V.,
c. 33,
s. 51; 54-55 V., c. 17, s. 7.

A ccentance
for honour.

117. Where a dishonoured bill has been accepted
for honour
supra protest, or contains a reference in case of need,
it mu-sr
be protested for non-payment before it is presented for paym
ent
to the acceptor for honour, or referee in case of need.
Protest for
2. When a bill of exchange is dishonenred by the
non-payment.
acceptor
for honour, it must be protested for non-payment by
him. 53
V.) c 33 '66
. ,s
.
Noting
equivalent
to protest.

118. For the purposes of this Act, where a bill
is required
to be protested within a specified time or before
some further
proceeding is taken, it is sufficient that the bill
has been noted
for protest before the expiration of the speci
fied time or the
taking of the proceeding. 53 V., c. 33, s. 92.

Noting or
protest.

119. Subject to the provisions of this Act, when
a bill is
protested the protest must be made or noted on
the day of it:
dishonour.
2. When a bill has been duly noted, the formal
be extended thereafter at any time as of the date ofprotest may
the noting.
53 V., c. 33, ss. 51 and 92.

FAtending
protest.

Protest on
copy or
particulars.

120. Where a bill is lost or destroyed, or is
wrongly or
accidentally detained from the person entitled
to hold it, or is
accidentally retained in a place other than wher
e payable, protest may be made on a copy or written particulars
thereof. 53
V., c. 33, s. 51.

Plare of
protest.

121. A bill must be protested at the place where it
is dishonoured, or at some other place in Canada situate
within five
2166
miles
R.S., 1906.




•

Part II.

Bills of Exchange.

Chap. 119.

25

miles of the place of presentment and dishonour of such bill:

Provided that,—

(a) when a bill is presented through the post office and re- Where bill
turned by post dishonoured, it may be protested at the returned.
place to which it is returned, not later than on the day o."
its return or the next juridical day;
(b) every protest for dishonour, either for non-acceptance or Time when.
non-payment may be made on the day of such dishonour,
and in case of non-acceptance at any time after nonacceptance, and in case of non-payment at any time after
three o'clock in the afternoon. 53 V., c. 33, s. 51.
122. A protest must contain a copy of the bill, or the on- contents of
piotest.
ginal bill Ma y be annexed thereto, and the protest must be
signed by the notary making it, and must specify,—
Person.
(a) the person at whose request the bill is protested;
Place.
(b) the place and date of protest;
Reason.
(c) the cause or reason for protesting the bill;
Proceeding.
(d) the demand made and the answer given, if any; or,
(e) the fact that the drawee or acceptor could not be found. Excuse.
53 V., e. 33, S. 51.
123. Where a dishonoured bill is authorized or required to official wlem
notary is
.
be protested, and the services of a notary cannot be obtained at accessibnotle.
the place where the bill is dishonoured, any justice of the peace
resident in the place may present and protest such bill and give
all necessary notices and shall have all the necessary powers of
a notary in respect thereto. 53 V., c. 33, s. 93.
124. The expense of noting and protesting any bill and the Expenses.
postages thereby incurred, shall be allowed and paid to the
holder in addition to any interest thereon.
2. Notaries may charge the fees in each province heretofore Fees.
allowed them. 53 V., c. 33, s. 93.
125. The forms in the schedule to this Act may be used in Forms.
noting or protesting any bill and in giving notice thereof.
2. A copy of the bill and endorsement may be included in content:4.
the forms, or the original bill may be annexed and the necessary changes in that behalf made in the forms. 53 V., c. 33,
S. 93.

126. Notice of the protest of any bill payable in Canada When notice
s
shall be sufficiently given and shall be sufficient and deemed to tri'l:qt
duly given and served, if given during the day on gien
have been
which protest has been made or on the next following juridical
or business day, to the same parties and in the same manner
and addressed in the same way as is provided by this Part for
notice of dishonour. 53 V., c. 33, s. 49.
2167
Liabilitie




R.S., 1906.




26

Chap. 119.

Bills of Exchange.

Part II.

Liabilities of Parties.
Equitable
assignment.

127. A bill, of itself, does not operate as an assignment of
funds in the hands of the drawee available for the payment
thereof, and the drawee of a bill who does not accept as required
by this Act is not liable on the instrument. 53 V., c. 33, s. 53.

Engagement
by acceptance.

128. The acceptor of a bill, by accepting it, engages that he
will pay it according to the tenor of his acceptance. 33 V.,
e. 33, s. 54.

Estoppel.
Genuineness
and authority.
Capacity of
drawer.
Payee and
capacity.

Drawer.
Engages
acceptance
and compensation.

Estoppel or
to payee.

129. The acceptor of a bill by accepting it is precluded from
denying to a holder in due course,—
(a) the existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the bill;
(b) in the case of a bill payable to drawer's order, the then
capacity of the drawer to endorse, but not the genuineness
or validity of his endorsement;
(c) in the case of a bill payable to the order of a third person, the existence of the payee and his then capacity to
endorse, but not the genuineness or validity of his endorsement. 53 V., c. 33, s. 54130. The drawer of a bill, by drawing it,—
(a) engages that on due presentment it shall be accepted and
paid according to its tenor, and that if it is dishonoured
lie will compensate the holder or any endorser who is compelled to pay it, if the requisite proceedings on dishonour
are duly taken;
(b) is precluded from denying to a holder in due course the
existence of the payee and his then capacity to endorse.
53 V., c. 33, s. 55.

Liability by
131. .No person is liable as drawer, endorser or acceptor of
signature.
Irregular en. a bill who has not signed it as such: Provided that when a
dorsement. person signs a bill otherwise than as a

drawer or acceptor he
thereby incurs the liabilities of an endorser to a holder in due
course and is subject to all the provisions of this Act respecting
endorsers. 53 V., c. 33, ss. 23 and 56

Trade or asslimed name,
Firm name.

Endorser.

132. Where a person signs a bill in a trade or assumed
name he is liable thereon as if he had signed it in his own name.
2. The signature of the name of a firm is equivalent to the
signature by the person so signing, of the names of all persons
liable as partners in that firm. 53 V., e. 33, s. 23.

133. The endorser of a bill, by endorsing it, subject to the
effect of any express stipulation hereinbefore
Engages
(a) engages that on due presentment it shall be accepted and
acceptance
compenpaid according to its tenor, and that if it is dishonoured
or
sation.
he will compensate tlw bolder or a subsequent endorser
2168
who
R.S., 1006.




Part II.

Bills of Exchange.

Chap. 119.

27

who is compelled to pay it, if the requisite proceedings on
dishonour are duly taken ;
(b) is precluded from denying to a holder in due course the Genuineness
and regugenuineness and regularity in all respects of the drawer's larity.
signature and all previous endorsements;
(c) is precluded from denying to his immediate or a subse- Validity.
quent endorser that the bill was, at the time of his endorsement, a valid and subsisting bill, and that he had then a
good title thereto. 53 V., e. 33, s. 55.
134. Where a bill is dishonoured, the measure of damages Measure of
damages.
which shall be deemed to be liquidated damages shall be,—
Amount of
(a) the amount of the bill;
bill.
(b) interest thereon from the time of presentment for pay- Interest.
ment, if the bill is payable on demand, and from the
maturity of the bill in any other case;
(c) the expenses of noting and protest. 53 V., c. 33, s. 57. Expense.
135. In case of the dishonour of a bill the holder may Recovery
recover from any party liable on the bill, the drawer who has same.
been compelled to pay the bill may recover from the acceptor,
and an endorser who has been compelled to pay the bill may
recover from the acceptor or from the drawer, or from a prior
endorser, the damages aforesaid. 53 V., c. 33, s. 57.

of

136. In the case of a bill which has been dishonoured abroad Re-exchange
in addition to the damages aforesaid, the holder may recover and interest.
from the drawer or any endorser, and the drawer or an endorser
who has been compelled to pay the bill may recover from any
party liable to him, the amount of the re-exchange with interest
thereon until the time of payment. 53 V., c. 33, s. 57.
137. Where the holder of a bill payable to bearer nego- Transferrer
tiates it by delivery without endorsing it, he is called a trans- by delivery.
ferrer by delivery.'
2. A transferrer by delivery is not liable on the instrument. Liability of.
53 V., c. 33, s. 58.
138. A transferrer by delivery who negotiates a bill thereby Warranty by.
warrants to his immediate transferee, being a holder for
value,—
(a) that the bill is what it purports to be;
Genuineness.
Right to
(b) that he has a right to transfer it; and,
fact transfer.
(C) that at the time of transfer he is not aware of any
Bona fides.
which renders it valueless. 53 V., c. 33, S. 58.
Discharge of Bill.
139. A bill is discharged by payment in due course by or Payment.
on behalf of the drawee or acceptor.
2169
2.
R.S., 1906.

28

Chap. 119.

Payment in
due course.

2. Payment in due course means payment made at or after
the maturity of the bill to the holder thereof in good faith and
without notice that his title to the bill is defective.
3. Where an accommodation bill is paid in due course by the
party accommodated, the bill is discharged. 53 V., e. 33, s. 59.

ACC01111110d lion bill.

Payment by
drawer or
endorser.
Gives rights.

Second
negotiati(01.

Bills of Exchange.

Part II.

140. Subject to the provisions aforesaid as to an accommodation bill, when a bill is paid by the drawer or an endorser, it
is not discharged; but,—
(a) where a bill payable to, or to the order of, a third party
is paid by the drawer, the drawer may enforce payment
thereof against the acceptor, but may not re-issue the bill;
(b) where a bill is paid by an endorser, or where a bill payable to drawer's order is paid by the drawer, the party
paying it is remitted to his former rights as regards the
acceptor or antecedent parties, and he may, if he thinks fit,
strike out his own and subsequent endorsements, and again
negotiate the bill. 53 V., c. 33, s. 59.

Acceptor
holding at
maturity.

141. When the acceptor of a bill is or becomes the holder
of it, at or after its maturity, in hi o‘Vn right, the bill is discharged. 53 V., e. 33, S. 60.

Renouncing
right,.

142. When the holder of a bill, at or after its maturity,
absolutely and unconditionally renounces his rights against the
acceptor, the bill is discharged.
2. The liabilities of any party to a bill may in like manner
be renounced by the holder before, at, or after its maturity.
3. A renunciation must be in writing, unless the bill is
delivered up to the acceptor.
4. Nothing in this section shall affect the rights of a holder
in (Inc course without notice of renunciation. 53 V., c. 33,

Against one
party.
Writing.
11 older in
due course.

8. 61.
Ca ncellat ion
of

Of any
signa ture.
Discharge of
endorser.

Unint cut ional cancellation.
Burden of
proof.

143. Where a bill is intentionally cancelled by the holder or
his agent, and the cancellation is apparent thereon, the bill is
discharged.
2. In like manner, any party liable on a bill may be discharged by the intentional cancellation of his signature by the
holder or his agent.
3. In such case, any endorser who would have had a right of
recourse against the party whose signature is cancelled is also
discharged. 53 V., c. 33, s. 62.
144. A cancellation made unintentionally, or under a mistake, or without the authority of the holder, is inoperative: Provided that where a bill or any signature thereon appears to have
been cancelled, the burden of proof lies on the party who alleges
that the cancellation was made unintentionally, or under a mistake, or wit114 111t, authority. 53 V., c. 33, /3. 62.
211'0
145.

R.S., 1906.







Part II.

Bills of Exchange.

29

Chap. 119.

Alteration of
145. Where a bill or acceptance is materially altered with- bill.
out the assent of all parties liable on the bill, the bill is voided,
except as against a party who has himself made, authorized, or
Holder in
assented to the alteration and subsequent endorsers: Provided due course.
that where a bill has been materially altered, but the alteration
is not apparent, and the bill is in the hands of a holder in due
course, such holder may avail himself of the bill as if it had not
been altered, and may enforce payment of it according to its
original tenor. 53 V., c. 33, s. 63.
Material.
146. In particular any alteration,
Date.
(a) of the date;
Sum.
(b) of the sum payable;
Time.
(c) of the time of payment;
Place.
(d) of the place of payment;
(e) by the addition of a place of payment without the accep- Adding
places.
tor's assent where a bill has been accepted generally;
is a material alteration. 53 V., c. 33, s. 63.

Acceptance and Payment for Honour.
Acceptance
147. Where a bill of exchange has been protested for dis- for honour
honour by non-acceptance, or protested for better security, and supra protest
is not overdue, any person, not being a party already liable
thereon, may, with the consent of the holder, intervene and
accept the bill supra protest, for the honour of any party liable
thereon, or for the honour of the person for whose account the
bill is drawn. 53 V., c. 33, s. 64.

148. A bill may be accepted for honour for part only of the In
sum for which it is drawn. 53 V., c. 33, s. 64.
149. Where an acceptance for honour does not expressly
state for whose honour it is made, it is deemed to be an accept
ance for the honour of the drawer. 53 V. c. 33, S. 64.

part.

Deemed to
be f‘'r
honour of
drawer.

Maturity
150. Where a bill payable after sight is accepted for honour. tAfitirr sightof
its maturity is calculated from the date of protesting for non
acceptance, and not from the date of the acceptance for honour.
53 V., c. 33, s. 64.
151. An acceptance for honour supra protest, in order to he Requirements.
valid must,—
(a) be written on the bill, and indicate that it is an accept- Writing.
ance for honour; and,
(b) be signed by the acceptor for honour. 53 V., c. 33, 8. 64. Signature.
152. The acceptor for honour of a bill by accepting it Liability of
honour.occneptor for
engages that he will, on due presentment, pay the bill according our.
to the tenor of his acceptance, if it is not paid by the drawee,
provided
2171
R.S., 1906.

30

Chap. 119.

To holder
a 3 others.

provided it has been duly presented for payment and protested
for non-payment, and that he receives notice of these facts.
2. The acceptor for honour is liable to the holder and to all
parties to the bill subsequent to the party for whose honour he
has accepted. 53 V., c. 33, s. 65.

Bills of Exchange.

Part II.

153. Where a bill has been protested for non-payment, any
person may intervene and pay it supra protest for the honour
.4 any party liable thereon, or for the honour of the person for
whose account the bill is drawn.
If more than
2. Where two or more persons offer to pay a bill for the
one offer.
honour of different parties, the person whose payment will discharge most parties to the bill shall have the preference.
Refttsal to
3. Where the holder of a bill refuses to receive payment
receive paysupra protest, he shall lose his right of recourse against any
ment.
party who would have been discharged by such payment.
Entitled to
4. The payer for honour, on paying to the holder the amount
bill.
of the bill and the notarial expenses incidental to its dishonour,
is entitled to receive both the bill itself and the protest.
Liability for
5. If the holder does not on demand in such case deliver up
refusing.
the bill and protest, he shall be liable to the payer for honour
in damages. 53 V., c. 33, s. 67.
Payment for
honour supra
protest.

Attestation
of payment
for honour.

Declaration.

Discharge.
Subrogation.

154. Payment for honour supra protest, in order to operate
as such and not as a mere voluntary payment., must be attested
by a notarial act of honour, which may be appended to the protest or form an extension of it.
2. The notarial act of honour must be founded on a declaration made by the payer for honour, or his agent in that behalf,
declaring his intention to pay the bill for honour, and for whose
honour he pays. 53 V., c. 33, s. 67.
155. Where a bill has been paid for honour, all parties subsequent to the party for whose honour it is paid are discharged,
but the payer for honour is subrogatted for, and succeeds to both
the rights and duties of the holder as regards the party for whose
honour he pays, and all parties liable to that party. 53 V.,
c. 33, s. 67.
Lost Instruments.

tn

duplicate of lost
bill.
ha% 0

Refusal.
Compulsion.

156. Where a bill has been lost before it is overdue, the person who was the holder of it may apply to the drawer to give
him another bill of the same tenor, giving security to the
drawer, if required, to indemnify him against all persons whatever, in ca-;e the bill alleged to have been lost shall be found
again.
2. If the drawer, on request as aforesaid, refuses to give such
duplicate bill, he may be compelled to do so. 53 V., c. 33, s. 68.
'1172
157.

R.S., 1906.







Part II.

Bills of Exchange.

Chap. 119.

31

157. Tn any action or proceeding upon a bill, the court or Action on
a judge may order that the loss of the instrument shall not be lost bill.
set up, provided an indemnity is given to the satisfaction of the Indemnity.
court or judge against the claims of any other person upon the
instrument in question. 53 V., c. 33, s. 69.
Bill in a Set.
158. Where a bill is drawn in a set, each part of the set Bills in set.
being numbered, and containing a reference to the other parts,
the whole of the parts constitute one bill.
2. The acceptance may be written on any part, and it must Acceptance.
be written on one part only. 53 V., e. 33, s. 70.
•

159. Where the holder of a set endorses two or more parts Endorsing
more than
to different persons, he is liable on every such part, and every one part.
endorser subsequent to him is liable on the part he has himself
endorsed as if the said parts were separate bills.
2. Where two or more parts of a set are negotiated to differ- Negotiation
ent holders in due course, the holder whose title first accrues is, to different
holders.
as between such holders, deemed the true owner of the bill :
Acceptance
Provided that nothing in this subsection shall affect the rights in due
or pays the part first pre- course.
of a person who in due course accepts
sented to him.
More than
3. If the drawee accepts more than one part, and such one part
accepted parts get into the hands of different holders in due accepted.
course, he is liable on every such part as if it were a separate
bill.
4. When the acceptor of a bill drawn in a set pays it without Part
accepted.
requiring the part bearing his acceptance to be delivered up to Payments
NVithollt
him, and that part at maturity is outstanding in the hands of a livery. dc•
course, he is liable to the holder thereof.
holder in due
5. Subject to the provisions of this section, where any one Discharge.
part of a bill drawn in a set is discharged by payment or otherwise, the whole bill is discharged. 53 V., c. 33, s. 70.
Conflict of Laws.
160. Where a bill drawn in one country is negotiated, Reg isit es 0:
form.
accepted or payable in another, the validity of the bill as regard,
requisites in form is determined by the law of the place of issue,
and the validity as regards requisites in form of the supervening
contracts, such as acceptance, or endorsement, or acceptance
supra protest, is determined by the law of the place where the
contract was ma(le: Provided that,—
(a) where a bill is issued out of Canada, it is not invalid 1),\ Unstampeil
reason only that it is not stamped in accordance with the
law of the place of issue;
(b) where a bill, issued out of Canada, conforms, as regard- Conformi,iir
to the law
requisites in form, to the law of Canada, it may, for tin of ransida.
purpose of enforcing payment thereof, be treated as valid
ft F.-4
2173
1904.1

82

Chap. 119.

Bills of Exchange.

Part III.

as between all persons who negotiate, hold or become parties to it in Canada. 53 V., c. 33, s. 71.
DJ' taci.

Li'w(.f
Canada

161. Subject to the provisions of this Act, the interpretation of the drawing, endorsement, acceptance or acceptance
supra protest of a bill, drawn in one country and negotiated,
accepted or payable in another, is determined by the law of the
place where such contract is made: Provided that where an inland bill is endorsed in a foreign country, the endorsement shall,
as regards the payer, be interpreted according to the law of
Canada. 53 V., c. 33, s. 71.

Law as to
duties of
holder.

162. The duties of the holder with respect to presentment
for acceptance or payment and the necessity for or sufficiency
of a protest or notice of jishonour, are determined by the law
of the place where the act is done or the bill is dishonoured.
53 V., c. 33, s. 71.

Currency.

163. Where a bill is drawn out of but payable in Canada,
and the sum payable is not expressed in the currency of Canada,
the amount shall, in the absence of some express stipulation, be
calculated according to the rate of exchange for sight drafts at
the place of payment on the day the bill is payable. 53 V.,
c. 33, s. 71.

Due date.

164. Where a bill is drawn in one country and is payable
in another, the due date thereof is determined according to the
law of the place where it is payable. 53 V., c. 33, s. 71.

PART Ill.
CHEQUES ON A 1L\ N1.

Cheque defined.
Provisions as
to bills

apply.

165. A cheque is a bill of exchange drawn on a banK, paynide CM dC111:111(1.

2. Except as otherwise provided in this Part, the provisions
of this Act applicable to a bill of exchange payable on demand
apply to a cheque. r)3 V., e. 33, s. 72.

166. Subject to the provisions of this Act,—
(a) where a cheque is not presented for payment within a
reasonable time of its issue, and the drawer or the person
on whose account it is drawn had the riuht at the time of
such presentment, as between him and ihie bank, to have
Measure of
the cheque paid, and suffers actual ditm:Ige through the
(1a ma ge.
delay, he is discharged to the extent of such damage, that
is to say, to the extent to which such drawer or person is a
creditor of such bank to a larger amount than he would
have been had such cheque been paid;
2174
(b)
li.S., 1906.
Presentment
for payment.




I




Part III.

Bills of Exchange.

Chap. 119.

33

11(.1,1er
(b) the holder of such cheque, as to which such drawer or becomes
person is discharged, shall be a creditor, in lieu of sucb creditor.
drawer or person, of such bank to the extent of such di
charge, and entitled to recover the amount from it.
2. In determining what is a reasonable time, within this sec Reasonable
tion, regard shall be had to the nature of the instrument, th( time.
usage of trade and of banks, and the facts of the particular case.
5:3 V., c. 33, s. 73.
Authority ta
167. The duty and authority of a bank to pay a cheque pay.
drawn on it by its customer, are determined by,—
Counter
mind.
(a) countermand of payment;
Death.
(b) notice of the customer's death. 53 V., s. 33, s. 74.

Crossed Cheques.
168. Where a cheque bears across its face an addition of,_ Definition.
bank between two parallel transverse lines,
'
(a) the word'
either with or without the words not negotiable', or,
(b) two parallel transverse lines simply, either with or with'
out the words not negotiable ;
addition constitutes a crossing, and the cheque is crossed General.
such
generally.
2. Where a cheque bears across its face an addition of the special.
name of a bank, either with or without the words not negotiable,' that addition constitutes a crossing, and the cheque is
crossed specially and to that bank. 53 V., c. 33, s. 75.
169. A cheque may be crossed generally or specially by the By drawer.
drawer.
2. Where a cheque is uncrossed, the holder may cross it gen- By holder.
erally or specially.
3. Where a cheque is crossed generally, the holder may cross Varying.
it specially.
4. Where a cheque is crossed generally or specially, the Words ma':
added.
holder may add the words Not negotiable.
5. Where a cheque is crossed specially the hank to which it BY bank
foreolleetion.
is crossed may again cross it specially to another hank for collection.
6. Where an uncrossed cheque, or a cheque crossed generally, Changing
is sent to a bank for collection, it may cross it specially to itself. gr,on Ing.
°8sI ,
,r
7. A crossed cheque may be re-opened or uncrossed by the
drawer writing between the transverse lines, the words Pay
rash, and initialling the same. 53 V., e. 33, s. 76.
170. A crossing authorized by this Act is a material part Materially.
of the cheque.
2. It shall not be lawful for any person to obliterate or, ex- Altering
c,ept as authorized by this Act, to add to or alter the crossing. ero:' n1
53 V., c. 33. s. 78.
2175
171.
R.S., 1906.

3-1
Crossed to
more than
one bank .

Liability for
improper
payment.

Rona fides.

Protection
in such case.

Chap. 119.

Bills of Exchange.

Part III.

than one
171. Where a cheque is crossed specially to more
for collecbank, except when crossed to another bank as agent thereof.
tion, the bank on which it is drawn shall refuse payment
53 V., c. 33, s. 78.
drawn,
172. Where the bank on which a cheque so crossed is ally
gener
nevertheless pays the same, or pays a cheque crossed
wise than
otherwise than to a hank, or, if crossed specially, other
g as its
to the bank to which it is crossed, or to the bank actin cheque
agent for collection, it is liable to the true owner of the
been so
for any loss he sustains owing to the cheque having
payment
paid: Provided that where a cheque is presented for
crossed,
which does not at the time of presentment appear to be
have
or to have had a crossing which has been obliterated, or to
this
been added to or altered otherwise than as authorized by ut
witho
Act, the bank paying the cheque in good faith and
ity, nor
negligence shall not be responsible or incur any liabil
cheque having
shall the payment be questioned by reason of the
haybeen crossed, or of the crossing having been obliterated or
authorized by
ing been added to or altered otherwise than as
than to
this Act, and of payment having been made otherwise
crossed, or
a bank or to the bank to which the cheque is or was
he.
to the bank acting as its agent for collection, as the case may
53 V., c. 33, s. 78.
173. Where the bank, on which a crossed cheque is drawn,
in good faith and without negligence pays it, if crossed generally to a bank, or, if crossed specially, to the bank to which it
is crossed, or to a bank acting as its agent for collection, the
bank paying the cheque, and if the cheque has come into the
hands of the payee, the drawer, shall respectively be entitled to
the same rights and be placed in the same position as if payment of the cheque had been made to the true owner thereof.
53 V., e. 33, s. 79.

Not
negotiable'

174. Where a person takes a crossed cheque which bears
on it the ‘vords not negotiable,' he shall not have and shall not
be capable of giving a better title to the cheque than that which
had the person from whom he took it. 53 V., c. 33, s. 80.

175. Where a bank, in good faith and without negligence,
receives for a customer payment of a cheque crossed generally
or specially to itself, and the customer has no title, or a defec""k jiving. tive title thereto, the bank shall not incur any liability to the
ii""" ild". true owner of the cheque by reason only of having received such
payment. 53 V., c. 33, B. 81.
Customer

without

2176
i.S.,1901.(




PA WV




Part IV.

Bills of Exchange.
PART

Chap. 119.

35

IV.

PROMISSORY NOTES.

176. A promissory note is an unconditional promise in Definition.
writing made by one person to another, signed by the maker,
engaging to pay, on demand or at a fixed or determinable future
time, a sum certain in money, to, or to the order of, a specified
person, or to bearer.
2. An instrument in the form of a note payable to the Endorsed by
maker's order is not a note within the meaning of this section, mak .
"
'
unless it is endorsed by the maker.
3. A note is not invalid by reason only that it contains also Pledge.
a pledge of collateral security with authority to sell or dispose Invalidity.
thereof. 53 V., c. 33, s. 82.
177. A note which is, or on the face of it purports to be, Inland not e.
both made and payable within Canada, is an inland note.
Foreign note.
2. Any other note is a foreign note. 53 V., c. 33, s. 82.
178. A promissory note is inchoate and incomplete until
delivery thereof to the payee or bearer. 53 V., c. 33, s. 83.

Delivery.

179. A promissory note may be made by two or more Joint and
makers, and they may be liable thereon jointly, or jointly and several note.
severally, according to its tenor.
2. Where a note runs I promise to pay,' and is signed by Individual
promise.
two or more persons, it is deemed to be their joint mid several
note. 53 V., c. 33, s. 84.
180. Where a note payable on demand has been endorsed, it Demand
note premust be presented for payment within a reasonable time of the sent men t.
endorsement.
2. In determining what is a reasonable time, regard shall be Reasonable
had to the nature of the instrument, the usage of trade, and the time.
facts of the particular case. 53 V., c. 33, s. 85.
181. If a promissory note payable on demand, which has Endorser
been endorsed is not presented for payment within a reasonable discharged.
time the endorser is discharged : Provided that if it has, with Security.
the assent of the endorser, been delivered as a collateral or continuing security it need not be presented for payment so long as
it is held as such security. 53 V., c. 33, s. 85.
182. Where a note payable on demand is negotiated, it is Notikeined
not deemed to be overdue, for the purpose of affecting the holder °`erd".
with defects of title of which he had no notice, by reason that
it appears that a reasonable time for presenting it for payment
has elapsed since its issue. 53 V., e. 33. . 65.
2177
183.
137
R.S., 1906.

36

Chap. 119.

Bills of Exchange.

Part IV.

Presentment,
where,

183. Where a promissory note is in the body of it made payable at a particular place, it must be presented for payment at
that place.
Liability of
2. In such case the maker is not discharged by the omission
maker,
to present the note for payment on the day that it matures; but
if any suit or action is instituted thereon against him before
presentation, the costs thereof shall be in the discretion of the
court.
Note payable
3. If no place of payment is specified in the body of the note,
generally.
presentment for payment is not necessary in order to render the
maker liable. 53 V., c. 33, s. 86.
184. Presentment for payment is necessary in order to
render the endorser of a note liable.
Place where.
2. Where a note is in the body of it made payable at a particular place, presentment at that place is necessary in order to
render an endorser liable.
What
3. When a place of payment is indicated by way of memosll
randum only, presentment at that place is sufficient to render
the endorser liable, but a presentment to the maker elsewhere,
if sufficient in other respects, shall also suffice. 53 V., c. 33,
s. 86.
As to
endorser,

185. The maker of a promissory note, by making it,—
(a) engages that he will pay it according to its tenor;
(b) is precluded from denying to a holder in due course the
existence of the payee and his then capacity to endorse.
53 V., c. 33, s. 87.

Maker.
Engn gement.
Estoppel.

186. Subject to the provisions of this Part, and except as
by this section provided, the provisions of this Act relating to
bills of exchange apply, with the necessary modifications, to
promissory notes.
Terms corre2. In the application of such provisions the maker of a note
sponding.
shall be deemed to correspond with the acceptor of a bill, and
the first endorser of a note shall be deemed to correspond with
the drawer of an accepted bill payable to drawer's order.
Provisions
3. The provisions of this Act as to bills relating to,
inapplicable.
(a) presentment for acceptance;
(b) acceptance;
(c) acceptance supra protest;
(d) bills in a set;
do not apply to notes. 53 V., c. 33, s. S.
Application
of Act to
notes.

Protest of
foreign
notes.

187. Where a foreign note is dishml ured, protest thereof
,
is
unnecessary, except for the preservation of the
liabilities of
endorsers. 53 V., e. 33, s. 88.

Its., 1906.




2178

SCHEDULE.




Sch.

Bills of Exchange.

Chap. 119.

37

SCHEDULE.
FORM A.
NOTING FOR NON-ACCEPTANCE.
(Copy of Bill and Endorsements.)
On the
19 ,
the above bill was, by me, at
the request of
presented for acceptance to
E. F., the drawee, personally (or, at his residence, office or
usual place of business), in the city (town or village) of
and I received for answer:
'
•
•
The said bill is therefore noted for non-acceptance.
A. B.,
Notary Public.
(Date and place.)

19 .

Due notice of the above was by me served upon {A. 13”1
C. D.,
S drawer, 1
the
day of
1 endorser, A personally, on the
(or, at his residence, office or usual place of business) in
day of
,on the
(or, by depositing
such notice, directed to him at
in Ills Majesty's
post office in the city, [town or village], on the
day
of
and prepaying the postage thereon).
/
A. B.,
Notary Public.
19 .
(Date and place.)
.
53 V•/ c 33• sch•/ form A.
FORM B.
PROTEST FOR NON-ACCEPTANCE OR FOR NON-PAYMENT OF A
BILL PAYABLE GENERALLY.
(Copy of Bill and Endorsements.)
day of
, in the year 19 , I,
On this
A. B., notary public for the province of
dwelling at
, at the request of
, in the province of
did exhibit the original bill of exchange, whereof a true
( drawee
copy is above written, unto E. F., the ,acceptor thereof
(
personally (or, at his residence, office or usual place of busi2179
137i
ness)
R.S., 1906.

38




Chap. 119.

Bills of Exchange.

, and, speaking to himself (or his wife, his clerk, or
I acceptance
his servant, &c.,) did demand
thereof unto
payment
( he /
which demand
she
answered:
ness) in

Wherefore I, the said notary, at the request aforesaid, have
protested, and by these presents do protest against the acceptor,
drawer and endorsers (or drawer and en(lorsers) of the said
bill, and other parties thereto or therein concerned, for all exchange, re-exchange, and all costs, damages and interest, present
acceptanee
and to come for want of
of the said bill.
payment
All of which I attest by my signature.
(Protested in duplicate.)
A. B.,
Notary Public.
53

•/ c• 33/ sch form B.

FORM C.
PROTEST FOR NON-ACCEPTANCE OR FOR NON-PAYMENT OF A
BILL PAYABLE AT A STATED PLACE.
(Copy of Bill and Endorsements.)
day of
On this
in the year 19 , 1,
A. B., notary public for the province of
, dwelling
, in the province of
at
, at the request
, did exhibit the original bill of exchange
of
whereof a true copy is above written, unto E. F., the
drawee } thereof,
at
, being the stated
acceptor
place where the said bill is payable, and there speaking
acceptance
did demand
to
( payment S
of the said bill unto which demand he answered:
Wherefore I, the said notary, at the request aforesaid, have
protested, and by these presents do protest against the acceptor,
drawer and endorsers (or drawer and en(lorsers) of the said bill
and all other parties thereto or therein concerned, for all exchange, re-exchange, costs, damages and interest, present and
c acceptance
of the said bill
to come for want of payment

S

An of which I attest by my signature.
(Protested in duplicate.,
A. B.,
Notary Public
53 V., e. 33, sell., form C.
21S0
R.S., 1906.

FoRm




Sch.

Chap. 119.

Bills of Exchange.

39

FORM D.
PROTEST FOR NON-PAYMENT OF A BILL NOTED, BUT NOT PROTESTED FOR NON-ACCEPTANCE.
If the protest is made by the same notary who noted the bill,
it should immediately follow the act of noting and memorandum
of service thereof, and begin with the words and afterwards
on, etc.,' continuing as in the last preceding form, but intro'
did
ducing between the words ' ' and 'exhibit the word
'again,' and in a parenthesis, between the words 'written' and
'unto,' the words: and which bill was by me duly noted for
day of
non-acceptance on the
But if the protest is not made by the same notary, then it
should follow a copy of the original bill and endorsements and
noting marked on the bill—and then in the protest introduce,
in a parenthesis, between the words 'written' and 'unto,' the
, by
day of
words:'and which bill was on the
, notary public for the province of
noted for non-acceptance, as appears by his note thereof marked
on the said bill.'
53 V., c. 33, sch., form D.
FORM E.
Y.
PROTEST FOR NON-PAYMENT OF A NOTE PAYABLE GENERALL
(Copy of Note and Endorsements.)
, in the year 19 , I
(hay of
On this
dwelling
A. B., notary public for the province of
, at the request of
at,in the province of
id exhibit the original promissory note whereof
the promisor,
a true copy is alx,ve written, unto
ess,)
personally (or, at his residence, office or usual place of busin
himself (or his wife, his
, and speaking to
in
ent thereof unto
clerk or his servant, etc.) did demand paym
c he
which demand she answered:
Wherefore I, the said notary, at the request aforesaid, have
the promisor
protested, and by these presents do protest against
other parties thereto or
and endorsers of the said note, and all
interest, present
therein concerned, for all costs, damages and
said note.
the
and to come, for want of payment of
my signature.
All of which I attest by
(Protested in duplicate.)
A. B.,
Notary Public.
53 V., c. 33, sell., for,. E.

2181

FORM
R.S., 1906.

40

Chap. 119.

Bills of Exchange.

Sch.

FoRM F.
PROTEST FOR NON-PAYMENT OF A NOTE PAYABLE AT A STAT LI)
PLACE.

(Copy of Note and Endorsements.)
, in the year 19 , I,
day of
On this
, dwelling at
A.B., notary public for the province of
, at the request of
, in the province of
, did exhibit the original promissory note,
whereof a true copy is above written, unto
, being the stated place where the
the promisor, at
did
said note is payable, and there, speaking to
demand payment of the said note, unto which demand he
answered :
Wherefore 1, the said notary, at the request aforesaid, have
protested, and by these presents do protest against the promisor
and endorsers of the said note, and all other parties thereto or
therein concerned, for all costs, damages and interest, present
and to come, for want of payment of the said note.
All of which I attest by my signature.
(Protested in duplicate.)
A. B.,
Notary Public.
53 V•, e. 33 sch•, form F.

FORM G.
N0TAI:IAL NOTICE OF A NOTING, OR OF A 11:4)-I'LST FOR NONACCEPTANCE, OR OF A PROTEsT FOR
NON-PAYMENT OF A BILL.
(Place and Date of Noting or of ProlM.)
1st.
To P. Q. (the drawer)
at
Sir,
Your bill of exchange for $
, dated at
the day of , upon E. F., in favour of C. D., payable
after sight
wa, this day, at the request of
1 date
dully c noted
non -acceptance
1- by me for
protested
non-payment

21S.
3
H.S., 1906.




days

A. B.,
Notary Mililie.
(Placf,

Bills of Exchange.

Sch.

Chap. 119.

41

(Place and date of Noting or of Protest.)
2nd.
To C. D., (endorser.
(or F. G.)
at
Sir,
, dated at
Mr. P. Q.'s bill of exchange for $
the day of , upon E. F., in your favour (or in favour of
c sight, 1
and by you endored,
days after 1 date,
C. D.,) payable
duly
was this day at the request of
c non-acceptance I
5 noted
1
1 by me for ( non-payment
I protested
A. B.,
Notary Public.
53 V., c. 33, seh., form G.
FORM H.
NOTARIAL NOTICE OF PROTEST FOR NON-PAYMENT OF A NOTE.
(Place and Date of Protest.)
Te
at
Sir,
, dated at
Mr. P. Q.'s promissory note for $
days
r
e months i after date to
payabl
day of
, the
on
J
i you 1 or order, and endorsed by you, was this day, at the
c
, duly protested by me for

request of
non-payment.

A. B.,
Nota? y Public.

53 V. c. 33 sell., form II.
FORM T.
NOTARIAL SERVICE OF NOTICE OF A PROTEST FOR NON-ACCEPTANCE OR NON-PAYMENT OF A BILL, OR NOTE.
(to be subjoined to the Protest.)
public, did
And afterwards, I, the aforesaid protesting notary
by law, of the foreserve due notice, in the form prescribed
non-acceptance 1
C bill } thereby
going protest for non-payment c of the
note
protested
2183
R.S., 1906.




tt




Chap. 119.

42

Bills of Exchange.

Sch.

1 ,. c drawer
protested upon j P. Q.
personally, on the
fle
i c• D., c ' 1 endorsers }
day of (or, at his residence, office or usual
place of business)in, the
day
on
of
,(or, by depositing such notice, directed
to the said 5 P. Q 1 at
"
, in his Majesty's post
D., 5
office in
on the
, and
day of
prepaying the postage thereon).
In testimony whereof, I have, on the last mentioned day and
aforesaid, signed these presents.
year, at
A. B.,
Notary Public.
•

53 V., c. 33/ sch form I.

FORM J.
PROTEST BY A JUSTICE OF THE PEACE (WHERE THERE IS NO
NOTARY) FOR NON—ACCEPTANCE OF A BILL, OR NON—
PAYMENT OF A BILL OR NOTE.
(Copy of Bill or Note and Endorsements.)
day of
, in the year 19 , I, N. 0.,
On this
Majesty's justices of the peace for the district (or
one of His
, in the province of
county, etc.), of
dwelling at
(or near) the village of
, in the said district, there
being no practising notary public at or near the said village
(or any other legal cause), did, at the request of
and in the presence of
well known unto me, exhibit the original
S bill I whereof true copy is
a
above written unto P.Q., the
I note
(drawer
thereof, personally (or at his residence, office or
' acceptor
.promisor
usual place of business) in
and speaking
to himself (his wife, his clerk or his servant, etc.,) did demand
i acceptance 1
thereof, unto which demand he } answered:
(payment
she
d

9

Wherefore I, the said justice of the peace, at the request
aforesaid, have protested, and by these presents do protest
drawer and endorsers
against the - promisor and endorsers
f
of the said
acceptor, drawer and endorsers
j bill 1
and all other parties thereto and therein concerned,
/ note
for all exchange, re-exchange, and all costs, damages and in2184
terest,
R.S., 1906.

terest, present and to come, for want of




said

chi:p. 119.

Bills of Exchange.

Sch.

acceptance
payment

43

of the

bill
/ note

All which is by these presents attested by the signature of
the said (the witness) and by my hand and seal.
(Protested in duplicate)
(Signature of the witness)
(Signature and seal of the J.P.)
53 V., c. 33, sell., form J.
OTTAWA: Printed by SAMUEL EDWARD DAWSON, Law Printtr to the King's
most Excellent Majesty.

2185
R.S., 1906.




7-8 EDWARD VII.
CHAP. 8.
An Act to amend the Bills of Exchange Act.
[Assented to 10th April, 19081
IS Majesty, by and with the advice and consent of the.
Senate and House of Commons of Canada, enacts as
follows:
-

H

1. Section 133 of The Bills of Exchange Act is amended by R.S., c. 119,
striking out the word "endorser" in the second line of paraa i3
3
graph (c) of the said section and substituting therefor the word s.mended
endorsee.),
OTTAWA: Printed by SAMUEL EDWARD DAwsoN, Law Printer to the
King's
most Excellent Majesty.

vol.. 1-12

177

Attention is invited to the article on International Banking or Foreign Exchange, which
is contributed to this number by Mr. William G. Bliss, and contains
a discussion of some of the difficulties encountered by banks in this
important brnich of bankii,4. Mr. Miss is the :intlior of the Lc:xi
:
book on Foreign Exchange issued by the International Correspondence Schools of Scranton that is now part of the complete course of
study in Banking and Banking Law that will be taken up by members
of the Correspondence Chapter of the American Institute of Banking.
Mr. Bliss's work is most complete and practical and it seems a pity
that its use is to be restricted to those who take that course or will
buy the volumes of the Technical Library of the schools, but such is
the case.
Foreign Exchange.




tof

provides that the drawee who
Paragraph XIII of the (;erman law
e that the receipted cheque
pays the amount of the cheque can requir
as to receipt might be useshall be handed to him. This provision
versies not infrequently arise
fully incorporated in our law, for contro
ck over the counter can reas to whether the bank which pays a che
of identifying him as the require the payee to indorse as a means
ceiver.
s is definitely fixed by the
The time for presentment of cheque
s drawn in Germany and the
German law at ten days upon cheque
which cheques drawn abroad
Federal Council fixes the period within
wn in the United States on Ger
are payable in (iermanv. Checks dra
months.
many must be presented within two
in the (;erman law in which
The above are only some of the points
es4-11,tr.
••1 1 1•
1




1

1

INTERNATIONAL BANKING, OR FOREIGN
EXCHANGE AND INCORPORATED BANKS.
A Discussion of Some of the Difficulties Encountered
by Banks in this Important Branch of Banking.
BY WILLIAM G. BLISS.
WING to the increase of foreign trade and other financial interests,
also to territorial expansion, the demand for foreign banking
facilities in the last twenty-five years has become so general
throughout the United States, that national and State banks
have been compelled to provide the means to meet that demand.
Some banks in the largest cities have done this by organizing what
are commonly known as"Foreign Exchange Departments ;" but the
majority have wisely contented themselves with handling such for-

0

eign business as may come to them, through private banking houses
and incorporated banks having such departments.
The recent panic demonstrated clearly and conclusively that incorporated banks of large resources, properly equipped for international banking, are in position to render invaluable services to the
country in general, as well as to their own customers.
But there are certain difficulties that confront incorporated banks
engaging in International Banking or Foreign Exchange, and that
deserve special consideration with a view to their adjustment.
GENERAL LACK OF ACQUAINTANCE WITH THE SUBJECT.
As the first among these difficulties, attention is called to the lack
of acquaintance with the most elementary principles of international
banking. A little conversation with the average bank officer or director will bring out two facts: (1) that the term "Foreign Exchange" conveys to him a somewhat vague idea of banking al4
togeLlicr different from ',he oidinaiy domestic bailkini ',.,, v..11ich Ilk,
has become accustomed by training and practice; and (!) that he believes he has not the time to make a careful study of the subject.
This vagueness of idea in regard to international banking or
general lack of acquaintance with it is attributable in part to failure
to study the different monetary and banking systems of the world,
and in part to failure to appreciate the fact that in principle, the
transactions common to international banking are identical with those
of domestic banking. The former are subjects deserving special
study at this time and the press has devoted considerable space to a
discussion of them ; but it will undoubtedly help to remove any difficulty connected with the latter, to point out what, from an account-







546

THE BANKING LAW JOURNAL.

difing standpoint, is involved in international banking, and what
ferentiates some international transactions from corresponding domestic transactions.
International banking involves: (1) The maintaining by banks in
and
this country of accounts current with banks in foreign countries,
in this
by banks in foreign countries of accounts current with banks
country, known collectively in reports of condition as the "Due from
banks" and "Due to banks" ; (2) discounts and loans to customers
and loans to foreign banks—bills receivable; (3) loans obtained from
foreign banks, acceptances for the bank's account or for account of
its customers—bills payable; (4) rediscounts; (5) deposits; (6) cash,
inconsisting of foreign money, etc. ; (;) collections; and, not
frequently, (s) securities of various descriptions.
The principal points of difference between international and domesg
tic banking are seen in the following: (1) International bankin
usually involves two or more differing currencies, while domestic
banking involves but one currency; (2) in international banking
practically all paper (commercial and bankers) consists of bills of
exchange, while in domestic banking it consists of promissory notes;
in international banking whenever two differing currencies are
involved, the amount of discount is not an item of record, since the
discount is applied to the rate of exchange at which one currency is
converted into the other, i. c. at which bills of exchange are bought
and sold (discounted); while in domestic banking the discount being
applied to the face of the note or bill, its amount becomes an item of
record ; and (4) in international banking the commercial letter of credit
as a basis of credit and exchange is a most important factor while
it is comparatively unknown to domestic banking. There are other
minor differences due to banking. and commercial usages and laws
abroad which it is unnecessary to describe here.
REDISCOUNTS AND THE REPORT OF' CONDITION.

A further difficulty to which attention is called is the form and
place in which the Comptroller of the Currency and the State Superintendent of Banks (New York)* require rediscounts to be reported.
The importance of having- this difficulty removed is apparent to every
one who is acquainted with the subject and who wishes to comply
with the requirements of the departments since in international bank
ing a very large part of a bank's remittances abroad consist of time
bills of exchange that have been bought or discounted. These bills
are rediscounted abroad either immediately on their acceptance by
the drawees, or when required by the state of the American bank's
account, and if the apparent intention of the Departments with
regard to rediscounts were regarded by the banks, they would report
* The writer has not examined the forms in use by the Banking Departments of
other States, and therefore refers to that in use in the state of New York.

INTERNATIONAL BANKING.

547

these time bills as rediscounts. But the requirement itself is wrong
from an accounting standpoint, for it obliges a bank to report as an
actual liability, its liability by endorsement, which is (z conting-ent
liability.f That the requirement is wrong is evidenced by the fact
that when observed its effect on the report is to make it a false or incorrect report of condition, since it obliges a bank to report a fictitious
asset as the contra to this contingent liability. That this is the case
is clearly shown by the fact that the bank that rediscounts any of its
bills receivable either receives the cash for them, or charges them to
its account with the discounting bank, so that there is merely a change
in the position and title of the asset from "Discounts" to either
"Cash" or "Due from Banks." But in a financial statement or report, such as banks are required to make in which the resources should
equal the liabilities, no liability can be shown without some asset as
its contra. Therefore, in order to make the rediscounts appear as
an actual liability in the statement of condition, it becomes necessary
to create a fictitious asset, and banks that comply with the requirement usually do this by leaving the rediscounts in "Discounts."
Obviously then, since no new asset has been created, but only a
change in position has been made, and since the same asset cannot
be produced to the Bank Examiner at the same time in two accounts,
i. c. both in "Discounts" and in "Cash" or "Due from Banks," one
of them must be fictitious. The difficulty in the case is apparently
due to the wish to enforce the recording of the contingent liability
involved, and overlooks the fact that contingent liabilities can only
be carried in a memorandum account, apart from the Actual Resources and Liabilities.
Furthermore, when the volume of the foreign bills that pass
through our banks is taken into consideration, it is clear that the
publication as an actual liability of the contingent liability involved
only creates an altogether incorrect impression as to the nature of
that liability and at the same time necessitates the showing of a correspondingly large fictitious asset.
As far as the foreign exchange department is concerned, therefore, banks disregard the requirement. This is not to be construed
as an indication that the banks question the right of the Federal and
State Departments to require a report of this Contingent Liability,
but rather that they wish to emphasize the undesirability and injustice of requiring its publication. In the official report to the department the item may very properly be called for in a foot note, but it
should be omitted from the published report.
It may here be noted that the handling of the Foreign Commercial business of the country by incorporated banks would be greatly
t The liability of the endorser of a bill is contingent on the failure of the principal
parties to the bill to fulfill the contract involved, a liability, that is most remote in
every well conducted bank.







MS

THE BANKING LAW JOURNAL.

hampered if the same prejudice should prevail with regard to the rediscounting of foreign bills, as at present exists among bankers with
regard to the rediscounting of domestic paper.
THE BEARING OF THE PRESENT LAW ON ACCEPTANCES OR LOANS.
Still another difficulty in international banking has been encount-

ered by our banks, owing to the interpretation of the law whereby
banks are not permitted to accept time bills of exchange drawn on
them. It is particularly opportune to call attention to this difficulty,
which is purely American, at this time when a congressional commission is considering what changes should be made in our currency and
banking systems.
As already pointed out, the instrument of a loan in international
banking is the bill of exchange while, in domestic banking it is the
promissory note so that to give effect to a loan in international banking it is necessary for the drawee to place his acceptance on the bill
of exchange, the instrument of that loan. But it has been held that
a bank may not assume the liability involved in placing its acceptance
on a bill that is payable at a fixed future date, although it may
assume the liability involved in placing the loan to the credit of the
borrower subject to withdrawal at any time. In other words, the
law seems to discriminate against the instrument of the loan by permitting incorporated banks to make loans to any bank or institution
against a promissory note but not against an acceptance or bill of
exchange. It cannot be argued that the acceptance of a bill of exchange is not properly a loan but is an accommodation acceptance because in international banking there is a consideration—a commission
charged by the acceptor to the drawer. Neither does it seem reasonable, y articularly when collateral is deposited by the drawer as security
for the payment of the loan to hold that a bank may not by its acceptance obligate itself to make the necessary payment to the holder
at a known future date.
The question has, however, a broader application and should be
considered in the light of its bearing on the usefulness of our banks
to the commercial and financial interests of the country in respect to
the acceptance of drafts drawn under commercial letters of credit, and
in respect to the usage in those foreign countries in which bankers
and merchants make their remittances by means of bankers time bills
of exchange instead of checks.
In the former, obviously the effect is to limit our banks to the
issue of sight commercial credits, whether payable in this country or
abroad, since a time credit authorizes the drawing cf time bills of
exchange on the issuing bank or on some other bank or banker whose
acceptance and payment of the bills the issuer guarantees. Nevertheless it is the common and approved practice of both national and state
banks to issue time credits payable abroad but not in this country.

INTERNATIONAL BANKING.

549

But this is clearly an evasion of the law as interpreted, unless it is
permissible for an incorporated bank to guarantee and protect another
bank in that bank's acceptance of the bills which it is prohibited
from accepting itself. One of the worst features of this evasion is
that the acceptance under a commercial credit, which is an actual
liability, is only carried by the American bank in a memorandum
account and therefore does not appear where it properly belongs in
the report of condition.
In the latter, the inability of banks to accept bills of exchange not
only causes annoyance to foreign banks, bankers, and merchants accustomed to the use of time bills of exchange for their remittances to
all other countries, but it has a tendency to divert from our banks a
considerable amount of business that is legitimate, safe and profitable.
The law is frequently evaded in this case, by noting the date, either
of acceptance or maturity, on the face of the bill without signature.
The bills are then either carried in a memorandum account, or credited
to a draft account and charged to the issuing bank. If carried in a
memorandum account, what is understood by the holder and the
drawee to be an actual liability does not appear in the report of condition as such.
Any one understanding the importance of haying our banks properly
equipped for international banking cannot fail to see the mischief and
injustice of the present situation, for until the present rulings are
modified or revised or new laws or amendments to the present law
are passed, the banks will be unnecessarily restricted and required to
turn down good business, or they must evade the laws with the tacit
approval of the Federal and State Banking Departments.

BANKS IN CHILE.
In the Republic of Chile on December 31, 1907, there were in operation 24 banks wiih paid-up capital of 124,040,525.63 pesos (a peso
equals 36,'/C cents), and aggregate resources of 811,363,263.17, as shown
by the balance sheet of the banks published in the February 22d edition
of La Revista Comercial of Valparaiso, Chile. The most important
of the banks is the Bank of Chile, the subscribed capital of which is
30,000,000 pesos.







550

THE BANKING I„A,W JOURNAL.

BANKS IN MEXICO.
HARTERS are granted in Mexico for the establishment of three
kinds of banks, viz., banks of issue, mortgage banks, and loan
banks. Banks of the class first mentioned are those which are
permitted to issue notes of the various denominations, which
are redeemable at par on demand. Circulation is limited to three
times the paid-up capital stock and the banks are required to have
cash on hand to the extent of at least one-half of the amount of their
circulation, plus sight deposits and deposits at three day's sight. The
minimum capital is $500,000, at least 50 per cent of which must be
held in cash before begining business. Banks of issue are prohibited
from discounting paper of any running nature, negotiating paper running over six months, or accepting notes or other documents for discount which do not bear two responsible signatures or are not guaranteed by mortgage security. They can not secure loans or contract
any compromise on notes of their own circulation, and are forbidden
to mortgage their properties or surrender their discounts for collateral
security to any third party. They can not accept mortgages, except
under special circumstances, and with the approval of the department
of finance. A mortgage in favor of a bank of issue that does not exceed one-fourth of the paid-up capital, and taken to protect a credit,
which will mature within two years from date of the transaction, may
be accepted, within the approval of the department of finance.
Mortgage banks are those which make loans on real and urban
properties and issue bonds which accrue interest and are amortizable
through special conditions and at specified dates, being protected by
mortgages. The minimum capital must be $50,000 and 50 per cent
of the total subscribed paid in cash.
The third class of banks, banks of loan, are institutions which are
authorized or expressly organized for the purpose of facilitating mining, agriculture, and industrial enterprises by means of privileged
loans without mortgage security. These banks issue short time credit
bonds, which accrue interest and are payable at specified times or
dates. The minimum capital is 8200,000.
.
All banks in the Republic are subject to governmental control and
required to publish monthly statements in a form specified.

C

0

APPENDIX A.
NUMBER AND CAPITAL OF STATE BANKS AND TRUST COMPANIES CLASSIFIED ACCORDING TO POPULATION OF LOCALITIES.
lcomPiled from rePoit, made to Ihe Compthille, of the Currency in June, NI 1, and from Bankers Pireitorie,.1
New England States.
Number of
banks.

Amount of
capital.

Southern States.

Eastern States.

Number of
hanks.

Amount of

capital.

Number of
banks.

Amount of
capital.

Middle Western States.
Number of
banks.

Altmann of
capital.

Western

Number of
banks.

States.

A1114)11111 of
capital.

Island possessions.

Pacific States.

Number of

banks.

Amount of
capital.

N umher of

banks,

Amount of
capital.

Total United States.
Number of
banks.

Amount of
capital.

STATE BANKS.
(Including stock savings hank'.)
POPULATION 3,000 ANI) LEsS.
'.Banks of and

above $25,000 capital .
2. Less than $25,000

5

$229.500

I o6

84.052,000

2

38,425

280,000

29

25,000

9

1,259

$45,050,067

1,727

$56,089,968

589

$18,620,150

412

2,199

29,450.517

2,625

29,509.165

252

816,640,58i
3,180.365

2,077,000
2,049,800

79
68

9.424.700
1,763,800

76

14,243,710

81,321,857

507

74.718,937

79

3,517,145

115,130

898

37i 795,956

29,800,244

1,999

26,437,450

2.278,500

212

13,305,800

190

11,197,900

245,000

210

5,474,962

129

3 686,950
,

43
88

4. lob

0140.683,066

7.077

88,615,922

ss8

399163,900

505

13,2459512

POPULATION OVER .L000 TO 6,000.
1. Banks of and above S50,000 capital
a. Less than $50,000

5

POPULATION OVER 6,000 TO so,000
1.
2.

Banks of and above $100,000 capital. ....
Less than $100,000

4
4

6so,000

42

5,363,100

165

23,2099470

188 ,

26,805,800

28

229,700

41

2.155,250

302

12,780,456

321

13,642,275

147

5
4

1,840,000

64
63

30,911,300

49
155

18,818,593
10, 294.417

79

28,641,675

4

1,000,000

450,000

129

8,235,530

3
6

1.637,500

62
60

19

2,999,500

241

43,60
4,0
00

1,685

100,364 730

2,184

1229 735,343

704, 700

115

7,838,981

2,666

54,9879285

2,778

55,015,272

664
2,896

259422.150

9

38,552,465

34

1,635,000

36

21

983,500

13

00
375.4

2

30,000

3,125,00
°
5.356,000

POPULATION OVER so,oco
i.
2.

Banks of and above $20o,000 capital
Less than 8200,000

...• •

1. Total State banks conforming to national hank I
standards as regards capital.
2. Total State hanks not so conforming

5,400,306

4,000,000

268

115,011,812

3,714,961

4

377,500

451

30,110,214

629

701109,235

9

5,321,857

459

12,176,271

8

492,630

5,439
8,931

369,577,71 c
169, 767,604

I0

It 104+060

142
to

9,092,310

00 0
43 , °

114

11,369.()C.)o

25,000

23

boo,000

TRUST COMPANIES.
POPULATION 3,000 AND LESS.
.
2.

Banks of and above $25,000 capital
Less than $25,000

900

28

1,516,450

3

55,600

5

58.500

45

6,123,150

3,477.

144,100

POPULATION OVER 3.000 TO 6,000.
1.
2.

Banks of and above $50,0o0
Less than S50,0oo

750.000

26 '

2.266,450

22

1,400,000

5

400,000

8

190,000

9

255,000

2

55,000

28.315.120 ,

51

10.376,100

62

8,9m,coo

14

1.952,986

3

25

1,336,000

65

3,180,550

16

769,500

7

800,000
325.000

309
142

54,161,715

88,311 ;

41
18 ;

32,621,800

90

79.076,000

8

I,900,oo0

15

9.650,000

372

30098909140

1,550,000

39

3
,494,000

5

525,000

4

450.000

143

15,181,824

146 1
56

46,780,800
3,134.500

195
113

90,359,500

40

4,628,386

31

6,929,550

25

1.379,500

12

11,984,060
800,000

2

50,000

27

3,817,509

152

25

1.245,000

4

48
z6

28.666, 100
1,563,057

170

61

7
,599 67 ,
,3

122

34,868,609

43

2,858,057

403
69

186,892,410 i
7,768,278

25,000

3

POPULATION OVER 6,000 To so,000.

I. Banks of and above Suao,000 capital
2. Less than Stoo,000

6,944,361

POPULATION OVER 50.000.

t. Banks of and above $2.00,000
2. Less than S2o0,0oo
t. Total trust companies conforming to national
hank standards as regards capital
2. Total trust companies not so conforming

16717-APP




148,976,240

937 I
318

A-I I

•

375,513,765

22,870,285




APPENDIX B.
NUMBER AND CAPITAL OF BANKS AND TRUST COMPANIES, BY STATES.
[Compiled from reports made to the Comptroller of the Currency in June, Nix, and from Bankers' Directories.
]

National banks.
Statt'S, etC.

Poi ailation.

Maine. .......
3

742,372

Vermont..

4
5

Connecticut

Rhode Island

10

51
:88

42
17

5,210.000

4.125,000

466

98,526.950

28

3, 704,200

:65

37,726,666

_

.....

...

C 198

32.728,000

C 85

71, 731,000

23

2,298,500

83

!if), 565,000

741
302

275,826,370

21,987.000

830

tr:8,288,270

d '39

d 289

104,629,658

1,258

237,815,309

28

2,373.985

C4

14
,897,381
520,000

15

1,735,030

47

4,629,015

1j512

314,016,625

364

50,443,881

472

194,66o,688

2,34
8

559,121, 194

3,59 ,488
6
1,613.890

C17

8,563,000

210

29,741,898

cc

8,000,000

31

15,715,890
26.595,970

19,518,214

:3 • Virginia

128

:4 I West Virginia
:5 North Carolina.

16,618,5oo

C 240

1,221,119

106

9.187.000

2,206,287

74

8,385.000

322

7,048,867

1,515,400
2.609.121

45

5,410.000

114

13.841,000

30
8
c564

South Carolina
Georgia .
Florida
Alabama.

8,775.470
10,572,673

3

1,202.000
959.000

371
292

2,252,800

410

12,078,282

c 14
8

360,000

359

17,848,282

22,532,350

6

2.450,000

684

38,823.350

500.000

164

10. 532.49
0

4

367.000

295

20.776.600

373

16,804,770

6.375,000

240

22,564,600

752.619

Louisiana

45

5,893,590

117

4,138,900

81

9,379 670
,

210

lt,029,930

3,335.000
8.120,000

342

13.469,770

31

189

8,069,600

20

511

1.797, 1 14
1.656,388

Texas
Arkansas.

3,896,542

31

40,850,500

C5

2,138,093

Mississippi .

20, 718,673
17,686,667

26
27
28
29
30

Wisconsin... .......

31

.....

Minnesota

32

.....

Iowa

440

17,596,912

244

17.405.900

C 430

12,633.783

8.302.250

617

100

12,435.000

371

14.936,600

10

930.000

481

38,341,933
28,301.600

1,572

183,034,070

4,351

155,372,015

202

49,915,300

6,125

388,321,385

380

62.347.257

C422

17.295,438

c68

23.573.800

870

103.216,495

261

27,453,000

312

11.571,302

110

10,816.60o

683

,8 0
49 4 ,902

438

73,220.000

C500

32.071,300

C 44

32.000.000

982

137,291,300

100

14.710,000

('405

22.949, 775

2.400.000

510

2,333,860

Michigan..

66.271,750

2.100,000

2,810.173

Illinois.

2,158

'3
C 43

5,638,591

Indiana

7.554.25o

11,062,912

2,700,876

Ohio.

C52

381

27,529,853

Tennessee

13,813,500

00
4.435,0

2. 184.78
9

............... . .

C 595

46

4,767, 121

Kentucky..

44.904,000

1,574.449
2,289.905

Total Southern States.

128

17.080.000

532

15.910.150

II

2.360.000

671

40.059.775
35,350.150
39.655,000

2,075,708

Missouri

36

New Mexico.

42

Oklahoma
Total Western States

43

Washington

44

1.3:8

;5,765,700

1,093

31.132.950

C52

21.589.050

1. 274

88,377.000

62
4.9

177.750.615

3o8

97.28
9.450

7.305

549.556,322
13,046,000

129

35,655.000 !

2,035

14
8
102

274.516.257

C 555
C 516

7.411,000

4

350,000

707

4.205,000

6,978,275

II

575.000

629

11.758,275

245

16,062.500

678

14,053,540

923

30,116.040

1.690,949

208

11.817.500

e 866

16.626,300

C4

525.000

1.078

28,968,800

376,053

...

58

4.875.000

4, o6o.000

'7

1.150,000

155

10,085,000

I. 267,000
3.005,750

583,888
1.192,214

Colorado

41

997

1.900.000

-

Wyoming.

40

e4
C 14

2.650.000

.32.485.700

577,056

Montana

39

1 4.334.000

977

_

Nebraska

37

721

21.380.000

25,844,435

Kansas

.38

22.671.000

327

3,293,335

North Dakota
South Dakota....

272

2.224,772

Total Middle Western States

35

139,957,816

659

271.367,370

C is

34

26.229,20o

458
196

C86

33

15,1:8,307

30

6,1o2,000

25

37

7.943,057

'.7

475,000
2.190,000

II

79

17,582,410

24

,
74 401,109

C4

II

23

241

6,7oo, 2so

107

22

20,783,609

19,914,200

331,0 9
6
2,061,612

21

6,660,000

53

53,617,500

202,322

' District of Columbia

20

6,274.200

80

7,665,111

Maryland

t8

$11.275,000

2,537,167

Delaware.

19

112

1,450,000

22

9,113,614

Pennsylvania

17

Capital

29

6,552,681

New Jersey

06

Number.

73

$3,425,000

$1.039,200

1'2999346

I2

Capital

"fotal

-

Total Eastern States.
11

$7,850,000

5,235,000

Number
of companies.

Capital.

,756
'
1 114

New York

9

Number
of banks.

Trust companies.b

542,610

Total New England States

8

70
56

355,956
3.366,416

Massachusetts. .

6

Capital.

430,572

New Hampshire

2

Number '
of banks
(June 7,
1910.

State banks.a

5.285,000

145,965
........

29

1.685,000

799.024

126

10.515.000

327.301
1,657, 155

42
276

12,622,500

c633

9,701,750

C II
C3

7,349.605

1,234

69,162.500

3,5 0
6

63.974.615

2,095,000

871,000

Oregon

100.000

84

000

2.635.400

285

t6, 156, 150

86

3,428,486

210,000

912

22.534,250

65

6,007,886

,859
4

,145,001
139

6 1
62
4 ,48

12,200.000

c 215

8,319,000

C /7

3.250,000

312

23,769.000

77

7,371,000

151

7,968,100

500.000

231

15,839,100

2,477 549
,

203

51,803,750

444

53,668,836

3
6

6.700.000

653

:12,172,586

;25.594

46

2.640.000

134

3.607,264

Cl2

654.060

192

21

6 01,324
,9

03
,351

2.780.000

4.423.180

C2

550,000

96

81,875

II

73
I9

1,835,00o

3

1,130,000

33

7.753. Ig0
4,707,00c

California

46

So

672.765

45

1,141.990

Idaho

47

Utah

48

Nevada..,

49

Arizona

50

Alaska

204.354

i2
53

Porto Rico

1.030.000

C 39

1,592.126

2

100,000

13

872.000

5.241,834

453

79,666, 750

1.088

82, 285,s06

191,909

Hawaii

23

64,356

Total Pacific States
iT

1.742.000

4

610,00o

7
C'S
e

2,000.000

1.118,012

100.000

Philippines
Total I,!mid possessions
Total United States

1.309,921

93,346,543

2,622,126

It 584

174,736,316

2.399. 500

11

9,
.4.00 500

1.414.987

9

5

710,000

:7

7,277

1,019,633,152

14,37
0

M9
,343;31
9

43

12,784,060

972,000

1.514,9
87
2,000.000

5,814.487

a Includes stock savings hanks.
Banking institutions known as ' Bank and Trust companies''
which do not transact a trust
business have been classed with state banks.
Num-Data for State banks and trust companies, not otherwise
indicated, from hankers' directories
167 1 7-- -APP B-- II

52
15

22
1,21,
:5
11

398,384,050

6,524,487

22,902

1,957,362,521

-----------

e Prom reports compiled by the Comptroller of the Currency, as of June 7, 191i.
yi From annual report of the commissioner of banking, Pennsylvania, for 191C.
e Classification by municipal districts




/THE AMERICAN BANK UNION.
A PLAN FOR A BANK CURRENCY FOR THE
UNITED STATES.

The Congress to charter a Bank to be located in Washington, D. C. The stockholders to consist of, first, the
UNITED STATES, for such sum as the Congress may
deem proper; and the other stockholders to be the Banking
Institutions (only) each one to the extent of one-tenth, or
one-fifth, or one-quarter, or one-third, of its own Capital, as
it may elect.
All subscriptions to be paid in GOLD COIN of the
United States. The Capital stock of the AMERICAN
BANK UNION to constitute a reserve, on the strength of
which and other security to be given by the stockholding
Banks, the AMERICAN BANK UNION may issue its
notes in the proportion of three dollars in notes to one dollar
in GOLD.
Any stockholding Bank to be permitted to borrow of the
AMERICAN BANK UNION its notes to the extent of
three times the amount of its subscription, provided it deposit
with the AMERICAN BANK UNION security consisting
of a part of its assets, but all securities offered must be approved by the Board of Governors of the AMERICAN
BANK UNION with a margin to be specified by said Board;
provided further, that in estimating the margin of security
for such loans, the Board of Governors must take into consideration the value of the stock which the borrowing Bank
owns in the AMERICAN BANK UNION, and regard it
as a part of the security.
Stock in the AMERICAN BANK UNION will not
be transferable so long as the stockholding Bank is indebted
to the AMERICAN BANK UNION.




For such loans the borrowing Bank must pay interest
at the rate of two per cent per annum.
In the event of a great demand for currency, such as
financial panic, or the movement of the crops, any stockholding Bank may borrow additional notes of the AMERICAN BANK UNION, to the extent of one and owe-half of
its interest in the AMERICAN BANK UNION, upon depositing with the said Bank additional securities acceptable
to the Board of Governors, the margin to be determined by
said Board; but must pay for the loan of said notes interest
at the rate of five per cent per annum for the first half of
the additional loan, or any part thereof, and six per cent per
annum for the second half, or any part thereof.
Any stockholding Bank may borrow less than it has the
right to borro\N% Any stockholding Bank may increase or
diminish its indebtedness to the AMERICAN BANK
UNION according to the demand within the limits stated,
provided that not more than ten millions of dollars shall be
withdrawn in any month, from the whole Bank note circulation.
The AMERICAN BANK UNION shall do no other
business than to issue its notes, lend them to its stockholders
and redeem them when presented; except that it may receive
on deposit GOLD COIN and issue its notes therefor, dollar
for dollar.
(The AMERICAN BANK UNION would simply be
a Currency Bureau for all Banks which became stockholders.)
The profits of the AMERICAN BANK UNION
should be divided semi-annually after setting aside annually
one-tenth of one per cent of its capital as a Guaranty Fund,
until that Fund shall reach the sum of Twenty-five Millions
of Dollars, and said Fund should be maintained at these
figures.
All notes loaned to any Bank should be designated by a
2

number, by which the different Banks would be distinguished.
The AMERICAN BANK UNION must redeem all
of its notes presented for redemption, and when as much as
Five Hundred Dollars (bearing the same number) have been
redeemed, notice should at once be sent to the Bank designated
by that number, to forthwith remit to the AMERICAN
BANK UNION, the same amount in GOLD COIN, on receipt of which, the old notes should be destroyed and new
notes issued and sent in place thereof.
In case of the failure of any Bank indebted to the
AMERICAN BANK UNION, the Board of Governors
should have the power in their discretion to sell the securities deposited with said Bank, within sixty days, and out of
the proceeds, including the par value of its stock, to redeem
the notes loaned to the failed Bank, and turn the balance
over to the receiver or other representative of the failed Bank,
but its share of the Guaranty Fund should be forfeited to
said Fund.
If for any cause the capital stock of the AMERICAN
BANK UNION should become impaired, a pro rata assessment should be made on the stockholders to make the same
good, but it should be understood that the reduction of the
capital when paying off the stock of a Bank that has failed,
is not to be considered an impairment.
As to the organization of the AMERICAN BANK
UNION, the Comptroller of the Currency should be Chairman of the Board of Governors, and the other members should
be elected by the stockholders, and should reside at or near
Washington, and be allowed a reasonable salary, commensurate with their duties and positions.
All officers of the Bank should be elected by the Board
of Governors and hold their places during good behavior, but
for cause should be removable by a two-thirds vote of the
Board. (This rule to keep politics out of the Bank.)







All National Bank Currency should be retired within six
months after the AMERICAN BANK UNION commences
operations, under such rules as may be recommended by the
Secretary of the Treasury.
Two agencies to be established for redemption only, one
at St. Louis and one at San Francisco.
February 12 1906, Norfolk, Va.

4

1111.101:4o•rue.o.

.4a •

-

ego?'

•




A CENTRAL BANK TO BE CALLED THE
AMERICAN BANK UNION.

Principal features of a plan for a Bank Note Currency
for the United States of America.
First.

A Uniform Bank Note Currency.

Second. To be Guaranteed by all the Banks participating; in other words, all Banks who may become stockholders in the Central Bank.
An issue of Bank Notes based on a deposit of Gold in
the proportion of three in notes to one of Gold.
'Third. The Notes will be secured by a deposit of Securities by the Banks borrowing said notes, which Security
must be approved by the Board of Governors of the Central
Bank.
Fourth. All notes to be redeemed in Gold on demand by
the Central Bank, which is to be reimbursed by the Bank
for which they were issued.
Fifth. A Guarantee Fund to be set aside out of the
profits of the Central Bank of One-Tenth of one per cent
per annum, as a further security.
Sixth. The Central Bank to do no other business than
to issue notes, lend them to the Stockholding Banks and redeem same when presented.
Seventh. The United States to be a Stockholder and
the Comptroller of the Currency to be Chairman of the
Board of Governors.
Eighth. The exclusion of politics from the management
of the Central Bank.
5

'

Ninth. The entire issue of notes may on ordinary occasions be equal to the sum of the Capital Stock of all the
Stockholding Banks, and in time of i panic, this amount
might be increased by fifty per cent.

Tenth. The elasticity of the Bank Currency is provided
for by allowing the Banks to borrow only what they require
in dull seasons, and permitting them additional notes in times
of financial stress or when more currency is needed to move
the crops.
Remarks:—As the Central Bank will usually have outstanding notes for three times its Capital loaned to the Stockholding Banks at the rate of two per cent per annum, it will
be earning six per cent per annum on that Capital. A fter
paying all expenses and taxes and setting aside the annual
contribution to the Guaranty Fund, it will be able to declare
Dividends of three to four per cent per annum to the Stockholders. So the reserve fund will not be idle.
Thus the Banking Institutions of the country can he provided with a Currency which must command the confidence
of every one. All the machinery for redemption will be provided by the Central Bank ; all expense of Engraving: all
Taxes on Circulation will be paid by the Central, which
expenses and taxes, the Individual Banks now have to pay.
The notes issued to each Bank would be treated by it as its
own CIRCULATION, and it would take measures to make
good their redemption by the AMERICAN BA N K UN IO N.
There would be 110 use for Gold outside of the Central
Bank's reserve, except in the event of a heavy and continued
balance of trade against this Country: then the immense
Gold Reserve of the Central Bank would come into use, and
would be able to stand an immense strain, especially in having
all the Ilanks in the Country lending their support.
This Plan does not affect the National Banks except as
6

/






to the issue of circulating notes; all other privileges and duties
would remain as at present. It would furnish a circulating
medium for all parts of the United States, no matter how
remote.
Under our laws at present, there is undoubtedly a discrimination against the State Banks; with such a plan in
force, there would be no demand for a repeal of the law imposing a penalty of ten per cent per annum for putting in
circulation State Bank notes.
The present issue of the National Banks to be retired
within six months after the AMERICAN BANK UNION
C( mmences operations.

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