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Col lection Title

NdsoiLV
Series/Volume

Shelf/Accession No.




Col lection Title -----------------------------------------------

Nelscm W Aldnch
.
Series/Volume

Shelf/Accession No.
L 77-38 (1/70)
C






■

Waushington, D. C. A p ril 14, 1008.
'TO'
BIT3V- 8 ... 3 0: 1 .
SFOdSfiff D BY J. HOWARD COVI SHTff j p o ? 7
B- f o r




B: S l a g l e

YORK-

Currency Committee o f House o f Kppr-oent.v t i v e s .

Provided t h a t th e Secret, ry of the T reasu ry ,

in h is

xi s c r - . j t i o n , may a c c e p t t h e a p p l i c t i o n o f c»ny .'Tt.tioru-1 Baruc
fo r nev, n o t s o f s u c h bank w i t h o u t t h * d e p o s i t o f s e c u r i t i e s *

s u c h £p p l i c a t i o n b e i n g a cc om panie d by t h e gu r v n ty c l the
Cl-, r i n g House A s s o c i a t i o n o f which s u c h bank s r i l

ie *

member, t h e s a i d g u a r a n t y b e i n g t o t h e e f f e c t t h a t t h e s a i d
n o t e s so i s s u e d o r t h e i r e tu i v*: 1 e n t i n la^xu.i money sricill be
r e t u r n -b t o t h e T r ’ s u r v w i t h i n s i x months top th r * i t h

ti

t x. herein levis ■ i ai provid id, however,
,

d e r i n . House A. s o c i t i o n she 13 b ? p rmi t t
to

fu r t h e r

t a

i t o so g u a r a n t e e

jx t e n t than 60^ o f the combined c a p i t a l

3u r h l u s o f th -1 b a n k s com; o s in g s u c h a s s o c i ation,
ai .--Iso t h a t

a ll

and

• \i p rov id e

o f t h e b*nks i n s u c h a s s o c i a t i o n s h a l l j o i n

in the s4id g u -re n ty .

Argument shows th<-t the A.„dri c> Bi.: 1 i f
h
s above {

pco oaed)
fa

nd s a c tio n s 8 end 13

-*lre..dy

tlira i n t • i
t> :

mos t i eg or tau t

-voud x giVv the Unit- d

hch
i

ta r * o f Europe n c •.ntr 1 b anki ng •

n i t y f o r banks t o h v-

, m•nd ad
;

c o r im e r c i a1 p . r

1s t

* o
.

r -discount

o r t u:i.

lio Closuring House A s s o c i a t i o n would guarantee a member
bank ,w ithou t the p o s s e s s io n o f th a t bank* 3 s e c u r i t i e s or i t s
co: j i a r o i a l p a p e r ;o r wltriout t'nat Vank'a pu r^ i43 ion t o d i s t r i b a te

the now money to o th e r member banks.

*
/

Mr.

Andrew Carnegie.

Cl)

Gentlemen:
T h e s e a r e t h e days w h e n h a n k i n g a n d
floor.

Our » y s t e m has h a d great s h o c k .

doctors

and quacks

They are

ready with certain

d i v i d e d into t w o

ienced advisers*

The

l e t us

latter reoall

the q u a c k w h o

s y s t e m of

and

enable

and just

and s e v e r i t y .

Prosperity

gr o w s

o f f o o d crops
point

that

as

suc­

essential

L e t us

to t h a t

to B t r e t c h

of t h e t o t a l

of ^ p e c u l a t i o n a n d

attention

is

- ----- —•m

t h o r o u g h l y w i t h th o s e , h —

dismiss

for

an u n e q u a l e d s u c c e s s i o n
our products

t hat

change we

s u b s t i t u t i o n of g o l d f o r our r e s e r v e s

u p o n w h i c h w e h a r e built.

We

± ie

■
*

.hail do

a s s e t s , i n s t e a d of u p o n g o v e r n m e n t

abroad.

o u r b a n k i n g s y s t e m is

^
see

Ter, who belisre

the o o * p l e t e

a ll p a n a c e a s

experienced and w h ich were

delayed by

, o o d b . n e e to a b a n d o n it. a. w .

l8 n o t i n e to u r g e

is b o u n d

of de-

the p e r c e n t a g e

therefore

and strong demands

_ ___

seasons

No

f i n a n c i a l d i s a s t e r ^ ^fiorease in

ago b u t

demands

life.

as

a n d d u l l t i m e s n e e d e d to r e ­

smaller

such as we have just

due several years

to e s c a p e

in p r o p o r t i o n as

gambling upon margins

for panics

t h e tides,

of summer,

a n d sure j u s t

us

and l o s s e s .

legitimate business

number

ii ise h a v e

c e r t a i n as

the g e n e r a l h e a l t h o f h u m a n

t h e lines b e y o n d b r e a k i n g p o i n t ,

of

is any

there

c l e a r a n c e a n d p u r i f i c a t i o n of b u s i n e s s

currency will

them;

sold pills

and panics.

are as

froaen winter,

a re f o r

pressionfailures

store

i d e a t hat

the w a r m s t i m u l a t i n g s u n s h i n e

the regulation,

the changes

t he

troubles

in h u m a n n a t u r e

c e e d e d b y the icy,

legion.

^

dismiss f r o m our minds

or t h e s t o r m s ,

are

c l a s s e s ---- e x p e r i e n c e d a n d i n e x p e r ­

cure possible f o r financial
their root

the

T h e n u m b e r of

remedies

w a r r a n t e d to c u r e ' e a r t h q u a k e s *

for

currency hare

day.

I ag r e e

that t h e p r e . e n t

n eed,

w h i c h i* the

and currency based upon

d ebt,

the f a l s e f o u n d a t i o n

c an n e w e r r e a p f r o . b a n k i n g the

v a l u a b l e r e s u l t s w h i c h o t h e r c o u n t r i e s do u n t i l w * c h a n g e that




u

(2)

foundation.

I t would n e c e s s a rily corns by payment of the

p u blic debt, which was our am b ititio n at the c lo se of the re ­
b e ll i o n .

We proudly proclaim ed that we would show the w orld

one nation out of debt.

This seems to have been lo s t s ig h t

of by our lead ers of today.
from e ith e r p a rty .

Not a word is heard about th is

N ev e rth e le ss, we m y , I think, expect the

people to r is e soon and r e c a l l th eir statesmen to the true
path o f economical expenditure.
The currency question w i l l never down tm til i t is founded
upon correct p r in c ip le s .
it

I f there be anything e sta b lish e d ,

is that i t should be based upon the a s s e ts , v i z , ,

trade

b i l l s , which expand and contract as business does, the reserve
Q,

b fin g in g o ld .

But th is does not. seem to be the proper time

to urge so great a change as th is im plies .

The part o f w i i -

dom is to s e iz e the opportunity which presents i t s e l f

to get

a step taken in th is d ire c t io n and whan normal times return
make every e ff o r t to get su ccessive steps forw ard as occasion
o ffe rs .

Congress is ju s t now in the mood to lis t e n to those

who understand banking and currency and to le g is la t e to some
extent in accordance with th eir view s.
a lesson and is disposed to acquiesce.

The country has had
Our f i r s t e f f o r t

should be to get le g is la t io n turned from the wrong to the
r ig h t path by introducing to some extent asset currency.

As

the people see the advantages o f this system we may hope to
enlarge its use and g ra d u a lly to abandon bond se c u rity and in
due time to begin the su b s titu tio n of gold , r e a l value fo r
our reserves instead of Government evidences o f debt, thus
g iv in g us the most p r o f it a b le and se rv ic e a b le form of banking,
as abundantly proven by the experience of other coun tries,
according to not a few a u t h o r it ie s , Scotland, the foremost of
a ll.

That l i t t l e

fa c ilit ie s

country had 1065 in 1902, b rin g in g banking

to every v i l l a g e in the land and extending to it s

sm all customers, the farm ers e s p e c ia lly , cash c re d its to agreed




4

(5)

upon amountb , in t e r e s t being charged only upon the advances
made, ra te o f in t e r e s t the sane thruou t, the m illio n a ir e in
the m etropolis and the v i l l a g e blacksm ith paying the same.

If

our farmers and sm all traders g e n e ra lly knew how much they would
be b e n e fite d by the Scotch system, we should encounter l i t t l e
delay in Washington.
Another change we g r e a t ly need.

I t s absence gives the

sudden and t e r r i b l e shook which ch aracterises cur fin a n c ia l
re v u ls io n s .
banknotes.

Other countries have e l a s t i c i t y of issu e o f
We have none.

Our system is r i g i d .

This may be

i l l u s t r a t e d by the f a l l o f one e le v a to r which has only the
bard rock f lo o r below




/

4

/

it

io smashed and i t s inmates in ju re d or k i l l e d , w h ile one

which s t r ik e s a s a fe t y a i r cushion a llo w in g the weight to drop
slo w ly down, avoids se rio u s consequencos.
expanding or con tractin g cushion.
f a s t lim it - -

a rock f l o o r .

Our Tanks have no

They have only a hard arid

They s t r ik e the rock and wreck

and panic ensue.
our hanks had an expanding and con tractin g e la s t ic cushion below then such as hanks h<we in other lands —
even in Canada from th e ir rig h t to expand or contract note
is s u e s , they would avoid the v io le n t and d isa stro u s shock to
which they
d is t r e s s .

are now suddenly subjected in p eriod s of fin a n c ia l
In other words, to meet unusual demands o f business

in excited times, instead of the hard stone f lo o r o f d en ia l
upon wv-ich they must s trik e and he smashed, our banks would have
i t in th e ir power to issue a cortitin percentage o f enter ency
currency — the so ft p l i a b l e cushion, which would break the blow
and as a ru le prevent lo s s o f confidence which p re c ip it a t e s
Panic,

I f our fl nanciol in s t it u t io n s could promptly meet,

fo r w en a day, and sudden c a l l fo r unusual muss, panic would
sometimes be averted a lto g e th e r.
P lease riots that a ft e r the cushion has once served i t s
purpose and T on crushed, i t s a i r e x p e lle d , i t must again be
b
f i l l e d and put in p lace e x ac tly as b e fo re , prepared to recti ve






And a f t « r the catastrophe has occurred, and not t i l l

then,

vre get to work find im provise the cushion — fo r e l a s t i c i t y
we must have — and c le a rin g house c e r t i f i c a t e s appear and
a v e rt ru in .

Think o f a people reported p r a c t ic a l and not

without sense, p rovid in g the in d io p e n sib le chshion a ft e r
the accident occurs which i t

i s meant to

rovont.

How long

w i l l the American people permit t h e ir l e g i s l a t o r s to con­
tinue such fol^y?

Bemetober, no c en tra l bank i s necessary

to e ff e c t a cure — but only the cushion, E l a s t i c i t y , which
the P re sid e n t recommends.

and so ften s the next pressu re that cornea upon i t *

no with

omorrency banknotes; a ft e r the unusual demand o f p an ic, these
nuat be withdravm and held in reserve fo r the next s tra in upon
them.

Take o n o illu a t r a t io n :

every autumn the crops have to

he moved and between the two and three hundreds o f n illio n n o f
d o o la rs o f a d d itio n a l currency are required f o r th is s p e c ia l
purpose.

Thin causes a cootlj/1 disturbance o f our re so u rc es,

our banks having no power o f expansion, and yet her e at our
hand i s an automatic device which wo Id adju st i t s e l f without
the s lig h t e s t s t ra in to the task and the fin a n c ia l world would never
fe e l a ja r .

More than t h is , our neighbor, Oonadu, has

the sane demand p ro p o rtio n a te ly and is using the device suc­
c e s s f u lly and our go-ahead country la g s behind.

TSuropeon

n ation s n il have i t ,
Mr. "Fowler who honors us by h is presence today has shown that
our present d ie c re d ita b le bunking system a lo s s o f at le a s t one hundres and f i f t y m illio n s o f d o lla r s per year from the unusual re ­
quirement that currency be scented by Oovornnont two per cent bondo
costin g P a r.

The money requ ired to purchase these bonds i s vdth-

drawn from actu al banking f a c i l i t i e s and l i e s in the v a u lts in the
form o f u seless Bonds,

Other nations secure th e ir note issu e s

without compelling bunks to lc00fth th e ir powers to meet the de­
namls o f busin ess.




ft
They nuke currency notes f i r s t lie n
A

•W A *
upon a l l th I r a s s e ts ; ao brinks cannot issue such notes to an
amount exceeding t h e ir c a p it a l, loon by note h o ld ers it) unknown.
Our Government could exact a fund from banks ample to secure ih<?
ru rrency, as the two b i l l s now b e fo re the country cu rren t, upon
emergency notes.
t r iflin g .

The percentage upon the t o t a l in duo would be

I t i s estim ated loan than one h a l f o f one fmr cent

would be ample, so small i s the r is k .

This would re le a se one

thousand two hundred and f i f t y m illio n s o f re se rv e money invented
in Government Bonds or h eld in r e s e rv e .
An explanation o f our backwardness in th is department may p e r­
haps be found in a p r e v a ilin g p re ju d ic e in h e rite d from the N atio n al

Bank question o f the p a s t.

P o li t ic ia n s r e f le c t the fe e lin g s o f the

people and as a whale our people have not in te re ste d themselves in
banking.

The C iv ic Pedoration, rep resen tin g as i t does both C ap ital

and T.abor, is e s p e c ia lly f it t e d to perform a g reat se rv ic e lie r e , be­
cause our la b o r d ele ga te s can roach the nasoes.

I t i s to be hoped

that th is di se s s io n w i l l throw lig h t upon the su bject and impress
i t s importance upon them viewed from the otandppint o f tho workers.
I am c ertain that i f they knew what the v/orkero o f Scotland enjoyed
d ir e c t ly and in d ir e c t ly as a re s u lt o f i t s Snaking System , they
would jo in with and holp us to inpress our l e g i s la t o r s with the
n ecessity fo r prompt actio n .
While ups and downs in business in a developing country lik e
ours arc in e v it a h l s , these can bo rendered much len s v io le n t and




u

✓ b

HfN /Bmay even in none canes be prevented by adopting the proper
ranking nyutem.

Kesolutiono panood by the Federation on

b e h a lf o f both Labor and C o i t a l c a llin g the atten tion o f
Congress to th is su bject night prove h ig h ly b e n e f i c ia l.
c-entlenen, i t i s not c re d ita b le to our country,
foremoot in many departments o f human a c t i v it y au she io ,
that such an o ld -fa s h io n e d , ric k e ty piece o f antiquated machine
as our present currency system should be e x h ib ite d in the world
T ow fo r the prooent p o lic y :
T
Two plana have been l a i d b e fo re ub which are e n t it le d
to c a re fu l/ a tte n tio n and an I think, to our support.

F ir s t ,

the h i l l fa v o ra b ly recommended December lust, by the Comnitt.ee
on banking and Currency of the




House o f which. Hr. bowler i s Chairman.
Second, tho report o f the Committee November lb

lu s t year,

appointed hy the American B ilk e rs A s so c ia tio n , Mr. Hepburn, C hair­
man.

(ff p i e e ewfc ii n t i m r e t M a )
ie

Both these measureo meet the

v i a t l poin t o f the i s s u e o f emergency currency bused upon a s s e ts .
H eith er touch the q u e s t i o n o f gold re se rv e s except that both pro­
vide that the taxes le v ie d by government upon the e x tra i snues of
notes s h a ll bo paid in gold coin which i s at le a s t a begin n in g.
X fe a r the taxes propoes are in s u f f ic i e n t to ensure the prompt
withdrawal o f the emergency notes as business resumes ordinary
c o n d itio n s, and th is i s v i t a l .

2 -l/ 2 o/o per annum taxes are

proposed by one plan and three per cent by tho other tor the f i r s t
40 o/o o f notes issued end 5 o/o f o r the l a s t 12-1/2 o/o.

These

w i l l both, I ju d g e , have to be in creased , but th is i s a d e t a i l .
Borne minor changes w i l l no doubt be made by Congress.

Keanv'hilo

T favo r our concentrating upon these two kindred b i l l s and steo d i
l y re fu sin g to bo le d into s c a tte rin g , and X f e a r w astin g our
e f f o r t s , upom more ambitious schemes at p resen t.

Prom what I

have s a i d you w i l l in fe r that I regard these measures as simply
turning us upon the rifgit path.

We s h a ll have to march upon i t

some distan ce b e fo re an e n t ir e ly s a t is fa c t o r y re n u lt in readied




4

/

*

to r in th is department o f a f f a i r # we are not only worn© o f f
than any other o f the c h ie f n ation s, we have wandered f a r upon
the wrong path.

T aw so rry to nay we have not only the

very

worst hut a lso the most expensive system known among c i v i l i s e d
people#

The people w i l l

soon see, however, that the changes

proposed, i f adopted, are h ig h ly b e n e fic ia l and Mr# T o i le r ,

n•

*repburn and other pion eers who honor us by t h e ir presence today
w i l l have earned the reward o f b e in g esteemed wise cou n sello rs
who have done the sta te some se rv ic e .

They w i l l be lis t e n e d to

h e re a fte r and X tru st that b e fo re t h e ir days of high se rv ic e end
they w i n

see our beloved Hopublic not the fa r t h e s t behind among

c i v i l i s e d nation s in her currency and banking system, us she
c e r t a in ly i s today, but f i n a l l y occupying her r i g h t f u l place
in th is as in other branches o f in d u stria lism , in the van.




The c

r-i l a n i ort,

in * h
,*

ion of

'■ ■rliic tho tv %**nion* hnr* boon
v & r \ ou»

ph^tso# o f tho ingsortimt. work

*is * i£**«<$ to Vhow b;-' tho Aot o f :%
5

*lr &>»

230o,

a

Xar/50 portion

t^no h&# ht%n?t ia&ap, sip in <irm8M uring plan* fo r soisur-

of

inc InformUon upon %^Uoh tholr ultin iito roport to non^ro r??
*
V H 1 b« btistxL

** W d* * * * '? o f the «tnost inportanee that steps b« t«k<4S
* ” to eeenre a thoro*#. and, as ne.tr as poseible, exhaustive
exaMtnation o f the rwnstary and bankina system of tho teadi»«
*<»„-,«rel.,-a nations.

Preparation for th is vork w** entrusted

to a <m be«»m «* eenr,ietln3 of Senators Mdrieh, Kale,

’no*,

'U
K '“ *' ** Ant* •5opror,ORt,i.tlTOS Yrseland, Overstreet, -Sirton,
ft*®! ?/%d^ tt.
Thi*

ootsiittss will took to f?e«iire from eoMpetent and

authoritative sourees a ll available htstorieai and s t a t i s t i eal data with reference to tho owrrenoy ^
o f sre.* aritfttn, *»ra«hy, and ?mn«e.
*P*«1.U eswsinatton o f the Seoteh,

b«,*ins ext-erleneo

They w ill also a*ke

Canadian, and Swedish sy*-

voti.. »« k; t,he OhsngBs whioh have re c e n tly been adopted in

S"H**rjtanrf.
U

U

* he in ten tion o f

tho f-41 O om isston to v i s i t can-

*<!-< a . .sn e a r ly day f a r t>ie pnr.ose o f Making a opeelal exatt-

1 notion

in to tho Canadian systen.

In the prose ration o f their work, the subaomittee w ill
eo abroad in the n ear fntssre, s a ilin g on the K ronprlnsessin

Jto&uU.

n e e ilio „ n thn * th o f




t
4

o

Another subcommittee, c o n sistin g o f Senators A llis o n .
Burrows, T e lle r , ?!oney, and B ailey and R epresentatives Weeks,
Bonynge, Smith, Burgess, and Rujo, w i l l take up fo r immediate
consideration the question o f necessary amendments to the admini stra tiy e fe a tu re s o f our n ation al banking law s.

Secretary

o f the Treasury Cortelyou was in conference with the Commis­
sion with reference to the character o f those amendments, and
the subcommittee l a s t mentioned expect to be able to re p o rt
t h e ir recommendations to a meeting o f the f u l l Commission to
be held In Washington on November 10.
The action o f the Commission with reference
tio n s has been harmonious and unanimous.




to a l l ques­

PROCEEDINGS OP THE NATIONAL MONETARY COMMISSION.

Washington, D. C .,
Hay 51, 1908.
Tha Act o f May 30, 1908, e n t it le d "An Act to Amend the
N ation al Banking Law s," contains the fo llo w in g p ro v isio n s
c re a tin g the N a tio n a l Monetary Commission:




Sec. 17. That a Commission is hereby created, to be called the
“ National Monetary Commission,” to be composed of nine members
of the Senate, to be appointed by the Presiding Officer thereof, an
nine members of the House of Representatives, to be appomted by the
Speaker thereof; and any vacancy on the Commission shall be tiled in
the same manner as the original appointment.
. .
Sec. 18. That it shall be the duty of this Commission to mquiie into
and report to Congress at the earliest date practicable, what changes
are necessary or desirable in the monetary system of the United States
ur in the laws relating to banking and currency, and for this purpose
they are authorized to sit during the sessions
such times and places as they may deem desirable, to tend forsw orn
and papers, to administer oaths, to summons and compel the attendance1
^witnesses, and to employ a disbursing officer and such seerefarips exnerts stenographers, messengers, ana other assistants as shall
be necessary to carry out the purposes for which said Commission was
' created. The Commission shall have the power, through subcommit­
tee or otherwise, to examine witnesses and to make such investigations
and examinations, in this or other countries, of the subjects committed
to their charge as they shall deem necessaij.
.
S e c 19 That a sum sufficient to carry out the purposes of sections
seventeen and eighteen of this Act, and to pay the necessary expenses
of the Commission and its members, is hereby appropriated, ou
anv money in the Treasury not otherwise appropriated. Said appro
prfationsLll be immediately available and shall be
out °n the
audit and order of the chairman or acting chairman of said Commi.
sion which audit and order shall be conclusive and binding upon all
Demitments as to the correctness of the accounts of such Commission.
& c. 20. That this Act shall expire by limitation on the thirtieth
dav of June, nineteen hundred and fourteen.

In accordance w ith the p ro v is io n s o f th is Act, the
fo llo w in g were appointed as members o f th is Commission:
Senators Nelson V. A ld ric h , Rhode Is la n d .
W illiam B. A llis o n , Iowa.
J u liu s C. Burrows, M ichigan.
Eugene Ila le , Maine .
P h ilan d e r C. Kiiox, Pennsylvania.
John W. D an ie l, V ir g in ia .
Henry K. T e lle r ,

Colorado.

Hernando D. Money, M ississippi.
Joseph W, B a ile y , Texas.
R epresentatives Edward B. Vroeland, New York.
Jesse O v e rstree t, Indiana.
Theodore E. Burton, Ohio.
John W. Weeks, M assachusetts.
Robert v
W. Bonynge, C olorado.
S y lv e ste r C. Smith, C a lif o r n ia .
Lemuel P. P ad gett, Tennessee.
George F, Burgess, Texas.
Arsene P, P u jo , L ou isian a.

By agreement o f the members, the Commission h eld i t s
f i r s t meeting in the rooms o f the Senate Finance Committee,
at 12 o 'o lo o k tf. on the 31st o f
o f o rg a n isa tio n .




May, 1908, fo r the purpose

/

3.

There were present at t h is meeting Senators A ld ric h ,
Burrows, H ale, Knox, D a n ie l, T e lle r , and B a ile y ; and Repre­
sen tatives V reelan d, Burton, Weeks, Bonynge, Smith, P ad gett,
Burge8S, and Pujo.
Mr. A ld ric h o a lie d the meeting to ord er, and state d to
the members that the Commission had met fo r the purpose of
o rga n izatio n .
Mr. B a ile y moved that Senator A ld ric h be e le c te d as
Chairman o f the Commission.

This motion was seconded and

unanimously adopted.
Mr. Hale moved that Mr. Vreeland be e le c te d Vice Chair­
man o f the Commission.

This motion was seconded and unan­

imously adopted.
t
Thereupon, Mr# A ld ric h t~ok the c h a ir.
A fte r some d isc u ssio n ,

i t was deaidod that there be

e le c te d e ith e r two s e c re t a rie s or a secretary and an a s s i s t *
and s e c re ta ry .

Mr. Burrows then moved that Arthur B. Shelton

be elected as Secretary o f the Commission,

This motion was

seconded '.end adopted.
Mr. Burton moved that th3 se lec tio n o f the a d d itio n a l
secretary or a s s is ta n t se c retary and the d isb u rsin g o f f i c e r
be l o f t to the Chairman and Vice-Chairman, with au th o rity to
fill

these p o s itio n s on b e h a lf o f the Commission.

Thie mo­

tion was seoonded and adopted.
The Chairman suggested that a subcommittee composed of
three Senators and three R epresentatives might be appointed




«r

i

4.

/

by the Chair, to rap a p lan o f organ isation .and o f the work

t o be done by the Commission, and to f i x a time and plane
fo r future meetings o f the Commission.
Mr, Burton moved that the suggestion o f the Chairman
be agreed to , and t h is motion was seconded and adopted.
The Chairman appointed as members o f t h is subcommittee
Senators A ld rio h , H a le, and B a ile y , and R epresentatives
V reelan d , Burton, and P ad gett.
I t was agreed that th is subcommittee should meet in
Hew York on the 11th o f June to form ulate p lan s fo r the
fu tu re work o f the Commission.
The question o f a s u ita b le

time fo r the mooting o f

the f u l l Commission was discussed in fo r m a lly * and i t ap­
,
peared to be the consensus o f opinion that a date as near
as p ra c tic a b le to the 20th o f July would most n e a rly s u it
the convenience o f a l l the members.
Upon motion o f Mr. Burton, the Commission then, at
1

: \f p.m, , adj ourne d .

At a conference h eld by the Chairman and Vice Chairman
irim-'dia t e ly a ft e r the Commission adjourned, i t was agreed
that Mr. R. ? , Mix on should be the d isb u rsin g o f f i c e r o f
the Commiesion, and th at the a d d itio n a l secretary or ansi s t­
and secretary should be named at some fu tu re time, at the




4

5

convenience of the members of the C o m iseio n v*ho are M ­
em
bers o f the House of R ep resen tatives,




S e creta ry .

WHEREAS, the cause o f currency refo rm has been stren g th en ed by
the a c t i o n o f the r e c e n t R epublican c o n fe re n c e in d e c l a r i n g , by an
overwhelm ing v o t e , i t s c o n fid e n c e in commercial paper as a s a fe l o g i ­
c a l a s s e t f o r em ergen cy.cu rren cy, and a ls o by approving the appointment
o f a commission to i n v e s t i g a t e f i n a n c i a l c o n d it io n s and to frame a
permanent f i n a n c i a l measure.? but
WHEREAS, S e rio u s embarrassment and l o s s to the R a t io n a l Government*
and g ra v e d is tu rb a n c e to f i n a n c i a l and commercial i n t e r e s t s are l i k e l y
to f o l l o w the a d o p tio n o f a c r e d i t o r a s s e t currency measure, u n less
the c o n s t r u c t io n o f s a id measure i s com plete and s c i e n t i f i c , and such
as woulid in s u re the autom atic expansion and c o n s t r u c t io n o f the volume
o f currency i n response to the normal demands o f tr a d e , and would i n ­
sure the redem ption o f s a id currency i n g o l d o r i t s e q u i v a l e n t w it h ­
ou t t h r e a t e n in g the i n t e g r i t y o f the g o l d r e s e r v e i n the R a t io n a l
Treasury;
RESOLVED, That i n view o f the c o n f l i c t i n g o p in io n s ex p ressed
by d i f f e r e n t members o f Congress, and the i m p r o b a b i l i t y o f the s u b je c t
r e c e i v i n g the e x h a u s tiv e and d is p a s s io n a t e c o n s i d e r a t i o n which i t s
im portance w a rra n ts , t o g e t h e r w ith the absence o f currency pan ic
apprehension f o r t h i s y e a r , the Trades League o f P h i l a d e l p h i a b e l i e v e s
t h a t c o n s t r u c t i v e currency l e g i s l a t i o n could be w i s e l y d e f e r r e d u n t i l
such a measure i s duly framed by a competent commission; but i f i t
be deemed e s s e n t i a l to enact some form o f c o n s t r u c t i v e cu rren cy l e g i s ­
l a t i o n a t t h i s tim e, the Trades League e a r n e s t l y a dvoca tes the a d op tion
o f the F o w ler C r e d i t Currency B i l l , in tro d u c e d in t o the House May 9th ,
1908, because, under sa id b i l l , the currency would be secured by the
asBets o f the banks; p r o t e c t e d by the same r e s e r v e o f la w fu l money
which i s now r e q u ir e d a g a in s t d e p o s i t s ; guaranteed by a g e n e r a l *
guaranty fund, and, by reason o f i t s prompt redem ption, be automa­
t i c a l l y r e t i r e d when n ot needed by the normal demands o f t r a d e ,
and the redem ption o f which currency would be independent o f the g o ld
r e s e r v e i n the R a t io n a l T re a s u ry ,
RESOLVED, That the Trades League o f P h i l a d e l p h i a f u r t h e r earn­
e s t l y u rg es the enactment o f the F ow ler Currency Commission B i l l ,
f o r the reason t h a t w h ile sa id b i l l p r o v id e s f o r r e p r e s e n t a t i v e s
o f a l l l e g i t i m a t e i n t e r e s t s , th ereb y l e g i c a l l y commanding the con­
fi d e n c e o f a l l c la s s e s and a l l s e c t io n s o f the cou n try, the l a r g e
m a j o r i t y o f C o n g res sio n a l r e p r e s e n t a t i v e s and f i n a n c i a l e x p e r t s upon
s a id commission would j u s t i f y e x p e c t a t io n o f the fram ing o f a
s c i e n t i f i c , comprehensive and p r a c t i c a l measure which would duly
s a fe g u a rd a l l l e g i t i m a t e i n t e r e s t s and in s u re the g r e a t e s t s e c u r i t y
and u n i f o r m i t y to the f i n a n c i a l and commercial . i n t e r e s t s o f the
n a tio n .




Secretary

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EDWA RD B. V R EE L A N D , N. Y.,
Vice C h a i r m a n .
JESSE OVERSTREET, In d .
T H E O D O R E E. B U R T O N , O h i o .
J O H N W. W E E K S . M a s s .
R O B E R T W. B O N Y N G E , COLO.
S Y L V E S T E R C. S M I T H , CAL.
L E M U E L P. P A D G E T T , T e N N .
GE ORG E F. B U R G E S S , T e x .
A R S E N E P. PU J O , L a .

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N E L S O N W. A L D R IC H , R. I.,
WILLIAM B. -A L L IS O N , I O W A .
J U L I U S C. B U R R O W S , M i c h .
E U G E N E HAL E, Me.
P H I L A N D E R C. K N O X , P a .
J O H N W. D A N IE L, V a .
H E N R Y M. T E L L E R . C O L O .
H E R N A N D O D. M O N E Y , N
J O S E P H W. BA ILE Y, Tex .

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A R T H U R B. S H E L T O N ,

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EDWA RD B. V R EE L A N D, N. Y.,

Ch a ir m a n .

Vice C h a ir m a n .

WILLIAM Bi A L LI SO N , I OW A.
J U L I U S C. B U R R O W S , M i c h .
E U G E N E HA LE, M e .
P H I L A N D E R C. K N O X , P a .
J O H N W. DA NI EL, V a .
H E N R Y M. T E L L E R , COLO.
H E R N A N D O D. M O N E Y , Miss.
J O S E P H W. BA ILE Y, T e x .

JESSE O VERSTREET. In d .
T H E O D O R E E. B U R T O N , OHIO.
J O H N W. W E E K S . M a s s .
R O B E R T W. BON YN GE, COLO.
S Y L V E S T E R C. S M I T H , C a l .
L E M U E L P, P A D G E T T , T e n n .
GE ORG E F. B U R G E S S . T e x .
A R S E N E P. P U J O , LA.

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Secretary.

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WILLIAM 6 , A L L I S O N , I O W A .
J U L l 'u S .C . B U R R O W S , M i c h .
E U G E N E HAL E, M e .
P H I L A N D E R C. K N O X , P a .
J O H N W. D A NI E L, V a .
H E N R Y M. T E L L E R , COLO.
H E R N A N D O D. M O N E Y , Miss.
J O S E P H W. BA ILE Y, T E X .

EDWA RD B. VR EEL A N D, N. Y.,
Vic e C h a i r m a n .
JE S SE O V E R S TR E E T, IND.
T H E O D O R E E. B U R T O N , OHIO.
J O H N W. W E E K S , M a s s .
R O B E R T W. B O N Y N G E , COLO.
S Y L V E S T E R C. S M I T H , CAL.
L E M U E L P. P A D G E T T , T E N N .
GE OR GE F. B U R G E S S , TEX.
A R S E N E P. PU J O , LA.

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R B. S H E L T O N ,
SECRETARY.

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PROCEEDINGS 0? THE HAII0..AL M0BB2ARY COMMISSIOH.

H otel P la z a , New York C ity ,
June 12, 1908.
The subcommittee o f the n a tio n al Monetary Commission,
c o n sistin g o f Senators A ld ric h , H ale, and B a ile y , and Repre­
se n tativ es Vreel&nd, Burton, and Pad gett, which was appoint­
ed by the Chairman at the meeting of the Commission on May
31, 1908, to map out a plan of organ ization and o f the work
to be done by the Commission, and to f i x a time and place
fo r fu tu re meetings o f the Commission, met at the H otel P la ­
za, New York C ity , on the 11th o f June.
A l l the members of the subcommittee were present ex­
cept Senator B a ile y , who w^s absent on account o f i l l n e s s .
The subcommittee h eld two se ssio n s, the f i r s t
2

one from

p.m. to 5 p.m ., June 11, and the l a s t from 10 a.m. to 1

p.m ., June 12,
The g re a te r p art o f the session s of the Buboommittee was
occupied in an inform al discussion o f the scope of the fu ­
ture work o f the Commission.
At the request o f the Chairman, P ro fe ss o r A. P« Andrew ,
jr .,

o f Cambridge, M assachusetts, A a e i s t a n i P ro fe s s o r of

Economics a t Harvard U n iv e rs ity , appeared before the subcom­
m ittee.

A fte r a conference w ith Mr. Andrew , the subcom­

m ittee appointed him as an a ssista n t to the Commission, at a
s a la ry of $3,000 per annum, h is appointment to take e ffe c t




V*

*

2

when he should report to the Chairman that he was ready to
take up h is work fo r the Commission*
(N ote: Mr. Andrew rep orted in person to Mr. A ld rio h on
June 18, and h is se rv ic e s f o r the Commission began on that
d a t e ).
I t was agreed that a f u l l meeting o f the Commission
should be c a lle d on July 20, at some point on the New Eng­
land c o a st, and that the Chairman should be auth orized to
make the neoeosary arrangements fo r the m eeting.
(N ote: Mr. A ld rio h subsequently arranged f o r the meet­
in g to be h e ld at the Im perial H o te l, N arragan sett P ie r ,
Hhode I s l a n d ) .
The subcommittee auth orized the Chairman to request the
Secretary of the Treasury to submit to the Commission h is
recommendations as to d e s ira b le or necessary amendments to
the adm in istrative fe a tu re s o f the n a tio n a l banking law s;
and a ls o to request him to designate an o f f i c i a l o f h is De­
partment to re p o rt to the Commission, a f t e r a person al in ­
v e s tig a tio n here and abroad, a comparative statement of the
system o f re c e ip ts and disbursements and handling of p u b lic
moneys o f the U nited S ta te s, England, Prance, and Germany;
the expenses o f such o f f i c i a l , w h ile abroad, to be paid by
the Commission.
The subcommittee, thereupon, a t 5 p .m ., June 12, ad­
journed.




Secretary.




The Memorial o f the "Congress Club o f Kings
County, N. Y ." to the Congress o f the United States in ­
cludes a c le a r ly o u tlin ed plan f o r an almost id e a l currency,
but as id e a l plans are not always p ra c t ic a b le ,

I w i l l give

a concrete example to show that th is one is p e r fe c t ly so.
The annual rep ort o f the T reasurer shows that
on June 30th 1908 the debt o f the United States was, in
d e t a i l , as fo llo w s :
Loan o f 1925
"
" 1908/18
Panama Canal
C e r t ific a t e s o f
indebtedness
Consols o f 1930

4 per cent.
3 "
"
2 "
"
3
2

"
"

’
"

$118,489,900.00
63,945,460.00
54,631,980.00
14,186,500.00
646,250,150.00

In te re s t b e arin g debt

$
$

Funded loan o f 1891
Loan o f 1904
Funded - 1907
Refunding C e r t ific a t e s
Old debt

56,500.00
72,600.00
3,065,550.00
19,270.00
917,095.26
4,130,015.26

Debt upon which in te re s t has ceased
U. S. Notes (Greenbacks)
Old Demand Notes
N ation al Bank Notes,
Redemption Account
F ra c tio n a l Currency

397,503,990.00

$346,633,016.00
53,282.50
72,459,284.50
6,962,814.28

Debt b e arin g no in te re s t
Total

426,056,397.28
$1,327,090,402.54

the annual in te re s t charge being_j20^946,270.41.
At th is d ate,lJun e 30th 1908/) the Government held
Gold again st Gold C e r t ific a t e s $822,923,869.00
u In R eserve Fund
150,000,000.00
"
" General Fund
31,964,813.00
Making a t o t a l o f

$1, 004,888,682.00

which, i f placed in one Reserve Fund, would permit the issue
at once, o f $2,009,777,364.00 o f the proposed new notes, hav­
ing a reserve o f f i f t y per cent, o f g o ld , and these new notes

4




oou ld be used as f o l l o w s ~

R e t i r e a l l N a t io n a l Bank N otes,

$698,332,917.00, and bonds h e ld as s e c u r i t y f o r th ese N otes,
b e s id e s $65,195,980.00 a d d i t i o n a l bonds and c e r t i f i c a t e s as
fo llo w s

(t h e bonds oou ld be h e ld i n the Treasury f o r necessa ry %

fu t u r e u se, or r e t i r e d ) :
Loan o f 1925
"
" 1908/18
Panama Canal
C e r tific a te s o f
in d ebted n ess
Consols 1930
(p a rt)

4 per c e n t .
3"
"
2
"
3"

$118,499,900.00
63.945.460.00
54.631.980.00
14.186.500.00

”

512,276,057.00
-------$

A le o pay debt or which i n t e r e s t has ceased

763,529,897.00
4,130,015.00

and r e t i r e **
A l l U. S. N otes (G reenbacks)
Old Demand Notes
N a t io n a l Bank redem ption fund
A l l Gold C e r t i f i c a t e s

$2,009,777,364.00
P la c e i n t r e a s u r y f o r g o ld taken
which, w ith f r a c t i o n a l cu rrency

181,964,313.00
6,862,814.00

$2,198,604,991.00
would make a n o n - i n t e r e s t b e a r in g debt o f
133,974,093.00
and b a lan ce o f Consols o f 1930 a t 2 per cent
T o ta l,

i n t e r e s t and n o n - i n t e r e s t
b e a r in g debt

Less - Gold in new R eserve Fund
T o ta l

$2,332,579,084.00
1,004,888,682.00
$1,327,690,402,00

b e in g the same in amount as in p r e s e n t r e p o r t , but as
$763,529,897.00 w i l l have been changed from i n t e r e s t b e a r in g
bonds to c i r c u l a t i n g n o t e s ,

th e r e would be a s a v in g in the

annual i n t e r e s t account o f $18, 26 6,788.55, and t h i s i s no
v a i n t h e o r y , but could be a re a s o n a b le f a c t .

--

4

A l l other Treasury balanoes would be p re c is e ly
as now, except that the $150,000,000.00 in old reserve
fund would be tra n s fe rre d to the gen eral fund, in c re a sin g
the a v a ila b le cash balance from $245,171,347.73 to
$395,171,347.73•
The stock o f money in the United States would
then be «




New Notes

$2,009,777,346.00

S ilv e r and S ilv e r
C e r t ific a t e s

715,615,595.00

Gold Coin in C irc u la tio n

605,244,809.00

Total

#3,330, PV7,750.00

or about $48,000,000.00 le s s than shown by the T re a s u re r’ s
re p o rt, but as the banks would re q u ire no re se rv e f o r c irc u ­
la t io n ,

the new amount would be ample f o r present needs.
For in crea sin g demands there would be the

$490,222,654.00 remaining unissued from the $2,500,000,000.00
auth orized, and f o r emergencies the reserve fund a lrea d y
provided f o r such occasion s.
Our money would then be d is t in c t iv e ly American
in c h a ra cte r, and good enough f o r c ir c u la t io n in any
c i v i l i z e d country.

*

The g e n e r a l

p u rp o s e o f th e C om m ission b e in g

to make an exhaustive and comprehensive inquiry into the
various systems which are in operation in the leading^nat,ions
o f the world;

oxp^r^s should be employed in each

o f such coun tries to prepare fo r the in fo rmation o f the Com­
m ission

concise, accurate historyr^o4 the development o f

t 'll
tih rrn irrrt systems in such c o u n trie s,—i-neluding a l l banks,
r^
A
c±-r\fi ji f.vfeOj>s4rS o f

those sy ....... ....... ............................ ..
• £ j£*ry%Jc>a)
-c
"
2
/cLc*. f

fre .ether w ifrh

y s t a t i s t i c a l inform ation r e la t iv e

\
to the same; such h ij^ L orlca l

and st a t i s t i ca l in fo r m a tio n

in regard to theso v a r io u s c o u n tr ie s to f o l l o w ,
p o s s ib le ,

l i n e s t hafr w i l l make n p
.pmiutr l g o n p<»eaibi- ^itw-o^n
e-

t h t riiffarflni avstems in use.
-r




as f a r as

f

\

The gen eral scope and purpose o f the Commission being
to make an exhaustive and comprehensive inquiry into the
variou s systems which are in operation in the le a d in g n ations
o f the world: an expert or exports should bo employed in each
o f such coun tries to prex^are fo r the inform ation o f the Com­
m ission a concise, accurate h isto ry o f the development o f
the present systems in such co u n tries,

in cludin g a l l banks,

and a syhopsis o f those systems that are now in op eration ,
together with a l l necessary s t a t i s t i c a l inform ation r e la t iv e
to the sane? sueh h is t o r ic a l and s t a t i s t i c a l inform ation
in regard to theso variou s coun tries to fo llo w , as f a r as
p o s s ib le , lin e s that w i l l make a comparison p o s s ib le between
the d if fe r e n t systems in use.




ii

Tho general scope and purpose of the Commission being

to make an exhaustive and comprehensive inquiry into the
variou s aystens which are in operation in the le a d in g nations
o f the w o rld : an expert o r exports should bo employed in each
o f such coun tries to prepare fo r the In fo m a t Ion o f the Com
­
mission a concise, accurate h isto ry o f the development o f
the present aystoma in such c o u n trie s,

includin g a l l banka,

and a synopsis o f those systems that are now in op eration ,
togeth er with a l l necessary s t a t i s t i c a l inform ation r e la t iv e
to the same; such h is t o r ic a l and s t a t i s t i c a l inform ation
in regard to thoao va rio u s cou n tries to fo llo w , as f a r as
p o s s ib le , lin e s that w i l l make a comparison p o s s ib le between
the d if fe r e n t systems in use.




The general

and purpose of the Commission

being

to woke An exJiaustivs and corapre henaive inquiry into the
various systems which arc in operation in the loading nations
of the world: an expert or exports should bo miployed in *ach
of such countries to prepare for the info mat Ion o f the Com
­
mission a concise, accurate history o f the development o f
the present systems in such countries, including a l l brinks,
and a syfeopsis of those systems that arc now in operation,
together with a ll necessary s ta tis tic a l information relative
to the samel such h istorical and s ta tis tic a l information
in regard to these various countries to follow , as fa r as
possible, lin es that w ill m
ake a comparison possible between
the d ifferen t systems in use.




4

Th« itm ora-l scope and purpose o f the Commission b ein g

to rank* an e x h a u s tiv e and com prehensive t n ^ iir y in to th«
v a r io u s sy stem s which a re in o p e ra tio n in the le a d in g n a tio n s

of the w o rld , an e x p e r t o r e x p o rts should be <w*>loyed in o.teh
o f such c o u n t r ie s to p re p a re for the in fo rm a tio n o f the Com­
m issio n a c o n c is e , a c c u r a te h is t o r y o f the developm ent o f
the p re s e n t system s in such c o u n t r ie s , in c lu d in g a l l b an k *,
and a sy h o p sls o f those system s t h a t a r e now in o p e r a t io n ,
t o g e th e r w ith a l l n e c e s s a r y s t a t i s t i c a l in fo rm a tio n r e l a t i v e

to the san e; such h i s t o r i c a l and s t a t i s t i c a l in fo rm a tio n
In reg ard to th e s e v a r io u s c o u n t r ie s to fo llo w , a s f a r a s
p o s s ib le , lin e r , that w i l l make a com parison p o s s ib le between
the d i f f e r e n t system s in use




f k « f i i i r t l purpose o f the commission b e l l i to make am
exhaustive aad comprehensive in q u iry lmto the v a rio u s bank la g
and currency systems which a r t im op eration in the le a d la g
commercial n ation s e f the w o rld 9 competent pereene should be
employed in each e f eueh coun tries te prepare f o r the i n f o r ­
mation e f the Commission een elee9 accurate h is t o r ie s e f the
development e f e x is t in g systems in such c o u n trie s 9 which
should in clu d e a l l in portan t h i s t o r i c a l and s t a t i s t i c a l in ­
form ation r e l a t i v e te the same; such inform ation in regard
te these v a rio u s coun tries te f e l l e v 9 as f a r as p o s s i b l e y
s im ila r gen eral l i n e s 9 in ord e r that the r e s u lt s may be com­
p a r a b le .




4

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MINUTES O THE PROCEEDINGS O TJU SUBCOJCHITTEE O AM
P
P
5
N
ENDM
ENTS
TO THE .ADMINISTRATIVE PEATURES O THE NATIONAL BANK ACT.
P

Hotel Imperial,
Narragansett Pier, R .I .,
July 2 5, 1900.

The member* of the subcommittee are Senators A llison,
Burrows, T o ller, Honoy, and Bailey and Representatives Weeks,
Bonynge, Smith, Burgess, and Pujo.
Present at the meeting: Messrs. Burrows, T e lle r, Weeks,
Bonynge, Smith, Burgess, and Pujo.
The

committee organized by electing Senator Allison

Chairman and Representative Weeks Vice Chairman.
The committee took up the consideration of the suggest­
ions made by the Secretary of the Treasury relative to the
changes in the national bank laws, and determined to request
the Secretary to oomplote the suggestions which he had made

-

as he had requested opportunity to do - and to submit the
revised statements to the

committee as soon as possible; but,

i f possible, as early as August IS .
The committee determined to propound a l i s t of questions
to national bankers, asking for their views on certain desired
changes in the national bank laws; and & committee, consisting
of the Vice chairman, Senator T eller, Representatives Bonynge,
and Burgess were appointed to attend the meeting of the Awerioan Bankers' Association, to be held at Colorado Springs the
week of September 27.




2.

Minute8 o f Ju ly 26.

After replies are received and compiled from the nation­
al bankers to the questions submitted, it is proposed that the
committee give public hearings

in som of the larger c it ie s ,
e

to add to it s information on these subjects.
At this point the subcommittee adjourned, subject to the
c a ll of the Chaim an.




<w> •

• -a

j •

•^

A m

m

o m

s s .

AGENTS LOCAL EARLY

opinion that the upshot of the coiTiiiinjJ on’ s studies •Jill be
not to pramulyate a neu currency .10 .sure entirely, but
firmly to make additions and improvement3 to the present
so-called Aldrich-Yresiand 1a : .
In banking c ircles the r e -s
Aldrich has been received

n't

thin opinion of Senator

great interest, fc r i t is

recognized that, as head, cf the conmi&sion 0 . 1 sponsor fo r the
currency b i l l adopted in the closing hours of CongressT h is
-7ord \/ill have great i; eight'

The-- U-, of course, disappoint-

m
erit of an ^extreme kind among many fi ending barkers over the
outlook as limited by this situation, but hope is s t i l l
entertained that as a result of Senator Aldrich’ s in v e st!ration of Eurorear bank inn methods and its currency system he
may experience a charts of heart.

.

Senator Aldrich,, -rith Senators Hale, Knor.. - ad Ttanielt?
V,

-

12:d Padf-crr;,

and Tiepresentativea V re e liid , Ov-rsfre.-t, 3ur.cr

•.rill anil from this city on Tuesday next cn the Krpnprinz- .
n

-

- i p

f

A r

'

a

- a il*,- '.

c s

-

.

\

examinat ion of hlie currency
•

•

an
B ritain, France, and Ctsrm , y

.
.

■ .7 1 1 6

r> t p

S e r f

* and Sviss neth6d s -il l 3d sc .be sgudibd,

1

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.usiivs

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placed 'at the disposal of thi s
• 1i
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P r> 'V
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0

1 ' 4—
•

’■ ^ £5 .

lu x m

m

z ra m

s .

agents. local early m m

iitt'/.v y .

in the United States*

At any rate, the members of the famous

London insurance company refused tc issue a policy fo r
^10,000 on a consignment of "shevth” got/ns recently imported
from Paris by a local department store'.
.
•
i
The uptoun merchants, feelin g someuhat skeptical as to
•
.
just hou y e ll the la te st Parisian craze yould take v/ith
Tier York rbmen asked an insurance broker to obtain a policy
insuring the sale of the go.jns

—

in otjier rords, to insure

the popularity of the "sheath” go^n*

.

The broker, knowing that the London Lloyds v/ere 'Tilling
to :riua a p olicy on anything, from a presidential election
to the safeguarding of an automobile racecourse, or the
fluctua ions of the stock market, promptly applied fo r a
policy^on the "sheath” goons*

To his surprise, however,

he uas, to use h i ! oun uords, "turned doun cold*.” He applied
»
/
to several ether companies ith the sare re su lt’,
'

x

'

'

^ N *? YOLY, ■August 1 .— -Tlio TIMS. th is morning sayar
E

For several days laacibors of the National Monetary
Consuission, 'appointed' at tb

devise olano i Tr.urrr.-'^ryrl

j

I t at session of Congress' tc
./J.n?

at ten and Com
posed p£j?ip e

'

dona1ora. and niiio Congressman, 'have, boon in th is c ity making
p rep a ra tive fo r th e ir rip to Europe'to study-foreign Linking
*
\
conditions and to confer \7ith bankers here!
Ae a resu lt,
it ha3 become fcnorr in ’"a ll Street that Senator Aldrich:

u <4 is at the head of the commission, has ccme. to hold the
h
4"

'




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MONETARY

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V
1

To obtain nor# complete and accurate in fo rm a tio n 'w ith
c< _

referen ce to the monetary and hanking implement! o f the le
in g commercial nations (than l a now a v a ila b l e ^ i s the p r i n c i ­
p a l purpose o f the suhoemittee o f the N a tio n a l Monetary Com­
m ission oho a re le a v in g today fo r London.

The subcommittee

a ls o intend to make thorough examination into the methods in
use f o r the c o lle c t io n and d is t r ib u t io n o f the p u b lic re v e ­
nues in each o f the leadin g c o u n trie a ^ o f ^ u ro p e .
ta ry o f the Treasury has d e t a ile d Mr/TBr

The Secre­

Man son 9 C h ief o f

the D iv is io n o f Accounts o f Issu e and Redemption o f the
T r e a s u r e r s O f f i c e , whs m l l a s s i s t the Committee in t h is
i
work.
The a c t iv e work o f the Commission th is summer w i l l be
c a rr ie d on kk by the subcommittee who a re going a b ro a d t and
b y another subcommittee, o f which R ep resen tative Veeks i s the
a c tin g Chairman^ 0 1 ^ are now engaged in co n sid e rin g amend­
ments to the ad m in istra tiv e fe a tu re s o f the n a tio n a l banking
law s*
This work i s but p re lim in a ry to the re p o rt which the Com­
m ission a re re q u ired to make to Congress o f a complete mone­
t a r y mid banking system f o r the country*

I t was not e x -

peeted that the l e g i s l a t i v e p ro v is io n s o f the a c t o f May 30 th ,




2 .

1908, would b « f i n a l or, permanent.

They vara adopted w ith

the a in g la purpoaa o f p ro v id in g a ga in st the recurrence o f
d e s tru c tiv e oondltiona s im ila r to thosa from which the
country s u ffe re d in October l a s t .

T h is act w i l l undoubtedly

be superseded In time by l e g i s la t i o n e s t a b lis h in g a compre­
hensive monetary s y s te s ^

Memoranda o f

s u b j e c t s t o be i n v e s t i g a t e d i n England,
(August 9,

1908)

CUIi...E!TCY AND BANK! NOTES

How and by whom should t he y be i s s u e d
We should t r y

Ao 1 844----

to

secure s t a t e m e n t s from b e s t a u t h o r i t y ,

p r i or

a Of the e x p e r i e n c e o f England which l e d t o th e a d o p t i o n o f
the a c t o f 1844.
b E x p e r i e n c e i n S c o t l a n d and I r e l a n d which l e d t o the l e g i s ­
l a t i o n o f 1845.
c T h e o r i e s upon whic h t h e s e a c t s were c o n s t r u c t e d and adopted
d P r i n c i p a l p o i n t s i n t h e c o n t r o v e r s i e s p r e c e e d i n g and f o l ­
l o w i n g a d o p t i o n o f Bank A c t .
e
as e x p e r i e n c e i n the U n i t e d Kingdom w i t h r e f e r e n c e to n ot e
i s s u e s ■ iWW under t i s l e g i s l a t i o n been s a t i s f a c t o r y ?
aJ
f
In t h is
ledged a u th o r it ie s ,

are any amendments s u g g e s t e d by acknow­
and i f so what a re t h e i r natu re ?

g I s t h e r e any p r o p o s i t i o n , e i t h e r i n th e p u b l i c i n t e r e s t o r
t o b e n e f i t banks, f o r t h e r e s t o r a t i o n o f the r i g h t o f i s s u e to
banks g e n e r a l l y and u n c o n d i t i o n a l l y , o r under l i m i t a t i o n s ?
h I s t h e r e any c o n t e n t i o n i n b a n k i n g or economic c i r c l e s th a t
i t i s n e c e s s a r y to r e s t o r e or e x t e n d the r i g h t o f issu e t o ba n’ s to
en a bl e them t o a f f o r d adequate f a c i l i t i e s t o b o rr o w e r ? o r to meet
l e g i t i m a t e b u s i n e s s demands
i
In o t h e r words, have the banks which 1
the r i g h t o f i s s u e s u f f e r e d , o r have the comm
account o f t h e d e p r i v a t i o n .
j l s the r i g h t o f psftv&le n ot e i s s u e any l o n g e r important
e i t h e r to banks o r communities.
k S t a t e B r i t i s h d o c t r i n e , ( p i t e G la dst one and o t h e r s , ) t h a t note
i s s u e i s a jaeoa-c, ary f u n c t i o n o f the Government.




2
1 Trace the changes i n the use and i mp or tan ce o f bank n o t e s
g r o w in g out o f t h e new and g r e a t e r use o f ch ec ks , b i l l s o f exchange,
f o r e i g n and dom es tic d r a f t s , comm ercia l p a p e r , and o f c l e a r i n g house
f a c i l i t i e s , r e d d e r i n ^ e m p l o y m e n t o f n o t e s u n n e c e s s a ry .
m S t a t i s t i c s showing gr ow t h i n r e l a t i v e use' o f o t h e r i n s t r u ­
ments o f exchan ge , gr owth i n amount o f b u s i n e s s done, amount o f f o r ­
e i g n and d o m e s t i c commerce., c l e a r i n g house r e t u r n s ---- f o r as many
y e a r s as a v a i l a b l e .




3

B A N K S

1

The d i s t i n c t i v e

functions

a

Of t he Bank o f England

h

Joint

c

Pr4v&&e hanks

d

Government and p o s t a l

e

D i s c o u n t houses

f

Fi n a nc e companies and p r o m o t e r s

g

B i l l Brokers

s t o c k oomftan>* c

s ta tistic s

s a v i n g s hanks

2

A vailable

o f amount o f b u s i n e s s done by each c l a s s .

3

We r e q u i r e the l a w s which g o v e r n each c l a s s as e v i d e n c e d
a
b

4

by l e g i s l a t i o n
by u n d e r s t o o d and u n w r i t t e n laws.

These i n q u i r i e s

should be d i r e c t e d to

a

O rganization

b

Government and c o n t r o l

c

P r o v i s i o n s as t o c a p i t a l and s u rp l u s

d P r o v i s i o n s as t o l i a b i l i t y
directors.

of

(reserve

stockholders,

fu n d ) .

officers,

and

e R e q u i r e m e n t s , i f any, f o r government or o t h e r s u p e r v i s i o n ,
i n s p e c t i o n or e x a m i n a t i o n o f any ki n d .
f
Nature o f s t a t e m e n t s o r r e t u r n s ,
r e q u i r e d or p u b l i s h e d .

p u b l i c or p r i v a t e ,

if

a y

p Stamp t a x e s imposed on c h e c k s , b i l l s o f exchange, e t c . , and
o t h e r d i r e c t and i n d i r e c t c h a rg e s upon b a n k i n g , and the a g g r e g a t e
annual amount c o l l e c t e d .




4

‘3 "unctionr o f these lank.; .ml r hi'* fere. it conditions a ffectin g
character o f buz.il no 3d
•

In :pai’cci> a’?’: Mod con unities*
■

b

in j urely -.p;rj cultural cca :uniti«8

c

In

d

In •r<:pi oa

c

.V-• . ■

In d u strial

.

ar- .

:e:u fa ctm -in r

co n tro l,

rci 1 centroe, liv e
'

.

-

.

- ■■

-

2 I. he

<v-che-sr« r*

Iv.ip o ol.
■

r. t*

■'

■ •;#

■ • ui;.i e- ice f ;r c mn'ien of
• ;
g showing amount o f deposita in
oac; cla a o .'* ' ■.*hE, cl a r i f i v- a , .?blic or . r iv a le,
U- 0 1*;
<
y J H on f. ■ ' • :* on llr.iC.
/
htabc

-V c f inv-.
.
i ■u b l i e ,

Ai • . V
> .-w

cr.»ta if. cla • -or of 80c.,rlt,i©B, public, a---oi—
an d

p , i v*e : e .

. : t o o i / X< dot.Ml oher a . r of loa-ia» — orc^v its. U ; ,
■
, r
•
.. .
on gc , rciiOL
on c a ll or on t ’ "ac, on coHat r-

;:,1, o

re al < ;.t a t r , ot c ♦

I •
t
■ io . i
oi mtioxta o'" er than
c lc ari p ho;,^: a - eecl .tioev in e::ini ‘nee, a d • at lr their cvarac-

ter?

10

.t ia t: • (a , .rj .l tc.-.-oci. a e i
'

'

■

. 20 ■

■2

1
alreu
desirable?

12 iluaber and c ,

.

of

.... ' -

,

camera?

..

,

,

.

*
j

f
/ ,

.

m

,

.

■.

.~

ion

.-.c • r of clearing hour>e organisotIona
"

10 All available etc.tiaiict nhovirii in d etail i e rowth of bn- Ini?
in nrV... ?r, Scotland an-.. Ireland, and the relative
;row
in
n
utd <>f he Jo i ■
Ml
do
• .
14 70c

f f‘«:ct o f branch . i-nSal

•!■:

on pro -a j-i t> and V

c f co- •rvcniMcs, a .-:, on dank rate a,
n

rtev> lo p e nt

10 Arc branch banka no e n ’.tie facto y to c^nati t«K nci c ’.!ian in<le-

^neb nt loc -1 bani.c?

I f ir;
1

' •. e
.

rel-- toe owy-.evrhif b* tv n large tauji a o f dlaoount
ru.;. d o* it and o tf . ‘ :..r. corporate inter*:ata?
v *

<v are bw
>/
ji?r xat r. controller., an« how nearly doc a th< bank
ratr or the join t rtoc> uotapanlea fo lio * the r»‘.te o f




t * . ‘ rf- Of . >1 1
■ .
;

;

5

18 Secure t a b l e o f co m p a r a t i v e r a t e s f o r a s e r i e s o f y e a r s o f Bank
o f E ng la nd , I m p e r i a l Bank o f Germany, Bank o f P r a n c e ,
and t he r a t e s o f j o i n t s t o c k companies and o t h e r
banks in each countrjr.
19 B e st

i n f o r m a t i o n as t o amount and c h a r a c t e r o± r e s e r v e s h e l d
from time to ti m e by Bank o f England and j o i n t s t o c k
banks*

20 What methods a r e i n use i n m a i n t a i n i n g the adequacy o f
reserves?
21 Are r e s e r v e s i n a c t u a l cash r e l a t i v e l y
in recen t years?
22 W a t

3uch

in crea sin g or d ecieasin g

r e a t i o n e x i s t s between r e s e r v e s and t h e bank r a t e ?

23 S t a t e co urs e o f exchange and a c t u a l m o v e m e n t s o f g o l d f o r ^ a
s e r i e s o f y e a r s , g i v i n g causes*,
also state e f f e c t
o f changes i n bank r a t e noon t h e s e
ovements.
24 S t a t e c h a r a c t e r o f the p r o p o s a l s and a g i t a t i o n f o r g r e a t e r cen­
t r a l r e s e r v e s f o r the purpose o f s e c u r i n g g r e a t e r
s t a b i l i t y o f E n g l i s h f i n a n c i a l i n t e r e s t s , which i n ­
cl u d e p r o p o s a l s f o r sec ondary r e s e r v e s and f o r en­
la r g e d " f i d u c i a r y " issues.
25 A ls o examine movement f o r a d d i t i o n a l bank s t a t e m e n t s or r e t u r n s .




t

*,..

Memoranda o f s u b je c t s to be in v e s t ig a t e d in En glan d.

(August 9, 1908)

How and

by

whom should t he y be i

Y
-'e should t r y

to

>ued.

secure s t a t e m e n t s from b e s t a u t h o r i t y , -)

4
rff—IcH *■ '' a O f the e x p e r i e n c e o f England which l e d
the a c t o f 1844,
b Exp r i e n c e
l a t i o n o f 18 4 1.

to the a d o p t i o n o f

in S c o t l a n d anc I r e l a n d which l e d

to

the l e g i s ­

c T h e o r i e s upon v' i c h t h e s e a c t s were c o n s t r u c t e d and a d o p t e d
d P r i n c i p a l p o i n t s in the c o n t r o v e r s i e s p r e c e e d i n r and f o } io w i n g a d o p t i o n o f Bank A c t ,
experience

i n the U n i t e d Kingdom w i t h r e f e r e n c e

p Xn tii.it
aro any a .end.neat?:, su g g e ste d
led ged a u t h o r i t i e s , and i f so what a re t h e ir n atu re?

d:

to n o t e

acknow­

r j s t' cro any p r o p o s it io n , e it h e r i the p u b lic in t e r e s t o r
to b e n e f it b a n k s, fo r the r e s t o r a t io n o f the .ripbt o f is s u e to
banka g e n e r a lly ana u n c o n d itio . i l l y , or m der lim it a t io n s ?
h I s th e re any c o n te n tio n in b an kin g or economic c i r c l e s th a t
i t i s n e c e s s a r y to r e s t o r e or exten d the r i h t o ' i s ue to ban e to
en ab le them to a f f o r d adequate f a c i l i t i e s to b o rro w ers o i to icot
le g it im a t e b u s in e s s derm ds
i In o th e r w ords, have the 1 anha which have been d e p riv e d o f
I
t t o f is s u e s u ffe r e d , or i f e the co u n i t i e s ^ u f '*crad on
account o f the d e p r iv a t io n .
j l s the r ig h t o f p v iv & tc note i s ; ue any lo n g e r im portant
cither to an s or comm u n itie s.
k f t ate B r i t i s h d o c trin e , ( c i t e
I AatMft M i
X ; aue i s * ----------- -- f u n c t i o n o f the Government.




ec
4

o V c r e ) t h a t n ot e

2

I
jcov/irif
foreign

Trac e the e ;angec in the use and imp ortan ce o f bank n o t e s
out o f ti e new and g r e a t e r use o f checko, b i l l s of exchange,
an
o stia r a ft s , oi u c i a l paper, an< i f S li uring 1 •
fa s ilitle fi, riil<jcitt§fittp l^yaiR t^if n o t e e iu n n e c e s s a r y •

a driA >«v/tA «i^u.

r: s t a t i s t i c s s ov/ir r f rowth in relative use o f
10 , i '•£ o f exc arif e , growth in amount of busine .s done
. cat cle irln hoi
u .. -•*
s i g n and. d o m e s t i c o
y i a r e *e •tv a i 1 ab .1e
/f




*

ot ': r i n s t r u amount

of

for * s m
any

for-

3

a

1

The d i s t i n c t i v e

i n

.

functions

%

a
b

P r i v a t e banks

d

Government and p o s t a l

o

D i s c o u n t houses

f

? i nan c e c o mj < i e a an d p r ono t e r e
an

f

3

Joint

c

2

Of the B .nk o f England

B ill

A vailable
e re,,

ire

s t o c k 8€nniftFi'Win-»

( j — n.
t

s a v i n g s banks

brokers
sta tistic s

o f amount o f b u s i n e s s done by each c l a s s .

the l a w s which pov rn each c l a s s

a

4

by l e g i s l a t i o n

b

as e v i d e n c e d

by u n d e r s t o o d and u n w r i t t e n laws.

These i n q u i r i e s should be d i r e c t e d to
a

O rganization

b

Government and c o n t r o l

c

P r o v i s i o n s as t o c a p i t a l a d

d P r o v i s i o n s as to l i a b i l i t y
d irectors.

.
u r p l u s ( r e aery*

o f stockholders,

c R e q u i r e m e n t s , i f any, f o r g o v . r n ^ n t
i n s p e c t i o n or e x ami a t i o n o f any ki n d .

fund).

o fficers,

and

or other su p e rv is io n ,

f
Mature o f s t a t e m e n t s o r r e t u r n s , p u b l i c o r p r i v a t e ,
r e q u i r e d or p u b l i s h e d .

if

a i

p F>tam, t a xe s imposed on c h e c k s , b i l l s o f ex ch ang e, e t c . , and
o t h f r d i r e c t a i d i n d i r e c t c h a rg e s upon b a n k i n g , and th e a g g r e g a t e
annual a ount c o l l e c t e d .




4
5

function:-: o f t h e s e banhc

nd .r di 'Tiv. r e v;. c o n d i t i o n s a f f e c t i n g

character of businesr

a

In

:p a ro d y s e ttle d corn 'u n itie s

b

in purely a g ric u ltu ra l com u n itie s

c

In in d u stria l and

-anufacturing cen tres, lik e

d

In great com *-re i d
.;. •

cen tres, lik e L iv e rp o o l,

e

In the great in tercon tin en ta l cxchan-e centre o f London.

arches'.er*

6

s t a t is t ic s fo r a s e rie s o f years showing amount o f d ep osits in
each d a t a o f banks, cl a d r i e r as p u b l i c or p riv a te ,
and d eposits payable on demand or on liras.

7

htatcpent c f invo r:tu«ntc in c l an cos o f s e c u r itie s , p u b lic, acrai*
pub lie, a c :r ivat e.
n.

Also statement s; o i
in d e ta il character o f loans*— m ercan tile,
on ce -r.r c ia l |
;upcr, on c till or on t ime, on c o lla t e r ­
a l , on rea l e st at e , etc.
h

Are t ere any haul; organisations or assool at lone o;h er than

clearing house association? in existence, and r" at ie their charac­
ter?

10 What is the Central A ssociation o f
II I

anlcera?

t . . . -.n c o o p e r a t i o n or u n i f i c a t i o n o f . i v t e r e s i c under o r .
y
uin.fl.ry c i r c u ^ s t a n c e s ,

desirable?

one

is

greater c e n tra lis a tio n

12 Humber and ci-aracter o f c l e a r i n g house o r g a n i s a t i o n s

Id A ll a v a ila b le s t a t i s t i c s showing

i n d e t a i l t e rowth o f b .nving
i n England, S c o t l a n d and I r e l a n d , and the r e l a t i v e
growth i n England o f the J o i n t b l o c k and o h r banks.

14 7Le

f f e c t o f branch conking on pro v r i ty and the development
o f comaunities, and on bank rates.

15 Arc branch ban hr. no e s a tis fa c to r y to const I t . -ncics than independt nt lo c a l banks?
*
16 Ic “bore any rclr.tec ownership between large banks o f discount
rind dopocit and other large corporate in tere s ts ?
IV

ow a r e bank r a t e s c o n t r o l l e d , ans bow n e a r l y docs the bank
r a t e o f the j o i n t s t o c k companies f o l l o w th e r a t e o f
the I' nk o f hng l a n d .




4

5

la

rteeure t a b l e o f c o m p a r a t i v e r a t e s f o r a s e r i e s o f y e a r s o f B * - *
o f England, I m p e r i a l Bank o f Germany, Bank o f F r a n c e ,
and the r a t e s o f j o i n t s t o c k companies and o t h e r
BanVs i n each count.

19 B e s t

i n f o r m a t i o n as t o amount and c h a r a c t e r o f r e s e r v e b he ld
f r o m time to ti m e By Bank o f xingl&nd arid j o i n - fc
.tock
Banks,

iO > . a t methods a r e i n use i n m a i n t a i n i n g the adequacy o f
7
reservea?
ill Arc r e s e r v e 8 In a c t u a l cash r e l a t i v e l y
i n r ec ent y e a r s ?

such

In crea sin g or decreasing

22 W a t r e a l i e n e x i s t s "between r e s e r v e s and the hank r a t e ?
21 S t a t e co urse o f exchange and a c t u a l movements o l g o l d fox «
a
s e r i e s o f y e a r s , g i v i n g causes;
also sta te c j f e e t
o f c h a r g e s i n Bank r a t e upon t h e s e
ovements.
24 Gt a te c h a r a c t e r o f the p r o p o s a l s and a g i t a t i o n f o r g r e a t e r cen­
t r a l r e s e r v e s f o r t he purpose o f securing, g r e a t e r
s t a b i l i t y o f E n g l i s h f i n a n c i a l i n t e r e s t s , which in­
clude p rop osals f o r secondary re se rv e s and fo r en­
la rg ed " f i d u c i a r y " issues.
25 Also examine movement f o r a d d i t i o n a l bank s t a t e m e n t s o r r e t u r n s .




4

\




MINUTES ON HEARINGS OF THE NATIONAL MONETARY COMMISSION
COMMENCED AT LONDON,

On Wednesday,
in gs.

The f i r s t

ENGLAND,

August 1 2 t h ,

AUG.

12,

*08.

the Commission commenced h e a r ­

man heard was Mr.

R.

W.

W halley,

Ge n er a l

Manager o f P a r r * s Bank, an i n s t i t u t i o n which was o r i g i n a l l y
an o u t s i d e bank i n L a n c a s h i r e .

He s t a t e d t h a t

s t o c k hanks pay 1 l/fe$ l e s s i n t e r e s t
a cco u nt s t h a n . t h e bank r a t e ,
He d i d not make e x a c t l y

that i s ,

the

on d e p o s i t s

jo in t

of

current

to r e g u la r customers.

c l e a r w he th er t h i s i n t e r e s t

m e r e l y i n the c o u n t ry o r i n the c i t y

as w e l l .

was p a i d

(See l a t e r

minutes W h a l l e y . )
On Thursday o f each week a f t e r a change i n bank r a t e ,
rep resentatives
fix

o f each bank i n the c l e a r i n g house meet and

the r a t e o f i n t e r e s t

on d e p o s i t s . A ch arg e i s made t o cus­

tomers who draw checks on what i s

c a l l e d the

’’ t u r n o v e r

fr om l/Q th o f 1% down t o per hap s 1 /32 o f 1% on amounts
drawn out •
year,

I n some ca ses a round sum i s

say 100 pounds f o r d o i n g t h i s

ch a rg e d f o r

bu siness.

There are two c l a s s e s o f d i s c o u n t s :
which the r a t e i s

higher;

the

Trade b i l l s ,

on

and bank b i l l s .

The Bank o f En gland n e v e r c o n s u l t s

the # o i n t

stock

banks i n r e g a r d t o the bank r a t e .
I n the c l e a r i n g house, which has ijiore than a do ze n mem­
bers,

no new members have been a d m i t t e d d u r i n g the l a s t

twen­

ty years.
I n some r a r e i n s t a n c e s
est

the B&nk o f England pa;

on d e p o s i t s when money i s

He did not d e s i r e

that

any me nt io n o f t h i s

when the r e p r e s e n t a t i v e s

the

e low.

shouldmade

o f the Bank should be p r e s e n t

the Commission. The r e s u l t
t h a t money go es i n t o

redundant and r a t e s

of

t h is paying o f i n t e r e s t

before
is

Bank •

L a t e r he s a i d t h a t i n t e r e s t

i s p a i d i n London o n l y on

mr

4

in te r




>
*

-

2 -

money w ith dr awn on seven days n o t i c e .
A l a r g e r p r o p o r t i o n o f ac co u nt s a r e c r e d i t
I n t h e i r s t a t e m e n t s , money at c a l l ,
considerable ite m .

manent s e c u r i t i e s .

or short n o t ic e ,

Short n o t i c e means t h r e e

He said, he r e g a r d e d i t

The s t a t e m e n t s o f a l l

stocks,

sec u rities.

B ills

railw ay debenture,

3 ,5 0 0, 00 0 pounds.

000 pounds; Loans and advances t o
These

to seven days.

That o f P a r r f o Beak
03, government

and o t h e r f i r s t

The s t a t em en t i s

d i s c o u n t e d and i n c l u d i n g t r a d e

pounds.

a

the banks show a

shows 1 ,0 0 0, 00 0 pounds o f C o n so l s v a l u e d at
B ritish

is

as bad p o l i c y not t o c a r r y p e r ­

c e r t a i n amount o f permanent

secu rities,

accounts.

a l s o made up o f

and bank b i l l s ,

customers,

are l o a n s made a g a i n s t

against

commercial pa pe r d e p o s i t e d ,

against

the p e r s o n a l s e c u r i t y

class

1 ,0 0 0 ­

1 4 , 40 0, 0 00

secu rities;

sometimes

and i n r a r e i n s t a n c e s ,

o f the b o r r o w e r w i t h o u t

co l­

la tera l .
Th ree p e r c e n t , i n t e r e s t
rate.

Four p e r c e n t ,
Mr.

R.

NUGENT,

MANAGER, THE

DISCOUNT

COMPANY

OP

Nugent a l s o a p p e a r e d ,

count house,

o f which t h e r e

fu n c t io n s i m i l a r to that
The j o i n t

LONDON.

r e p r e s e n t i n g the l e a d i n g d i s ­

a re ID o r 1 4 .

of b ill

s t o c k banks l i m i t

u l a r cu s t o m e r s ,

the v e r y l o w e s t

the usual minimum.

CHRISTOPHER
UNION

M r.

is

to tr a d e r s i s

They p e r f o r m a

brokers in

t h e i r discounts

and do not go o u t s i d e .

the U n i t e d S t a t e s .
and l o a n s t o r e g ­

A'hen -> ey h -ve a

p l u s o f money t h e y d e p o s i t w i t h t he d i s c o u n t h ou se s ,
chase from them commercial p a p e r and o t h e r I o a n n .
p o s i t s o f the d i s c o u n t

o r pur­

The de

companies are made up o f bhese

i n t r u s t e d t o them by hanks, at

lea st,

sumo,

f o r t he most p a r t .

They

do not have g e n e r a l d e p o s i t s from the p f c b l i c .

-T o t u » - d
e

that

t h e s e d i s c o u n t houses han dled perhap s o n e - h a l f

of

d i s c o u n t s o f I.ondon. They go out a f t e r b u s i n e s s .
do n o t .

The banks are l e s s

conservative

the

■nc b..nko

than the d i s c o u n t

V

houses.

When the d i s c o u n t have a s u r p l u s su pply o f pa pe r

t he y go t o the Bank o f England whi ch u s u a l l y p r o v i d e s
t h e i r purchase.

They d i f f e r

t h e r e are o n l y t h r e e

or fou r l e f t ,

d e p o s i t s from the banks: 2 .
own
t h e i r a c c o u n t , w h i l e the b i l l
A

a ries.
days,

Mo s t

1 . i n that

o f whom

they r e c e i v e

They c a r r y the l o a n s t a k e n on
brokers act

as mere i n t e r n e d i o r not more than 14

though l o a n s are o f t e n a l l o w e d t o

run f o r a v e r y con­

time .

banks which i s
b ill

brokers,

t h e i r l o a n s a re on c a l l

siderable

of

from the b i l l

for

They gu a ra n t ee the p a p e r turned, o v e r t o the
en tirely

d ifferen t

fr o m the

course

of

the

brokers.
Th ere i s

usually

00, 000,000 t o

d i s c o u n t e d p a p e r at London.
o r more i n t e r e s t

100 ,000 ,000 pounds o f

The d i s c o u n t houses pay as much

on d e p o s i t s as the banks.

T h e i r d e p o s i t s are a b s o l u t e l y

on c a l l w h i l e

t h o se

o f the

banks are s ev en to f o u r t e e n d a y s .
The banks ao not r e - d i s c o u n t .

It

would be r e g a r d e d as

an i n d i c a t i o n o f i n s t a b i l i t y .
The Bank o f Engla nd does not taker f o r e i g n b i l l s .
in stan ce,
side

a b ill

payable in fra n c s

o f England would not

On the o t h e r hand, i t
e r i c a or A m e r i c a ,
in English
B ritish

ch ild s,

o r marks, and p a y a b l e

be r e c e i v e d by the Bank o f England.

does d i s c o u n t p a p e r drawn i n South Am­

c r any o u t s i d e

c u r r e n c y . They t a k e

country,

o n l y p a p e r a c c e p t e d by a

The l a r g e m e rc h a nt s,

such as B a r i n g B r o s . ,

R o t h s­

and Morgan d o .
a class

o f pa pe r known as " D o m i c i l e d B i l l s "

which a re drawn on persons i n o u t s i d e
i n London.

(See s t a t e m e n t s P a r r ^
Th u rs d ay ,

i

on London, p a y a b le

s t o c k companies do not take f o r e i g n exchange

There i s

*




out­

o r C o l o n i a l house o r bank.

Joint
eith er.

Bor

4

countries,

but p a y a b le

Bank and Discount
August 15, 1908.

Company.)




Mr.

EDWARD

H.

HOLDEN, W.

MIDLAND

BANK ,

I n our s t a t e m e n t s
to

-

THE

LONDON

CITY

AND

LIMITED *

" Cash i n Hand n may i n c l u d e

checks

be p r e s e n t e d n ex t d a y .
The g r e a t e s t

It

P.

is

demand f o r money i s

l e s s i n Jume .

in

the March q u a r t e r .

Money i s most p l e n t i f u l i h December.

P u rc ha se s i n the autumn and e a r l y w i n t e r a re p a y a b l e i n the
March q u a r t e r .
ment

of

A l s o , money i s

in large

demand f o r

the pay­

the income t a x .

Many co u nt ry banks are t a k e n o v e r when th e y have e n l a r ­
ged t h e i r d i s c o u n t s t o o much, and the se may be s a i d t o be i n
d iffic u lty ,

but a l l

banks i n England are

safe.

two methods employed when banks o r p r i v a t e

The re a re

banking houses are

acqui red • 1 . an addi t i ona l s t o c k i soue f *-■ an a c t u a l pu r­
.
c h a s e , i n which case a l l o w a n c e i s made f o r good w i l l .
The re i s

a g r a d u a l abandonment o f c o u n t r y ba n k s .

t i m e s we e s t a b l i s h

branches,

and sometimes buy out

Some -

o r ab­

so rb e x i s t i n g bunks.
For your item s c a l l e d
p ro fits

we have c a p i t a l ,

ca p ita l,

surplus,

and u n d i v i d e d

reserve

fund,

and c r e d i t

on d e p o s i t s o f the

jo in t

stock

on p r o f i t

and l o s s account .
The r a t e
is

a p p r o x i m a t e l y 1 1 A f y b el o w th e d i s c o u n t

o f England.
est

I n the c o u n t r y t h e y must f i x

that

th e y cannot
at

pay the

th e r a t e

the Bank
of in te r­

t o t h e 2 1 /2/«

the abs’o r p t i o n o f

the o u t s i d e

banks i s

compete w i t h th e p o s t a l s a v i n g s banks,

c e r t a i n seasons o f the y e a r th e y c o u l d w e l l
same i n t e r e s t ,

f o r money i s
rate.

of

s a v i n g s ba nk s.

One re as on f o r

is ,

rate

on d e p o s i t s i n a measure w i t h r e f e r e n c e

p a i d by p o s t a l

unks i n London

less,

it

that

afford

but a t o t h e r t i m e s , when the demand
would be burdensome t o pay so h ig h a

I n times when t h e r e i s

a large

need t o have r e c o u r s e t o a c e n t r a l
t i m e s when the demand i s

small

demand f o r money they

supp ly at London.

In

t h e i r funds can be i n v e s t e d

to




i n London where th er e i s a more a c t i v e money market.
There i s

a s a v i n g s bank i n Y o r k s h i r e

Rank” which pays 2
Postal

called

the

"Penny

in terest .

S a v i n g s funds have been l a r g e l y

s o l s which have d e p r e c i a t e d

i n v e s t e d i n con­

so as to e n t a i l

a loss

of 15,­

000,000 pounds on the go v e r n m e n t.
Country basks are mow,
accounts,

t a k i n g one pound o r m o re .

good b a n ki n g ,
i n time

because the l a r g e

o f depression, w i l l

a m u ltip licity

e fitted ,

them, o pe n in g s a v i n g s
T h :s i s

number o f

not r e g a r d e d as

small

t h e r e i s more da nger o f

that

a ru n .

t a k e n o v e r the community i s

because more ample funds a re a v a i l a b l e

of

dep ositors,

be a s k i n g t h e i r money; a l s o w it h

of depositors

When a c o u n t r y bank i s

efit

some o f

for

ben-

the ben­

community.

Th ere are s e v e n t e e n members o f the c l e a r i n g hou se,
c l u d i n g some small

banks,

in ­

such as M a r t i n ' s .

A new bank c o u l d not be e s t a b l i s h e d w i t h any p r o s p e c t
of

success.

I n the f i r s t

c l e a r i n g house.

place,

th ey c o u l d not e n t e r the

Two banks have r e c e n t l y

tried

to e s t a b l i s h

t h e m s e l v e s and have f a i l e d .
There i s

no a g i t a t i o n f o r not e i s s u e by the banks o t h e r

than the Bank o f E n g l a n d .
the

right

because
sent

of issu e,

The o l d i n s t i t u t i o n s , which have

oo not d e r i v e

ben efit

from the p r i v i l e g e

when the branch banks o b t a i n t h e i r n o t e s t h e y p r e ­

them f o r r e d e m p t i o n v e r y p r o m p t l y .
MR.

Ho lden a d v o c a t e d two r e f o r m s :

1.

That the

s t o c k banks sh ou ld h o l d more gold, i n t h e i r v a u l t s ,
000,000 pounds,

and l e t

ces at the Rank o f En gl a n d;

g,0 id>’

then,

(2)

silver,

and b a l a n ­

the Rank oi England

o f 11 ,0 00 ,0 00 pounds o f government

have g o l d i n s t e a d : .

say l o , -

them show s e p a r a t e l y by s t a t e m e n t s

what t h e y have i n g o l d and what i n b i l l s ,

dispose

j o ir io

secu rities

T h i s would make an a d u i t i o n a l

and

su p p ly oi

26, 000 ,0 00 o f g o l d .
Last f a l l

our bank sent

lO,DDO,COO oi

g o l d t o Hew York




- 6 f o r which we were v e r y much blamed, New Yo rk c o u l d draw on
us f o r an almost u n l i m i t e d amount.
MR.

R.

T.

HAIMES, GENERAL

MANAGER OF TFE NATIONAL

PROVINGI AT RANK OF ENGLAND, LTD.

T h i s bank does not make a p r a c t i c e
try

banks,

though o r i g i n a l l y

it

of

did s o .

t a k i n g o v e r coun­

I n some t e n y e a r s

o n l y two have been a b s o r b e d .
O rigin ally
not e i s s u e ,

the i n s t i t u t i o n was an o u t s i d e

concerns are o f two k i n d s ,

branch which has a permanent s t a f f ,

2 , on

is

and i s

open

a
week

every

open one o r two days a week and

advantage o f the branch banking system o v e r

banks i s

t h a t the l a t t e r a re amenable t o l o c a l

and l e n d more on s p e c u l a t i v e

an ex a m p l e.

to e s t a b lis h

firs t,

through a br an ch .

One g r e a t

pressure

which i s

agency

does busin ess

the l o c a l

and had

b e i n g more than 65 m i l e s from London.

Our s u b s i d i a r y

da y;

one,

The N a t i o n a l

en terp rises.

Provin cial

Bradford

has not a t t e m p t e d

a bank t h e r e .

The l o c a l

hank t h e r e shows a v e r y l a r g e

proportion of

d i s c o u n t s to r e s o u r c e s .
The N a t i o n a l P r o v i n c i a l has a v e r y l a r g e
manent d e p o s i t s ,
p arties,

some o f which remain f o r

and on which i n t e r e s t

i s p a id at

p o s i t s are e s p e c i a l l y n o t i c e a b l e
ral

d istricts

the l i f e

oi

the

2 1 /'?, f t , These de­

i n ’’' a l e s ana some ol

the ru­

o f England.

We do not l o a n l a r g e l y
s t o c k exchange l o a n s i s
co u nt ry i s

amount o f p e r ­

2% .

on s t o c k s .

The usual i n t e r e s t

The usual d i s c o u n t

rate

i n the

l / 2 o f 1% o v e r the bank r a t e w i t h a minimum oi

Our bank has an unusual p r o p o r t i o n o f i t s

assets i

manent i n v e s t m e n t s whi ch pay an a v e r a g e o f 3 z / s r f .
we s u p e r v i s e

transfers

of

stock.

s t o c k i n t h i s o r o t h e r London j o i n t

A p e r s o n cannot buy

s t o c k banks e x c e p t

w it h

on




-

th e a p p r o v a l o f

7 -

the Board o f D i r e c t o r s .

has perhaps 1,000 s h a r e s .
about

The s t o c k s e l l s

holder

f o r 43 t o 4 4 , -

2 l / 2 t o 1 on the pa r v a l u e .
It

is

the usual custom o f banks to h o l d as much as t h e i r

c a p i t a l and r e s e r v e i n c o n s o l s
s o l s were at 113 b e f o r e
fo r

Our l a r g e s t

about 86 1 / 2

and g i l t

the Boer War.

edge s t o c k s . Con­

They are now s e l l i n g

.

Of 55, 00 0, 0 00 pounds o f d e p o s i t s ,
13 ,0 00 ,0 00 a re i n the c o u n t r y .
proportion h ere.

all

but 12, 000 ,0 00 or

Other banks have a l a r g e r

Our d i s c o u n t s a re

about 1 4 ,0 00 ,0 00 pounds.

Out* l o a n s 17 ,0 00 ,0 00 pounds.
We g i v e
extent
do,

the l o c a l managers t o a l i m i t e d

o r amount, g i v i n g them l a r g e r d i s c r e t i o n

that

give

d is c r e tio n to

is,

up t o c e r t a i n

them a b s o l u t e

amine b r a n c h e s .

amounts o f lo an d o r d i s c o u n t s , w e

au th ority.

Vr have 14 i n s p e c t o r s who e x ­
e

Some London banks compel the

a p p l i c a t i o n f o r a l o a n t o the c e n t r a l
approved.

at b r a n c h e s .

most f a v o r a b l e
titio n .

must be

but one manager.

as a s e p a r a t e i t e m the depos­

To do so would be t o

field s

s e n d i n g o f the

o f f i c e where i t

Th ere i s no l o c a l board sy st em ,

Our bank s t a t e m e n t s do not g i v e
its

than o th e r s

show c o m p e t i t o r s

and encourage

enter in to

The branches o f the Bank o f Engla nd r e p o r t

the
compe­

e v e r y day

and depend upon the c e n t r a l i n s t i t u t i o n f o r

a ll

T h i s p r e v e n t s the bank from b e i n g a s e r i o u s

com petitor.

The bank has a c i v i l
ernment p l a n ,
each y e a r t h a t
shall

viz.,

l/60th

service
o f the

tha'o they do.

system based on the g o v ­
salary

a man s e r v e s , p r o v i d i n g

on r e t i r e m e n t

the t o t a l

for

pension

not ex c e e d 2/3rds o f the s a l a r y p a i d on r e t i r e m e n t .

Most p e r s o n s who e n t e v* the employ o f the bank rema in w i t h i t
during t h e i r l i v e s .
age .

When t h e r e i s

any p o i n t

Employees b e g i n at 16 o r 17 y e a r s

o-

a vacancy i n the p o s i t i o n or manager at

t ^ e deputy manager i s not promoted t o h i s p l ^ c e .

To do so w o r l d be t o e s t a b l i s h

a p l a n under wnicb t h e deputy




would be j e a l o u s

o f b i s immedl

t ~

;upe~ior.

would have come i n touch w i t h l o c t l
would to l i k e l y

in terests

GEORGE

so t h a t he

MURRAY

K.

customs, the i n l a n d r e v e n u e ,
the e x c h e q u e r .

buy ex ch eq u er b i l l s

2 statements-

re sp ective ly.)

C.

B.

, made a st at em en t

the a f t e r n o o n r e g a r d i n g g e n e r a l f i n a n c i a l

a re p a i d i n t o

con d ition s,

and th e p o s t a l

receipts

The T r e a s u r y has the

up t o I f , C O O , 000 o r 1?,

i n g s o f the T r e a s u r y Dep artment,
and the s o - c a l l e d T r u s t e e
a long tim e.

l i s h e d i n 1861.
The f o r m e r are

Banks.

ire

eight

to

000,000 pds .
work­

S a v i n g s Banks,

The T r u s t e e Banks have e x ­

The P o s t a l S a v i n g s Banks were e s t a b ­

The i n t e r e s t
subject

the P o s t a l

in

alike

He gave much i n t e r e s t i n g d e t a i l i n r e g a r d t o trie

isted fo r

be

a cc o u n t s of managers

h e r e w i t h , - London C i t y & M i d l a n d ,

f o r December and June l a s t
SIR

too,

t o be t o o p a r t i a l t o b i s n e i g h b o r s .

( See s t a t e m e n t s o f banks and b r i e f
filed

Then,

p a id by the l a t t e r i s

2 1 ,2>.

to re g u la tio n s

c l the C o m m i s s io n e io

f o r the R e d u c t i o n o f the P u b l i c D e b t ,

i n t o whose hands the

fu n ds d e p o s i t e d w i t h the T r u s t e e S a v i n g s banks are p a i d f o r
a p p l i c a t i o n on the n a t i o n a l d e b t .

Tie mentioned a n o t h e r body-

co mm is si o ne rs i n r e g a r d t o Loans, who have the
t er m i n e on l o a n s made t o l o c a l
itie s

f o r imp ro vem en ts ,

boards,

right

.o de­

such as t o m u n i c i p a l ­

i n c l u d i n g harbor

i m p r o v e . .

In

case o f a p u b l i c body the government has a l i e n f o r r e i m b u r sernent on th e r a t e s .
Mr.
Treasury,

Murray i s

c a l l e d the permanent S e c r e t a r y

and was p r i v a t e

Roseberry.

secretary

See b r i e f b i o g r a p h i c a l
Saturday,

M r.

V alley
/h

1.

sketch.

G l a d s t o n e and
( Who’ s ,/h0 •)

August 15, 1908.

, o f Power M Bank:
s

Most o f the managers o f
country.

to te t>

o f the

join t

s t o c k banks cane ±ro..)

- ■

I n th e co u n t r y we have two c l a s s e s o f d e p o s i t s .

Current

accounts,

on which th e r a t e i s

1

below bank




9
rate;

2.

More permanent accounts s u b j e c t

more n o t i c e ,
It

on which the r a t e i s

ranges about 2 t o 3 1 / 2 % .

On the
more,

the r a t e

say 3/4th/k b e l o w bank r a t e .

rate

of 2 \/2 % .

t h e r e i s no i n t e r e s t

second c l a s s
is

of

days o r

Some t i m e s the banks a g r e e

w i t h p a t r o n s upon an i n v a r i a b l e
I n the c i t y

to t h i r t y

on c u r r e n t

accounts,

accounts.

on seven days n o t i c e

or

variab le.

The banks o f the c l e a r i n g house a s s o c i a t i o n meet e v e r y
Thursday a f t e r a change o f bank r a t e t o d e t e r m i n e the r a t e
in te rest

on d e p o s i t s .

There i s

a v a r i a b l e p r o p o r t i o n o f the c i t y

d e p o s i t s i n the j o i n t
gate i t

and c o u n t r y

s t o c k banks i n th e c i t y .

I n the a g g r e ­

would be about 2 / 3 co unt ry t o 1 /s c i t y .

be the p r o p o r t i o n w i t h B a r c l a y & Co .
ties

of

That would

The C a p i t a l and Coun­

Bank would be 4/5 c o u n t r y ; L l o y d s ’ 5/7; London & County,

h a l f and h a l f ;

P a r r ’ s , h a l f and h a l f ;

London and S ou th w es t­

e r n , l / 4 c o u n t r y ; London & W e s t m i n s t e r , no c o u n t r y d e p o s i t s .
The c o u n t r y d e p o s i t s are more d e s i r a b l e
because the acco unts are l e s s a c t i v e

f o e b a n k in g ,

and the d e p o s i t s more

permanent.
Our bank came t o London t o f i n d
The c i t y

an o u t l e t

l o a n s are out o f p r o p o r t i o n t o the c i t y

I n the c o u n t r y the p r o p o r t i o n o f lo an d i s
u factu rin g d i s t r i c t s .
Bahk i s

for

the l a r g e s t

We have

our money.

d ep osits.

largest

i n the man­

The Ma nchester and L i v e r p o o l

co u nt ry bank.

8,000 t o 9,000 s h a r e h o l d e r s i n P a r r ’ s Bank.

We are more p a r t i c u l a r i n l e n d i n g t o d i r e c t o r s
others.

D istrict

We a lw ay s r e q u i r e

o f the d i r e c t o r s o f h i s

s e c u r i t y fr om them.

(P a rr 's )

bank,

them were men who were not b o r r o w e r s .

than t o

Heread a l i s t

showing; t h a t most o f
On t h e Board t h e r e i s

r e p r e s e n t a t i o n o f men who owned c o u n t r y banks t a k e n o v e r and
who are

s till

in a c tiv e

s t o c k h o l d e r s fior l n v e s t m e n t , not b e i n g engaged

business.

He mentioned one o f the d i r e c t o r s con­

n e c t e d w i t h a l a r g e m a n u fa c t u r i n g c o n c e r n ,

and s a i d o f

the




20

e st ab3 i shment with which he . &o conne cted , th at t h e i r depos­
its

are u s u a l l y l a r g e ,

and t h e i r loa ns c o m p a r a t i v e l y s m a l l .

His statement would seem t o show that those engaged i n
manufacturing or o t h e r e n t e r p r i s e s depend much l e s s on b o r ­
rowing than i n our c o u n t r y ; that they have ample permanent
capi t a l .
In speaking f u r t h e r o f the management o f the bank he
s t a t e d that o f the e i g h t e e n d i r e c t o r s th ere were always* two
who met each da y .
sors.

Each

d

i

r

The d i r e c t o r s r o t a t e i n f u r n i s h i n g a d v i ­
e

c

s te r v e s f o r two weeks.
o
r

th at one g i v e s way t o
They make part

They r o t a t e

so

another at the end o f each week.

o f the managing boa^d or nine which meets oc-

casi o n a l l y •
P a r r * s Bank l o s t

795 pounds i n s i x months, l e s s than

1 /250th o f l/o o f t h e i r d i s c o u n t s . T h is

, it

i s t r u e , was ex­

cept i o n a l .
At t h i s time H r .

Reynolds s t a t e d that h i s bank has

two hundred s t o c k h o l d e r s .

On a b a s i s o f $50,000,000 o f i.re­

vestments our l o s s e s , a s i d e from shrinkage cn i n v e s t m e n t s , were
A

not more than $50,000

. The st oc k o f h i s bank, the Continen­

t a l N a t i o n a l , i s $ 4 , 0 0 0 , 0 0 0 , surplus $2,000,000 u n d iv id e d p r o f ­
its,

$1 ,50 0, 00 0.

Mr.

Davidson s a i d the Dosses o

t*e hirst

N a t i o n a l Bank of New York f o r a y e a r were only $ 2 0 , 0 0 0 .00.
Mr. P a dg e tt r e f e r r e d t o C 3 a r e , s statement that good
b ills

o f exchange

n va

the best

s

e

c

u

proved t h i s with a m o d i f i c a t i o n th at i t
o f exchange accepted by banks.

r

i

tk r . e
i

should

r

s/h^ll«-c
,
,
e

f

e to r

b ills

The se con d-b es t c l a s s o f

loans i s marie up o f advances on s e c u r i t i e s .
I t i s the usual custom o f f i r s t - c l a s s

banks to have as

much as t h e i r c a p i t a l and r e s e r v e s i n f i r s t - c l a 3 3 s e c u r i ­
ties.

Te would not r eg a rd i t

a3 good l i n k i n g t o have l e s ^

than an amount o f s e c u r i t i e s equal t o cur c a p i t a l and r e s e r ­
ves .
As r eg ard s t a x e s , nothing i s pa id on an assessment o f




11
the shares f o r l o c a l t a x a t i o n .

The b-:nks, o f co u r s e , pay

r a t e s on t h e i r r e a l e s t a t e , which, when the main banking o f ­
fice

at London and the branches are taken i n t o

ounts t o say 20,000 pounds f o r P a r r f s .
20,000 pounds a y e a r .

sh illin g s,

The income t a x i s

The bank owns r e a l

o f about 800,000 pounds.

account am­

e s t a t e o f a value

The average t a x e s are about s i x

e i g h t pence i n the pound on the r e n t a l v a l u e . On

a note t he re i s a stamp t a x of one s h i l l i n g pe r hundred
pounds.

The e x i s t e n c e o f t h i s l a r g e t a x i s

one reason why

an arrangement i s made with so many customers t o charge then
with i n t e r e s t

on advances f o r o v e r d r a f t s on t h e i r a c c o u n ts .
London, England.
Saturday a f t e r n o o n , A u g .,

THE

BANK

AND

FREDERICK

EDWARD

Kr.

0.

CP

ENGLAND,- W.
HUTH

JACKSON,

GRENFELL,

Campbell.

CAMPBELL,

GOVERNOR;

C.

ALFRED

DIRECTORS,

AND

COLE,

WERE PRESENT.

In our i s s u e department o t h e r s e c u r i t i e s are

government o b l i g a t i o n s ,
ernment.

MIDDLETON

15, 1308.

or o b l i g a t i o n s guaranteed by the gov­

In computing tbe p e r ce n ta g e o f our r e s e r v e s , which

i s not done by us, but by the o u t s i d e p u b l i c ,

the pe rce n tag e

i s not computed upon c a p i t a l or r e s t , but on ly upon our ob­
l i g a t i o n s upon d e p o s i t s , e t c .

(F or c a p i t a l ,

su r p lu s, and

undivided p r o f i t s , the E n g lis h e q u i v a l e n t s i n terms r e s p e c t ­
ively

are

: C a p i t a l , Rest or R e s e r v e , arrl c r e d i t

on p r o f i t

and l o s s account.
The r a i s i n g o f the bank r a t the course o f exchange .

a t t r a c t s g o l d and changes

Money was l e n t f r e e l y

Trade had been good, though on Augtst 15th l a s t
r a i s e d from 4 t o 4 3 /2J&.

la st f a l l .

.

the r a t e was

We had no d i f f i c u l t y i n mee tin g de­

mands f o r g o l d and d is c o u n t s l a s t f a l l ,

and w i l l not have at

any time p r o v i d i n g t h e r e i s good t r a d e , c o n f i d e n c e and c o ­
o p e r a t i o n on the p a r t of the banks.

The bank must always act

■NMMHHMMMHMMMnMHMMNNVNHMMiHHRi

quickly,

b e f o r e circumstances r a t h e r than upon cir cumstances.

I f you make a no t a b le or m a t e r i a l i n c r e a s e
must r a i s e the r a t s .

W do not advocate any changes.
e

oppose the i n c r e a s e i f
one-pound n o t e s .

of d is c o u n t s you

It

the f i d u c i a r y

circu lation .

W
e

W oppose
e

i s b e t t e r that the r e s e r v e o f gold,

should be i n t i e po ckets o f the p e o p l e , - th en , i n case of a
g r e a t emergency, such as a f o r e i g n war, i f

loans were asked

by the government, t h i s r e s e r v e would come i n to
obligation s,
it

and. i t

Ike the

i s b e t t e r wi th the peop le than to have

i n the b ank s .
W oppose the s o - c a l l e d secondary r e s e r v e
e

pounds or t h e r e a b o u t s , as has been p r o p o s e d ,
s t r e s s o t h e r banks would demand i t ,

and i t

o f 10,000,000
in t i n e s oi

would he d i f f u s e d

or exhausted i n the business o f the banks.
Our statements are based upon an Act of Pa rl ia m en t •

Vo

do not se pa r at e d e p o s i t s by bankers from d e p o s i t s by i n d i ­
v i d u a l s f o r the reason that th er e i s no law which compels us,
*

or even a u t h o r i z e s us to do i t .

'A

private deposits.

W have no r i g h t
e

t o publis h

The banks have no reason t o complain be­

cause we do not pu bl is h them s e p a r a t e l y , because they have
the r i g h t t o show t h i s i n t h e i r own statements t o show t h i s
by s e t t i n g f o r t h the amount of t h e i r d e p o s i t s w it h the Bank
o f F ng la n d.

They have the e n t i r e

should t h e y do i t

it

r i g h t to do t h i s ,

would accomplish the o b j e c t

and

sought by

those who demand a sepa rate statement by the bank.
It

i s not c o r r e c t t o say t h a t p r i o r t o 1875 we s t a t e d

these two c l a s s e s o f d e p o s i t s s e p a r a t e l y , abe r e t u r n

in

1875 was i n response t o an Act of Pa rl ia m en t and r.,f . r t e d

X

p rio r deposits.
3ome o f the bankers, such as S i r F e l i x S c h u s te r , w it h

v/
v, y -

}

j r the London and S m it h 's

p u b lis h e s s e p a r a t e l y

cash d e p o s i t s i r

j^anl^and cash cn hand
^
>




_

_

X *

^ ........... ..t i-e b r o k e r s were onl y a llow ed t o disco un t at
up t o a h . i l

•
f

\

V

W n ' d i v i d e n d s were about t o be d e c l a r e d .
y *
0

Ho*

- 15 are a llo w e d to discount at any t i m e .
E l a s t i c i t y i s p r o v id e d by i n c r e a s i n g the r a t e .
o f e x c e p t i o n a l annual demand,
year,

at d i f f e r e n t

the bankd draw out t h e i r b a l a n c e s .

In times

p o r t i o n s o f the
We r a i s e the r a t e

at such a t i m e .
Mr.

Jackson suggested that

ela sticity

and exte nd the market was by l i m i t i n g loans t o a

s h o r t e r t im e , i n some
Mr.

another means t o secure

i n s t a n c e s even t o t h r e e day s.

Campbell co nt in ue d:

When the o u t s i d e r a t e i s low­

e r than the bank r a t e we borrow money and thereb y .absorb the
surplus i n c i r c u l a t i o n .

Sometimes we s e l l c o n s o l s .

b r i n g s the money i n t o the bank.

Th is

W do not s e l l f o r cash and
e

buy back f o r account, as i s s t a t e d i n some o f the books.
That may have been done at some time but we do not do i t

now.

Ev ery F r id a y n ot es go out from the bank and r e t u r n on
Tuesday.

I
!

Th is i s probab ly because persons go out l o r e x c u r ­

s io ns at the week end, and because o f the demand f o r money
f o r wages and weekly di sb u rse m en ts.
Mr.

Cole suggested that he did not b e l i e v e i n the Her­

man pl a n of a l l o w i n g an i n c r e a s e d c i r c u l a t i o n on payment o f

JC

\v

5% i n t e r e s t .

5^ i s not a panic r a t e .

The tendency o f such

r e g u l a t i o n i s toward an i n c r e a s e o f i s s u e s ,

sc that with

such promo ti on, the amount o f currency i s s u e d

tends to be­

come redundant .
Mr.

Campbell resumed:

The r i g h t t o i s s u e more notes

under such a r e g u l a t i o n would be f a t a l .

A weak g o v e r n o r ,

response t o demands f o r more money, would is s u e i t

in

i n s t e a d of

-‘-V




r a i s i n g the r a t e or t a k i n g o t h e r means t o p r o v i d e f o r the
situ ation .

I n Germany t h e r e i s a moral r i g h t t o h ol d back

g o l d which we do not h a v e .

That f a c t makes t h e i r s i t u a t i o n

d i f f e r e n t from o u r s.
Mr.

Ja cks on remarked th a t the tendency o f the German

iss ue was t o make an abnormal is s u e a normal one.
Mr.

Campbell resumed:

4

In l B fP t> e panic was l o c a l . In

14
1907 i t

was i n t e r n a t i o n a l .

Mr.

Jackson again said that the d i f f e r e n c e between 1866

and 1908 was that i n the forme r y e a r t h er e was a comparative­
ly

small amount o f g o l d a v a i l a b l e .

effect

F i g u r e s were shown t o the

that wi th the ve r y high r a t e o f dis cou nt i n England

only one m i l l i o n pounds o f g o l d was a t t r a c t e d h i t h e r from
France from May t o August, w h i l e i n 1907 the supply o f g o l d
had enormously i n c r e a s e d , and p r a c t i c a l l y

a l l European count

r i e s had adopted the g o l d stan dard, thereb y making a supply
o f g o l d a v a i l a b l e not only i n f a r g r e a t e r abundance, but from
a much l a r g e r number o f s o u r c e s .

Twenty m i l l i o n s o f g o l d

was sent to America i n 1907.
Of l a t e t h e r e has been no f a i l u r e
the i n f l u e n c e o f an in c r e a s e d b a t e .
e v e r adopted by the bank.

t o b r i n g i n g o l d under

2% i s

the low es t r a t e

The r a t e was 7% f o r n e a r l y two

months from November , 1907 u n t i l

January 1908.

v e r y r a r e l y made except on Thursday .

Changes are

On two or t h r e e occa­

s i o n s , however, i n case o f emergency, the change has been
made on o t h e r da y s . The r a t e which i s f i x e d i s a minimum one.
The g o v e r n o r may always charge more.
knows on Tuesday that i t

For i n s t a n c e , i l

i s i n s v i t a b l e a change w i l l

he

be made

bn Thursday, he r a i s e s the r a t e t o customers and o t h e r s .
In 1847 and 1857 the m i n i s t r y approached the bank with
the s u g g e s t i o n that the Bank Act be suspended.
were read from the o f f i c i a l




Extracts

r e c o r d and t h er e was some d i s ­

cuss ion as t o whether the bank had not s o l i c i t e d o r taken
HEkXKK a c t i o n l e a d i n g t o t h i s p r o p o s i t i o n by the m i n i •
The statement was made that the bank makes v e r y l i t t l e
p rofit

on c i r c u l a t i o n ,

but as the o f f i c i a l

r e a d i l y obta ined no d e f i n i t e

l i g u r e s could be

statement was made from memory.

(Statements o f the Bank o f England, and London and
Westminster Bank, which see i n e n v e l o p e .
F r e d e r i c k Huth Jackson i n same e n v e l o p e .

•
4

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*

'

S chweizerische Nationalbank * B anque Nationale S uisse
B anca Nazionale S v izzera
BERN, den 18. Aug.
1908.
B E R N E , le 18 Aout

Ausweis

Situation

der

de la

Schweizerischen Nationalbank

T}anque R a tionale S u isse

eu1 jT u 1 0 .
r 5 o t 98

vom 15. August 1908.
JL C T IF

A K TIV A 1 Metallbestand
.

Franken — Francs

Encaisse m italliqu e
a) Gold — O r ..............................

115,408,104. 17

b) Silber — A r g e n t ..........................

.
3.
4.
5.
6.

9,777,185.
Noten anderer Banken 1
.. « 1
4,595,186.
B ille ts d ’autres banques ) .......................... ■ ’
’ ’
Portefeuille............................................ 49,301,529.
Lombardvorschusse
1,246,906.
A vances su r N antissem ent }
Effekten
9,007,529.
Titres
}
Sonstige Aktiva
16,795,382.
A utres posies de Fact i f

PASSIVA
1 Eigene Gelder
.

\ 1M
1

+

7,794,504. 40

9,843,195. —

40

6,093,036. 70

—

1,497,850. 30

32

49,847,672. 73

—

546,143. 41

55

2,528,774. —

—

1,281,867. 45

45

9,639,512. 30

—

631,982. 85

42

15,960,276. 82

+

835,105. 60

206,131,823. 31

201,526,067. 32

—

P

J L

8

S

I F

66,010. —

1

25,000,000. —

3,107,000.

29,691,243. 23

21,978,655. 47

+

7,712,587. 76

8,553,580. 08

t

A utres postes du p a s s if / ’

—

8,563,411. 86

+

168. 23

206,131,823. 31

4. Sonstige Passiva

145,994,000. —

201,526,067. 32

142,887,000.

Engagem ents a courte dcheance \




107,613,599. 77

25,000,000. —

..................
2. Notenzirkulation
i
B ille ts en circulation / * ‘ * *
3. Kurzf&llige Schulden
. ^
Bonds propres f

V d giBn dm7. A g tt
irln im it
uu

C a gem ts d u lev Aout f
h n en ep is

—

)

Zusammen

7 X0& } 1908

‘ '

—

Die Uebereinstimmung mit den Buchungen bescheinigt:

Certifle conforme m x ecritures:
Dr HuptMlulttr:
e

•

D D oriim
ie lreU :
La direction generate:

4

-

S chw eizerische Nationalbank * B anque Nationale S uisse
B anca Nazionale S v izzer a

¥ 3

Bern, den \9 . August
B E R N E , l e i 9 aout
iyu'

Ausweis

Situation

der

de la

Schweizerischen Nationalbank

Jjanque R a tion a le S u isse
au
1907.

yom 7 August 1907.
.
A K T IV A

1 Metallbestand
.

A C T IF

-

Encaisse m Stallique
a) Gold — O r ......................

38,407,486. 25
4,238,270. —

—

9,777,600. —

5,916,950. —

+

49,891,730. 63

46,365,931. 22

81 938. 88

1,402,138. 88

—

1,197,531. 25

-t-

3,267. 35

11,778,036. 51

11,433,333. 93

4-

344,702. 58

)

A vances su r N antissem ent /

5. Effekten 1
)

1

Sonstige Aktiva

A utres postes de Vcuctif /

,

Zusammen

—

Total 119,711,125. —

P A S S IV A
1 Eigene Gelder 1
.

—

+

4,521,444. 13
186,180.
3,860,650.

—

—

3,525,799. 41
1,320,200.

—

108,961,641. 63

P A S S IF

25,000,000.

2. Notenzirkulation

4. Sonstige Passiva

*

A utres postes du p a s s if

i

Zusammen

—

—

69,560,350. —

-1 10,024,700.
-

23,405,885. 70

+

553,701. 77

1,166,487. 53

1

Kurzf&llige Schulden

Engagem ents a courte teh&ance /

26,000,000. —

23,959,587. 47

i

B ille ts en circulation /

—

69,585,050.

P ropres fo n d s f




C a gem ts
h n en
d u le 3 juillet 1 0
ep is
1
97

4,052,090. —

3. Portefeuille.................................
4. Lombardvorschiisse
1

3.

V d u alt d 11. Jill 110
trin iraM
im
7

1,200,798. 60

B ille ts d ’autres banques

6.

S i ju ille t 19 0 7

42,928,930. 38

b) Silber — A r g e n t ...............
2. Noten anderer Banken \

Titres

81. Juli 1907

Franken — Fran cs

996,406. 83

4-;

171,081. 70

Total 119,711,125. —

108,961,641. 63

—

Die Uebereinstimmung mit den Buchungen bescheinigt:

Certifid conform# am ecritures:
Der H&nptMJialter:

Das Direktoriiim:
L a direction g in ira le :

—

Questions and Answers at the Bank o f France dur ing the v i s i t
the f i r s t

of

Sub-Committee o f the Monetary Commission, c o v e r i n g s u b j e c t s

not inc lud ed i n the examination by the l a s t Sub-Committee.

Q.

Can you s t a t e the number o f your share h o l d e r s ?

A.

They number between 29,000 and 30,000, but o n ly the 900 l a r g e s t
share h o l d e r s o f the Bank are a l l o w e d t o v o t e f o r the General
Council o f the Bank,

i t s Regents and i t s

Censors.

Q.

For how l o n g a p e r i o d does your Chart er run?

A.

The Charter was renewed in 1097 and e x p i r e s in 1920, but under i t s
p r o v i s i o n s P a r lia m e n t , by t a k i n g a c t i o n in 1911, may t er m in at e the
Charter one y ea r l a t e r ,

in 1912.

Q.

How is your note is s u e l i m i t e d ?

A.

The maximum note iss ue at pr e se n t a u t h o r i z e d i s 5,900,000,900 of
4

francs.

The a c t u a l note i ss u e on August 04th was 4,000,000,000

francs.

The iss ue o u t s t a n d in g v a r i e s f r e q u e n t l y in amount but

i s always g r e a t e s t at the crop-moving p e r i o d .
Q.

i s th er e any l i m i t a t i o n in the s i z e o f the accounts which w i l l be
taken at the Bank?

A.

Anyone can open an account who i s known t o the Bank, the minimum
b e i n g 500 f r a n c s .

A f t e r an account is once opened, the d e p o s i t o r

may d is c o u n t paper as low as 5 f r a n c s ,

p r o v i d e d i t meets w it h a l l

o f the o t h e r r e q u ir e m e n t s .
Q.

What p r o p o r t i o n o f the b i l l s

di s co u n t ed at the Bank are presen ted

by o t h e r banks?
A*

About 80 per c e n t ,

o f the paper now h e l d be ars the s ig n a t u r e of

some bank as one o f the e n d o r se r s.
Q.

Have you any e s t i m a t e as t o the t o t a l amount o f g o l d in the country?

A.

The t o t a l g o ld in France i s es ti m a te d at 6,000,000,000 f r a n c s ;




the Bank o f France hold s 3,225,000,000 f r a n c s and the remainder
is

in the pockets o f the p e o p l e .

— is '*the

worm l

privilege of note issue a source Of great profit to the
------ -

-

*

,Ac

1J t t n r 'g y p E
ffttra

-in e lu d li^ ^

" t h y -Bank

afreut 1iho oame amount as interest on their- dypo*4ts.oo«ke the-indeuendent banks,
Q.

Is the Bank of France subject to examination by the Government?

A.

There is no regular system of examination, but the Minister of
Finance has the right to ask for information whenever he chooses.

lal

of a ll t hg fcant e are r

a

•"hf

France ^ijsues^t.afca.lanoa^.shaet e w y r y T h u r a d a y .
Q.

Does the Bank of France make the same charge for the discount of
bills and for loans upon collateral?

A.

The Bank usually charges somewhat more for loans upon collateral
than for the discount of bills.

Q.

{u r

*L

L.

Ct^ut ^

Is the Bank of France ever attacked in the controversies between
political parties?

A.




No charge has ever been made that the Bank favored or aided any
political party.

There is never any claim that politics enters

in any degree into the management of the Bank.

Except for the

renewal of the Charter in 1897, no legislation affecting the Bank
has been made since 1857.

There is no sentiment for any change

in banking methods nor for any new legislation.
It should be added that neither the Governor nor DeputyGovernor is permitted to be a member of either body of Parliament.

Questions and Answers at the Bank o f France d u r in g the v i s i t o f
the f i r s t

Sub-Committ e e o f the Monetary Commission, c o v e r i n g s u b j e c t s

not included in the examination by the l a s t Sub-Committee.
—— —
— 0— —
Can you a La Loathe iiumbar
D « JL& dL
****
k \ rv t 0
T H ^ _rmn^r> -hffit.CTnftr) m nnnmmmA 70 nnnr >mt
m

Q.
A.

s?
the CO0 l a r g e s t

share h o l d e r s o f the Bank are a l l o w e d t o v o t e f o r the General
//^ - 4 (
»
.
Council » f the Dankfl i t k g Repents and i t s Censors.

Q.

For how l o n g a p e r i o d does your Charter run?

A.

The Charter was renewed in

1 0 0 7

and e x p i r e s i n 1070, but under i t s

p r o v i s i o n s P a r lia m e n t , by t a k i n g a c t i o n in 1911, may t erm in at e tbe
Charter one y ear l a t o r ,

in 1017.

How is your no te iss ue l i m i t e d ?

Q.

The maximum note iss ue a t pr e se n t a u t h o r i z e d i s 5,000,000,000 o f
francs.
francs.

The a c t u a l note i ss u e on August ~4th was 4 , $oo,oo o,oo n
^ m
m

?t-•-1a^ i r<g vp.r an

a

±. but

per i o d .
I s t h e r e any l i m i t a t i o n in the s i z e o f the accounts which w i l l be

Q.

taken at tbc Bank?
Anyone can onon an account who i s known t o the Bank, the minimum

A•

b e i n g 500 f r a n c s .

A f t e r an account i s once opened, tb© d e p o s i t o r

may d is c o u n t paper as low as 5 f r a n c s ,

p r o v i d e d i t meets with a l l

o f the o t h e r r e q u ir e m e n t s .
,»hat p r o p o r t i o n o f the b i l l s

Q.

by o t h e r banks?
„t zO
J
U
J
~
.
About 80 per c e n t ,

di s co u n t ed a t the Bank are presented

< ) J^ i
A.

A

o f the Pacer now hol d bears tbe signature o f

some bank as one o f the e n d o r se r s.

Q.

Have you any e s t im a t e as t o the t o t a l amount o f g o l d in the country?

A.

The t o t a l g o ld in France i s es ti m a te d at 6 , 00 0, non,000 f r a n c s :
the Bank o f France holds 3,275,000,000 f r a n c s and the remainder
is in the pockets o f the p e o p l e .
— - J the-prdviA oge of note ioaue a wmaroe e# g e at-prefi4-4rO"the
— .0
.
y




Djrifcf

*

A.

The expense o f the note i s s u e , i n c l u d i n g o r i n t i n g , c o s t s the Bank
\
/ \
‘ \
/ \
\
/
\
/
about the sane amounts as I n t e r e s t on t h e i r d e p o s i t s c o s t s the i n \ /
\ /
\ /
\
,
\ /
' /
dependent banks*
Is tho Bank o f France s u b j e c t t o examination by the Government?
There i s no r e g u l a r system o f examination, but the ’M in is t er o f
Finance has the r i g h t t o ask f o r i n f o r m a t io n whenever he chooses.
_ q£ a3,l , tbO -bank &■ u r t r mT
T
n tttg"; biyfc t hw 15STHT o f
Franc e i-srra c

(

Q.

Does th e Bank o f France make the same charge f o r the di sc ou nt o f
b ills

\

- « v«» r y ^Thuaaa-da y .

and f o r loans unon c o l l a t e r a l ?

<

A.




The Bank u s u a l l y charges somewhat more f o r loa ns unon c o l l a t e r a l
than f o r the dis co u nt o f b i l l s .

^

f ^ 4 " ^

Is the Bank o f France e v e r a t t a c k e d in the c o n t r o v e r s i e s between
p o l i t i c a l parties?
No charge has e v e r been made t h a t the Bank f a v o r e d or ai de d any
p o l i t i c a l party.

There i s ne ver any c la im t h a t o o l i t i c s

in any d e g re e i n t o the management o f the Bank.

enters

Except f o r the

renewal o f the Charter in 1^97, no l e g i s l a t i o n a f f e c t i n g the Bank
has been made s i n c e 1857.

There is no sentiment f o r any change

in banking methods nor f o r any new l e g i s l a t i o n .
I t should be added t h a t n e i t h e r the Governor nor DenutyGovernor i s n e r m i t t e d t o bo a member o f e i t h e r body o f Pa r li a m e n t.

\
Synopa ib o f

Exam ination of M. G eorges Pallain,

Governor of the Bank of France,

BY
Sub-Committee of the National Monetary Commission,
Consisting of
Mr, Yr uel and of New York,Vice-Chairman,
Mr. Overstmet, of Indiana,
Senator Daniel, of Virginia,
Memorandum made "by Mr. Or o r s t r e e t ,
Paris, Eranee,
August 24th, 1903.

The capital of the Bank of France is 182,0OO,0OOF, divided
into shares of 1,000 F each,held by shareholders mantoering between

2 ,0 0 and 3 , 0 0 The charter wan renewed in 19 and expires
90
0 0.
87
in 1 2 .
9 0 Under the provision the Parliment, by taking action in
1 1 , may terminate t o charter one year later, in 1 1 , A Governor
91
92
and two Vice-Governors are proposed by the MinistVy a d serve indef­
initely,

In the absence of the Governor one of the Vice-Governors

represents him.
The court or ge oral counsel of t « Bank consists
fifteen
of ikxxx re ents and throe censors, who ar
shosen annually by the
two hundred largest shareholders of the Bank.

The Governor must

own one hundred shares,the Vice-Governors fifty shares,and the re­
gents thirty shares each.
each Thursday,

The court of regents and censors moots

It is divided into corru ittevs of v a r y i n g duties.

The flank rate is proposed by the Governor and verj> generally accepted
without change by the court(or board of Directors), and continues
until changed by a new proposal from the Governor.

5 8 00 0 0 F. The
, 0 , 0 ,0 0
4 6 00 0 0 F . The total
, 6 , 0 ,0 0

The maximum note issue authorized i s
actual note issue on August

2 th
4

was

issue outstanding varies frequently, but is always greatest at the
crop moving period.

Ho was unable to state the difference in the

issue at that period.
Bank ol France,

There are no banks of issue other

than the

Many years have passed since any suggestion has

been made for a change in the method of issue.

The lapt su -ration

was by the father-in-law of the present manager of t3ie Credit
Lyonais, who p oposed in Parliment a law opening note inrue to torn*



p etition .

I t met w i t h l i t t l e

f’avo;

then,

No payment in made to trio Government f o r note issue* or any
ot he r privilege.

Thu taxes, however, are considerable, amount inf to

api roximr tely 13 p«j

cent o f t o profits of th - Bank, including inter­

est on the e&rh roserYe, computing it at the Bank rate.

The tax

on circulation is 50 C.on the 1,000 F. aad the tax on the carh in
the Bank is 20 C.on the 1,000 F,
c i r c u l a t i o n wh-n p a id out over
Bank, they are not c a n c e l l e d ,
are in proper condition.

Tin

notes are considered in

the counter.

Whan

eceived at the

but are ar ain paid out as long a ; they
r

She averag

life of a nou,

*•
/

.arc.

The Bank redeems its notes unaur the law in specie(e ithen -old or
silver),

but since 1B60 redemption has been p r a c t i c a l l y in <-old.

The Bank,howev er, determines t h i s .
s e v e r a l br anches.

The name r u l e i s f o l l o w e d a t the

Sometimes t he Bank o f f e r s g o l d f o r s i l v e r

at

a p omiurn, an an a l t e r n a t i v e ,
Independent banks sometimes keep or. d e p o s i t w i t h the Bank o f
Trance t h e i r surplus fends, but ^ol d w i l l not be r e c e i v e d f o r
d e p o r l t upon agreement to pay in kind,
other d / po si t s,

special

but must be t r e a t e d l i k e a l l

by t a k i n g c r e d i t on the books f o r the d e p o i i t - a l l

d a po i;i f or s t h e r c by b e in g on an a q u a l i T.y.
Anyone can open an a c court f o r
Bank, th e minimum b; inr* 300 F,

A ftci

t v - d e p o s i t o r may discount paper ar
■ '

■
:

•'

*
■

• •

ntc.

deror.it who it. known to the
an account 1c cnee opened

iow as 5 I * . , p r o v i d e d i t meets

No p r a c t ic e y n c tc i

used, but

t h e debt l e evide nce d by h i l l n c
,r:d l e t u-rs o f exchange.
on b i l l r cannot exceed t h r ee months.
re q u ir e d *

m t the th r e e

)•’ chocks i f

the country in not g e n e r a l ,

i .. no tendency to i n c r e a s e rueh u r o ,
does not r e ta r d t h e l

The hank

and thei e i.

no isentimenl

fe

le- : than f o •. f l y ,
The t o t 1 <rold o f y ”
The Bank o f

but ir: s t i l l
xX

and t h er e

The revenue . t amp on chi eke
•

se M a t e r ia lly *

The lo w e s t denomination i s 50 F.




endorsers.

• - ay r i n t e r e s t on d p o r i t a *
The use

c o in ,

endorsers

About e i g h t y p e r c e n t o f the pa] e r now h i l l b ea re

th e s i g n a t u r e o f scene b a n k a r onn.’ y

Throe names o.

The time

S e tc e a i e used more t.&n

a low er no we than M l

in use.

Hoarding o f money i s p r a c t i c e d
considerable,

e s p e c i a l l y gold.

’ranee i s es ti m a te d at 6 , 00 0,0 00 ,0 00 .F,

'r a n e e h ol d s 3,22 5,0 00 ,00 0 F. and the r e a in de r i s in the

3

pock-- Lb o f t h e p e o p l e .
branches.

T h ere a r e 127 l a r g e b r a n c h e s a n d 50 s m a l l

The s m a l l br& n ch er a r e c o n t r o l l e d by rome o f

branches, p a r t i c u l a r l y in discount m a tte rs .
a s p e c i a l b f d l d. i f

branches.

'.he l a r g e r

Each l a r g e b r a n c h h a s

. o r e o r d i r e c t o r s # b u t none i n t h e email

T 8 Got o r n o r o f th». Ga k o f F r a n c o p r o p o s e s t h r o e

n a n c e to the M i n i s t r y f o r m an a g er o f e a c h o f t h e b rfin ch e s and the
M i n i s t r y must n a r e one o t h e

three.

I n d e p e n d e n t b a n k e r s r e -arc! t h e

lank, o; F r a n c e a s a c o m p e t i t o r ,

:..nc<‘ c o n s i d e r s i t s e l f t h e bank o f b a r k s .

hut
Independent

Ski pflgf i n t e r e s t or, d- p o s i t s .

T>u- t o t a l l i p i l l t s

on Au m s t 2 4 t h , 1508, were 8 0 1 , 0 0 0 , 0 0 0 5*., o f which t h e S t a t e
f u n d s amounted to 2 4 2 , 0 0 0 , 0 0 0 F. and a l l o t h e r s t o 5 5 9 , 0 0 0 , 0 0 0 .
( The Governor requewtr •( th at t h i . in

particularly with r c f i r i M

t o th

The e x r o n s e o • t h e note, i
’

u a u l i o n be h e l d c o n f i d e n t i a l ,

of the G o v e rn m e n t).

4 pssit
m

ue, i n c l u d i n g p r i n t i n g , c o s t s the

Bank a b o u t t h

same a s t h e i n t e r e s t on their* d e p o s i t s c o s t s i n d e p en d

oat hfinks.

T h ere a re now about two thousand

b a n k s , b u t the number l a d e c r e a s i n g .

m all in d epen d en t

S t a l l b a n k s a»*e absorbed

the e e a b l i a h m e n t e f branch es i s in s r e a s in g .

People, not

t r a d e s m e n n o r b o r r o w e r s , a r e much p l e a s e d w i t h the b r a n c h b * nk s y s t e m ,
b o c a ’ ■. i t a f f o r d s g r e a t e r
'€

s e c u r ity for

‘.heir

p r i v a t e depof i t s - b u t

borrow-;; s and t r a d o s i a o i a r e n o t p l e a s e d b e c a u s e i n d t p unde: t bank
managers ar

more le n ie n t , and i n c l o s e r t o u c h w i t h l o c a l

cor*, u n i t i n s

y,t r-..noral . dvi o r e .

T here a r e no

i n e x i s t e n c e 550 p r i v a t e

i n c l u d i n g p o s t a l b a n k s ) w i t h 1500 b r a n c h e s .
a r e i r ie r e a r i n g r a p i d l y ,
lay t h e p e o p l e

I

kept

P avings: bank:

ekholders.

u f

it

i;

in the

ft

Pfc e t y d e p o t i t bo xes

b e l i e v e d much o f ■5 > -.old h o a r d e d

boxes,

have no cap i t 1 a n a a l l
Th

-|

i

th e

r %mn% inti r#St

1 / 4 of one p e r c a n t i - h e l d & s r e s e r v e *
<

p o r t a l s a v i n g ? b n k an i a l l o t h e r s a v i n g ,

i v i d e n d s C° t °
■

q.

its,b u t

The p o r t - 1 s a v i n g s bank

p a y s 2 3 / 4 p e r c e n t i n t e r e s t on deposits.

the; p o r t a l bank

savings banks(not

The ri p o & it t o f t h e
b a n k s a r e on t h e i n c r e a s e ,

hov/ing more r a p i d i n c r e a s e .

The t o t a l d e p o s i t s

Ot t h e s a v i n g s banks o t h e r t h a n t h e p o s t a l a r e a p r o x i m r . t o l y 3 , 4 0 0 ^
0 0 0 , 0 0 0 F.



The d e p o s i t ^ o f the p o s t a l bank w i t h

v

e ig h t thousand

4
poBt o f f ! top arse branches i s 1,278,000,000 F.
b v i in operation
r

i no : 1832,- the p r irate t
*
saving* bank?

The growth o f the postal
p r i v a t e savin gi

1815,

-ank greatly i n j u r e s the growth of the

liasited l i a b i l i t y

' nks, the l i m i t brin,~ thno

j ince

banks.

There i

nr

Th« postal-bank has

o f s h a r o h o ld e •-* in j o i n t

amount o f the share*

l i m i t e d in l i a b i l i t y ,

rtock

P r i v a t e banks

K o t i e e o jpor withdrawal o f funds

ai * c o n t r o l l e d by a v a r i e t y or e l e •' n t s ,

i n c l u d i n g time, amount,

an j general chargef r of th* account.
ihe? c j
.
b?fnkwi

no exartin a t ion by tno doveminert

to ascerta in the p r o p er p-yu n^t o

There i n
Frane®,

n o g en e r al

cx jnin; ti on by the Government

but the M i n i s t r y o f Finance i s

mation from time vo time,

p rivileged

of j o i n t

stock

the rtanp d u t i e s .
o f the hank o f
to a k

or

infer

Anminl statements o f both the independ

ent banks and the bank o f France arc made, but t h e bank o f fr a » M
i ‘‘ *ues a b u l l e t i n
Neither
■ mbtr

novel

body oi

arlim cnt,

No charg® har c ,;cr b &r . ?

-hank a i d i n g or f a v o r i n g e i t h e r p o l i t i c a l p a r t y .
any claim thnt. p o l i t i c s

meet o ' the bank.
no l e g i s l a t i o n
There 1;

e n t e r s i n any de g re e i n t o

There i s
the man a

E x c e p t i n g the renewal o f the c h a r t e r in 1897,
f e e t i n g the Hank has been had r inee 1857,

no m r r t l m n t

f o r any change i n bank methods, nor f o r p+ny new

l e g i s l a t ion*




Thursday.

th e bovernot nor V ic e -G o v e r n o r :i r. permit fed to be a

o • ei t iei

r the

o f b a la n ce s each

■i
•

Synopsis of Kxamin? tion of M. flisurges Pallain,
Governor o

t

< Tade of l^runo#,
w

Sub-Committee of the lotion . Monetary Comr'ir ioft,
1
Consisting of
Hr. Vr eland, of Mew Yo-k, V i c e - 0 h < i i ; on,
Hr. Overstreet, of Indiana,
Senator

ani 1, of Virginia*
Purls, Fr since,
Au.fu t 24th, If06.
The c a p i t a l

I k 182,000,000

Trains*,divided into shares of 1,000 f r a n c a each, h e l d hy .shareholders
numbering betwe n 29,000 and 30,000.
in 1§97 and e x p ir e e in 1929.

The charter was renewed

Under t e 5rovieion, t e P a rlim e n t

by ’ akin* action in 1911 may tcriairia • t < c arter toe y e a r later,
^in 1912.

A 0 rernor and two Vice-Governors are proposed by

the ministry and serve indefinitely.

In t e absence of the

Governor one of the Vi ce-love.'noru represents hits.

T; # court or
»

general counsel of t u- Bank consists of fifteen regents and thr e
censors, who ar<

chosen annually by the two hundred 1ar* st share­
;

holders of the Bank.

The Governor must cv.n one hundred shires,

tb* Vice-Governors fifty shares, an d the Ke^ents thirty shares each*
The court of regents and censors

each Thursday.

divided into committees of v r y l r i f duties.
.
posed by the Governor
(o

and very

board of Directors) an

It is

The dank rut / is pro­

■■•rally aceeptea by the/court,

continues ui til chanr*■ t by /. new pro­

posal by the Governor.
The maximum note it. me: authorised i s 5,600,0^0,000 f r a n e s .
The actual nor.: i r.t:uo on Auruut 24th was 4,600,000,000 f runos.
T o total i sue out. tending varlci
at t r crop moving per iod.
v

He wa: unaibl/ to b l u -c t e dillorence
.

in the iecue at that pi .tod*
than t r hank of ?Vr
jice*
hu

frcqucnbly,bu t i • always f cutest

There arc no ba/ku of i> u»e other
Uauy years have

- ' *t ion has b » n muds for a c anrit in t i

The last fu
Sf^r 0




ention wa

made by

the Credit Lyonais,

e

j

Vb ^o

since any

f t/o i of i : iu s *

athcr-in-lAw of t•* present man«

/ho p oposod in Pa/liment a law opening

4

i

8
• note

'3 M<e
;

1
j
I t met with H

to c o m p e titio n .

t i c fay or thou,

No payment has been made yo thoV hornritnent for n ote itssue or
The tax^e, howoyer, are corn,i terable,

any o' her pr ivllogo.

amou* t in g to u: p ro x i a i*ly 15 p<Vr oe t of the p r o f i l e o f the Bank,
cash j^eserYe, compu' ng i t at the hunk

Including Intercut on t

.

ra te *

The t a x on c i r c u l a t i o n ,h

on th e ca h in *hc Bank i s

bO C* on t o 1,0 )0 ?* and the t a x

2 t ,o n
0

co n sid e re d in c i r c u l a t i o n when t
h>un re c c iT o d at the Bank,

1e>

e

o f a not . it

t . law in

ar

hat B

th re e y e a r**/

p e c i e ( e i t h e r ?tOx'

not c a n c e lle d , but a re a p a in

T c

ank r cdeems it»

n o te* under

n i l r e r - a t a premie®- af an a l t < r n a

f04 l o ^ d at t

Independent hanku jo

T c a v e rag e

The Bank,however, determines t h i s .

oirj fc

T r tm c rule i

tire.

c o n d itio n ,

or uilTer) but since i860 redemption

n r action .ly in ^old.
.

Sometimes t o hank o f f e r s

Thr n o te s a re

/ are p^id. out oy r th e c o u n te r.

p aid out at lo n g asr tncy arc lit prone
life

1 0 F.
,0 0

several branches.

eti ei keep on dep©. ;t with the B a hk

of franco their aurplutt fund»,\b t gold will not b< r e c e i v e d for
I
special deyo nit-up on agreement Vo p«y in kind-%ut must be treated
Ilk

ail ot or

Spoilt*- by t a k i W credit on

.

books foe t e deposit

all depositor* thereby bring on a!p equality.
Anyone car. open an account who i
m i n i m ® b< Ing 500 ?.

Af te

known to t h * Bank, the
/r

an account is once opened the deposi­

tor may discount p ncr as low as 5 ?. provided it m ote with all
other require cnt*.

1 praniecory note?/ arc used* but the debt
*0
Th c t lxn# on

la evidenced by bills ar.d l e t '.ere of c7.cm.ng0 .
bills cannot exceed three month*.
always required.
the signature of t :
o.

Th$4e names or endorser* arc

About 80 per ce t J b f

the piper now held bears

bank at one of the endorser*.

never pay; i: U r o r t on deposits.

/

The use o f c eck:; it not g e n e r a l in
it

no tendency to In c re a s e

such u/e,

he country,

in use*

coin, a*id th c ie i s no




\

ThC t o a l

Notes a r e used

tiv c m /i\.. lx lo w er note t an now

The lo w e s t denomination lr. sjO F*

p r a c t ic e d l e e s t .an f ormrr l y ,
^ ^

bc

and there

The,revenue b taupe on

checks does not r e t a r d th e ir uso m a t e r i a l l y /
more t

The iank

but ifc

ill

Hoard o f money i s

c o n p id c r able, * c p d a i l y

K°*( of. ire®oe i s estim ated at 8 ,0 0 0 ,000f 000 f.
1

3
Ttfe Bank of France holda 3,225,000,000 F. an
the pocketr of t te people.
50 email branches.

the •er*aindei

are] 1 2 7

There

is in

large branches and

TV e wall branches are control! d by t me
©

of the large broncho*, particularly in/dl©court m a tore.

Each

large branch har a special board of manager• or directors,but none
The 0ot./nor of t e Bank o

in t c ©mall branches.

r

poses thr o mimes to the Ministry fur manor

Franco pro

of each of t ■<
?

branches, arid t o -'ini t . must ngr/e o e of the t roe.
Independent bonks regard t r f

’ k
o

but t « ’ f n of France considers
■ .ik
»
•. ’ .<• t "■JV
• ! »>
August 24th,

;
■

10,
05

8 10 0 0 / F . ,
0 , 0 ,0 0

were

a n d all

00t o rnor rcqueutcc that thl:
particularly .l : h
.

f

Inde-

tOtul CterOi.lt f On

of v*hich the Pt.ate funds

ot- err. to 559,000,000. The

i to/-..ation

•fore . rc

e

Id confidential,

o • iIS o'

Th«' expense of t < note i
.
th - h .rt about
.l

ranee as a competitor,

the bunk of banks.

iMlv- -n t OH r •ybritC*

amounted to 242,000,000

' . h,7v n • nt).
o

u, including printing,costs

o same as interest on their d posits costs

Indopemds it bunks.
y tp

of

'f < r .
J ;

no

• O. t fft Miout,;.
'i

indejendent banks, but the number is decreasing.
e talli I
s

ir« b lug alBorlMli si:! th
p* op le not tra d e triinn M r
bank rye t o * ,

p riv at

Smaller banks

» • branches is incroaring.
:

b o rro w e rs are much p le a s e d

v>^cause i t a f f o r d * g re a te r

branch

d e p o s i t s * but bo:

.1

it-: the

se c u rity fo r t h e ir

-were and t r a d e r on ar

not pi caned*

because independent bank managers arc more l e n i e n t and in c lo s e r
touch '’ i t h l o c a l co

u n itie s

g e n e ra l advduors.

There a rc now in o x irtn n e e 550 p r i v a t e sa v in g s b n k s (n o t

savings b -riles) with 1500 bran ch es.

i n c l u d in g p o s t a l

depof it boxes a r e in c re a ; i n j r a p i d l y ,

a ;:

it

S a - ty

A b e l i e v e d much o f the
s

g o ld hoarded I p the t o p le { r kept in these boxe s.
j
favings banks hav- ho c a p i t a l , a a l l dividend© go to
the

to c k h o ld o rs.

T uv j a y 3 p e r cent i n t o e a t on d e p o s it s ,

but

l/ 4 o f one per cent 1

h e ld at. r e © e r v s .

bank pays 2 j /4 per cent i n t e r e s t on d e p o s i t s .
o f the p o s t a l

raving;

bank and a l l

The p o s t a l

The d e p o s it s

ot'nor sa v in g s b n ks a re on the

Increase, the p o s t a l bank showing more r a p id i n c r o a s * .
deposits- o f the

©avingn

banks* other than t

l v 3.400.000.000 v.



ravings

mm
mm

The t o t a l

p o s t a l 0a re a p ro x im a te -

4

The depocitr. o 4' l ' " * p o s t a l M n k ,
..

■

.

..t o

O p e r at io n

0 >0,000 F,

in

inc;

M th oirht

lft.' 2,

t e priv,. e

flu

thousand pent

* tees

po t 1 hunk har b

a v i n -:

h-nks

n in

luce 1615*

The v owth o f the p o s t a l bank g r e a t l y i n j u i o » the r o*fth o f t h e
T' iv; to r a v i n e s b t kB,
There i f

lim ited 1

batffcs, the l i m i t b e i n ' t

M l it.

o f r t o c k h o l d e r e in j o i n t

a ount o f the

are no- l i m i t e d in l i a b i l i t y ,

a re .

N o t i c e s fo:

stoc k

P r i v a t e banks

withdrawal o f funds

are c o n t r o l l e d by a v a r i e t y o f e i o > rrts,

i n d u s l n g time,amount

an ft ~ nor&l c h a r a c t e r o f t.h.- ac ou n t,

There i . no exarUrt ♦ ion

by t- - "overnru nt o f J o i n t stoc k banka, ex cept
proper p;,ym«Mt c f

s 1cap d u t i e s ,
.

by the Covernvie t o f t e
•trance i t
Aeet» i

v. k o f

to ar.cort in the

T erv. i . no «■
Y nc o, but

*

»e*r a l examin t i o n
in is try of

p r i v i l e g e d to ark for* i s for: .at ion from tir.e to t im e,

-tat.

r,tte o f

both i

r nee are made, but
.

i/niov ende» t hanks an

• n.-sk/'f

rano;

the hjr.sk o f

issues a bulletin of

' - n c e s each Thursday,
M
v it
7­

< r i- :*

- verno

nor Drputy Gov - nor i . per- i t i r d to

be a member o f ei t or Jaa4T o f Par 11 a it,
%

made o f t o

ho

0

■ .!' .
;■

a

ev er b- -XI

:ahk f a v o r i n g or ai f i n • ei if « r p o l i t i c a l p a r t y ,

There t

u -r. . a?yc i a n \ m. t p o l i t i c s e n t e r s

m n..-*
r

'. o f ' •«

1697, no

l e r i s t a t io n >
.

Tie re i ;

no *<>nti

in any

decree i n t o the

S '-L '~

C &

nk,

Pxce- t i n g v •renewal o f t h e c h a r t e r in
a c t i n g the Bank has b en hrid

nt f o r any c

rev. 1 -g i fx a t i o n .
-




*

.n.r

i n bank ' et o d «

sin ce lftS7,
no?any

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