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63D CONGRESS, ) H O U S E O F R E P R E S E N T A T I V E S , T

1st Session.

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REPORT

No. 69.

A*
CHANGES IN THE BANKING AND CURRENCY SYSTEM OF
THE UNITED STATES.

SEPTEMBER 9,1913.—Committed to the Committee of the Whole House on the state
of the Union and ordered to be printed,

Mr. GLASS, from the Committee on Banking and Currency, submitted
the following
R E P O R T .

TOGETHER WITH VIEWS OF THE MINORITY AND MINORITY VIEWS.
[To accompany II. R. 7837.]

The Committee on Banking and Currency, to which was referred
the bill (II. K. 7837) to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means-of rediscounting commercial paper, to establish* a more effective supervision of banking in the United States, and for other purposes, having
bad the same under consideration, report it back to the House
with certain amendments and recommend that the bill as amended
do pass.
AMENDMENTS.

The amendments to the bill are almost without exception mere
alterations of phraseology, made for the purpose of consistency or
with a view to clarifying the meaning of certain provisions. Thus,
in section 2, page 3, line 19, the word "subscriber" is stricken out
and the words "member bank" substituted in order to conform the
language to other provisions of the bill; and so in section 3, page 4,
lines 14, 16, and 17, and in section 5, page 11, lines 15 and 21, and on
page 12, lines 6, 7, 10, 13, and 16, and in section 6, page 12, lines 20
and 21, and on page 13, lines 2 and 3; in section 7, page 13, lines 9,
10, and 22; in section 14, page 24, line 19.
Section 2, page 3, lines 24 and 25, is so amended by the committee
as to require that no Federal reserve bank shall "commence business"
with a paid-up and unimpaired capital less in amount than S5,000,000,
the original provision being that no Federal reserve bank should
"be organized" with a paid-up and unimpaired capital less than
S5,000,000. This alteration is considered desirable by reason of the
fact that member banks are permitted to pay their stock subscrip-




2

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

tions in two installments, covering a period of 60 days, and it is not
deemed advisable to permit the Federal reserve banks to begin business until the total required subscriptions are paid, albeit they should
be permitted to organize.
In section 3, page 4, line 12, the word "each" is inserted after
"$100," and in lines 14 and 16 the word "stock" is inserted, to make
it clear that the surplus of a bank is not comprehended in the use of
the term "capital."
Section 4, page 4, beginning with line 24 and continuing to the
word "Act," inline 9, page 5, is stricken out and the words in italics
substituted in order to make plainer the method of organization prescribed for Federal reserve banks. The change in phraseology simply
embodies the language of the statute relating to the organization of
national banks and applies it to the organization of Federal reserve
banks, whereas the provision originally simply made reference to the
statute. In the same section, page 8, line 14, an amendment iss
inserted making provision for the contingency of a tie vote in balloting for Federal reserve bank directors of class A.
In section 5, page 12, line 17, an amendment is inserted requiring
the Federal reserve board to prescribe regulations under which Federal
reserve banks shall be required to make payment for surrendered
shares of member banks which either reduce their capital stock or go
into voluntary liquidation.
In section 10, page 17, line 22, and on page 18, line 1, and also in
section 11, page 19, lines 15 and 16, and likewise in section 12, page
21, line 19, and on page 22, line 2, where the word "board" occurs
the committee has altered the expression to "Federal reserve board"
to make it more explicit.
In section 14, page 25, line 7, the semicolon after the word "Act"
is stricken out and a comma substituted, and in line 9, after the won!
"securities," the comma is stricken out and a semicolon substituted,
in order to make clearer the meaning of the provision.
In section 17, page 30, lines 9 and 10, an erroneous reference is
corrected by striking out the words "and 15."
In section 20, page 37, line 16, and in the same section, page 38,
line 16, the reserve requirement of 25 per cent within the 60-day
period is dropped to 20 per cent in order to enable the reserve city
and central reserve city banks the better to respond to the immediate
demand upon them from the country banks in the first stage of shifting reserves. In short, instead of reducing the reserve requirement
of the reserve city and central reserve city banks at the end of 60
days from the establishment of the Federal reserve bank, the reduction is made immediately after the Secretary of the Treasury shall
have officially announced the organization of such bank. In the
same section, page 38, lines 24 and 25, and on page 39, lines 1,2, and
3, an alteration m phraseology is made so as to make the reserve
requirement of central reserve city banks correspond exactly with the
requirement of reserve city banks.
In section 26, page 44, lines 14 and 15, having reference to loans
by national banks on farm lands, the words "or fifty per centum of
its time deposits" are stricken out, for the reason that the committee
thinks that the aggregate of such loans should be based on a bank's
capital and surplus rather than on the constantly fluctuating per
cent of time deposits.




3 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.
NATURE AND PURPOSE OF II. R. 7837.

Ii. R. 7837 is intended to bring about necessary changes in the
present banking and currency system of the United States and to
correct long-standing evils that have had a slow and deep-rooting
growth. It aims at the rectification of the essential defects of the
present system, although it does not seek to make all the innovations
that might, from an ideal standpoint, be deemed desirable.
DEMAND FOR ACTION.

There has for a great while been strong public demand for remedial
legislation on banking and currency. This demand was partly obscured during the controversy regarding the adoption of a monetary
standard. Yet even before the adoption of the act of March 14, 1900,
there had been a vigorous popular movement directed to the amendment of the national banking act. This took form in various voluntary organizations and in actions by bankers' associations as well as
by organizations of business and commercial interests. It was
practically universally admitted from 1898 onward that one of the
basic commercial evils of the day was the lack of a suitable banking
system.
This view has been frequently reiterated and restated ever since
the earlier days of the banking discussion to which reference has
been made. Of late it has taken form in renewed agitation following
the panic of 1907 and promises of action have been made in nearly
every political platform, by whatever party adopted, within recent
years. The call is loud and comes from many sources of widely
divergent character.
It is probable that not a single scientific student of currency and
banking could be found who would approve the conditions which
now exist in the United States or the banking system under which they
have sprung up. Nowhere in the world to-day can there be found
a banking system similar or analogous to that of the United States,
or a situation as to credit which could be compared to that prevailing in this country at the present moment.
REASONS FOR ACTION.

The considerations which thus dictate action upon the banking
and currency question at the present time have often been stated
and from many different points of view. In the opinion of the committee there can be no doubt whatever with regard to the essential
elements of the case. The general background of the situation
which calls for banking reform is this: Half a century ago Congress,
in the midst of a civil war, established a new system subsequently
developed into the national banking system. The essential elements
in this system were three in number: (1) The maintenance of the
principle of free banking through the unrestricted organizati n of
banking institutions; (2) the refusal to allow the extension of systems of banking throughout the country by the organization of
branch banks; and (3) the adoption of a peculiar system of note issue




4

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

whereby the banks were required to buy a minimum of national
bonds when chartered and subsequently to deposit with the Treasury bonds to protect all currency received by them for circulation.
The different elements in this system will be fully considered at other
points in the present report. It is enough now to suggest the general bearings of the case. This system has continued substantially
unamended to the present time, and to-day includes some 7,473
banking institutions within its range. These banking institutions
vary in size from $25,000 capital to $25,000,000. They are entirely
local. The only bond between them is found either in mutual stock
ownership or in the redepositing of reserves as they are permitted
to do under the national-bank act. In view of the lack of any
factor of unity the national banks have failed to furnish to the Nation
as a whole a single and powerful system of credit. The strength of
the credit situation in each community has depended upon the
strength of the banks there situated, and, except in times of stress,
has even in these communities been measured by the strength not of
the strongest, but of the weakest institution there located. In times
of stress the banks of such independent communities have at times
in self-defense united to place their combined resources temporarily
at the service of the public and of one another, but they have taken
such action only under stern pressure. As a rule, they have been,
individualistic in the highest degree, and the country has lacked the
capacity either to prevent credit disorders from breaking out locally
and spreading to the centers, or to defend its own resources against
the monetary demands of foreign nations or against the infection
due to bad financial conditions m countries with which wo stood in
close relations.
The evidence that this system has not done its duty is not found
in dishonesty or failure. While at times failures have been numerous among the national banks, as must necessarily be the case in
any system of numerous and highly individualized banks, the average
record of failure or irregularity has been small. No noteholder has
ever lost a dollar, and the losses of depositors constitute in the aggregate a very small percentage of the total deposits held by the banks.
The country has been enabled to do an expanding business, to its
own great profit. But the evil of the situation has been perceived
upon all those occasions when unusual pressure was brought to bear
upon the banks of the country. In 1873, 1884, 1890, 1893, 1896,
and 1907, to mention the most familiar occasions, it has been necessary for large groups of banks practically to suspend specie payments.
They have done so as the result of concerted action, and one feature
of the situation upon each of these occasions has been a genuine
effort to relieve conditions by resorting to an issue of obligations for
which the banks became jointly liable, and which in some measure
helped to overcome shortage of currency and the stringency that
was associated with it. In spite of all that could be done, however,
the public has been put to great inconvenience and loss upon such
occasions, the relations of the United States with foreign countries
have been embarrassed, if not brought into jeopardy, the failure of
firms, corporations, and individuals has been necessitated, and the
loss of wealth has been tremendous. We think it is axiomatic that




5

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

these conditions should not be allowed to repeat themselves, but that
they should in some manner be relieved or prevented, if possible.
On the other hand, the national banking system, with its man}r
merits, has not proved responsive to the seasonal needs of the community. At periods of exceptional demand for credit the movement
of currency between various points, with attendant expense and
delay, has been enormous, while the (expansion of this currency has
been slow and halting, local necessities being met by withdrawing
circulating media from other regions. In consequence, the marketing of the country's annual crops has been slow, difficult, and expensive, and it has frequently happened that various sections of the Nation
have been obliged to depend too largely upon the limited extension of credit to them by banks located elsewhere.
Conversely, it has been found that whenever the seasonal needs of
credit in agricultural regions throughout the United States had been
met and. when the crops there produced had been fully disposed of
there was an accumulation of currency, partly borrowed from other
portions of the country, partly of local origin, which could not be
used to advantage upon safe or sound security throughout the less
active portions of the business year, and which was therefore shipped
to banks in distant cities, that it might be there put to some employment that would yield its owners an income. It has not always
turned out that the employment thus found for it was desirable or,
on the whole, conducive to" the good of the country.
NATURE OF EXISTING CONDITIONS.

Turning from the general considerations which tend to prevent the
acceptance of existing banking conditions as satisfactory, there is
need of a recognition of the immediate status of the financial and
business world at the present day. There can be no doubt that for
some time past the national banks of the United States have been in
a difficult situation. The committee has been amply warned and
advised of this state of things, and a general knowledge of it is common to the country at large, certainly to all close or careful observers
of existing conditions. In the reserve centers to-dav banks are unable
to extend the credit that they would under normal circumstances be
disposed to grant, while merchants are frequently unable to get the
accommodation to which the}7 are entitled. A general tendency
toward stringency evidently exists, and while this is not peculiar
to-day to the United States it should not be felt here in anything
like its present severity, inasmuch as this country has not had to bear
the burden of warfare "and destruction of capital that has been thrown
upon the European countries. All over the western world there is
now a distinct shortage of capital, both fixed and floating, while our
banking and reserve situation is anything but reassuring. Under
such circumstances it is highly desirable that the utmost efficiency
should be given to the reserve resources in the hands of the banks
and that they should be enabled to do all that circumstances will
permit in extending to the business world the volume of loans that it
needs, so long as they maintain themselves in position to protect the
accommodation thus granted. Legislation which will relieve this
pending condition of pressure and possible panic, which will place




6

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

the banks in position to employ their resources to the best advantage,
which will obviate the necessity of expensive transfers of funds between different parts of the country, and which will furnish loans
upon an inexpensive but absolutely safe basis was never more urgently demanded than it is to-day. It is this condition of affairs
that nas most strongly moved tke Committee on Banking and Currency in its effort to press a measure of relief upon the attention of
the House.
LACK OF PROTECTION AGAINST PANICS.

Reference has just been made to the fact that the national banking
system, among other defects, fails to afford any safeguard against
panics and commercial stringencies or any means of alleviating them.
This fact has received more attention than has thus far been given
to any other in the whole range of the banking and currency discussion, and there has been more effort to apply some legislative
remedy to this than to any other condition.
In practice, when commercial credit had hopelessly broken down
and the banks of the country found themselves seriously threatened
by danger of failure, they have united for mutual protection, and
clearing-house associations in the chief cities of the country have
joined in the issue of certificates good in liquidating obligations
between banks. Sporadic and temporary as this remedy has been,
it nevertheless has proven effective while in use, and after the panic
of 1907 an attempt was made to provide for a permanent resort to
this so-called clearing-house currency by passing the act of May 30,
1908, ordinarily known as the Aldrich-Vreeland law. This law will
expire automatically on June 30, 1914, inasmuch as the act itself
carries a provision limiting its own life to six years. The fact that
this legislation will thus expire is regarded by many persons as an
additional argument for action at the present time, inasmuch as the
measure in question constitutes the only emergency protection against
conditions of sudden difficulty in the money market that the country
now has. The Aldrich-Vreeland law provides for the establishment
of organizations of banks, to be known as National Currency Associations, which are to be allowed to take out notes under certain
conditions.
It is worth observing that up to date the Aldrich-Vreeland associations have been an entire dead letter. The situation regarding them
was clearly sketched by the Comptroller of the Currency in his last
annual report, in which he said:
Under authority of the act of May 30, 1908, providing for the issue of " additional
currency" secured otherwise than by United States bonds, 18 national currency
associations have been formed, all of which, with the exception of the Los Angeles
association, were formed prior to the current year. Each association has an aggregate capital and surplus of at least $5,000,000, and is composed of at least 10 national
banks having an unimpaired capital and an unimpaired surplus of not less than 20
per cent of the capital, and having United States bonds on deposit to secure circulation to the extent of at least 40 per cent of its capital. There are 286 national banks
forming these 18 national currency associations, their capital aggregating $321,105,710
and surplus $281,544,722. The capital represented is slightly in excess of 30 per
cent of the paid-in capital stock of all national banks, as shown by the reports for
September 4 last.




7

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

The title, membership, capital, and surplus of each of the associations are shown in
the following table:
National currency associations.
Associations.

National
National
National
National
National
National
National
National
National
National
National
National
National
National
National
National
National
National

Number
of banks.

Total

Surplus.

$5,702,000
117,052,000
20,975,000

Currency Association of Washington, D. C
Currency Association of the city of New York, N. Y
Currency Association of Philadelphia, Pa
Currency Association of the State of Louisiana
Currency Association of Boston, Mass
Currency Association of Georgia
Currency Association of Chicago
Currency Association of St. Louis, Mo
Currency Association of St. Paul and Minneapolis..
Currency Association of Detroit
Currency Association of Albany, etc
Currency Association of Kansas City, etc
Currency Association of Baltimore
Currency Association of Cincinnati
Currency Association of Dallas
Currency Association of Alabama
Currency Association of Denver, etc
Currency Association of Los Angeles

Capital.

$4,792,512
127,175,000
36,665,000
4,030,000
18,950,000
6,434,000
25,950,000
9,095,000
9,545,000
3,101,200
3,385,000
3,800,000
7,752,010
6,450,000

6,100,000

26,700,000
8,206,000
42,750,000
19,510,000
10,750,000
6,325,000
3,560,000
6,659,000
12,340,710
14,300,000
3,760,000
5,700,000
4,700,000
6,025,000
286

321,105,710

8,100,000

3,497,500
4,991,500
2,831,000

281,544,722

In accordance with the terms of the Aldrich-Vreeland Act, $500,000,000 in currencyhas been printed and is now ready, in blank, for issue in case of a call from any of the
banks or currency associations authorized to issue notes by the terms of the law.
Individual banks may issue such notes by depositing at the Treasury State or municipal bonds of approved kinds, receiving in exchange 90 per cent of the par value of
such bonds, provided they are worth at least par. The currency associations may obtain notes equal to 75 per cent of the face value of commercial paper left with them by
the constituent banks of the association.
One reason why the Aldrich-Vreeland law has never been availed of is that the issue
of the currency was made very expensive, owing to the imposition of a heavy tax on
such notes as might be taken out, while the banks were for a long time reluctant to go
into the currency associations because of the onerous conditions under which they
were at first required to be authorized by the terms of the regulations laid down by the
Secretary of the Treasury. The law is thus not likely to be resorted to except in cases
of very severe necessity for notes; but, even if such were not the case, it would remain
a temporary expedient and a mere extension of its life would be only the renewal of
such an expedient.

No statement could make clearer the inadequate character of the
Aldrich-Vreeland Act or its purely temporary character. It is a weak
makeshift, soon to expire.
RECOGNITION OF SITUATION.

That under the conditions just sketched there is a responsibility
resting upon those in charge of the Government of the United States
no one can deny. No more serious obligation to-day exists in the
whole range of national problems. This duty has been amply recognized by the Democratic Party. In platform after platform it has
stood firmly for the adoption of sound and courageous legislation,
and at Baltimore in 1912 it adopted without dissent the following
plank:
We oppose the so-called Aldrich bill for the establishment of a central bank; and
we believe our country will be largely freed from panics, and consequent unemployment and business depression, by such a systematic revision of our banking laws as will
render temporary relief in localities where such relief is needed, with protection from
control or domination by what is known as the Money Trust.




8

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

Banks exist for the accommodation of the public and not for the control of business.
All legislation on the subject of banking and currency should have for its purpose the
securing of these accommodations on terms of absolute security to the public and of
complete protection from the misuse of the power that wealth gives to those who
possess it.

That this plank constitutes a direct claim upon the party, challenging its immediate attention, is the opinion of the Banking and Currency Committee. The claim is the more urgent because there has
been a most lamentable failure to face the banking situation fairly
in past legislation.
PREPARATIONS FOR WORK.

Believing that there would be a Democratic victory at the polls
and fully appreciating the obligations to follow therefrom, the
Banking and Currency Committee of the Sixty-second Congress had
already begun preparations looking to the redemption of party
pledges, past and present. In that Congress a subcommittee of the
Banking and Currency Committee was directed to begin a study of
the question of reform legislation. This subcommittee conducted
preliminary inquiries during the summer and autumn of 1912, and
having thus marked out the lines of necessary work undertook
hearings during January and February, 1913, for the purpose of
obtaining the views of qualified members of the community with
regard to what ought to be done. The subcommittee extended
invitations at that time to representatives of labor organizations, to
agricultural associations, to the bankers of the country, to voluntary
associations of citizens interested in questions of banking, money,
and credit, and to individuals recognized as being expert students of
monetary and credit conditions. While some of those who received
invitations to appear before the subcommittee failed to accept, the
majority did so, and practically all the essential phases of the situation
were thoroughly canvassed. Besides holding these hearings, the committee sent to many economists, bankers, and expert persons questions bearing upon the currency and banking problem and received
responses giving the views of those who were thus appealed to.
H. R. 7837 was drafted as the result of these investigations and thus
represents, all told, the results of approximately 16 months' work.
The Banking and Currency Committee as at present organized held
its first meeting on June 6,1913, and since that date the committee has
devoted almost continuous work to the discussion of the bill. The
outcome of its deliberations has been to approve the essential features
of the bill H. R. 7837, with some modifications which are embodied
in the measure as now reported.
WORK OF MONETARY COMMISSION.

The committee, in undertaking to prepare for banking and currency
legislation, has first of all endeavored to take into account all existing
data and to examine such preliminary work as had neen made available. The most recent collection of such material available is that
prepared under the auspices of the National Monetary Commission.
While the Republican Party refused to take any affirmative action,
except the act or May 30, 1908, it did undertake what was called an
investigation of monetary and banking conditions. The act of




9

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

May 30,1908, known as the Aldrich-Vreeland Act, already referred to,
Erovided for the appointment of a body known as the National
[onetary Commission, in the following language:
APPOINTMENT OP 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, and nine Members of the House of Representatives, to be
appointed by the Speaker thereof; and any vacancy on the commission shall be filled
in the same manner as the original appointment.
POWERS OP COMMISSION—COMMISSION TO REPORT TO CONGRESS.

SEC. 18. That it shall be the duty of this commission to inquire into and report
to Congress at the earliest date practicable what changes are necessary or desirable in
the monetary system of the United States or in the laws relating to banking and currency, and for this purpose they are authorized to sit during the sessions or recess of
Congress, at such times and places as they may deem desirable, to send for persons and
papers, to administer oaths, to summons and compel the attendance of witnesses, and
to employ a disbursing officer and such secretaries, experts, stenographers, messengers,
and other assistants as shall be necessary to carry out the purposes for which said commission was created. The commission shall have the power, through subcommittee 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
necessary.
EXPENSES OP COMMISSION.

SEC. 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, out of any money in the Treasury not otherwise
appropriated. Said appropriation shall be immediately available and shall be paid
out on the audit and order of the chairman or acting chairman of said commission,
which audit and order shall be conclusive and binding upon all departments as to the
correctness of the accounts of such commission.
W H E N ACT EXPIRES B Y LIMITATION.

SEC. 20. That this act shall expire by limitation on the thirtieth day of June,
nineteen hundred and fourteen.

This commission was immediately organized and continued to do
sporadic work until March, 1912, when it was dissolved by virtue of
an act of Congress passed in the preceding August, just before the
close of the special session of Congress summoned by President Taft
for the discussion of the reciprocity question. Persons employed by
the National Monetary Commission prepared a large series of books
on various historical and current phases of the banking question, but
the only significant feature of its work is found in a bill drafted under
the auspices of the commission and finally laid before Congress with
a brief accompanying report giving the reasons for the measure. This
measure was at once introduced into Congress by Senator Theodore E.
Burton, himself a member of the commission, and was referred to
the Senate Finance Committee, but never received official consideration.
The monetary commission provided for as just described spent a
large sum of money in costly travels, including journeys to Europe and
outlays for printing. In answer to a request for information made by
the Senate m 1911, Secretary MacVeagh, then in charge of the Treasury Department, sent to the House a letter in which he fixed the
cost of the commission to May 12, 1911, at $207,130.




10

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.
VALUE OF COMMISSION'S WORK.

The work done at such great cost should not, indeed can not, be
ignored, but, having examined the extensive literature published by
the commission, the Banking and Currency Committee finds little
bearing upon the present state of things in the credit market of the
United States. Most of the matter published by the commission is
a revision or recasting of books and documents having only historical
value or brought down to modern times by their authors or others.
There is practically nothing of original value or of direct aid bearing
upon the details of remedial legislation.
The bill favored by the commission and popularly known as the
Aldrich bill, from the name of the chairman of the monetary commission, ex-Senator Nelson W. Aldrich, of Rhode Island, remains as
the chief distinct trace of the commission's existence. It has not
commended itself to the Banking and Currency Committee. The
Aldrich bill is a lengthy and elaborate statute and no sufficient account
of its contents or of the reasons for refusing to accept it can be given
in brief space. Something, however, may be said of it. This bill has
often been spoken of as a poisonous theoretical novelty and at other
times as an mgenious scheme to create a central bank which would
absorb all banking functions to itself. In fact it was neither of these
things. Little of novel character is found in the ideas underlying the
Aldrich bill. To mention only two of the many proposals embodying
the same general ideas as those held bv the framers of the Aldrich
bill, the plans for banking and currency legislation suggested by Hon.
Charles N. Fowler in his " A financial and banking system for the
United States " (H.R. 23707,60thCong., 1st Sess.), and by Hon. Maurice
L. Muhleman, in his "Plan for a central bank," reprinted from the
Banking Law Journal, have the same purpose in view. They differ
in several important details, none of which, however, is absolutely
fundamental to the scheme presented.
The objects technically aimed at in all these measures were desirable and the criticism to be made of the Aldrich bill does not, in the
opinion of the committee, reside in its confessed purposes, but in the
methods by which it undertook to carry them out and the disregard
of public welfare by which it was characterized.
The Aldrich bill was not a plan for a central bank as that term is
properly used. It called for the creation of a national reserve association which was to do business only with banks, while the Government had but little power over the institution and the public neither
business nor other relations with it. Without going further into the
detailed analysis of the Aldrich bill it may be stated that the committee objects to the plan fundamentally on the following points:
1. Its entire lack of adequate governmental or public control of the
banking mechanism it sets up.
2. Its tendency to throw voting control into the hands of the larger
banks of the system.
3. The lack of adequate provision for protecting the interests of
small banks and the tendency to make the proposed institution subserve the purposes of large interests only.
4. The intricate system by which the reserve institution it created
was prevented from doing any business that might compete with that
of existing banks.




11 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

5. The extreme danger of inflation of currency inherent in the
scheme.
6. The clumsiness of the whole mechanism provided by the measure.
7. The insincerity of the bond-refunding plan provided for by it,
there being a barefaced pretense that this system was to cost the
Government nothing.
8. The dangerous monopolistic aspects of the bill.
ESSENTIAL FEATURES OF REFORM.

The other plans before the committee or examined by it have likewise been found unsatisfactory—some for reasons analogous to those
which made the Aldrich bill unacceptable, others because of defective
detail, erroneous principle, or faulty construction. An effort was,
however, made to ascertain the constituent elements of these measures and of the Aldrich bill, common to all, which should be recognized
and provided for in any new plan because representing the fundamentals of legislation. It is believed that these are as follows:
1. Establishment of a more nearly uniform rate of discount throughout the United States, and thereby the furnishing of a certain kind of
preventive against overexpansion of credit which should be similar
in all parts of the country.
2. General economy of reserves in order that such reserves might
be held ready for use in protecting the banks of any section of the
country and for enabling them to go on meeting their obligations
instead of suspending payments, as so often in the past.
3. Furnishing of an elastic currency by the abolition of the existing bond-secured note issue in whole or in part, and the substitution
of a freely issued and adequately protected system of bank notes
which should be available to all institutions which had the proper class
of paper for presentation.
4. Management and commercial use of the funds of the Government which are now isolated in the Treasury and subtreasuries in
large amounts.
5. General supervision of the banking business and furnishing of
stringent and careful oversight.
6. Creation of market for commercial paper.
Other objects are sought, incidentally, in these plans, but they are
not as basic as the chief purposes thus enumerated.
The first problem in developing a measure was, of course, the consideration of various alternative courses which might be pursued.
CENTRAL BANK QUESTION.

At the outset of the committee's work it was met by a well-defined
sentiment in favor of a central bank. This idea appeared to have
become rooted with a large section of the banking community, and
w~as the manifest outgrowth of the work that had been done by the
National Monetary Commission, and those who believed that the
recommendations of that body were well founded. While the institution which would have been created by the National Monetary
Commission bill was not a central bank in the technical sense of the
term, inasmuch as it did not do a general banking business, it was
a central bank in many of the aspects that are usually regarded as




12

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

characteristic of that term. The idea of the monetary commission
bill had been accepted with great fervor by those who believed that
the use of a centralization principle was necessary, as well as by others
who deemed that their own objects would be served by the particular
form that had been given to the proposal of the monetary commission
in its bill.
Without allowing itself to entertain any prepossessions either for
or against the central bank idea, the committee carefully examined
this notion both at hearings and through private study. It reached
in general the following conclusions:
1. The idea of centralization or cooperation, or combined use of
banking resources, is the basic idea at the root of central banking
argument.
2. It is not necessary in order to obtain the benefits of the application of this idea that there should be one single central bank whose
activities should be coterminous with the limits of a nation's territory.
3. Equally good results can be obtained by the federating of existing banks and banking institutions in groups sufficiently large to
afford the strength or cooperating power which is the chief advantage
of the centralization.
4. In the United States, with its immense area, numerous natural
divisions, still more numerous competing divisions, and abundant
outlets to foreign countries, there is no argument either of banking
theory or of expediency which dictates the creation of a single central
banking institution, no matter how skillfully managed, how carefully
controlled, or how patriotically conducted.
5. It is therefore necessary to abandon the idea of a single central
banking mechanism for the United States unless it shall be found
that there are considerations of expediency which would dictate a
resort to this policy.
6. For reasons which will be stated at a later point the conviction
was formed not only that there are no such reasons of expediency,
but that every consideration of that character would lead to action
of an opposite nature.
It was therefore decided that throughout its efforts to formulate a
banking measure there should be no necessary attempt to base the
result of the bill upon the central banking idea. Only in so far as
that idea indicated an easy and natural adjustment to existing institutions and conditions was it to be given a place in the ultimate
findings.
BRANCH BANKING SYSTEM.

Many bills have been introduced into Congress from time to time
for the establishment of branches of existing national banks, and the
system has so widespread and respectable a support as to make it
apparent from the outset that this aspect of banking theory and practice should be considered. The eminent success of the Canadian
banking system and of others similar to it enforces upon the most
indifferent student of the subject the significance of branch banking
as a means of securing cooperation and the junction of resources in
support of any weak element in a banking system that may have
been subjected to attack at a given moment. It is clear that Canada,




13

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

for example, with her 27 banks and thousands of branch banks, represents a distinctly different type of banking from that which is
exemplified by the national bankmg system with its 7,473 independent banks, none of which possesses a single branch formed under the
national banking act. The question was thus clearly to be considered
whether the bestowal of the branch power would in fact meet the
difficulties of the present situation in the United States. Careful
study of the applicability of the Canadian banking system to American conditions convinced the committee that an adaptation of it
would not be feasible to-day. The successful introduction of the
branch system would almost necessarily have meant the abandonment of the idea of free banking. While it would not necessarily
have been requisite to abandon free banking in theory in order to
introduce the Canadian principle, it would have been practically true
that the power of establishing branch banks, if widely exercised by
large national institutions, would have entailed the contracting of
the number of independent banks in the United States and a corresponding limitation of the perfect freedom of competition which
exists to-day. Certainly it would not have been possible to introduce
the principles of the Canadian system into American banking without
a very extensive and vital modification of banking legislation and
conditions in the United States. That the country was prepared
for so profound a modification, not to say transformation, of the basic
ideas upon which the national banking system has been developed
the committee did not believe and it was therefore led to the abandonment of all thought of attempting a plan of banking reform based
upon the conception of large privately managed institutions operating
unrestrictedly and with great numbers of branches. This conclusion
did not, of course, imply any belief that the adoption of other features
of the Canadian system which seemed applicable and could be easily
grafted upon our own system was undesirable. It was a conclusion
relating simply to one of the general ideas underlying the structure
of Canadian banking.
QUESTION OF NOTE ISSUES.

Very early in its inquiries the committee was necessarily confronted with the question whether a mere reconstruction of the noteissue system of the United States would suffice to furnish the basis
for banking reform. Ten years ago and earlier, the dominant note
in banking reform literature seemed to be that of elasticity in currency, and it was frequently urged by men of widely different political
beliefs and of totally varying views as to the theory of money and
banking that the whole problem was essentially a matter of currency
issue. The bankers who urged the creation of an asset currency and
the public men who recommended the issuance of additional United
States notes or Treasury notes, whether protected or unprotected,
were fundamentally alike in their belief that the whole trouble with
existing banking lay in a difficulty in securing proper supplies of
currency when needed and of withdrawing them wnen not needed.
A careful study of this phase of banking discussion convinced the
committee most unmistakably that those who would regard the
banking and credit problem as soluble through the proper treatment
of the paper currency question solely were accepting a superficial




14

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

view of the real elements of the difficulty. As is well known, the
bank extends its credit in two forms, either (1) by the granting of a
book credit or u deposit" or (2) by the issuing of notes. There is no
essential difference between these two forms of credit, if they are
Erotected by similar reserve funds, except that they are likely to
ave a different term of existence, the deposit credit being ordinarily
redeemed much more rapidly and efficiently than even the most
elastic note issues. To provide therefore for a free issue of note currency, whether by the Government or by the banks, would not meet
the need for a more effective supply of deposit credits. In times of
stress the difficulty under which banks labor is not usually that of
lack of assets, but is that of inability to convert good assets into a
medium that can be used in making payments. However desirable
it might be to be able to turn sound and liquid commercial assets into
a note currency payable to anyone willing to receive it, and however
desirable it might be to obtain a free issue of Government legal-tender
notes obtainable by any individual who might possess property of
specified classes, such notes would plainly not meet the needs of those
who desired the book form of credit. While they might indeed be
converted into book credit by depositing them with the banks, such
a course would have entailed many incidental consequences that
should not have been made prerequisite to the obtaining of means of
payment. It was felt therefore that a return to the older conception
of banking reform as being primarily a problem of securing easily
expansible supplies of notes would not meet the needs of the situation
to-day, and even though it should prove to be of some temporary
value in times of special stress woula not constitute that permanent
and reliable support to business credit that was sought. It was
therefore concluded that while a proper issue of note currency should
necessarily be included as a feature in any measure to be recommended it could not be taken as the sole or even the primary purpose
of such legislation.
CLEARING-HOUSE ORGANIZATION.

Another type of plan that has been frequently urged by students
of banking conditions in the United States is that of clearing-house
organization. It has been suggested that inasmuch as the clearinghouse associations of the country represent a kind of voluntary
association among bankers—one, too, that has already been frequently
and successfully availed of in time of stress—it would be well worth
while to endeavor to base such new organization as might be favored
upon the clearing houses of the country. Various plans for this
purpose have been worked out with more or less success. The
Aldrich-Vreeland law, already frequently referred to, was a partial
application of this idea although before the act was finally adopted
it had become necessary to modify in very great degree the original
clearing-house principles upon which the plan was in the first instance
founded. Most such plans have proceeded upon the theory that it
was entirely feasible to compel banks to join national clearing-house
associations which should be incorporated and over which the Government should exercise a measure of control. To these incorporated
clearing houses, it has been suggested, could be committed the function of issuing tlemergency currency" based upon the joint assets




15

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

of the banks, thus providing for regular and authorized employment
of the method of credit extension which has been made use of in
times past when stringent conditions had developed themselves in
the banking community. It has not been deemed wise upon examination to attempt any device of this sort. If the clearing houses
as thus recognized and authorized perform their functions of credit
extension only occasionally and sporadically they remain an emergency expedient. The committee is convinced that what is needed
is not a means of remedying emergencies after they have arisen but
a plan for guarding against the development of such emergencies
and for so protecting the community that it will not be under the
necessity of calling for the use of abnormal devices in its interest.
If the clearing-house associations referred to should be organized
upon a permanent basis with a view to making such extensions of
credit as a regular and normal incident of business, they would not in
any material respect differ from banking institutions. The retention
of the name "clearing houses" would then be misleading and could
not be defended. From no point of view, therefore, has the plan
suggested commended itself. This does not signify that the idea of
cooperative effort embodied in the clearing-house plan is unsatisfactory, but, as will be seen later, quite the contrary. It does mean
that the use of existing clearing-house machinery for the purpose of
granting accommodation under exceptional conditions does not seem
to the committee to be a wise method of providing the credit resources
that are needed in affecting a thorough reform of the banking and
currency system of the country.
OTHER PLANS INADEQUATE.

Of the multitude of other plans, some beyond the confines of reasonableness, others more or less conforming to actual necessities and
to legitimate principles of banking and currency legislation, nothing
needs be said except that none has been found which, in the opinion
of the committee, is at the same time feasible, available, trustworthy,
and sufficiently inclusive to afford a thorough basis of reform of the
present conditions. The committee does not feel that the legislation now to be adopted should seek to include within its scope all
the possible features upon which action is required, but rather that
it should attempt to lay a foundation for future development by
selecting those elements in the situation that are most in need of
attention and seeking to deal thoroughly with the problems offered
in this more restricted field of action. It has therefore put aside
many schemes of reform which, however desirable they might abstractly be, do not conform to the standards already outlined. It
has limited itself to the fundamental necessities of the present situation as it views them and has sought to keep its recommendations
within narrow scope in order that no extraneous issues might become
involved with the general problem which lies at the base of further
improvement. It has deferred the thorough reform of the nationalbank act on its administrative side, and it has determined to postpone, in like manner, the question of long-term agricultural credit,
firmly believing that neither of these subjects can be adequately
dealt with until the substructure of banking organization has been
remodeled.




16

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.
FUNDAMENTAL FEATURES OF REFORM.

After looking over the whole ground, and after examining the
various suggestions for legislation, some of which have just been
outlined, the Committee on Banking and Currency is firmly of the
opinion that any effective legislation on banking must include the
following fundamental elements, which it considers indispensable in
any measure likely to prove satisfactory to the country:
1. Creation of a joint mechanism for the extension of credit to banks
which possess sound assets and which desire to liquidate them for
the purpose of meeting legitimate commercial, agricultural, and
industrial demands on the part of their clientele.
2. Ultimate retirement of the present bond-secured currency, with
suitable provision for the fulfillment of Government obligations to
bondholders, coupled with the creation of a satisfactory flexible
currency to take its place.
3. Provision for better extension of American banking facilities
in foreign countries to the end that our trade abroad may be enlarged
and that American business men in foreign countries may obtain the
accommodations they require in the conduct of their operations.
Beyond these cardinal and simple propositions the committee has
not deemed it wise at this time to make any recommendations, save
that in a few particulars it has suggested the amendment of existing
provisions in the national-bank act, with a view to strengthening that
measure at points where experience has shown the necessity of
alteration.
PROPOSED PLAN.

In order to meet the requirements thus sketched, the committee
proposes a plan for the organization of reserve or rediscount institutions to which it assigns tne name "Federal reserve banks." It recommends that these be established in suitable places throughout the
country to the number of 12 as a beginning, and that they be assigned
the functipn of bankers' banks. Under the committee's plan these
banks would be organized by existing banks, both National and State,
as stockholders. It believes that banking institutions which desire
to be known by the name "national" should be required* and can
well afford, to take upon themselves the responsibilities involved in
ioint or federated organization. It recommends that these bankers'
banks shall be given a definite capital, to be subscribed and paid by
their constituent member banks which hold their shares, and that
they shall do business only with the banks aforesaid, and with the
Government. Public funas, it recommends, shall be deposited in
these new banks which shall thus acquire an essentially public character, and shall be subject to the control and oversight which is a
necessary concomitant of such a character. In order that these
banks may be effectively inspected, and in order that they may pursue a banking policy which shall be uniform and harmonious for the
country as a whole, the committee proposes a general board of management intrusted with the power to overlook and direct the general
functions of the banks referred to. To this it assigns the title of
"The Federal reserve board." It further recommends that the
the present national banks shall have their bonds now held as security




17

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

for circulation paid at the end of 20 years, and that in the meantime
they may turn in these bonds by a gradual process, receiving in
exchange 3 per cent bonds without the circulation privilege.
In lieu of the notes, now secured by national bonds and issued by
the national banks, and, so far as necessary in addition to them, the
committee recommends that there shall be an issue of "Federal
reserve Treasury notes/' to be the obligations of the United States, but
to be paid out solely through Federal reserve banks upon the application of the latter, protected by commercial paper, and with redemption assured through the holding of a reserve of gold amounting to
33J per cent of the notes outstanding at any one time. In order to
meet the requirements of foreign trade, the committee recommends
that the power to establish foreign branch banks shall be bestowed
upon existing national banks under carefully prescribed conditions
and that Federal reserve banks shall also be authorized to establish
offices abroad for the conduct of their own business and for the purpose of facilitating the fiscal operations of the United States Government. Finally and lastly, the committee suggests the amendment of
the national-bank act in respect to "two or three essential particulars,
the chief of which are bank examinations, the present conditions
under which loans are made to farming interests, and the liability of
stockholders of failed banks. It believes that these recommendations,
if carried out, will afford the basis for the complete reconstruction
and the very great strengthening and improvement of the present
banking and credit system of the United States. The chief evils of
which complaint has been made will be rectified, while others will at
least be palliated and put in the way of later elimination.
FEDERAL RESERVE BANKS.

The Federal reserve banks suggested by the committee as just
indicated would be in effect cooperative institutions, carried on for
the benefit of the community and of the banks themselves by the
banks acting as stockholders therein. It is proposed that they shall
have an active capital equal to 10 per cent of the capital of existing
banks which may take stock in the new enterprise. This would
result in a capital of something over $100,000,000 for the reserve
banks taken together if practically all existing national banks
should enter the system. It is supposed, for a number of reasons,
that the banks would so enter the system. More will be said on this
point later in the discussion. How many State banks would apply
ior and be granted admission to the new system as stockholders in
the reserve banks can nc' 1
ever, be fair to assume
reserve banks will be in t
„
0
recommended by the committee provides for the transfer of the
present funds of the Government mcluded in what is known as the
general fund to the new Federal reserve banks, which are thereafter to act as fiscal agents of the Government. The total amount
of funds which would thus be transferred can not now be predicted
with absolute accuracy, but the released balance in the general fund
of the Treasury is not far from $135,000,000. Certain other funds
now held in the department would in the course of time be transferred
SS29°—H. Rept. 69, 63-1




2

18

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

to the banks in this same way, and that would result in placing,
according to the estimates of good authorities, an ultimate sum of
from $200,000,000 to $250,000,000 in the hands of the reserve banks.
If the former amount be assumed to be correct, it is seen that the
reserve banks would start shortly after their organization with a cash
resource of at least $300,000,000. As will presently be seen in greater
detail, it is proposed to give to the reserve banks reserves now held
by individual banks as reserve holders under the national banking
act for other banks. Co lfining attention to the national system, it
is probable that the transfer of funds thus to be made by the end of
a year from the date at which the new system would be organized
would be in the neighborhood of $350,000,000. If State banks
entered the system and conformed to the same reserve requirements
they would proportionately increase this amount, but for the sake of
conservatism the discussion may be properly confined to the national
banks. For reasons which will be stated at a later point, it seems
likely that at least $250,000,000 of the reserves just referred to would
be transferred to the reserve banks in cash; and if this were done the
total amount of funds which they would have in hand would be at
least $550,000,000. This would create a reservoir of liquid funds far
surpassing anything of similar kind ever available in this country
heretofore. It would compare favorably with the resources possessed
by Government banking institutions abroad.
It will be observed that in what has just been said the reserve banks
have been spoken of as if they were a unit. The committee, however,
recommends that they shall be individually organized and individually controlled, each holding the fluid funds of the region in which it
is organized and each ordinarily dependent upon no other part of the
country for assistance. The only factor of centralization which has
been provided in the committee's plan is found in the Federal reserve
board, which is to be a strictly Government organization created for
the purpose of inspecting existing banking institutions and of regulating relationships between Federal reserve banks and between them
and the Government itself. Careful study of the elements of the
problem has convinced the committee that every element of advantage found to exist in cooperative or central banks abroad can be
realized by the degree of cooperation which will be secured through
the reserve-bank plan recommended, while many dangers and possibilities of undue control of the resources of one section by another
will be avoided. Local control of banking, local application of
resources to necessities, combined with Federal supervision, and limited by Federal authority to compel the joint application of bank
resources to the relief of dangerous or stringent conditions in any
locality are the characteristic features of the plan as now put forward. The limitation of business which is proposed in the sections
governing rediscounts, and the maintenance of all operations upon
a footing of relatively short time will keep the assets of the proposed
institutions in a strictly fluid and available condition, and will insure
the presence of the meahs of accommodation when banks apply for
loans to enable them to extend to their clients larger degrees of assistance in business. It is proposed that the Government shall retain
a sufficient power over the reserve banks to enable it to exercise a
directing authority when necessary to do so, but that it shall in no way
attempt to carry on through its own mechanism the routine opera-




19 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

tions of banking which require detailed knowledge of local and individual credit and which determine the actual use of the funds of the
community in any given instance. In other words, the reserve-bank
plan retains to the Government power over the exercise of the
broader banking functions, while it leaves to individuals and privately owned institutions the actual direction of routine.
TRANSFER OF RESERVES.

Reference has been briefly made to the fact that the committee's
proposals provide for the transfer of bank reserves from existing
banks which hold them for others to the proposed reserve banks.
At present the national banking act recognizes three systems of
reserves:
(1) Those in central reserve cities, where banks are required to
hold 25 per cent of their deposit liabilities in actual cash in the vaults,
while banks situated outside of such cities are allowed to make certain
deposits with them which shall count as a part of the reserves of
such outside banks.
(2) Those in reserve cities, 47 in number, which are required to
keep a nominal reserve of 25 per cent, 12J per cent of this being in
cash in their own vaults, while 12^ per cent may consist of deposits
with banks in central reserve cities.
(3) Those in the "country," by which is meant all places outside
of central reserve and reserve cities, it being required that such banks
shall nominally keep 15 per cent of their deposit liabilities, of which
6 per cent is held in cash in their vaults and 9 per cent may be held
in the form of balances with other banks in reserve and central
reserve cities.
The original reason for creating this so-called "pyramidal" system
of reserves was that inasmuch as central banking institutions were
absent, and inasmuch as banks outside of centers were obliged to
keep exchange funds on deposit with other banks in such centers, it
was fair to allow exchange balances with such centrally located banks
to count as reserves inasmuch as they were presumably at all tiriaes
available in cash. This is an absolutely anomalous and unique
system, found nowhere outside of the United States, and dangerous
in proportion as the number of the reserve centers thus recognized
increases beyond a prudent number. The law has almost necessarily
been liberal in recognizing the power to increase the number of such
centers, with the result that whereas but few existed just after the
organization of the national bank act, there being tnen 3 central
reserve and 13 reserve cities, there are to-day 3 central reserve
and 47 reserve cities. Even had this extension of the number of
centers not occurred, the system established under the national
banking act would still have been unsatisfactory. As matters have
developed, it has been vicious in the extreme. Coupled with the
inelasticity of the bank currency, the system has tended to create
periodical stringencies and periodical plethoras of funds. Banks in
the country districts unable to withdraw notes and contract credit
when they have seen fit to do so, because of the rigidity of the bondsecnred currency, have redeposited such funds with other banks in
reserve and central reserve cities and have thus built up the balances
which they were entitled to keep there as a part of their reserves.




20

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

Moreover, the practice of thus redepositmg funds having been once
established, it nas been carried to extreme lengths, and at times has
been decidedly injurious in its influence. The payment of interest
on deposits by banks in the centers has been used for the purpose of
attracting to such banks funds which otherwise would nave gone
to other centers or to other banks in the same centers or which
would have been retained at home. The funds thus redeposited,
even when not attracted by any artificial means, have of course
constituted a demand liability, and have been so regarded by the
banks to which they were intrusted.
In consequence, such banks have sought to find the most profitable
means of employment for their resources and at the same time to
have them in such condition as would permit their prompt realization
when demanded by the depositing banks which put them there.
The result has been an effort on the part of the national banks, particularly in central reserve cities, to dispose of a substantial portion
of their funds in call loans protected by stock-exchange collateral as
a rule. This was on the theory that, inasmuch as listed stockexchange securities could be readily sold, call loans of this type were
for practical purposes equivalent to cash in hand. The theory is
of course close enough to the facts when an effort to realize is made
by only one or few banks, but is entirely erroneous whenever the
attempt to withdraw deposits is made by a number of banks simultaneously. At such times, the banks in central reserve and reserve
cities are wholly unable to meet the demands that are brought to
bear on them by country banks; and the latter, realizing the difficulties of the case, seek to protect themselves by an unnecessary accumulation of cash which they draw from their correspondents, thereby
weakening the latter and frequently strengthening themselves to an
undue degree. Under such circumstances the reserves of the country,
which ought to, constitute a readily available homogeneous fund,
ready for use in- any direction where sudden necessities may develop,
are in fact scattered and entirely lose their efficiency and strength
owing to their being diffused through a great number of institutions
in relatively small amount and thereby rendered nearly unavailable.
This evil has been met in times past by the suspension of specie payments by banks and by the substitution of unauthorized and extralegal substitutes for currency in the form of cashiers' checks, clearinghouse certificates and other methods of furnishing a medium of
exchange. Needless to say such a method of meeting the evil is the
worst kind of makeshift and is only somewhat better than actual
disaster.
HOLDING OF FUNDS.

The committee believes that the only way to correct this condition
of affairs is to provide for the holding of reserves by duly qualified
institutions which shall act primarily in the public interest and whose
motives and conduct shall be so absolutely well known and above
suspicion as to inspire unquestioning confidence on the part of the
community. It believes that the reserve banks which it proposes to
provide for will afford such a type of institutions and that they may
be made the effective means for the holding of the liquid reserve
funds of the country to the extent that the latter are not needed in
the vaults of the banks themselves. To meet this end it proposes




21 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

that every bank which shall become a stockholder in the new reserve
banks shall place with the Federal reserve bank of its district a portion of its own reserve equal ultimately to 5 per cent of its demand
deposits. Country banks would be required to keep 5 per cent in
their own vaults, while the remaining 2 of a required total of 12 per
cent might be at home or in the reserve bank of the district. In the
case of reserve and central reserve cities the committee has felt that
the change in their position as reserve-holding banks acting for other
banks called for a corresponding change in the cash to be held by
these banks. It has therefore reduced the gross reserve requirements
from 25 to 18 per cent of deposits and the cash in vault requirement
from 25 per cent in the central reserve cities to 9 per cent and from
12 J per cent in the reserve cities to 9. This places the two classes of
reserve cities on an equal basis, leaves each ultimately with 9 per cent
cash, requires each to keep 5 per cent in the reserve bank of the district,
and permits each to keep a final 2 or 4 per cent either there or in its
own vaults.
A period of three years is granted during which the deposits of
country banks may be kept with the present correspondent banks in
order that the latter may not be unduly embarrassed by sudden
withdrawals while the new reserve banks will not be as suddenly
compelled to provide for using a very large quantity of funds. The
committee is aware that the step thus recommended is of fundamental importance and will produce an extensive transformation in
present methods of national banking. It, however, believes that the
effects of this transformation will be altogether beneficial and is
confident that the conditions under which the change is to take place
as provided in the new bill are such as to make the transfer not only
without suffering to the banks but under conditions that will actually
enable them to extend further loans to the community. The actual
effects of the operation proposed have been worked out in some
detail by the committee and are presented as a series of computations in connection with the section of the proposed bill which provides for the revision of reserve requirements. Final analysis of these
figures may be deferred until that point. It is enough to say at this
point that a sufficient amount of reserve has been released, as compared with present requirements, amply to provide for the actual
transfer of funds called for by the bill at the outset of the new system.
Subsequent transfers will amount only to about enough to place the
new system upon the same basis as the old in the matter of reserve
requirements, when a margin has been allowed for contributions of
capital and for possible accessions of State banks to the system.
Or, to sum up, the new system will require less cash than the present
one in order to fulfill its reserve requirements and provide for the
payment of capital subscriptions. The margin between present and
proposed requirements which it is thought should be left in order
that State banks may come into the system without causing any
strain upon the cash resources of the country will probably be from
$100,000,000 to $150,000,000, a sum which is believed to be ample.
Needless to say the new reserve requirements will not fall upon all
banks in precisely the same way or with precisely the same degree of
severity. In the case of some it may be that a transfer of cash to
the new system will be undesirable. In such an event it is, of course,
always open to the banks to establish their required reserve credit with




22

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

the new Federal reserve banks by rediscounting paper with them.
With the enormous resources that will belong to these reserve banks
at the outset they will be amply able to take care of many times the
amount of any such applications that are likely to be made to them.
RETIREMENT OF BOND-SECURED CURRENCY.

There are several important reasons for the retirement of bondsecured currency. The most obvious is that bond-secured notes are
not "elastic." By this is meant that the necessity of purchasing
bonds to be deposited with a trustee for the protection of note issues
prevents banks from issuing these notes as freely and promptly as
they otherwise would, while it also prevents them from retiring or
contracting the notes as freely and promptly as would otherwise be
the case. There is little or no disagreement at present among students of the banking and currency problem in the United States that
the retirement of tne bond-securea notes is essentially necessary if
success is to be had in restoring elasticity to the circulation and in
making the national banking system really responsive to the needs of
business. For that reason every plan of currency or banking reform
that has been put forward during the past 15 years has contained as
an important factor some provision for getting rid of the bond-secured
notes. The basic criticism on the present system of notes already
indicated is reenforced by the fact that the supply of United States
bonds available for use in protecting note issues is likely to be limited,
as was the case in the panic of 1907. Then the national banks were
not able to enlarge their issues because of their inability to obtain
further bonds, until they had been aided by the action of the Government in issuing additional bonds for the very purpose of furnishing
a backing for currency, notwithstanding that at that moment there
was a very large surplus in the Treasury. Over and above this consideration has been the fact that the formalities and technicalities
connected with the issue of bank notes based upon bonds have been
so great and troublesome as to preclude the easy and prompt supplying of currency, even when there weie enough bonds in tne market
to furnish all the backing for notes that might be desired. This shows
why, apart from the special and peculiar difficulties that attend anything of the sort, the substitution of bonds other than national for
the national bonds now used will not help the situation. The only
way to relieve the bad conditions that have developed in connection
with national-bank currency is, therefore, generally admitted to be
the abandonment of the bond-security plan and the introduction of
something else in its place.
DIFFICULTY OF BOND HOLDINGS.

The first difficulty in passing from the bond-secured system of
note issues to anything that might be devised to take its place is the
fact that even if all had been satisfactorily arranged with reference
to the new system, its soundness, etc., the difficulty of dealing with
the bonds would remain. The act of March 14, 1900, provided for
refunding the outstanding bonds into the 2 per cent consolidated debt
and these 2 per cent bonds were subsequently sold at premiums




23 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

which once ran as high as 8 or 9 per cent and have regularly been 2 or
3 per cent or more. Primarily as a result of general depreciation in
the values of bonds due to rising prices and higher interest for capital, the national bond quotations have sunk until the 2 per cents are
now below par. The ownership of bonds has thus inflicted a severe
loss upon holders already, and something like $30,000,000 has, according to the Comptroller of the Currency, been "written off" by
the banks and must be regarded as one of the costs of carrying the
note system at present in use. There is general agreement that if the
circulation privilege were to be taken from t1 e 2 per cent bonds or,
what is the same thing, if a new system of note issue were to be
established which would practically displace the present system, the
twos would deteriorate to a price not higher than 80. This would
mean a shrinkage of one-fifth of the par value of the bonds and would
inflict upon the banks an aggregate loss of nearly $150,000,000.
Alternative to this is the idea of providing for a refunding of the
bonds. Experience, as well as computations made in the Treasury,
indicate that 3 per cent is now about the level of the Government's
resent borrowing power. The $50,000,000 Panama bonds last sold
rought a premium of between 2 and 3 per cent, but 3 per cent
interest without the circulation privilege represents the minimum
interest that must be paid (in round numbers) upon any future issue
which is to be floated upon an investment basis. In order to safeguard the banks against loss, therefore, a plan of refunding into 3
per cent bonds would have to be followed. The banks might be
offered cash payment for their bonds at par, and the new securities
might be sold for what they would bring, or an exchange of 3 per
cents for the old twos might be ordered. The latter would be simpler,
and the former would probably cost a little more. Either plan would
entail an increase in the present interest burden nearly amounting to
1 per cent annually on at least $740,000,000, or $7,400,000 a year.
Temporary alternatives for the retirement of the bonds are, however, proposed here and there. The most familiar and perhaps the
most available plan of the sort is that which proposes to require banks
to have outstanding a certain percentage of notes based on bonds
before they become eligible to take out notes without bond security.
This would mean that an inflexible volume of bank notes was kept
outstanding, or at all events that an inflexible volume of bonds was
held by the banks to protect such outstanding notes in case they
should be issued, and that whatever new form of currency might be
provided for would come out in excess of or in addition to the basic
volume of notes and bonds already referred to. The plan would
partially destroy the possibilities of elasticity in the note currency
system, but at the same time it would operate to keep up the value
of the existing bonds for the time being. The question would then
be whether the effort to sustain the value of the bonds in this manner
during the remainder of their life was not too great to be compensated
for by the saving in interest thereby effected. The general opinion
of students of the subject undoubtedly is that this temporary method
of sustaining the value of the bonds is undesirable, and that it is far
better to recognize the facts in the case and take up the securities
in such a way as to relieve the banks from any danger of further
loss, the Government bearing the increased interest charge and leaving
the banks to turn in their securities at will.

E




24

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

What has been thus far said has been founded upon the assumption
that agreement had been reached with reference to the method of
note issue to be followed when once a plan for retiring the old notes
and disposing of the bonds had been agreed upon. While no such
agreement has ever been arrived at, it is true that substantial agreement has been reached with reference to the basis on which the notes
which are to supersede national-bank issues shall be put out.
Another phase of the note-issue question is seen in connection with
the problem by whom the notes should be issued. The current
assumption is that in the event of the creation of any cential or
cooperative institution the note-issue power now exercised by the
several banks should be transferred to and vested in this new organization. There has been a tendency to overestimate the importance of
the note-issue function and to treat it as if it were the chief object to
be attained in banking legislation. This idea may be attributable to
the belief that "emergency currency" is what is needed in order to
relieve panics and stringencies, whereas what is actually needed is
fluid resources of some kind, whether notes or not. The belief that
the notes are very important has also been stimulated by the experience in this country with clearing-house certificates, which are often
spoken of as if they were notes. The fact is that they are merely
evidences that the banks that have gone into the clearing-house
arrangement are willing to accept a credit substitute for money in
settling their balances with one another. It remains true that the
provision of a satisfactory note currency would be a long step in
advance, as compared with existing conditions. With proper control and restriction it would, however, supply a means of obtaining
additional circulating media in time of panic or stringency when there
was a tendency to hoard money, and would to that extent relieve the
danger of collapse due to inability to convert assets into fluid resources.
It is therefore a cardinal element in currency and banking reform and
should be provided for.
COMMITTEE'S NOTE PLAN.

After reviewing all of the different factors in the situation, the
Banking and Currency Committee has reached the conclusion that the
issueof national-bank notes now current should, forthe reasons already
surveyed, be retired despite the serious difficulties that have been
sketched, and that in their place a new issue of notes put out by the
Government of the United States and closely controlled by it should
be authorized. This issue of notes it is proposed to entitle " Federal
reserve Treasury notes." In its essence the plan now recommended
by the committee for a new note issue contams the following points:
1. Ultimate withdrawal of the circulation privilege from the Government bonds of all classes.
2. Issue of notes by the Government through Federal reserve banks
upon business paper held by such banks.
3. ^Redemption of such notes and regulation of their amount outstanding at any moment through Federal reserve banks.
The ultimate withdrawal of the circulation privilege means that
some provision of proper character must be made for the existing
bonds. It is suggested that, first of all, this should mean the payment of the bonds at maturity and a definite statement to that effect.




25

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

This the committee has included in its bill. The bonds now have
no due date, and while the Government may redeem them after
1930, they are not necessarily payable at that period. If the bonds
are to be continued outstanding, it would seem to be an essential
feature of their composition that they shall be allowed to retain the
circulation privilege. To get rid of this, it is only necessary to declare
them due and payable as soon as the Government has the right to
apply that principle. But, in the second place, it would appear that
the reform of the currency along the lines proposed, if it is ever to
make a fair start, should proceed from the abolition of the circulation requirement in the case of banks either organized or to be
organized. The committee has, therefore, proposed to repeal that
provision of the existing law which requires the deposit of bonds by
every bank in stated amounts. This means that banks may, if they
choose, entirely free themselves from circulation. In order to enable
them to do this, and at the same time to supply the place of the small
but steady demand for bonds which was afforded by the purchases
made by newly organized banks, the committee proposes to allow a
voluntary refunding process to be carried out over a period of 20
years at the rate of not to exceed one-twentieth of the circulation
outstanding at the time of the passage of the act. It is probable
that if this provision were fully availed of it would mean an annual
refunding of 2 per cent bonds amounting to about $37,500,000. In
consideration of the action of the banks in surrendering the circulation privilege on the bonds which they thus voluntarily present for
refunding, it is proposed to give the banks a 3 per cent bond without
the circulation privilege. This is believed to be an excellent business
policy for the Government, as it could scarcely borrow at a lower
rate than 3 per cent to-day. What it will be able to do at the end
of 20 years is entirely problematical, but it is a fact that the circulation privilege is worth at least 1 per cent, and in surrendering it the
banks get no undue consideration from the Government. They do,
however, materially facilitate the process of converting the old
national-bank notes into the proposed new issue of Federal reserve
Treasury notes.
COST TO THE GOVERNMENT.

That the cost to the Government of this conversion will be 1 per cent
on the amount converted, or in the last analysis very near $7,500,000,
if all the bonds should thus be surrendered is obvious; but it is also
clear that the change would, for reasons stated, be an excellent investment for the Government. The committee has arranged to give the
proposed Federal reserve board power to tax the new currency at such
rate as it might deem best, and should it impose a tax of 1 per cent
the Government would be reimbursed for any excess interest payments
which it might be required to make on the new bonds. Over and
above this plan of recouping itself for any losses is the fact that the
Government is to receive a substantial share of the earnings of the
proposed institutions of rediscount. If the plan of the committee
should be accepted and carried through in complete form, the result
would be a profitable one for the Government.
Whatever may be the ultimate earnings of the banks, however,
the committee is convinced that the conversion of the bonds and the




26

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

retirement of the present notes, followed by the issue of new notes,
ought to be effected at all hazards and at any cost, as a fundamentally
desirable public reform. It believes that the change should be carried
through upon a frank, open, and direct basis, and that no effort
should be made to mask, as was done in the Aldrich bill, proposed by
the Monetary Commission, the real nature of the process or the burden
and distribution of its cost.
The committee is of the opinion that in order to have the new currency at once satisfactory and effective, it must be (a) sound and (b)
elastic. The soundness of the new notes will, in its judgment, be
amply secured by the fact that they are made obligations of the
Government and afirstlien on the assets of the Federal reserve banks
issuing them, while they have also been immediately protected by the
hypothecation of first-class commercial paper in the hands of an
agent of the Federal reserve board at each of the banks. Their
elasticity depends entirely upon two fundamental elements —(1) the
provision of an adequate money fund for their redemption and (2) provision for the prompt presentation of the notes. The money fund is
provided by the requirement that no notes shall be issued by a Federal
reserve bank unless 33 J per cent of money shall have been segregated
in the vaults of the issuing institution for the purpose of paying such
notes upon presentation by any holders. The banks are left to provide this fund, and are both vested with the duty and equipped with
the power to obtain it and hold it, either by withdrawing it from
domestic channels or importing it. They are required to redeem the
Federal reserve Treasury notes, both of their own issue and those
issued by other Federal reserve banks, whenever the notes may be
presented to them from any source; while, as a central point of redemption, it is provided that the Treasury Department shall pay the notes
out of a fund of money (constituting part of the 33 J per cant referred
to) which shall be placed in their hands by the several banks. This
means that the Federal reserve Treasury notes will be redeemable in
money at each of the 12 banks and at the Treasury, while the requirement that the notes shall be payable to the Government and to any
bank for deposit purposes will be tantamount to a quasi-redemption
at every point where banking is carried on. In order to insure the
prompt presentation of the notes for redemption, thereby avoiding
danger that they may accumulate in the bank vaults, the bill refuses
to authorize their use as reserve money by member banks, while of
course they will be excluded from the reserves of Federal reserve
banks.
Provision is also made whereby they will be prevented from accumulating in the Treasury or any of its sub treasuries even in small
quantities. It is believed that these provisions will insure the
prompt return of the notes, thereby producing genuine flexibility
m the currency. The notes will be taken out whenever business
paper eligible for presentation to Federal reserve banks for rediscount
is created; and as such paper matures, is paid off, and shrinks in
volume the basis for the notes will correspondingly shrink, and either
the notes themselves or an equivalent amount of lawful money will
be withdrawn from circulation. It is an undoubted feature of the
measure as now drafted that it will furnish an ample mechanism for
insuring the cancellation of the notes as well as for their issuance.
While this process is going on, there will have been an active re-




27 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

demption of the notes, owing to the operation of the provisions for
exchanging them for money already sketched.
USE OF GOVERNMENT FUNDS.

One feature of the proposals for legislation contained in the committee's bill is the recommendation that the funds of the Government
of the United States received by it as a result of current business
transactions and heretofore held in the Treasury shall thenceforward
be deposited with the Federal reserve banks, the latter institutions
to act as fiscal agents for the Government in all of its transactions
thenceforward. This recommendation is of fundamental importance.
The Independent Treasury system of the United States under which
the Treasury Department now carries on its operations dates from
1846 and is the result of the legislation then urged and adopted for
the purpose of putting the country upon a so-called hard-money
basis. Whatever may be thought of the idea of actual specie payments and of segregation of Government cash, both when it comes into
and when it goes out of the Department of the Treasury, experience
has shown that the system is not feasible. It was necessary to suspend the Independent Treasury system, practically speaking, when
the Civil War broke out; and upon every subsequent occasion of stress
or difficulty in the market a repetition of this suspension has become
practically unavoidable. It has been necessary on those occasions
to redeposit the funds of the Government in banks in order that the
commercial community need not be deprived of the use of them even
for a short time. At times it has been found expedient, if not absolutely necessary, to temporize with the law and with the technical
requirements of the Treasury system, and practically to abandon
the plan of requiring cash payments even when that was theoretically
lived up to—this again in order to avoid any withdrawal of urgently
needed funds from the business community.
In normal times the withdrawal of these funds has, of course, been
far less noticeable in its influence upon the business world, although
at all times it has been a fact that the withdrawals did disturb in a
measure the natural balance and distribution of funds between
different parts of the country and did thereby tend to embarrass
some parts of the country much more than others, owing to the
fact that withdrawals of cash due to the payment of taxes were
neither identical in amount nor proportionate in importance in these
several sections. The inadequacy of the Independent Treasuiy system and of the present method of making public deposits has indeed
been fully recognized bv Congress when it provided that all such
deposits in banks should be made only upon security of United
States bonds, a requirement which means, if it means anything, that
the banks called national and under congressional supervision,
although deemed safe enough for the use of the public, are not safe
enough to serve as depositaries of public funds—a situation which,
if actually what it seems to be, is both ridiculous and disgraceful.
This condition of affairs would, however, be greatly aggravated and
would become even more anomalous if Congress were to authorize
the creation of a new set of banks intrusted with the power of holding reserves and acting as the intermediaries through which a new
currency is issued, yet unable to be trusted as custodians of Gov-




28

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

ernment funds. Both for economic reasons and because of considerations of the logic and dignity of the situation, it is desirable to have
the current receipts of the Government deposited in the new banks
and its disbursements made by drawing upon these institutions.
The Treasury is in no way interfered with by this process save in
so far as it is relieved of some routine duty. It is left to manage the
fiscal affairs of the Government in precisely the way that is now
practiced, but the actual funds are placed with the Federal reserve
banks, where they will continue to be available for the banking needs
1 ' 1
1 1 1
1
1 ' 1
of the commu
>onsible for
afford the
the solvency
basis of taxat
esources of
iA ^
the public Treasury.
BENEFIT FROM DEPOSITS.

Too much can not be said of the benefit that will be derived from
the continuous depositing and withdrawing of public moneys through
the Federal reserve banks, as compared with the present artificial
system of periodically contracting currency through heavy withdrawals due to large payments for customs and internal revenue
and of periodically expanding the currency through deposits in the
banks, which, however wisely selected, can never restore the funds
to exactly the same channels from which they were drawn. A very
large share of responsibility for the past panics and crises of the
United States must undoubtedly be assigned to the Treasury system
which has been responsible for this sporadic and spasmodic movement
of funds. In unskilled or selfish hands, the power thus bestowed upon
the executive branch of the Government may be, as it has at times
become, most dangerous to the public welfare, while it is always a
source of grave responsibility and danger scarcely to be overestimated
in its importance. The usual consideration against placing Government funds in the banks has been that by so doing certain banks were
favored at the expense of others while the Government was deprived
of its legitimate return upon the moneys that it furnished. Under
the proposed plan, no such danger exists. Power is given to the
Federal reserve board and to the Secretary of the Treasury, jointly,
to establish a rate of interest upon public deposits, thereby rendering
it possible for the Government, if it chooses, to assure itself a fair
adequate return for its funds from the very time that they are placed
in the banks. Under the section of the proposed bill which provides
for a distribution of earnings the Government of the United States is
given 60 per cent of all net income after the banks have received
5 per cent upon their invested capital. The Government is therefore
in position to get its full and due return for every dollar that it places
in the hands of the banks, while the community has the use of the
money thus left subject to the disposal of trade and commerce according to their necessities. This is as it should be, since it amply protects the Government, safeguards the public interest, and assures the
returns of the profits from the use of the funds to the Government
after the banks have received the fair going rate of return for carrying
on their business and performing the routine operations connected
with their duties as fiscal agents of the Treasury.




29 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

There is another aspect of this Treasury deposit system that deserves mention in this connection. The bill provides for the depositing
of funds not in any one bank, and not in accordance with any system
that would place the moneys in any particular group of banks, but for
the depositing of the funds in such banks as from time to time may
be deemed wise, having due regard to an equitable distribution of
these moneys among the different sections of the country. The power
is, however, retained to make redistribution whenever deemed best,
and this means that the provision is important as an adjunct to the
power of the Federal reserve board over rediscounts and rates of
mterest as well as over reserves.
EQUALIZING RESERVE FUNDS.

It is evident that the Federal reserve board and the Secretary of
the Treasury could, by shifting the deposits of the Government from
place to place as occasion demanded, meet conditions of stringency
and difficulty in the market, or furnish exchange funds as occasion
appeared to require. The power would naturally be exerted before
any resort was nad to any method of interfering with the loans of the
banks or with their reserves, and would of course be far more satisfactory as a means of equalizing resources than the exercise of the compulsory rediscount power. What has been done by various Secretaries
of the Treasury in times past, and has been successfully done, toward
the readjustment of banking accommodation, by the making and
withdrawal of public deposits in different parts of the country, with
comparatively meager funds, under the present Treasury system,
gives a faint suggestion of what might be accomplished in the way
just indicated. We have stated that in our judgment the use of the
Treasury funds for deposit purposes in the manner referred to has
never been desirable and has frequently resulted in leading, through
long-continued employment, to panic or to artificial and injurious conditions of various kinds. WTiathas just been said does not in the least
weaken the force of the general observation thus restated. The
harm resulting from past efforts of this kind has arisen primarily
from the fact that they were necessarily carried out without intimate
knowledge of or close association with the banking mechanism of the
country.
The evil which came from these efforts was due to the lack of
adaptation to existing conditions. Under the proposed plan the
funds of the Government will never be removed from the uses of
the commercial community, but they will continue in the general
regions of the country where they originated, while those who are
to be charged with the duty of overseeing the management of Government funds will have at their disposal the information that is
needed to enable them to readjust deposits or to grant temporary
relief through the shifting of Government resources should conditions
suddenly require action of that kind. The situation will not only be
such as will put an end to the vicious and wholly artificial state of
things existing under the present type of Treasury organization, but
will substitute for it a helpful system whereby definite governmental
authority, closely informed concerning banking conditions and
constantly in touch with the development of credit in all parts of tine




30

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

country will be in control of an enormous mass of fluid resources
which it can transfer by normal methods through the ordinary channels of trade from one part of the country to another, as conditions
warrant; or, better still, can direct the flow of this mass of resources
now here and now there, as circumstances call for it. The process
will be conducted with knowledge of the highest order and will be
free of the difficulties which have heretofore beset the making of
Treasury deposits. It will be similar in operation to the function that
is performed by the central banking institutions of foreign countries
and will be carried out by exactly similar methods save that, because
the authorities in charge of it are not hampered by commercial
motives and are not interested more in one part of the country than
in another, they will be able to do the work without any of the
interfering considerations of private profit which frequently prevent
the operations of a central banking institution from being carried on
solely in the public interest. In the best sense of the word, the
Government will be completely "out of the banking business" and
in the best and proper sense of the word it will be in that business,
neither under the necessity of interfering with normal trade operations nor of artificially interposing to bolster up weak banks in any
part of the country;
BANKING FACILITIES FOR FOREIGN TRADE.

It has long been a ground of complaint that the national banking
system provided no adequate means for the establishment of American
banks in foreign countries. This criticism has had some warrant, and
in view of the rapidly expanding foreign trade of the United States
it is deemed wise to make proper provision for banking machinery
in foreign countries which shall be closely controlled by home institutions. The bill proposed by the National Monetary Commission
sought to accomplish this end by providing for the creation of a special
type of institutions to be organized by national banks as stockholders
and to engage in operations abroad. The committee is of the opinion
that no such elaborate mechanism is necessary, but that every good
purpose of the monetary commission plan can be attained by the
adoption of the plan it has proposed, which consists essentially of
provision for the establishment of foreign branches by existing
national banks when such banks have an adequate capital for the
kind of work in which they propose to engage and are, found by the
Federal reserve board to be m proper condition for undertaking such
an enterprise. The proposed plan is simple and, it is believed, sufficiently effective for the purpose. Under it national banking institutions will be in position to create branch offices at such foreign points
as they may deem best, assigning to them a due share of capital and
conducting their affairs separate from those of the home office in
order that there may be no difficulty in ascertaining at any moment
the distribution of the business of the institution. It is believed
that with the extension of national-bank powers which is provided
for in the present act, such branches of national banks would be
amply able to meet the requirements of their clientele wherever it
might be necessary for them to operate.




31 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.
EXAMINATIONS OF NATIONAL BANKS.

For some years the national banking act has been found to be
seriously defective in its provisions for examinations. In attempting
the organization of a more closely woven system of banking the
committee therefore feels impelled to urge the necessity of stiffening
existing examination requirements, while it also feels the imperative
character of the demand for careful examinations of Federal reserve
banks. In order to fulfill all the requirements of the case it therefore
has included in the proposed measure a considerable extension of the
examination function, dividing this between the Comptroller of the
Currency, the proposed Federal reserve board, and the Federal
reserve banks themselves. The committee is of the opinion that the
authority to institute bank examination should be lodged with every
part of the banking organization competent and trustworthy enough
to exercise it, not because, as some have asserted, it is desired to have
bank examinations constantly in progress, and not because of any
belief that such examinations wouId be in fact much more frequent
than they ^ow are, but because it is believed that the exercise of the
power to examine whenever necessary is essentially a fundamental
and desirable power, and one whose exercise, if judiciously carried
out, will result in the early detecting of dangerous conditions and their
correction before they have reached a desperate stage. It is believed,
moreover, that the provisions with reference to bank examinations,
if properly carried out, will largely if not wholly obviate any necessity
for the clearing-house examinations, which are carried on at the
present time in behalf of associations of banks and of which there has
been more or less complaint on the ground, however unjustified, that
such examinations were unfairly carried on or were in some way used
for the benefit of individual banks or bankers. That such charges
have frequently been unjustified is undoubtedly true, but it is believed
that the new system of placing all such examinations under authorized
control and supervision will eliminate many possibilities of criticism
or attack that lurk in the present system and may at times give rise
to prejudice and specious assertions of favoritism.
DETAILED REVIEW OF BILL.

Having thus examined in outline the principal considerations which
have led to the formulation of the proposed bill and the chief ideas
that have dictated the form that has actually been given to it, it is
now desirable to examine the terms of the proposed measure in detail.
SECTION L.

Section 1 creates a short title which may be used for convenience,
sake in the future in referring to the act. It needs no further discussion.
SECTION 2.

Section 2 provides for the districting of the country and for the
organization of a reserve bank in each such district. These two
topics may be discussed separately, it being prefaced that the purpose of the proposed bill is to substitute for the national currency




32

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

associations of the Aldrich-Vreeland law a series of reserve banks to
be organized in independent districts and to do in a better and more
continuous way the services which had been expected of the currency
associations themselves.
It has been explained at an earlier point that the purpose of any
thorough banking legislation must necessarily be the creation of a
means for rediscounting existing paper and for furnishing either a
bank credit or an elastic and reliable bank-note issue as the medium
by which such discounts may be afforded. Without going more into
the theory of this proposition, already thoroughly well covered, it
may be stated that the medium through which the present bill proposes to attain these ends is the organization of a reserve bank to be
entitled a uFederal reserve bank" in each one of the Federal reserve
districts to be established as provided in section 2. In briefest terms,
then the reserve bank in each district will do for existing banks what
an ordinary bank does for its customers; that is to say, it will hold
their surplus funds, furnish them loans, offset their payments and
receipts, and supply them with the means of making remittances.
In broad theory there will be no difference between the services performed by the reserve banks or bank and those performed by the
existing banks for individual customers. Unless it be true that the
reserve banks are granted some special privilege or relationship to
the Government there will be no reason why they should not be
organized upon the same basis and for same general purposes as
existing banks. Indeed, with one or two minor modifications of
existing law they could be so organized under the present national
bank act. It is to be noted that some national banks now organized
and doing business in the larger cities perform in a measure very
much the same functions for smaller banks which do business with
them that it is now proposed to have the reserve banks to be organized under this act ao for the banks that are to be their constituent
stockholders. The existing banks which perform this function do it
for profit, and when opportunity offers make exorbitant returns for
themselves on the transactions they enter into. The proposed
reserve banks are to be cooperative institutions, rendering their
service for the good of all the banks that are stockholders in them,
as well as for that of the public, while the Government is to get the
excess profits of the institutions. The detailed functions of the
reserve banks can be best brought out in connection with subsequent
sections, where they are dealt with more elaborately.
It is evident that before the different banks can be organized and
placed it must be decided where they are to be placed and how large
are to be the districts in which they shall operate. For reasons which
are already partly apparent and will be made more so as the discussion goes on, one such bank in a district is all that is needed or could
profitably or properly be organized there. This necessitates care in
choosing the locations and fixing the size of the districts. Two
fundamental considerations are sought in performing this work.
1. To provide each section of the country that constitutes a geographical and business unit with a reserve bank to serve its local
banks and hold their reserves, making the districts sufficiently
numerous to enable each such section to feel that its wants are met by
its own local reserve institution under its own control. At the same
time it is recognized that the districts should not be made so small




33 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

as to cut the capital of the reserve institutions to a figure that would
make them weak.
2. To see to it that reserve banks are given a capitalization that
will enable them to do what they are designed to do and are so
situated as to avoid any shock to business enterprise resulting from
the shifting of bank reserves from existing banks to the new reserve
banks in the way outlined in the present bill.
It is believed that the fixing of the exact number of banks and the
delimination of the districts are points that can only be exactly met
after careful investigation by a properly qualified body appointed
for that purpose. It has, however, been thought wise to fix the
minimum number of such banks to be established in order that in
passing the law the community may be assured of adequate provision
for its needs. It is proper to say frankly that much difference of
opinion as to the number of such banks has been expressed, some
placing the desired number as high as 50, others as low as 3. Those
who advocate the larger number think that there should be one such
bank in practically every reserve city, on the ground that the reserve
cities of the present day owe their existence to a definite need which
has resulted in their establishment, and that this need ought to be
recognized under such legislation as may be passed. Those who
advocate the smaller number think that the banks should be created
in central reserve cities only. They say that these central reserve
cities are now the ultimate holders of reserves and that if they alone
had the reserve banks proposed to be organized under this act there
would be very little friction or difficulty in passing from the existing
regime to the proposed plan.
The Committee on Banking and Currency finds itself unable to
side with either of these groups of thinkers. It believes that the
number of reserve banks to be created ought to be large enough to
meet the reasonable needs of the country and should not be so small
as to play into the hands of those who want to establish a very high
degree of centralization. It also thinks that the reserve banks should
be few enough in number to make them really independent institutions, likely to look to one another for aid only under emergency
conditions, and hence not in danger of being controlled by other
reserve banks. It has therefore fixed the minimum number of
reserve banks at 12. This number has however not been arrived at
from theoretical considerations solely, but also as a result of the following data:
1. The committee has asked a considerable number of bankers
their views as to the proper number of such institutions. Many of
these bankers were questioned during the hearings of last winter.
Among them were Messrs. A. B. Hepburn, who thought that if such
a plan were adopted the number should be one in each clearinghouse district (hearings, p. 10); Sol. Wexler, who thought that the
number should be about 15 (hearings, p. 623); Victor Morawetz, who
fixed the number at 1 in each clearing-house district (hearings,
p. 48); Sir Edmund Walker, who thought the number might run as
high as 20 (hearings, p. 666); and others. Mr. J. V. Farwell, a wellknown merchant of Chicago, suggested 5 to 7 as the number (hearings,
p. 452).
8829°—H. Kept. 69, 63-1




3

34

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

2. Experience under the Aldrich-Vreeland law has resulted in the
organization of 18 currency associations.
3. The Aldrich bill, so called, or National Monetary Commission
bill, provided for a central reserve association with 15 branches or
16 banking institutions, open to the banking public, in all.
4. Examination of the present bank capital of the country shows
that the number of banks on the basis of capital contribution could not
well be in excess of 12 or 15 if the capitalization of the reserve banks
themselves was to be sufficiently strong to make them effective.
Assuming that the total capital of the national banks to-day is somewhat over $1,000,000,000, and assuming further that State banks
possessing a capitalization of one-half that amount were admitted
to the proposed institutions, it might be estimated that these Federal
reserve banks would be owned by banks with an aggregate capitalization of $1,500,000,000. It will be shown later m the present discussion that the capitalization contribution to be exacted of each
bank is 10 per cent of its present capital. That would make a total
capitalization for the proposed reserve institutions of $150,000,000.
Assuming that this amount was contributed and that there were 12
such institutions, their average capitalization would be $12,500,000,
which is believed to be ample to meet the needs of the communities
represented. If it should be roughly assumed that one-third of the
proposed banks would be near the lower limit of $5,000,000 capitalization, this might mean five reserve banks with a gross capitalization of
$25,000,000; five reserve banks with an average capitalization of,
say, $7,500,000 and a gross of about $37,500,000, so that there would be
left five with a gross capitalization of $87,500,000, or an average of
$17,500,000. It is probable that as New York City already possesses
two banks of $25,000,000 capital each, while her banking resources
are very large otherwise, the bank of the New York district might be
given a capitalization of $30,000,000 or $35,000,000, in which case the
other four banks belonging to the group of large institutions might
have ^n average capitalization of $13,000,000 apiece. These figures
are all purely tentative and are merely intended to represent the way
in which the districting might operate. Further attention can be
given to the subject of districting and its effect upon the banks in
connection with the study of the reserve section of the bill, which
will be taken up somewhat later in this discussion. It is undoubtedly
true that the proposal to create as many as 12 reserve banks will
receive very sharp criticism from banking interests which are desirous
that there shall be as high a degree of centralization as possible in the
new system, while it is also thought probable that the proposed number will be sharply attacked by others who think that the 12 is by no
means enough to give all portions of the country a chance to be fairly
represented and adequately heard in connection with the rediscounting of paper. Thefigurefixed has, however, been the result of careful
study and the committee feels entire confidence in its approximate
correctness. It recognizes that in the future as the country grows
there will be need of an increasing number of reserve banks, and
therefore the power is given to create more such banks in the future
as occasion requires.
Inasmuch as no machinery is in existence for the creation of such
banks, and inasmuch as the process of districting the country can not
be described in any hard ana fast manner, it has been deemed best to




35

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

leave this analysis of business conditions for which there are at present no adequate statistics within reach, to a committee including the
Secretary of the Treasury, the Attorney General, and the Comptroller
of the Currency. In order that they may do their work correctly
and successfully it will be necessary for them to ascertain with care
the business connections of each of the principal cities of the country
in order that the districts in which such cities are located may be
properly shaped in a way that will not alter the present course of
exchange and interbank remittances. The task thus prescribed may
be one of some considerable length, and therefore it has been deemed
best to leave the establishment of the details and the fixing of dates
for organization to the judgment of the committee in question, subject only to the provision that in general it shall be completed within
a reasonable time. Inasmuch as the work of making the distribution
and apportionment of banks by districts will involve some expense,
it is proposed to assign a moderate sum to cover the cost of travel,
employment of expert assistance, etc.
SECTION 3.

Section 3 relates to stock issues, and divides the share capital into
shares of $100. This unit is adopted because it corresponds to the
unit of share capital in the national banking system, and is therefore an easy basis for computation of the share capital which a given
bank will be required under the act to take out. The fact that it has
been determined to have the share capital of the Federal reserve banks
bear a fixed relationship to and be subscribed by the existing banks
of the country make it necessary to provide some means of recognizing the growth of the system or its shrinkage, as the case may be.
The second clause of section 3, therefore, calls for the increase of the
capital stock of the Federal reserve bank according as the amount of
capital in the system increases and is decreased by a converse process.
This means that no Federal reserve bank would ever have a fixed
capital, since that capital might easily change almost from day to
day. The fact remains that the capital would be a fixed percentage
of that held by the member banks, while in view of the later provisions of the act it is believed that the amount of this capital could be
easily ascertained at any moment and the payments to withdrawing
banks be made without any serious difficulty.
A second feature of section 3 is the provision that each Federal
reserve bank may establish branch offices subject to the regulations
of the Federal reserve board not to exceed one for each $500,000
capital of the stock of each Federal reserve bank. After due study
it has been required that such branches should be established only in
the district in which the Federal reserve bank is located. Branches
of different Federal reserve banks will, therefore, not compete with
one another, but will be simply offices established for the convenience
of the member banks, facilitating their relations with the Federal
reserve bank in which they are stockholders. The question may fairly
be raised whether a Federal reserve bank should be allowed to establish one office in each of the other Federal reserve districts should it
so desire, but after due consideration it has not been deemed desirable
to permit such an extension of the power to create branches.




36

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.
SECTION 4.

Section 4 provides for the incorporation and organization of the
Federal reserve banks under the conditions already outlined in the
preceding section. Fundamentally the purpose of the section is to
authorize the incorporation of such a reserve bank in each district
with powers precisely analogous to those of national banks except in
so far as altered by the act itself. The organization, officers, ana the
like of the reserve banks will under the terms of this section be the
same as those of the national institutions. There is no reason why
any important distinction as to type of organization should be drawn
or exist between the typical reserve bank and the typical national
bank. This is worthy of special note because of the claim that
Federal reserve agents, whose functions will presently be described,
would practically be the active managers of the reserve banks. They
would m fact be chairmen of the boards of directors, but as in the case
of national banks such a chairmanship might be more or less active,
according as the bank itself chose to determine.
The first clause of section 4 provides that a "sufficient number" of
banks having made and filed with the comptroller a certificate, etc.,
shall thereupon be organized. As was provided in section 2, the
minimum capital of a reserve bank is to be $5,000,000, so that the
sufficient number referred to would mean in practice banks having a
joint capitalization of at least $50,000,000. The sections of the
national banking act referred to as defining the powers of the banks
in question are those which state generally the limitations upon the
functions of national banks and the rights and authority vested in
them. The final provision of the first paragraph of the section giving
to the Federal reserve bank a charter life of 20 years is the same as
the corresponding provision of the national bank act. The power of
Congress to dissolve the bank at an earlier date if desired is likewise
identical with the power reserved to Congress in the case of national
banks.
In dealing with the organization of the reserve banks the bill proposed by the committee has sought in section 4 to furnish a democratic representation of the several institutions which are members
and stockholders of a reserve bank. To this end, the directorate is
divided into three classes, each consisting of three members, while the
stockholder banks are similarly divided into three groups or classes.
The bill provides that the election of one member of class A and one
member of class B shall be intrusted to each one of the groups into
which the stockholding banks are subdivided. As it is required that
each of the banking groups thus created shall contain approximately
one-third of the number of banks in the district, it is clear that the
banks comprising one-third of such capitalization would have a representative of their own in class A and also in class B. It might well
be that the one-third in any given district would include a very
small number of banks and that the director in question would thus
be the representative of but few institutions. This, however, is
deemed far better than to permit of the general choice of directors by
all banks voting indiscriminately, it being the belief of the committee
that by the method proposed each group of banks will preserve its
autonomy and secure due hearing on the board of directors.




37 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.
SECTION 5.

Section 5 deals entirely with the method of increasing and decreasing the capital stock of Federal reserve banks and the effect thereon
of corresponding changes in the stock of member banks. The general purpose is to require member banks to pay additional pro rata
subscriptions as they increase their capital stock and to permit
them to withdraw capital subscriptions in the same manner as they
reduce their capital; or, in case they go out of business entirely
through failure or liquidation to permit them to withdraw the cash
paid in, assuming, of course, that there has been no loss sufficient to
impair the capital of the reserve bank. Should such a loss occur
the reserve bank would presumably have called sufficient of the unpaid subscriptions to restore its capital to the original amount, in
which case the withdrawal of a sum equal to the original cash paid
subscription would simply give the bank what it put in in the first
place, the loss meanwhile having been borne by its contribution
made on call. The prohibition upon the transfer or hypothecation
of shares in a Federal reserve bank is, of course, necessary in order to
prevent the reserve bank from ceasing to be a democratic organization composed of members contributing in a like pro rata proportion of their actual available cash resources. Any other plan might
result in the concentration of share ownership in a few hands. The
intent of the bill is to have all banks vote alike at elections and as a
preliminary requirement to enforce the retention of equal percentage
of capital by each in the business of Federal reserve banks.
SECTION 6.

Section 6 is complementary to section 5 and merely provides for
the treatment of the stock of Federal reserve banks belonging to
member banks which become insolvent. The fundamental idea in
it is that of intrusting the Federal reserve bank with the function in
the case of a failure of deducting from the original amount of the
failed bank's subscriptions any debts or claims due from said insolvent bank to the reserve bank and paying the rest to the receiver of
the failed bank. This, in effect, gives the reserve bank a prior lien
upon the assets of a failed member bank up to the amount of its
cash-paid subscription which of course is a carrying out of the principle involved in requiring the member banks to subscribe 20 per
cent, although they pay up but 10 per cent of their cash capital as a
contribution to the stock of the Federal reserve bank of which they
are members.
SECTION 7.

In section 7 it is provided that the division of earnings of Federal
reserve banks shall be such as to give to the Government a due share
of the proceeds of the banking operation after what is considered a
fair remuneration for Federal reserve banks themselves has been
provided. It is also sought to devote the share of earnings going to
the Government to the reduction of the public debt. In general, the
process of dividing the earnings is divisible into three stages under
this section:
(a) The first step in the process of dividing the proceeds of the
banking operation is that of giving to the subscribing banks which




38

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

own the stock of the Federal reserve banks a due return for the use
of their funds. This, after due consideration, has been fixed at 5 per
cent—a rate of dividend which, however, is to be cumulative. This
should not be confused, as has been done by some critics of the proposed bill, with a rate of 5 per cent from the capital of the banks.
The banks, of course, will not set aside a part of their capital for this
subscription but will devote a part of their current funds to it. The
real question then is whether the rate of 5 per cent represents about
the normal rate of return from current bank investments. Considering the high character of the security offered we are of the opinion
that it does do so.
(b) The second step in disposing of the earnings is that of the
accumulation of the surplus. While it is not supposed that the
Federal reserve banks will incur severe losses, on account of their
conservative nature and the auspices under which they are to be
carried on, it is believed that the accumulation of a surplus to furnish an increased source of banking capital for the reserve banks,
and so far as practicable to obviate any necessity of calling for any
of the unpaid balances of the original capital subscriptions is highly
desirable. One half of all net earnings after attending to the claims
of the 5 per cent cumulative dividend is therefore to be devoted to
the surplus until the said surplus amounts to 20 per cent of the
capital of the bank. The remaining one-half is to be divided in the
roportion of three-fifths to the Government and two-fifths to the
anVs stockholders in the ratio of their average balances with the
Federal reserve bank for the preceding year. It will be observed
that this introduces a new principle of distribution of earnings not
based upon relative ownership of capital stock. More will be said of
this point very shortly.
(c) The third and final step in disposing of the earnings relates to
the distribution after surplus has been fully provided for. Section 7
would give three-fifths of all earnings after the surplus is taken care
of to the Government and two-fifths to the member banks in proportion to their annual average balances as before.
It is worth while to consider with some care what this plan of distribution would signify. Assume for the sake of argument that the
rate of earning of the Federal reserve banks is about identical with
that reported by the comptroller for the national banks of the country, or, roughly, 9 per cent. Taking 9 per cent as thefigure,this would
mean that with a total capital of $100,000,000 the earnings for the
first year would be $9,000,000. Of this sum, $5,000,000 would be
required for the dividend requirements. This would leave $4,000,000,
of which $2,000,000 would be carried to surplus and the remaining
$2,000,000 would be divided as aforesaid in the proportion of
$1,200,000 for the Government and $800,000 for the stockholding
banks. It is, of course, impossible to state exactly how the division
between the stockholding banks would finally turnout, since it can not
be definitely stated what balances they would carry with the reserve
banks.

E

THE GOVERNMENT'S SHARE.

It has frequently been asked why the Government should be
allowed to share in the earnings of Federal reserve banks at all. There
are two reasons of conspicuous and obvious character why it should




39 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

do so: (1) It vests the Federal reserve banks with the sole and exclusive function of note lending, from which all other banks are debarred ; (2) it places the public funds with the Federal reserve banks
to an amount certainly vastly larger than that of any other depositor
and equal to the combined deposits of large groups of banks. The
distribution of earnings upon the basis of deposit balances would
give to the Government a large share of the profits in any case and
when the present national-bank notes shall have been replaced by
Federal reserve notes it is obvious that the function of note issue will
result in a large volume of earnings which the Federal reserve banks
could not enjoy were they to share this power with other banking
institutions. To a substantial share in this earning, leaving for the
reserve banks only a fair compensation for their services in taking out
the notes, the public is evidently entitled.
The provision that the earnings of Federal reserve banks in so far
as paid to the Government shall be regularly devoted to the reduction of the bonded indebtedness of the United States is manifestly
a proper use of the income in view of the fact that the Government
has incurred an additional interest charge upon its outstanding bonds
for the purpose of persuading the banks to surrender their twos from
time to time or at the end of 20 years for the purpose of converting
the twos. By gradually applying the earnings received by the Government to the reduction of the outstanding bonds, selecting those
that are available for circulation, it will be possible to maintain a
moderate market demand for the bonds and at the same time to
effect a gradual reduction of the outstanding indebtedness as well as,
of course, a corresponding reduction of interest charges thereon.
Attention should also be given to the provision exempting Federal
reserve banks and the stock held therein by member banks from
all classes of taxation, save such taxation as may be imposed upon
the real estate held by these banks. In view of the increasing burden
of taxation and of the Federal income-tax law, which now furnishes
an additional draft upon net earnings, this exemption is likely to prove
of material importance, since it amounts to an exemption of a corresponding proportion of the funds of member banks from the payment of taxes to which they would otherwise be subjected.
SECTION 8.

The essential features of section 8 are:
1. The grant of a year's time within which existing national banks
may make up their minds whether or not to take out stock in Federal
reserve banks under the provisions of the proposed bill; and
2. The provision that in the event of an adverse decision on this subject such national banks as may reach a decision of that character
shall be dissolved the remedies now provided by law against such a
dissolved bank shall not be impaired.
This in effect means that every national bank now in existence
must within a year either (a) take out stock in a Federal reserve
bank, (b) become a State bank under State laws, or (c) leave the business entirely. It is evident that any measure of legislation which
imposes substantial responsibilities and burdens upon banks will be
opposed by some of them, and that unless they are required to assume
their duties to the community, they will if they are permitted to make




40

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

a voluntary choice between their present condition and that proposed
for them, elect to continue as at present. No matter how advantageous a plan proposed by Congress might be, many banks would
refuse to go into it out of sheer inertia. This was the condition of
affairs found by experience to exist at the time when the national
banking act was first adopted, and it will be repeated to-day if the
whole matter of assuming the new responsibilities prescribed by law
is left optional with the banks. In view of the fact that the Banks
have their own remedy in their own hands, in that they may recharter
under State laws if they desire, the measure recommended in section 8
is deemed entirely proper, not to say indispensable. The committee
does not believe that it is the province of Congress to bribe or induce
the banks to enter the new system, but rather to lay down equitable
conditions and then to require their acceptance.
QUESTION OF "COMPULSION."

Much has been said by opponents of the proposed bill with reference
to the question of what they call "compulsion." By this is meant
the requirement of the bill that national banks shall subscribe to the
stock of the Federal reserve banks of the districts in which they are
situated, or if they do not choose to do so shall leave the national
banking system by surrendering their charters. A few persons have
been disposed to contend that there was some illegality or "unconstitutionality" in this section of the measure—a claim which is readily
dispelled by referring to existing legislation bearing upon the power
of Congress regarding the amendment or repeal of corporate charters. Those who complain of this provision, however, need not be
dealt with simply upon technical legal grounds, as the subject has
a very much broader bearing, and we believe that there is no one
who would wish to visit any hardship or injustice to the banks simply because Congress was within its legal rights in so doing. The
general considerations which make it entirely warrantable for Congress to impose certain burdens upon banking institutions as conditions precedent to the grant of national charters to such institutions are quite evident. They appear in all of the various more or
less stringent and onerous conditions laid down in the national-bank
act for the guidance of the conduct of banking associations. They
are also seen in the restrictions imposed by practically all foreign Governments upon the conduct of tne banking institutions under their
jurisdiction.
The Government, in granting to such banks the power and privilege
to operate under the protection and with the prestige of charters emanating from itself, naturally is authorized to make these privileges
contingent upon the acceptance of such conditions as it may deem best.
Nor is the argument solely to be rested upon these considerations.
The proposed bill will ultimately place the banks of the country upon
a far more liberal basis than that accorded to them by existing law.
This may be demonstrated, among other methods, in the following
way: By the terms of the national banking act banks must, in order
to become national banks, purchase and deposit with the Treasurer of
the United States Government bonds as security for circulation. This
requirement is nominally 25 per cent of capitalization for banks up
to $150,000 capital and $50,000 for all above that level. In reality




41 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

the requirement is much stronger than this, inasmuch as no notes
can be taken out without a deposit of Government bonds behind
them. Inasmuch as the supplying of notes is absolutely necessary
if the banks are to meet the needs of their customers even in a moderate degree, the proper measure of the burden imposed on them by
this requirement is the volume of the bonds that they have purchased.
As is shown elsewhere in the present report, this volume of bonds is
now something like $750,000,000, or very nearly three-quarters of the
capital stock of the banks. The proposed bill arranges for releasing
the banks from this required investment and substitutes in lieu of it a
required investment equal to 10 per cent of their capital (paid up), or
not to exceed $105,000,000. This is one-seventh of the amount now
invested in bonds. Inasmuch as the proposed bill allows the conversion of existing 2 per cent bonds into threes at the rate of 5 per cent
per annum, while it gives the banks a year within which to enter the
proposed reserve banks as stockholders, it is evident that within one
year trom the latest date set for the subscriptions to the capital stock
a bank owning bonds equal to capital would have been able to obtain
through conversion ana sale of its securities an amount equal to the
required investment in capital.
The answer may be made to this statement that the earnings upon
the investment in bank stock are unreasonably and unnecessarily
small. How much they will be is of course a matter of opinion, since
no one can predict the actual profits of the Federal reserve banks.
It is, however, worthy of note that even if the earnings were only 5 per
cent they would be in excess of the estimated earnings derived from
national bank-note issues, which have been notoriously unprofitable
for a good while. The banks receive the 2 per cent on their bond
investment and the current rate of interest on their notes (provided
they can keep them in circulation), but they are obliged to bear the
expenses of engraving and.printing, redemption, etc., so that it has
long been axiomatic that the profits on bank-note circulation were
very small—so small that many banks have taken out few notes, some
even holding their required minimum of bonds without taking out
any currency. From this showing it is evident that the idea of
"compulsion," instead of being a novelty is a very old one, as well as
one that is widely accepted among civilized countries to-day, while
the seveiity and degree of the compulsion as to the use of the bank's
current funds entailed by the proposed bill is very much less than that
involved in the provisions of the present national bank act. There
is in fact no reasonable basis for the complaint with regard to compulsion. National banks after the passage of the proposed bill will
be freer, more able to dispose of their funds as they choose, and far
less subject to serious interference with their legitimate use of resources
than they are to-day.
SECTION 9.

Section 9 is a general permission to any State bank to become a
national bank and thereby to become eligible upon the same terms
as national banks for membership in a Federal reserve bank as a
stockholder. The provisions follow substantially the lines now laid
down in the national banking act with reference to the conversion
of State banks into national institutions and need no considerable




42

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

comment, being repeated here for the sake of making plain the conditions under which such conversion may occur subsequent to the
passage of this act, that there may be no reasonable doubt in regard
to the matter, and that it may be certain under precisely what terms
and conditions State banks may make the transfer required.
SECTION 10.

After much examination of the subject, it has been deemed best
by the committee to permit State banks to become members, i. e.,
stockholders in Federal reserve banks, without themselves becoming
national banks. This concession has been determined upon partly
from the standpoint of the banks themselves and partly from that of
the new system. The success of the new system would be very
largely influenced by its extent and -scope. If it becomes practically
inclusive of all the banks of the country that are in strong condition,
its opportunity for service will be much greater than it could otherwise be. On the other hand, the committee has doubted whether,
from the standpoint of the banks themselves, it wcmld be acting
fairly were it to debar them from membership in the new concerns.
It has been plain, however, that inasmuch as State banks are
organized under different codes of legislation it would be unfair to
permit banks to become stockholders in the reserve banks and to
enjoy the advantages open to national banks which are stockholders
unless such banks were subject to practically as high a standard
of banking requirement as the national banks with which they
compete. It has been felt that the particulars in which greatest care
should be exercised on this score are (a) capital and (6) reserves. The
fundamental idea of section 10 is to require compliance with the
terms of the bill and of the national banking act as a condition antecedent to the holding stock in a reserve bank by any State bank.
This does not altogether place the State banks upon the same basis
as the national, inasmuch as they are not thus subjected to the same
regulations with respect to investments and general business. It is
believed, however, that the principal requirements will thus be met
and that the provisions of the section are about as far as the measure
can reasonably go with certainty of being held legal and at the same
time of proving feasible and available in practice. As a necessary
power in connection with this question oi membership section 10
confers upon the Federal reserve board the power to establish bylaws for tne general government of its conduct in acting upon applications made by State institutions, while it intrusts to the board the
power to approve applications when proper or to suspend banking
associations from membership when tlle provisions of the act are
violated, and to secure the cancellation ana retirement of their stock,
returning the value thereof to the banks so suspended.
SECTION 11.

In this section provision has been made for the creation of a general
board of control acting on behalf of the National Government for
the purpose of overseeing the reserve banks and of adjusting the
banking transactions of one portion of the country, as well as the




43 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

Government deposits therein, to those of other portions. The number of members of this board has been fixed at seven, after careful
consideration of other possible memberships, and it has been determined that the board as thus made up should consist of two distinct
elements, the one including three regular officers of the National
Government, the other-four specially appointed officers whose duty
it should be to devote their whole time to the management. of the
affairs of the reserve banks and the performance of the duties assigned
them under the present bill. The three officers chosen from the
existing staff of the Federal Government are to be the Secretary of
the Treasury, the Secretary of Agriculture, and the Comptroller of
the Currency. It is evident that the Treasury Department not only
is, but will continue to be, a fundamentally important factor in the
financial organization of the country, while the Comptroller of the
Currency, in charge as he is of the national banking system, will be
a necessary adjunct in the management of the reserve bank system
proposed in this bill. The causes for the selection of the two officers
thus named are therefore self-evident. The Secretary of Agriculture
has been added because of the belief that conditions in the producing
regions of the country would deserve special consideration at the
hands of the Federal reserve board, the Secretary of Agriculture
being the natural representative of the interests of these sections,
while it is further thought that the presence of a member on this
board whose direct concerns are not primarily those of technical
business or banking will be beneficial and will give the deliberations
of the board a broader character than they would otherwise possess.
The four members chosen by the President for special service on
the Federal reserve board will necessarily be intrusted with the
heavier and routine duties pertaining to this board, the regular
officers of the Government being naturally engaged in large degree
in the discharge of their ordinary functions. It is therefore important
to provide for the proper choice of the four officers thus called for.
The committee has thought it wise that they should be assigned a
tolerably long tenure, and has accordingly fixed that tenure at eight
years, providing, however, that the first appointees shall be so distributed with respect to tenure of office as to bring about a rotation,
so that all members of the board shall not change at any one time.
In the second place, it has been deemed wise to provide that, not
more than two of these four members shall belong to the same
political party. It can not be too emphatically stated that the committee regards the Federal reserve board as a distinctly nonpartisan
organization whose functions are to be wholly divorced from politics.
In order, however, to guard absolutely against any suspicion of political bias or one-sidedness, it has been deemed expedient to provide in
the law against a preponderance of members of one party.
The provision that the President in making his selections shall so
far as possible select them in order to represent the different geographical regions of the country has been inserted in very general
language in order that, while it might not be minutely mandatory,
it should be the expressed wish of the Congress that no undue preponderance should be allowed to any one portion of the Nation at
the expense of other portions. The provision, however, does not
bind the President to any slavish recognition of given geographical
sections.




44

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

Finally, it has been thought wise to insert a provision that at least
one of tne four persons so chosen by the President shall be an experienced banker. This, of course, does not mean that other members
of the board would be inexperienced in or ignorant of banking. On
the contrary, the assumption is that they would not be chosen unless
at least tolerably informed in the banking field, and that in all probability they would be not only experienced in banking but men of
broad business knowledge and culture. This, however, is a matter
that must necessarily be left to the appointive power, which not
only should but must, in order to give good results, be vested with
discretionary authority sufficient to enable it to make careful choice
from among all of the best material available for such a board. It
might easily be that a man of high business caliber, thoroughly
desirable as a member of the board, would not have had a technical
banking experience, notwithstanding that he might be well equipped
for the work. The Comptrollers of the Currency in times past have
not always been bankers in the technical sense, and some of the most
efficient among them have had least technical experience in banking
at the time wnen they assumed office. It is therefore believed safe
to vest this whole matter in the hands of the President with large
authority, believing that he will be able to use the same care and
discrimination that he employs in choosing the Supreme Court of
the United States. For obvious reasons it is considered wise that
every member of the Federal reserve board designated by the President shall surrender any banking connections he may have had at
the time of his nomination, and for equally obvious reasons it is
deemed best that the board shall annually report to the House of
Representatives, thereby establishing a direct relationship between
the board and the Congress. The President is authorized to designate one of the four appointees as manager of the Federal reserve
board and one as vice manager, this being deemed wiser than to
throw upon so small a board the duty of selecting executive officers
from among its own membership. In designating the Secretary of
the Treasury as ex officio chairman of the Federal reserve board the
bill aims to preserve the general concept of official responsibility and
duty which is fundamental to the conception of this board. In
ordmary times the Secretary of the Treasury's relation to the board
would be largely formal. In times of stress or sudden danger he
might become an active and effective working member of the board.
The final paragraph of section 11 is intended to make the Comptroller of the Currency in all respects answerable to the Federal
reserve board, thereby giving this board the practical connection it
needs with the national banks of the country which are under the
direct supervision of the Comptroller of the Currency. This is
believed to be desirable, inasmuch as the Comptroller of the Currency,
although a member of the Federal reserve board by virtue of the
earlier provisions of this section, might otherwise not be held to be
answerable to the board in his official capacity as the chief of the
national banking system. The paragraph referred to now makes him
responsible to the "Secretary of the Treasury acting as the chairman
of the Federal reserve board," which implies that the board would
have power to instruct the comptroller upon all necessary matters,
preferably through the chairman, whenever action affecting the
national banks in those respects in which they are subject to the




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

45

oversight of the comptroller was called for. The proviso at the end
of the paragraph in question, however, makes it evident that there
is nothmg in this grant of authority or in this imposition of responsibility to reduce the functions of the comptroller as at present understood or to render him less amenable than he now is to the Secretary
of the Treasury, who is his chief under existing circumstances.
SECTION 12.

In this section are set forth the basic functions bestowed upon the
Federal reserve board. These are not all the powers given to the
board, it having been necessary to distribute various other minor
grants of authority throughout the bill in the connections to which
such grants of authority specifically relate. The provisions of section 12, however, cover sufficiently the fundamental authorities
bestowed upon the reserve board. These may now be taken up in
order:
(a) In paragraph (a) is given the authority to examine the affairs
of each Federal reserve bank, to require statements and reports, and
to publish a weekly showing of condition. This is substantially the
same kind of authority which is to-day exercised by the Comptroller
of the Currency with respect to national banks, except that it is
more constant, close, and intimate as the different nature of the case
requires. The powers thus bestowed are identical with those granted
to the supervismg boards in control of the central banks of Europe.
(b) In paragraph (6) is given to the board the authority (1) to
permit or (2) to require one Federal reserve bank to rediscount the
discounted prime paper of other reserve banks. Much has been said
of this grant of authority and it therefore deserves careful analysis.
In the first place, it is evident that this power is not different in nature
from that which is exerted by the head office of a central bank possessing several branches. Such an office can transfer funds from one
to another, and withdraw the service of one for the service of the
others. It can, moreover, employ the resources of one portion of the
country for the advantage of other portions or for the purpose of safeguarding them at critical times if its managers deem such actions to
be wisest. Those, therefore, who favor the idea of a central bank
with a single head office, favor it because it grants just this power
to dispose of the resources of the one section for the benefit of another,
and must in consequence find themselves logically driven to a recognition of the view that such authority to transfer funds and to mass
them at points where weakness has been indicated is properly to be
exerted in the interest of the public. In the proposed bill, the exercise of such a power is subjected to restrictions which would manifestly and unquestionably make its use sporadic and exceptional,
in so far as it resulted from the exercise of a power to compel the rediscounting of paper by one Federal reserve bank for another. Section
12, in specific terms, explains that the power is to be exerted only
"in time of emergency" and by a unanimous vote of the reserve
board. It, moreover, imposes a penalty charge of from 1 to 3 per
cent upon the grant of sucn an accommodation. The power is clearly
much less than that which has been advocated by friends of the
central bank idea, inasmuch as it suggests an exceptional or occasional resort to an expedient which would be the staple of everyday




46

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

business under a central banking plan, such as that proposed by the
National Monetary Commission. The other side of the function—that
of permitting Federal reserve banks to rediscount for one another—
has also been objected to on the ground that such banks should be
allowed to deal with one another freely if they choose. The committee does not concede this view, but believes that the banks should
not thus be allowed to deal with one another except under oversight,
in view of their distinct character as reserve holders.
(c) Paragraph (c) grants the Federal reserve board the power to
suspend the reserve requirements of the act for designated periods
if in its judgment such action may be deemed wise. There is nothing
unusual or revolutionary in this requirement, it being in practice
somewhat akin to the power granted the Comptroller of the Currency
in section 5191, Revised Statutes, where he is practically able to permit national banks to go below their reserve for 30 days. In practice
this power is constantly exercised by him subject to his judgment.
The power is suggested by the process of "suspending the bank act"
in England, and is a desirable administrative function in every case
where a fixed reserve requirement is employed.
(d) The power to supervise and regulate the retirement of Federal
reserve notes granted in this paragraph is of course a necessary
concomitant to Government control of note issues, a matter to be
discussed in detail in connection with the provisions for note issue.
(ie) In paragraphs («), (/), (g), (Ti), and (i) are conveyed powers
which are largely self-explanatory and about which there can be little
or no question, granting the general idea of effective Government
oversight through a Federal reserve board or some similar organization.
In view of the fact that the Federal reserve board is vested with
functions other than those formally enumerated in section 12, it may
be worth while to list the chief powers conferred upon the board by
the act as follows:
POWERS OP THE FEDERAL RESERVE

BOARD.

To readjust districts created by the organization committee and create new ones,
acting upon a joint application made by 10 of the national banks within an existing
district.
To regulate the establishment of branches of Federal reserve banks within Federal
reserve district in which bank is located.
To designate three (class C) of the nine members of the board of directors of each
Federal reserve bank, one of these to be chairman of the board with the title of
"Federal reserve agent."
The Federal reserve agent to maintain a local office of the Federal reserve board
on the premises of the Federal reserve bank. He shall make regular reports to
Federal reserve board and be its official representative.
To remove any director of class B (business men) if it should appear that he does
not fairly represent the commercial, agricultural, or industrial interests of his district.
To remove chairman of Federal reserve bank without notice.
To establish by-laws governing applications from State banks and trust companies.
"Of the four persons * * * appointed (by the President), one shall be designated manager and one vice manager of the Federal reserve board." The manager,
subject to supervision of the Secretary of the Treasury and board, shall be the active
managing officer of the Federal reserve board.
To levy a semiannual assessment upon the Federal reserve banks for estimated
expenses for succeeding six months, together with deficit carried forward.
To examine at its discretion the accounts, books, and affairs of each Federal reserve
bank and to require such statements and reports as it may deem necessary.
To require, or on application to permit, a Federal reserve bank to rediscount the
paper of any other Federal reserve bank.




47

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

To suspend, for a period not exceeding 30 days (and to renew such suspension
for periods not to exceed 15 days), any and every reserve requirement specified in
this act.
To supervise and regulate the issue and retirement of Treasury notes to Federal
reserve banks.
To add to the number of cities classified as reserve and central reserve cities
under existing law in which national banking associations are subject to the reserve
requirements set forth in section 21 of this act, or to reclassify existing reserve or central reserve cities and to designate the banks therein situated as country banks, at
its discretion.
To require the removal of officials of Federal reserve banks for incompetency,
dereliction of duty, fraud, or deceit.
To require the writing off of doubtful or worthless assets upon the books and balance sheets of Federal reserve banks.
To suspend the further operations of any Federal reserve bank and appoint a
receiver therefor.
To perform the duties, functions, or services specified or implied in this act.
To determine or define (subject to stipulations) the character of paper eligible for
discount for member banks.
To prescribe regulations for purchase and sale by Federal reserve banks of bankers'
bills, etc.
To review and determine the minimum rate of discount established by Federal
reserve banks.
To authorize establishment of branches of Federal reserve banks in foreign countries.
To authorize the issue of Federal reserve Treasury notes.
To receive, through the local Federal reserve agent, applications from Federal
reserve banks for notes, such applications to be accompanied by rediscounted notes
for deposit as collateral security.
To require Federal reserve bank to maintain deposit in money of 5 per cent of notes
issued.
To grant in whole or in part or to reject entirely the application from Federal reserve
bank for notes.
To establish rate of interest on notes issued.
To prescribe regulations for substitution of collateral.
To make and promulgate regulations governing the transfer of funds at par among
Federal reserve banks.
To act, if desired, as clearing house for Federal reserve banks.
To require, in its discretion, Federal reserve banks to act as clearing houses for
shareholding banks.
To prescribe regulations for the recall and redemption of all national-bank notes
outstanding after 20 years.
To require extra examinations of national banks when deemed necessary.
To determine and report annually to Congress fixed salaries of all bank examiners.
To assess upon banks in proportion to assets or resources the expenses of examinations.
To fix a date for such assessment.
To arrange for special or periodical examinations of member banks for account of
Federal reserve banks.
To receive from Federal reserve banks information concerning the condition of any
national bank in its district.
To order examinations of national banks in reserve cities as often as necessary, not
less than four times a year.
To add to the list of cities in which national banks shall not be permitted to loan
on real estate as described.
To receive applications from national banks having $1,000,000 or more capital for
the establishment of branches in foreign countries, to reject or accept such applications, and to prescribe conditions under which such branches may be opened.
To require examinations of foreign branches as it may deem best.
To regulate savings departments of national banks and to prescribe their investments.
SECTION 13.

Section 13 provides for the creation of a Federal advisory council
which is to consist of as many members as there are Federal reserve
districts, each such district electing through the board of directors
of its Federal reserve bank a representative of that bank. The functions of this board are wholly advisory and it would amount merely




48

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

to a means of expressing banking opinion, informing the reserve
board of conditions of credit in the several districts, ana serving as a
source of information upon which the board may draw in case of
necessity. The desirability of such a body as a source of information
and counsel is obvious, and it is believed that it gives to the banking
interests of the several districts ample power to make their views
known, and, so far as they deserve acceptance, to secure such acceptance.
SECTION 14.

In section 14 is set forth the fundamental business purpose of the
bill in providing for rediscount operations. The Federal reserve
banks are at the outset authorized to receive current deposits from
their stockholders or from the Government or from other Federal
reserve banks in so far as the latter may need to keep funds with them
for exchange purposes.
The fundamental requirement throughout all of the discount section of the proposed bill is that antecedent to the performance of a
service by a Federal reserve bank for a member bank which applies
therefor the member bank shall indorse or guarantee the obligations
which it offers for rediscount. Subject to this requirement, the proposed bill first of all provides that notes and bills having a maturity
of not over 90 days and drawn for agricultural, industrial, or commercial purposes or the proceeds of which have been used for such
purposes shall be admitted to rediscount. The meaning of this provision is briefly that any paper drawn for a legitimate business purpose of any kind may be rediscounted when within 90 days of maturity. It does not mean that the paper thus rediscounted shall
have been originally made for 90 days, but that it shall have at the
time of being rediscounted 90 days more to run. Thus a paper
drawn for 120 days originally could be rediscounted when it was
30 days old. In view of the great difficulty of defining "commercial
paper," the actual definition of the same has been left to the Federal
reserve board in order that it may adjust the definition to the practices prevailing in different parts of the country in regard to the transaction of business and the making of paper. For obvious reasons it
is forbidden that any such paper shall be admitted to rediscount if
made for the purpose of carrying stocks or bonds.
It was felt that in some parts of the country the permission to
rediscount paper having a maturity of 90 days might not fulfill all
of the requirements imposed by the business practice of those regions,
and therefore it is provided in the third paragraph of section 14 that,
whenever the reserve of any Federal reserve bank is reasonably above
its required minimum (such excess margin to be determined by the
Federal reserve board), the reserve bank may rediscount commercial
paper having a maturity of not more than 120 days, provided that
not more than one-half of it shall have a maturity exceeding 90 days.
This is intended to fulfill the requirements of portions of the country
with an extremely long term of credit, but it is clear that no reserve
banks should be allowed to put its funds into a form in which they
will be "tied up" to such an extent, unless such a bank has a reserve
perfectly adequate to take care of any necessities that are likely to
present themselves in the meantime.




49

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

The fourth paragraph of section 14 grants permission to reserve
banks to rediscount acceptances of member banks which are based
on the exportation or importation of goods, run not more than six
months, and bear the signature of one member bank in addition to
that of the acceptor, the total of such rediscounts not to exceed onehalf the capital of the bank for which the rediscounts are made. In
the sixth paragaph, national banks are authorized to accept drafts
or bills of exchange drawn upon it to an amount not exceeding onehalf its capital. The acceptance business, which it is thus proposed
to authorize, is a new form of business heretofore forbidden to national
banks, by reason of the provisions and interpretations of the nationalbanking act, which have forbidden them to lend their credit or to
incur contingent liabilities thereby. The acceptance form of loan
is, however, very common in Europe, and has been found exceedingly
serviceable. It is the opinion of expert bankers that it could be
applied in the United States to excellent advantage. The following
extract from a discussion of acceptances by Lawrence Merton Jacobs
explains the method and purpose of the acceptance business:
a The fundamental difference between European and American banking has its origin in the dissimilarity between the evidences of indebtedness which lie behind the item of loans and discounts. It is most
strikingly evidenced in the fact that time bills of exchange form a
considerable proportion of the resources of the great banks of London,
Paris, and Berlin, whereas the assets of leading New York banks are
largely based on stocks and bonds.
" Of the bills of exchange in which are employed, either through loans
or discounts, the funds of European banks, an essential part consists
of what are known as bankers' bills—that is, bills drawn on bankers
and accepted by them on behalf of customers in accordance with
arrangements previously made. They are bills in exchange for which,
by sale to a broker or by discounting at a bank, bankers' customers
or those to whom they are indebted may secure immediate credit.
In some instances it is arranged that the customers themselves shall
draw the bills and in others that the bills shall be drawn by third
parties for their account. In granting the accommodation the obligation that the bankers take upon themselves is that they will accept
the bills upon presentation. This acceptance consists in the bankers
writing across the face of the drafts the word "Accepted," adding
their signature and the date. It is in the nature of a certification
that the bills will be paid at maturity—that is, a specified number of
days or months from the date appearing in the acceptance, or three
days later if grace is allowed, as m England. When a banker grants
accommodation to a customer by means of an acceptance he may
secure himself in various ways. Ordinarily a banker accepts a customer's draft merely upon his general responsibility, the banker's
risk being much the same as if he had discounted the customer's note
running a certain length of time. Where the customer is an importer
the banker ordinarily accepts the drafts upon the delivery to him of
the documents covering the shipment, which documents he then turns
over to his customer against a trust receipt. When a credit of this
kind is opened the usual practice is for the banker to require the signature of a form containing an agreement to hold him harmless for
accepting the bills, to place him in funds sufficient to pay off the
bills three days prior to their maturity, and to pay him a commission
8829°—H. Rept. 69, 63-1




4

50

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

on the transaction, this commission varying according to the length
of time the bills are to run and the financial standing of the customer.
The cost of the accommodation to the customer in this commission
plus the prevailing rate of discount for bankers' bills.
" I n the United States the national-bank act does not permit banks
to accept time bills drawn on them. Although the act does not specifically prohibit such acceptances, the courts have decided that national
banks have no power to make them. This restriction has had a
very considerable influence upon the development of banking in this
country. For some time after the passage of the national-bank act,
merchants and manufacturers provided themselves with funds by
discounting their promissory notes with their local banker. Gradually, however, many concerns, finding that their needs were outstripping the banking accommodation which they could secure in
their immediate vicinity, came to place their notes in the hands of
brokers who in turn disposed of them to such bankers as possessed
greater surpluses than they could satisfactorily invest at home. It
is this method of borrowing which is now largely employed. In other
words, the prohibition of bank acceptances nas led to the creation of
a vast amount of promissory notes instead of time bills of exchange.
The difference between these two classes of instruments accounts to
a great extent for the difference between European and American
banking. In the case of time bills of exchange drawn on and accepted by prime banks and bankers there is practical uniformity of
security. In the case of our promissory notes or commercial paper
there is no such uniformity, the strength of the paper depending on
the standing of miscellaneous mercantile and industrial concerns.
" I t is this uniformity of security on the one hand which makes possible a public discount market; it is the lack of it in single-name paper
which makes such a market impossible. As a result, we have great
discount markets in London, Paris, and Berlin, and none in New York.
In European centers the discount rate is the rate upon which the eyes
of the financial community are fixed. In New York it is the rate
for day-to-day loans on the stock exchange. The advantage in
character of the one rate over the other clearly indicates an important
advantage of European banking systems over our own. In tne first
place, the European discount rate bears a very direct relation to trade
conditions. Its fluctuations depend primarily on the demand for and
supply of bills which owe their origin to trade transactions, as balanced against the demand for ana supply of money. If trade is
active, the supply of bills becomes large, rapidly absorbing the loanable
funds of the banks. As these surplus funds become less and less
banks are unwilling to discout except at advanced rates. If trade
is slack, less accommodation from bankers in the way of acceptances
is required, bills become fewer in number, the competition for them
in the discount market more keen, and the rate of discount declines.
Low rates are an incentive to business and advancing rates act as a
natural check. The New York call-loan rate, on the other hand,
bears only an indirect relation to trade conditions. Its day-to-day
fluctuations register mainly the speculative and investment demand
for stocks. Low rates, instead of being an incentive to the revival
of trade, are rather made the basis for speculative operations in
securities.




51

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

"The striking difference, however, between European discount rates
and the New York call-loan rates is that the former are comparatively stable and the latter subject to most violent oscillations. Foreign discount rates as bank reserves become depleted advance by
fractions of 1 per cent. In New York the money rate advances on
occasion 10 per cent at a time, mounting by leaps and bounds from
20 per cent to 100 per cent in times of stress."
AMOUNT OF REDISCOUNTS.

There has been extensive conjecture as to the probable amount of
business which could be done by the Federal reserve banks under
the foregoing provisions and regarding the amount of paper likely to
be presented by the banks for rediscount. Such conjecture is more
or less profitless, for two reasons:
1. The rediscount business done in the United States heretofore
has been small, partly because of the limitations of the national-bank
act and partly because of the prejudice against borrowing by banks,
which has more or less artificially sprung up.
2. The purpose of the new act is to develop a commercial paper
market, and if successful in this endeavor the legislation will entirely
transform the conditions under which paper is bought and sold, loans
contracted between banks, and funds transferred from one part of
the country to another.
While it is thus true that the facts as to existing conditions do not
throw much light upon what is to be expected and that conjectures
based upon them are futile, it is worth while to call attention to the
following table, taken from the last annual report of the Comptroller
of the Currency, which gives a compact survey of the classes of paper
which might theoretically be available for rediscount under the
provisions of the act as already explained:

Date.

Sept. 15,1902
Sept. 9, 1903.
Sept. 6, 1904.
Aug. 25,1905.
Sept. 4, 1906.
Aug. 22, 1907.
Sept. 23, 1908
Sept. 1, 1909.
Sept. 1,1910.
June 7,1911..
June 14,1912.

On demand, paper with
Numone or
ber of more inbanks. dividual
or firm
names.

4, G01
5,042
5,412
5,757
6,137
6,544
6,853
6,977
7,173
7,277
7,372

Millions.
$237.3
283.1
279.8
320.1
374.7
428.2
395.9
441.5
524.3
529. 7
571.3

On time,
On deOn time,
singlemand. secured by paper with name paper
(one person
stocks,
two or
or firm)
bonds, and more indiwithout
other pervidual or
sonal secu- firm names. other security.
rities.

Millions.
$706.9
717.3
818.9
854.1
828.0
832.9
922.7
957.3
939.1
953.8
985.4

Millions.
$1,176.4
1,267.5
1,316.7
1,382.2
1.502.0
1,648.7
1,582.4
1,698.4
1 , 842.5
^

1.885.1
1,973.4

Millions.
$517.1
558.1
611.0
689.1
776.1
899.5
852.1
971. P
1,0(!S.3
1,124.7
1,19S.5

On time,
secured by
stocks,
bonds, and
other personal securities, or on
mortgages
or other
real estate
security.

Total.

Millions.
$642.4
655.4
699.7
753.0
818.1
869.2
997.5
3,060.1
1,093.0
1,117.5
1,225.3

Millions.
$3,280.1
3.481.4
3,726.2
3.998.5
4,299.0
4.678.5
4.750.6
5,128.8
5,467.2
5.610.8
5.953.9

The columns numbered 3, 5, and 6 are those which represent paper
potentially available under the act.
The fifth paragraph of section 14 forbids the rediscounting for any
one bank of an aggregate of notes and bills bearing the signature or




52

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

indorsement of any one person or concern, this being a repetition of
the prohibition of similar kind which is contained in the national
banking act. A new feature is, however, found in the last sentence
of the paragraph in question which reads as follows: "But this
restriction shall not apply to the discount of bills of exchange drawn
in good faith against actually existing values." This exception or
exemption has long been asked for in the interest of legitimate business transactions. Obviously when a bill of exchange is secured by
bills of lading and other documents accompanying it, it is primarily
dependent for liquidation upon this unquestionably marketable
wealth. There is therefore no reason for limiting the amount of the
discount to be granted by any reference to the resources of the person
applying for the accommodation or by the capital and surplus of the
bank granting the discount, that being merely a question of banking
judgment, while the bill itself is salable and will presumably be protected at the point where it is presented.
Summing up the terms of section 14, therefore, it may be said that
the section simply applies to the Federal reserve banks the same
general grants of authority and limitations thereon carried in the
national-bank act with respect to the national banks, except that it
more carefully limits the length of the paper to be rediscounted and
the purpose for which it is drawn, while it opens the acceptance
business to national banks and permits the rediscount of acceptance
papsr. The latter class of paper is limited to export and import
operations in order to prevent any possibility of undue use of the
provision at first by banks not thoroughly conversant with the working of the idea owing to lack of experience with this type of credit.
SECTION 15.'

It will have been observed that the transactions authorized in section 14 were entirely of a nature originating with member banks and
involving a rediscount operation. It is clearly necessary to extend
the permitted transactions of the Federal reserve banks beyond
this very narrow scope for two reasons:
1. The desirability of enabling Federal reserve banks to make their
rate of discount effective in the general market at those times and
under those conditions when rediscounts were slack and when therefore there might have been accumulation of funds in the reserve banks
without any motive on the part of member banks to apply for rediscounts or perhaps with a strong motive on their part not to do so.
2. The desirability of opening an outlet through which the funds
of Federal reserve banks might be profitably used at times when it
was sought to facilitate transactions in foreign exchange or to
regulate gold movements.
In order to attain these ends it is deemed wise to allow a reserve
bank, first of all, to buy and sell from anyone whom it chooses
the classes of bills which it is authorized to rediscount. The reserve
bank evidently would not do this unless it should be in a position
which, as already stated, furnished a strong motive for so doing.
Outright purchases in the open market would of course require the
payment of the face of the paper less discount, whereas rediscount
operations would require simply the holding of a reserve of 33J per
cent behind the notes issued or deposit accounts created in the course




53 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

of the rediscount operation. Apart from this fundamental permission, it was deemed wise to allow the banks to buy coin and bullion
and borrow or loan thereon and to deal in Government bonds. The
power granted in subsection (d) to fix a rate of discount is an obvious
mcident to the existence of the reserve banks, but the power has been
vested in the Federal reserve board to review this rate of discount
when fixed by the local reserve bank at its discretion. This is
intended to provide against the possibility that the local bank might
be establishing a dangerously low rate of interest, which the reserve
board, familiar as it would be with credit conditions throughout the
country, would deem best to raise.
The final power to open and maintaining banking accounts in foreign countries for the purpose of dealing in exchange and of buying
foreign bills is necessary in order to enable a reserve bank to exercise
its full power in controlling gold movements and in facilitating payments and collections abroad.
SECTION 16.

Section 16 provides for the transfer of all moneys now held in the
general fund of the Treasury to the reserve banks, disbursements to
be thereafter made by check: upon such banks. The general philosophy of this proposed change and the conditions which imperatively
demand it have been sufficiently sketched at an earlier point in
this report, and it is only necessary here to examine the actual
working of the provision. Twelve months are allowed to effect the
transfer, this being deemed a sufficient time in view of the comparatively low state of the Government's deposits in banks to-day. The
apportionment of the funds between banks is required to be made
as equitably as possible between the different sections of the country,
this proviso being practically a repetition of the language found m
the, national-bank act to-day. The Federal reserve board and the
Secretary of the Treasury are left with full power to fix a rate of
interest from month to month on the deposits, this to be not less than,
one-half of 1 per cent.
How large a transfer of funds would be effected under the terms
of this provision, and how such a transfer would affect the Treasury
itself, will depend upon the condition of the Treasury at the time of
the passage of the act, but an approximate idea may be formed from
the daily Treasury statement, a copy of which is hereto appended.
SECTION

17.

The subject of note issue has occasioned the committee no little
concern, but after due and full consideration it has determined that
the proper mode of note issue to be provided for in the proposed act
is that of an issue of government Treasury notes, obligations of the
United States and receivable for all taxes, customs, and other public
dues. Recognizing that the country is now definitely committed to
the immediate redemption of all existing paper currency in lawfu
money, upon demand, theproposed measure requires the redemption
of such notes both at the Treasury and at each of the Federal reserve
banks at par when requested.




54

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

Recognizing, moreover, that the regulation of the volume of currency in circulation—as distinct from the underlying money of ultimate redemption—is a delicate function requiring to be adjusted in
accordance with the commercial, agricultural, and industrial needs of
the country, the power of getting out the notes by making application for them is by the bill given to Federal reserve banks, they being
required to furnish the local Federal reserve agent with collateral
security consisting of rediscounted notes and bills to a sum equal to
the amount of the notes issued to the Federal reserve bank in question.
These operations, connected with the issue and retirement of reserve
notes, are to be carried on through the local Federal reserve agent,
who is daily to notify the reserve board of issues and withdrawals.
Such reserve notes are required to be protected by a specially segregated reserve fund of 33J per cent in lawful money.
The mode of protecting the notes is an essential and fundamental
element in this section of the bill. A first lien on all assets and a
Government guaranty of the goodness of the notes obtained by
making them liabilities of the United States render the security
behind the issue absolute, both as to immediate and as to ultimate
conditions. It may thus be fairly said that the protection of the
notes as distinct from their redemption is as follows: (1) Government promise to receive them and to be ultimately responsible for
them; (2) first lien on all the assets of the bank issuing them; (3)
direct lien on 100 per cent of prime paper specially selected and segregated for their protection; (4) claim on 33J per cent of money drawn
from the general funds of the bank and re-created as fast as notes are
redeemed, that there may always be a special fund for the immediate
protection of the issues.
While the notes are, under the new section, allowed to carry on
their faces a letter and serial number distinguishing them from
others, they are not suffered to bear the name of the bank through
which they are issued, and the fundamental feature of this peculiar
"Government" character is that they are required to be redeemed
at the counter of every Federal reserve bank, no matter whether such
bank has issued any notes, and no matter how many notes it may
have issued. This signifies that every Federal reserve bank is a
redemption agency for the w^hole of the issue, and the question at
once arises, Out of what will such reserve bank redeem the notes
should a great quantity be thrown in upon it? The section provides
that such a bank: may, if it chooses, (1) pay the notes out of the 33J
per cent fund of lawful money or gold held by it for the redemption
of its own notes, re-creating such fund at once from any other funds
held by it for its other liabilities, (2) charge the notes off against
Government deposits held by it (and against which, of course, there
is a reserve of 33i per cent of lawful money), which would mean that
such bank would at once send the redeemed notes to the Treasury
and get back an equal amount of fresh Government deposits, or (3)
present the notes presented to it for redemption, although issued
by some other Federal reserve bank, to the Treasury for redemption.
In either of these latter cases, of course, the result would be to throw
on the Treasury the work of getting back the amount of the redeemed
notes by sending them to the bank, through which they were originally issued. In addition to these provisions, of course, it is required




55 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

in other sections of the bill that every bank in the system shall
receive the notes on deposit at par, and that they shall be payable
to the Government for taxes, dues, and other public requirements.
All this shows how the notes are protected and how they can easily
be redeemed by a man who is desirous of getting lawful money for his
notes without any cost to himself. There is little doubt that his
interests under the provisions of the measure are quite thoroughly
safeguarded. But there remains the general question whether the
public requirement of elasticity has been met and provided for.
Elasticity must be considered from two standpoints—that of expansion and that of contraction. As to expansion, the regulatory
mechanism is the Federal reserve board, which is given the power to
veto applications for notes. The board, however, can not issue
notes unless they are applied for and accompanied by a tender of
proper commercial paper. This at least seems to assure that they
will not be hastily or rashly overissued. The contraction feature is
more difficult. In attempting to guard against the danger that the
notes might remain in circulation after the need for them had passed,
the bill makes the following provisions: (1) The notes can not be
used in bank reserves; (2) the notes are not to be legal tender;
(3) the notes can not be paid out by any Federal reserve bank (when
not at first issued by it) under penalty of a tax of 10 per cent on their
face value; (4) every Federal reserve bank is directed, upon receiving the note of another reserve bank, to (a) either send it direct to
the bank that issued it, (b) to send it to the Treasury, charging it
off against deposits, or (c) to present it to the Treasury for redemption in lawful money. On the other hand the Treasury is directed
when it gets such notes in ordinary receipts to have them redeemed
out of a 5 per cent fund kept with the department for that purpose,
and then to send them home for ultimate redemption. The belief is
freely expressed that these provisions will maintain the notes at par
everywhere and will also prevent them from expanding or remaining
out after the need for them has gone by.
There is a final paragraph in section 17 relating to the collection
at par and without charge for exchange of certain classes of checks.
The provision is that every Federal reserve bank shall receive on
deposit at par the following classes of items:
1. Checks and drafts drawn upon any of its depositors.
2. Checks and drafts drawn by any of its depositors upon any other
depositor.
3. Checks and drafts drawn by any depositor in any other Federal
reserve bank upon funds to its credit in such reserve bank.
The object of these provisions is twofold:
1. To establish par transfers of funds among the banks in each
Federal reserve district.
2. To establish par transfers of funds between Federal reserve
districts.
Precisely how much difficulty and cost will be incurred by the
Federal reserve banks in carrying out the provisions of this section
can not be precisely calculated. It can, however, be positively
stated that such expenditures will be very much less than those
incurred by banks at the present day in carrying through their
exchanges. The proposed provision will eliminate the numerous




56

CHANGES IN THEFCATFKLTFGAND CURRENCY SYSTEM.

and well-founded complaints of unjust charges for exchange; and,
while it will prevent certain banks from profiting as they now do by
exchange transactions, it will correspondingly benefit the community.
The committee is well aware that the operation of this section will
undoubtedly relieve some members of the community of greater
burdens than others. It does not, however, consider the fact that
some persons have been suffering an unnecessary burden under
existing circumstances, a good reason for refusing or failing to provide for an important public function.
That this function of exchange may be effectively carried out, and
that other duties connected with relations between the several banks
of the system maybe wisely, promptly, and effectively carried through,
the proposed bill confers upon the Federal reserve board the power
to require each Federal reserve bank to perform the functions of a
clearing house, and at its discretion to require some one of them to
act as a clearing house for all the others or at its own discretion to
act as a clearing house in this way itself.
SECTIONS 18 AND 19.

Sections 18 and 19 may best be treated together, as they jointly
provide for the disposal of existing national-bank notes and for the
refunding of the bonds now held by the banks behind these notes.
The general views entertained by the committee with respect to banknote issue in general and the treatment of existing national-bank
notes in particular have been sufficiently set forth at an earlier point
in this report. It remains here to outline the exact steps that have been
recommended to attain the desired end, and to indicate the probable
cost and incidental problems connected with each step in the process.
What has been done in the bill is as follows:
1. Provision has been made for paying at the end of 20 years the
existing outstanding 2 per cent bonds. This is a manifest matter of
justice.
2. Meantime banks have been permitted at their discretion to present one-twentieth of their bona holdings each year for conversion
into 3 per cent bonds, and in the event they do not so present them
the Secretary of the Treasury is authorized to reassign the quotas of
bonds not taken up to other banks which are authorized to in that
case secure a corresponding amount of additional conversions.
3. During the 20-year period any bank may increase or decrease its
circulation at pleasure, subject to the maximum limitation prescribed
by law.
4. However, from the date of the passage of the act no national
bank is to be required to hold any United States bonds as security
for circulation if it chooses to retire such circulation—in other words,
the compulsory bond-purchase requirement of existing law is repealed.
It will be seen that the only interference with the existing demand
for bonds provided under these sections is the withdrawal of the compulsory bond purchase now required. Precisely how great a limitation of the bond demand this would furnish can not be precisely
stated. For the last year for which full report was made by the Comptroller of the Currency (1912) the net amount of bonds purchased by
national banks to protect circulation was about $16,000,000. This,




57 CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

however, was far in excess of the amount of bonds necessarily to be
purchased under the compulsory-purchase requirement, inasmuch as
many banks bought more bonds than they were obliged to secure
under the terms of the national-bank act. There is no reason why
this demand for bonds should not continue, as in fact it undoubtedly
will. The capitalization of banks organized in the year in question
was $16,080,000, while the amount of bonds purchased was about
the same. If the amount of bonds required to be purchased be
assumed to have been 25 per cent of the face of the capital of the
newly organized banks it would have been $4,000,000, and this may
be taken as considerably above the amount of compulsory demand
for bonds for which there will no longer be legal basis should the
present bill be enacted into law. As against this the Government
stands ready to redeem in the form of 3 per cent bonds, roughly speaking, $37,000,000 per annum, and it is only reasonable to suppose that
under the most unfavorable conditions the quantity of 2 per cent
bonds which wi 1 be converted into threes in this way will be far in
excess of the amount of the compulsory demand for twos which is
now cut off.
The future of the 3 per cent bonds, should the conversions go on at
the rate of 5 percent per annum,may be open to some question. The
committee has, however, consulted able expert opinion upon this
subject and has found a practical unanimity of view to tne effect
that at least $50,000,000 per annum in 3 per cent bonds can and will
be absorbed in the United States at par. Should such prove not to
be the case, the banks have only to retain their present bonds and
continue the issue of circulation thereon, but it is confidently believed
that no such situation will occur. The committee looks forward with
assurance to the conversion of a very considerable percentage, if not
all, of the permitted 5 per cent in each successive year during the
earlier part at least of the 20-year period. As the 20-year period
draws toward a close it is quite likely that some bondholders will
prefer to hold their bonds for redemption, but in the meantime there
will have been a suffrcient retirement of national-bank notes to impart
to the new currency to be put out through the Federal reserve banks
the desired quality of elasticity. In order to improve the market for
the 3 per cent bonds, section 19 provides that they are to be free from
all taxation both as to income and principal. It will be remembered
that the status of the bonds is further helped in some measure by the
provision made in the earning section (sec. 7) for devoting the Government share of reserve bank earnings to the redemption of bonds.
As a corollary of the bond-refunding plan and of the note section the
committee has deemed it wise to insert in section 19 a prohibition
upon the further use of the extra-legal substitutes for circulating
notes which have heretofore done duty in times of panic under the
form of clearing-house certificates, cashiers' checks, and various substitutes for actual money which have been illegally paid out by banks
to their creditors in lieu of the payment in the usual forms of currency employed by them during normal times. No such expedients
would have been permitted save under severe stress, and witn a suitable provision for an elastic note issue based upon commercial paper
they should not longer be suffered to continue in use.




58

CHANGES IN" T H E B A N K I N G A N D CURRENCY

SYSTEM.

The amount of 2 per cent and other bonds now held behind circulation and affected by the provisions of sections 18 and 19 may be
recapitulated as follows:
Bonds held in trust for national banks, Sept. 2, 1913.
Bonds held for national banks.

Kind of bonds.

Rate
Total
of inamount
terest. outstanding.

To secure deposits of
public moneys.
Total.

To secure
circulation.

Value at
par.

Value at
rate approved by
department.

$3,487,700

$3,487,700

GOVERNMENT.

fU. S. loan of 1925..at par..
U. S. loan of 1908^1918,
at par
U. S. Panama of 1961, at
par
U. S. eonsol of 1930.at par..
U. S. Panama of 1936, at
par
U. S. Panama of 1938, at
par
Philippine loans.. .at par..
Porto Rico loans
do
D istrict of Columbia. do
Territory of Hawaii, 3} per
II. cent bonds at 90 per cent
of par; all other Hawaiian bonds at market
value, not exceeding par.

$118,489,900

$37,669,400

$34,181,700

63,945,460

0)

22,182,200

3,646,700

3,646,700

17,110,200
615,921,100

603,773,900

17,110,200
12,147,200

17,110,200
12,147,200

54,631,980
2
4
4
3.65

25,828,900

50,000,000
646,250,150

54,242,360

52,962,860

1,279,500

1,279,500

30,000,000

29,444,140
5,967,000

28,897,140

547,000
5,967,000

547,000
5,967,000

933,000

933,000

16,000,000
5,225,000
6,970,650

1,821,000
933,000

1,821,000

1,821,000

6,515,000

1,978,000

1,978,000

1,930,900

8,551,000
6,735,000

898,000
10,000

898,000
10,000

588,571
6,750

MISCELLANEOUS.

I

Philippine Railway Co

Manila Railroad Co
At 90 per cent of market
17,951,137
17,951,137 11,747,904
<0
value, not exceeding 90
per cent par.
Total.
809,774,237 741,997,800 67,776,437 61,213,425
IV. State, county, city, and
other securities »
1 Various.
8 As security for deposits made in connection with crop movement Government bonds are accepted at
par, other bonds at 75 per cent of market value, and commercial paper at 65 per cent of face value.
When banks have occasion to withdraw bonds held by the Treasurer to secure deposits of public moneys,
the following shall be the order of withdrawal: Group IV, Group III, Group II, and Group I.
Bonds within a group may be interchanged by banks if desired, but bonds in a lower group may not be
substituted for those in a hkher group, except tot an initial substitution of bonds of a lower group for
those of a higher group may D made to an amount not to exceed 30 per cent of the total security value of
e
bonds held for a particular bank. National-bank depositaries which have not as yet taken out the full
amount of circulation authorized by law may withdraw United States 2s and substitute for them bonds
in Group II, provided the 2s as withdrawn shall be used as security for additional circulation.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

59

SECTION 2 0 .

Section 20 seeks to readjust the reserve requirements now provided by the national banking act in such a way as to make them
conform to the dictates of scientific banking, and to adjust them
to the provisions of the proposed bill. The following main objects
have been had in mind:
1. To abolish entirely the present system of redeposited or "pyramided" reserves.
2. To establish a moderate required reserve actually to be held
in cash in the vaults of the banks.
3. To prescribe a secondary reserve to take the form of a credit
with the Federal reserve banks.
Several serious problems at once suggest themselves as the result
of any effort to attain these objects. In the first place, the present
conditions have grown up over a period of 50 years, and it is not
desirable, even if it were safe, to disturb them roughly. Secondly,
it is considered that existing reserve requirements, being based
upon the state of affairs in which many independent banks were
working without coordination it is possible to reduce the actual
amount of reserves to be held. Finally, it is noted that in making
the change suggested careful account must be taken of the total
sums in cash as distinct from those in balances required to be held
by existing law, and that they should be contrasted with the sums
in cash and balances prescribed under the proposed bill. In surveying the situation a beginning may be made by considering with
care the reserve requirements of the national bank act. These are
as follows:
RESERVE CITIES AND RESERVE

REQUIREMENTS.

120. SEC. 5191. Every national banking association in either of the following cities,
Albany, Baltimore, Boston, Cincinnati, Chicago, Cleveland, Detroit, Louisville,
Milwaukee, New Orleans, New York, Philadelphia, Pittsburg, St. Louis, San Francisco, and Washington, shall at all times have on hand, in lawful money of the United
States, an amount equal to at least twenty-five per centum of the aggregate amount of
p£s notes in circulation andj its deposits; and every other association shall at all times
have on hand, in lawful money of the United States, an amount equal to at least fifteen
per centum of the aggregate amount [ o / its notes in circulation and\ of its deposits.
Whenever the lawful money of any association in any of the cities named shall be
below the amount of twenty-five per centum of its [circulation andJ deposits, and
whenever the lawful money of any other association shall be below fifteen per centum
of its [<circulation andj deposits, such association shall not increase its liabilities by
making any new loans or discounts otherwise than by discounting or purchasing bills
of exchange payable at sight, nor make any dividends of its profits until the required
proportion, between the aggregate amount of its |joutstanding notes of circulation and\
deposits and its lawful money of the United States, has been restored. And the
Comptroller of the Currency may notify any association whose lawful money reserve
shall be below the amount above required to be kept on hand to make good such
reserve; and if such association shall fail for thirty days thereafter so to make good its
reserve of lawful money, the comptroller may, with the concurrence of the Secretary
of the Treasury, appoint a receiver to wind up the business of the association, as provided in section fifty-two hundred and thirty-four.
NOTE.—This section is amended by the act of June 20, 1874, section 2, which provides that no reserve need be held against circulation. Said act follows section 5192.
Act of March 3, 1903, amending act of March 3, 1887, providing for additional reserve
cities, follows section 5192. Provisions relating to redemption of circulating notes,
acts June 20, 1874, March 3, 1875, and July 14, 1890, follow Revised Statutes, 5192.
Provisions relating to redemption of old notes of banks extending their corporate




60

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

existence, act July 12, 1882, follows Revised Statutes, 5136. Leavenworth, Kansas,
was included as a reserve city in the original act, but was struck out March 1, 1872.
Words "lawful money" construed by Attorney General as including all that is legal
tender. (Opin. Atty. Gen., 17; 123.)
WHAT MAY BE COUNTED AS RESERVE.

121. SEC. 5192. Three-fifths of the reserve of fifteen per centum required by the
preceding section to be kept may consist of balances due to an association, available for the redemption of its circulating notes, from associations approved by the
Comptroller of the Currency, organized under the act of June three, eighteen hundred
and sixty-four, or under this title, and doing business in the cities of Albany, Baltimore, Boston, Charleston, Chicago, Cincinnati, Cleveland, Detroit, Louisville, Milwaukee, New Orleans, New York, Philadelphia, Pittsburg, Richmond, Saint Louis,
San Francisco, and Washington. Clearing-house* certificates, representing specie or
lawful money specially deposited for the purpose, of any clearing-house association,
shall also be deemed to be lawful money in the possession of any association belonging to such clearing house, holding and owning such certificate, within the preceding
section.
NOTE.—Leavenworth, Kansas, was included as a reserve city in the original act but was struck out
March 1, 1872. Charleston and Richmond not being included in the list of reserve cities enumerated in
section 5191, the banks of which are required to hold a reserve of twenty-five per centum of their net
deposits, the Comptroller of the Currency has never approved any banks in said cities as reserve agents.
LAWFUL MONEY RESERVE TO BE DETERMINED BY DEPOSITS.

ACT JUNE 20, 1874.

122. SEC. 2. That section thirty-one of "the national-bank act" be so amended
that the several associations therein provided for shall not hereafter be required to
keep on hand any amount of money whatever, by reason of the amount of their respective circulations; but the moneys required by said section to be kept at all times on
hand shall be determined by the amount of deposits in all respects, as provided for
in the said section.
NOTE.—Section 31 of "the national-bank act" is incorporated in sections 5191, 5192, Revised Statutes.
Section 1 of act June 20, 1874, precedes section 5133, Revised Statutes.
NO RESERVE NEED BE HELD AGAINST DEPOSITS OF PUBLIC MONEY.

ACT MAY 30, 1908.

123. SEC. 14. That the provisions of section fifty-one hundred and ninety-one of
the Revised Statutes, with reference to the reserves of national banking associations,
shall not apply to deposits of public moneys by the United States m designated
depositaries.
PROVISIONS FOR REDEEMING CIRCULATION—FIVE PER CENT REDEMPTION FUND
ACT JUNE 20, 1874.

124. SEC. 3. That every association organized or to be organized under the provisions
of the said act and of the several acts amendatory thereof shall at all times keep and have
on deposit in the Treasury of the United States, in lawful money of the United States,
a sum equal to five per centum of its circulation, to be held and used for the redemption of such circulation; which sum shall be counted as a part of its lawful reserve, as
provided in section two of this act; and when the circulating notes of any such associations, assorted or unassorted, shall be presented for redemption, in sums of one
thousand dollars, or any multiple thereof, to the Treasurer of the United States, the
same shall be redeemed in [ United States notes\ All notes so redeemed shall be
charged by the Treasurer of the United States to the respective associations issuing
the same, and he shall notify them severally on the first day of each month, or oftener,
at his discretion, of the amount of such redemptions; and whenever such redemptions for any association shall amount to the sum of five hundred dollars, such association so notified shall forthwith deposit with the Treasurer of the United States
a sum in United States notes equal to the amount of its circulating notes so redeemed. And all notes of national banks worn, defaced, mutilated, or otherwise
unfit for circulation shall, when received by any assistant treasurer, or at any
designated depository of the United States to be forwarded to the Treasurer of the
United States for redemption as provided herein. And when such redemptions
have been so reimbursed, the circulating notes so redeemed shall be forwarded to
the respective associations by which they were issued; but if any of such notes are
worn, mutilated, defaced, or rendered otherwise unfit for use, they shall be forwarded




61

CHANGES IN" THE BANKING AND CURRENCY SYSTEM.

to the Comptroller of the Currency and destroyed and replaced as now provided by
law: Provided, That each of said associations shall reimburse to the Treasury the
charges for transportation and the costs for assorting such notes; and the associations
hereafter organized shall also severally reimburse to the Treasury the cost of engraving such plates as shall be ordered by each association respectively; and the amount
assessed upon each association shall be in proportion to the circulation redeemed,
and be charged to the fund on deposit with the Treasurer: And provided further, That
so much of section thirty-two of said national-bank act requiring or permitting the
redemption of its circulating notes elsewhere than at its own counter, except as provided for in this section, is hereby repealed.
NOTE—Section 12 of act of May 30, 1908, provides that notes of national banking associations shall be
redeemed in lawful money of the United States. (See said section 12, page 49, ante.)
Section 32 of national-bank act is section 5195, Revised Statutes.

We may now contrast with the requirements which are thus laid
down by existing national-bank legislation those which are established in the proposed legislation. In the following tabular view is
given for each class of national banks—central reserve city, reserve
city, and country—the provisions which it is proposed to create
under the new legislation:
Reserve requirements.
COUNTRY BANKS.

Up to 14
months.

14
months
to 36
months.

Per cent. Per cent.
12
12

Total reserve required

Total reserve

5
3

5
5

4

2

12

Cash in own vaults
On deposit with Federal reserve bank, required
On deposit in reserve or central reserve city or in Federal reserve bank or
in cash, optional with bank
In cash or on deposit in Federal reserve bank, optional with bank

12

After 36
months.

Per cent.
12
5
5
2
12

Date.—"From and after the date set by the Secretary of the Treasury and officially
announced by him as hereinbefore provided."
Refers to.—"That within 60 days from and after the date when the Secretary of the
Treasury shall have officially announced, * * * the fact that a Federal reserve
bank has been established."
RESERVE CITY BANKS.

60 days.

Total reserve required.
Cash in own vaults
On deposit with Federal reserve bank, required
7 be cash or on
On deposit in central reserve city, optional with bank.
deposit with Federal reserve bank
On deposit with Federal reserve bank or in cash, optional with bank
(see note)
Total reserve.

60 days
to 14
months.

After 36
months.

Per cent. Per cent. Per cent.
20
18
18
10
10

20

18

18

Date.—"From and after the date set by the Secretary of the Treasury for the incorporation of the Federal reserve bank. ,,
Again.—" For 60 days from the date set by the Secretary for the organization of the
reserve bank."




62

C H A N G E S IN" T H E B A N K I N G A N D CURRENCY

SYSTEM.

BANKS IN CENTRAL RESERVE CITIES.

60 days.

60 days
to 14
months.

Total reserve required

20

18

18

Cash in own vault
On deposit with Federal reserve bank:
Optional
Required
On deposit with Federal reserve bank or in cash, optional with banks

10

9

9

io

3
6

$
4

L0

18

18

Total reserve

After 14
months.

Two questions present themselves in connection with these reserve
requirements—the first, How far would the banks be able to comply
with them without sacrifice; and the second, How far would tnis
change seem to be desirable ? These may be dealt with in the reverse
order.
In outlining the general philosophy of the proposed banking bill it
was pointed out that the existing system of redeposited reserves gives
rise to cheap money for stock-exchange speculation in the centers
while it fails to provide in times of panic a reserve upon which the
country can draw with assurance, because at such times stock-exchange securities can not be easily liquidated, so that call loans are
unavailable as a resource, and the city banks in self-defense have
deemed themselves warranted in suspending specie payments. It is
contended, however, that these difficulties ana irregularities of the
existing system are mere blemishes upon the surface of an otherwise
desirable state of affairs, and that there is good and sufficient economic
reason for maintaining the present system of redeposited reserves at
least in part. This claim may be reduced to a series of propositions,
as follows:
1. The redeposited reserves are placed with the city banks not for
stock speculation, but in large measure at least to supply exchange
funds upon which the depositing banks may draw.
2. The redeposited balances must be kept with the banks which
now hold them, because the country banks look to these city banks
for accommodation and the latter gauge the amount of accommodation to be granted them by the size of the balances.
3. The country banks, and in general all banks making the redeposits get a rate of interest thereon. They are thus able to make use
of a reserve which would otherwise be "dead," and which when held
in cash or in the Federal reserve banks will yield them no revenue,
the latter banks being forbidden by the terms of the bill to pay
interest on deposits.
These contentions are worthy of careful study, because they arc
widely urged.
Regarding the first point—the question of exchange funds—it will
be noted that the proposed bill has met the requirement for such
funds by specifically directing Federal reserve banks to receive
specified classes of checks at par. It has thus largely wiped out
the necessity for any such balance as now held. It may be noted,
however, that there is in the bill nothing whatever to prevent the




63 c h a n g e s in" t h e b a n k i n g a n d c u r r e n c y s y s t e m .

banks from maintaining any amount of such balances with city banks
as they desire. Clearly if the balances with the city banks are exchange balances they are not reserves and there is no reason for
regarding them as such.
The second point already noted has even less force than the first.
Not only does the proposed bill provide more extensive facilities for
rediscount than have ever been known, but even it if did not do so,
and even if, as alleged, there are many kinds and classes of security
not eligible for rediscount under the bill which country banks can
use as a basis for accommodation only with city banks, it would still
remain true that this does not afford any warrant for demanding the
maintenance of the existing situation. The refusal to grant accommodation except in proportion to the amount of balance held by the
would-be borrower is purely a matter of business practice. If a condition should be created under the proposed bill such that banks
could not maintain the present reserve city deposits, it is hardly to
be expected that the reserve city banks would immediately injure
themselves and destroy their own source of business profits by refusing
to buy good marketable paper or to extend loans upon sound security
merely because conditions had altered and the large balances of former days were no longer kept with them.
As for the third contention—the loss of interest to depositing banks
due to the sacrifice of their 2 per cent on reserve balances—the argument against the proposed change almost degenerates into absurdity.
The measure so greatly broadens the scope of banking business as to
open many new avenues of profitable investment, while the sacrifice
of the 2 per cent now customarily paid is not only no loss to the community but represents the abolition of a long-standing evil which has
drawn funds to places where they were not needed and away from
those where they were.
In the ultimate analysis, the whole question simmers down to an
issue whether the amount of reserve prescribed under the proposed
bill is or is not excessive, and whether it can or can not be readily
furnished by banks under the terms of the suggested legislation. The
existing system is not backed either by the custom of other countries,
by abstract logic, by the dictates of past experience, or by any other
considerations. The only problem in the case is that of determining
the correct amount of reserves to be required by the banks, and then
of making the transition to the new basis under proper conditions.
The next step in the study of the proposed requirements is therefore
an analysis of the ability of the banks to make the transition. The
following computations may first be examined:
1. The bill provides in section 20 for a revision of the existing
reserves of national banking associations.
2. The present reserve system recognizes three classes of banks:
(a) Country banks, (b) reserve city banks, (c) central reserve city
banks. Country banks are required to hold 6 per cent of their deposit
liabilities in lawful money ana may hold 9 per cent in balances with
other banks. Reserve city banks are required to hold 12^ per cent of
their deposits in lawful money and may hold 12^ per cent in balances
with other banks in central reserve cities. Central reserve city banks
are required to hold 25 per cent of their deposits (including those of
other banks with them) in lawful money in their own vaults.




64

c h a n g e s in" t h e b a n k i n g a n d c u r r e n c y

system.

3. The bill aims to transfer these reserves away from banks other
than those to which they belong, so that ultimately bank reserves
will be held partly (a) in the vaults of the banks to which they
belong and (o) partly in the reserve banks to be created under it,
the reserve banks thus created taking the place of existing reserve
city and central reserve city banks in their relation to others.
4. In carrying out this plan, the bill contemplates that ultimately
reserves shall be as follows: (a) Five per cent of the outstanding
deposits of all banks to be carried in the new reserve banks; (b) 5 per
cent of the deposits of present country banks to be carried in cash
in their own vaults; (c) 2 per cent of the deposits of present country
banks to be carried either m cash in their own vaults or as a balance
with new reserve banks; (d) 9 per cent of the deposits of present
reserve city and central reserve city banks to be carried in cash in
their own vaults; (e) 4 per cent of the deposits of present reserve
city and central reserve city banks to be carried either in cash in
their own vaults or as balances with the new reserve banks.
5. It is of course evident that the "balances" spoken of can be
obtained by rediscounting paper with the new reserve banks.
6. From the foregoing it is clear that as some discretion is left to
the banks about their reserves, the exact position of those reserves
at any given time can not be predicted. Maximum and minimum
limits can, however, be fixed. This is done as follows:
7. At the date of June 4, 1913 (comptroller's last report), the
resent bank reserve in central reserve cities was $409,601,424,
eld in cash.
At the same date the reserve which would have been required under
the new plan as above sketched would have been 9 per cent of net
deposits then subject to reserve requirements in cash and 9 per cent
as a maximum in balances with the new reserve banks, as follows:

E

To be held in cash
To be held as balances
Total

$141,127, 835
141,127, 835
282, 255, 670

From this it is clear that if the balances under the new plan were
established by taking actual money and putting it in the reserve
banks the actual release of cash as compared with the present plan
would be the difference between the total new reserve and the present
reserve, while if the reserve balances were created by rediscounting
the cash released under the new plan would be the difference between
the cash required to be held under the new plan and the cash now
actually held. That would signify:
Maximum release of cash
Minimum release of cash

$268, 473, 589
127, 345, 754

8. At the same date mentioned above the banking reserve in
reserve cities as held by the banks was:
Held in cash
Held in balances

$250, 383, 926
232, 799, 679

Total

483,183, 605

Under the new plan these banks would have to hold in cash 9
per cent of their net deposits subject to reserve requirements and a




changes in t h e banking and c u r r e n c y system.

65

like amount in balances (maximum), which would be for the reserve
cities as a group:
To be held in cash
To be held in balances

$175,128,701
175,128, 701

Total

350,257,402

Comparing these figures with the present requirements, as already
given, it is seen that the new plan might mean either a
Maximum release of cash
Or a maximum contraction of cash

$75,255,225
99, 873,476

9. At the same date mentioned above the banking reserve in
country banks was held as follows:
Held in cash
Held in balances

$289, 392,177
310, 689,129

Total

600, 081, 306

Under the new plan the cash required would be 5 per cent of their
net deposits subject to reserve requirements and 7 per cent in
balances (2 of this at the bank's discretion). This would mean:
To be held in cash
To be held in balances

$180, 533, 642
252,747,100

Total

433, 280, 742

On the same principles as before this would mean a maximum release or contraction as follows:
Maximum release
Maximum contraction

$108, 858, 535
143, 888, 565

10. Thus it appears that there would be a possible maximum contraction as follows:
Reserve city banks
Country banks

$99, 973,476
143, 888, 565

Total
Deduct central reserve city release

243, 862, 041
127, 345, 754

Net contraction

116, 514, 287

It is also evident that the result might work out as follows:
Released by central reserve city banks
Released by reserve city banks
Released by country banks
Total

$268, 473, 589
75, 255, 225
108, 858, 535
452, 587, 349

11. Which of these results would probably be reached? Assume
that the first (contraction) was the net result owing to banks fulfilling
their reserve requirements by depositing cash in every instance.
The Government balances which are now to be poured into trade
channels through the new reserve banks will run from $200,000,000
to $250,000,000. Bearing in mind the fact that the capital of the
new banks has to be raised in cash, it will be seen that allowing for
$100,000,000 of this capital the monetary situation would be left
about the same as it is to-day except that the new reserve banks
would be in position to add their loaning power to that of the older
8829°—H. Rept. 69, 63-1




5

c h a n g e s i n t h e b a n k i n g a n d c u r r e n c y s y s t e m . 66

banks. If we now assume that the transfer of reserves resulted in
the extreme limit of expansion already referred to, it would be noted
that the cash is released only on the assumption that the new reserve
banks have to hold one-third in lawful money in order to make these
discounts, it is clear that only two-thirds of $452,587,349, or about
$300,000,000, will be released. Of this sum a certain part would
be needed in bringing the reserves of State banks which may become
members of the new associations up to the level which is required of
them. How much this would be can not be positively asserted.
12. If it be asserted that this process will lead to inflation, the
answer to be made is that whether it will or not is a matter in the
hands of the reserve banks which have it in their power by fixing
their rate of discount suitably to prevent the banks from creating
with them by rediscounting reserve balances in excess of the required
5 per cent. If the reserve banks should do this, it would be iound
that the required 5 per cent referred to would be about $356,000,000
while the amount which the banks at their option might or might
not obtain in this way would be about $213,000,000, the actual cash
required to be held by them under the new plan as already sketched,
bemg as follows:
Central reserve city banks
Reserve city banks
Country banks
Total

$141,127, 835
175,128, 701
180, 533, 642
496, 790,178

Add to this the amount which the reserve banks can at their option
make it worth while for the other banks to hold in cash or to deposit
with them in cash, and we have a total of about $710,000,000. The
actual cash held to-day by the banks at home and in the redemption fund is about $950,000,000. Something like $240,000,000 would
thus be released under the probable working out of the system, and
this would be drawn upon for the other purposes already referred to.
IMMEDIATE SHIFTING OF FUNDS.

This review of the reserve requirements of the proposed bill is, however, based entirely upon a comparison of the situation as to reserves
at the present time contrasted with the situation which will exist at
the end of three years after the measure has gone completely into
operation. It was deemed wise to allow this length of time, as has
already been elsewhere noted, for the reason that there will necessarily be some readjustment of loans, and if the change were to be
suddenly made it might result in temporary embarrassment for some
banks. The committee has made very careful inquiry into the
length of time that should be allowed lor shifting reserve requirements in the way indicated, and the maximum period that has been
asserted to be necessary was found to be three years. It is probable
that the change could be effected in a very much shorter time than
this, if it were necessary to bring it about more quickly, but the committee has deemed it best to allow the full period that was thought
desirable by the most conservative reasoners whom it consulted.
This three-year period was the maximum mentioned either in the
public hearings or in communications sent to the committee by
experts with reference to the subject.




changes in t h e banking and c u r r e n c y system.

67

There is, however, another phase of the question of transfer which
has not yet been dealt with. A review of the reserve section will
make it clear that a period of 60 days after the creation of the reserve
banks is fixed, during which conditions are allowed to remain as they
are if desired by city banks, but by the end of which it is required that
a certain transfer of reserves shall have been made to the reserve
banks. Inasmuch as it was thought that this transfer might be difficult
for the banks unless they were granted relief to a corresponding extent,
the bill provides for the reduction of the reserve requirements in
reserve and central reserve cities from 25 to 18 per cent at the end of
the 60-day period in question. An examination of the latest returns
for banking condition made public by the comptroller as of June 4,
1913, and reproduced in the appendix of this report shows
that the total net deposits subject to reserve requirements may be
taken for purposes of discussion at $7,200,000,000. Three per cent
of this amount is $216,000,000. This might be supplied either
through actual transfer of cash from the banks which now hold it,
or through the obtaining of rediscounts, or partly in one way or
partly in the other. The committee, however, has endeavored to
adjust the requirements of the bill so that the transfer could be
made, as already stated, in actual cash without any inconvenience.
The reserve banks of the central reserve cities have normally on
hand about $400,000,000 of reserve money. Of this seven twentyfifths would be released under the provision for reduction of reserves
from 25 per cent to 18 per cent. Banks in reserve cities have normally about $250,000,000 in cash, and about an equal amount in
balances with central reserve cities. The reduction of reserve requirements from 25 to 18 per cent would release seven twenty-fifths
out of this amount, or 3^ per cent in balances and 3^ per cent in
cash—roughly speaking, $70,000,000 in each form.
Now, let it be assumed that the banks undertake to comply with the
requirement of a transfer of 3 per cent of their liabilities from existing
reserve city and central reserve city banks to the new reserve banks.
As an extreme illustration we may suppose that the country banks
will draw for the amount in question on the reserve city banks. As
the deposit liabilities of the country banks are about $3,600,000,000,
it may be supposed that the call will require about $108,000,000. How
would the reserve city banks supply this amount—assuming that the
call was made upon them and not directly upon central reserve city
banks ? Presumably they would draw upon their New York correspondents, and upon other central reserve cities, unless by so doing they
cut down the balances there below the figure necessary for them to
hold in order to comply with reserve requirements. We have seen
that they could spare only about 3^ per cent of their own outstanding
deposits. It must be remembered, however, that they will themselves find it necessary to shift 3 per cent of their outstanding deposits to the reserve banks. In addition, then, to the total draft of
$108,000,000 made upon them by the country banks, they will have
to provide in order to meet their own requirements 3 per cent of about
$2,000,000,000 or roughly speaking $60,000,000—a total requirement
therefore of $168,000,000. Of this it is fair to suppose that 3^ per
cent of their present deposits or fully $70,000,000 can be directly transferred in cash without damaging their position. Another $70,000,000




68

c h a n g e s i n t h e b a n k i n g a n d cuRRency s y s t e m . 68

can be clipped from their balances with central reserve cities without
unduly reducing the latter. There would thus be needed $28,000,000
to meet all demands in cash.
In connection with the foregoing computation, it should, however,
be borne in mind that 1 per cent of cash has been released in the
country banks by the reduction of the vault cash requirements from
6 to 5 per cent. Inasmuch as the total reserve requirements of
country banks is cut to 12 per cent, it may perhaps be fair to suppose that this margin of casn could be drawn upon at the very outset
m order to supply cash requirements. It would certainly before long
furnish a means of extending discounts and would be available as
a cash resource for the combined banks obviating the necessity of
applying to the new reserve banks for rediscount accommodation.
It must, moreover, be borne in mind in the foregoing computations
that by the process of withdrawing funds already referred to there
has been a corresponding reduction of deposit liabilities, with a corresponding reduction of reserve requirements against them. For
example, n the assumption that country banks draw upon reserve city
banks for the full amount of their transfers to the new Federal reserve
banks be correct, the effect would be to eliminate about $100,000,000
of deposits formerly held by reserve city banks against which reserves
had to be carried but which having been paid off are no longer subject to reserve requirements. This would be a release under the new
reserve provisions of $20,000,000 of reserve money in the reserve
cities. The reserve thus released might be either in cash or balances
and it is fair to assume would be about evenly divided between the
two. In central reserve cities if a draft for $70,000,000 were made
by reserve city banks the result would be a release of reserve against
deposits to a corresponding extent, thereby enabling banks to reduce
their necessary cash holdings by one-fifth of that amount, $14,000,000,
at the outset and by a further 2 per cent additional later on.
Summing up these compensating or offsetting factors of the situation it is a fair conclusion that the draft upon the banks during the
first 60 days' life of the new undertaking would be much less, so far
as reserve requirements are concerned, than the demands made by
present reserve requirements.
What has been said applies entirely to the first year under the new
measure. At the end oi that time an additional transfer of 2 per
cent of deposit liabilities must be made by the member banks.
Assuming tnat their deposits remain stationary during the year on
the basis of the report of June 4, last, the amount needed to be transferred would be 2 per cent of about $6,900,000,000, or about $138,000,000. If the banks had not accumulated cash during the year
or retained the surplus cash set free at the outset, this requirement might, so far as it consisted of an actual draft* upon reserve
and central reserve cities, have to be met by rediscounting. There
is, however, no probability that any such situation would develop. On the contrary, the year's operations would have been
marked by a far greater ease in the loan transactions of the banks
than any previously experienced, due to the fact that the new reserve
system was in operation. It is fair to suppose that the amount of
deposits would have increased considerably and that the amount of
reserve to be transferred would have correspondingly increased.




c h a n g e s i n t h e b a n k i n g and c u r r e n c y s y s t e m .

69

That in the meantime the habit of resorting to the reserve banks for
rediscounts would have grown up can not be questioned. At the end
of the year, therefore, the banks would simply be obliged to strengthen
their balances with the reserve banks to the extent of $138,000,000,
and they would do this through ordinary commercial processes involving no inconvenience or sacrifice whatever. If the extreme supposition that the banks did not enlarge their deposits during the year,
and that the cash originally held against them remained stationary,
should be accepted, the fact would remain that the reserve banks
would during that period have received some $200,000,000 from the
Government in cash deposits and would have paid out more or less
of it, into circulation, inevitably resulting in increasing the flow of
cash into the vaults of the member banks while they would still
have a comfortable margin left from the first release. If the volume
of loans were the same at the end of the year as at the beginning it
would be practically inevitable that they should be very much stronger
in cash than they are at present.
In closing this discussion of the relative strength of the banks
before and after the transfer of reserves, it is well to emphasize once
more the fact that the new requirements, far from causing constriction will cause relaxation and that the danger of the situation from
the banking standpoint will not be in the limitation of loans but
rather in the inflating of them—a process which, however, will remain
well under the control of the reserve banks to be organized, by reason
of their regulation of the rate of rediscount.
Throughout the foregoing computations, it should be understood,
reference has been had to the most unfavorable conditions that could
be supposed to exist and no effort has been made to put the situation
in a light that would present the transition to the new system as
unduly easy. There are two broad classes of considerations which,
however, should be taken into account in studying the situation
which would exist after the adoption of the proposed bill. These are
as follows:
1. Many banks do not keep their permitted balances with banks
in reserve cities, but with banks in central reserve cities. The result
is that the total amount of drafts to be made upon reserve city banks
will, in tact, be less than that which has already been computed and
there will be less necessary shifting of balances under the operation
of the bill in question.
2. It is not true that all banks would as assumed come into the new
system within 60 days. The act is founded upon the provision that
(a) within 90 days after the adoption of the act the organization committee sxiall designate places for the organization of reserve banks,
and that (6) within 60 days after the date when the organization of a
bank has been announced, there shall be a shift of a certain per cent in
the reserves required. This would be a total of 150 days after the passage of the act which would be likely to elapse before the new reserve
requirements would become effective. More important still, the
new reserve banks can be organized in any district as soon as a capital
of $5,000,000 each is assured. This would be $60,000,000 in all, so
that even if reserve banks were simultaneously organized in all districts it would not be necessary for more than three-fifths of the banks
to have signified an intention to enter the system. The banks are




c h a n g e s i n t h e b a n k i n g a n d c u r r e n c y s y s t e m . 70

given a year within which to settle for themselves whether they will
enter the system or not. It is thus entirely possible, although we think
not probable, that the organization of some of the reserve banks
might be deferred until several months after the adoption of the act.
If this shouM be the case tiie call for new reserves would be even
slower and it is fair to assume that the movement of banks into the
system will practically be distributed throughout the year so that the
draft on reserve funds will not fall suddenly as has been assumed in
the computations made above, but will be diffused over a very considerable period. This would give ample opportunity for the acquiring of reserve money through any one of the channels through which
it is ordinarily obtained—importation, production of gold, the gathering in of cash in circulation, or as a substitute the gradual extension
of rediscounts by Federal reserve banks which count for reserve purposes the same as actual cash, up to the specified limit permitted by
the act. There need therefore be no anxiety whatever with reference
to a sudden stringency due to an excessive demand for currency consequent upon a rush of banks into the new system immediately after
the enactment of the proposed legislation. On the contrary, the
reasonable expectation would point in the opposite direction—
toward a somewhat extensive relaxation of cash requirements due to
the fact that banks will see a profit in getting rediscounts from the
Federal reserve banks instead of fulfilling their reserve requirements
by transferring actual reserve money to such banks. This is quite
opposed, we are aware, to the current view on this subject, but it is
far more in harmony with the facts of the case.
SECTION 21.

In this section provision is made for the repeal of portions of existing law which require that the 5 per cent fund deposited with the
Treasurer of the united States by national banking associations for
the purpose of note redemption shall be counted as part of the lawful
reserve. There is no good reason for treating the 5 per cent fund
in this way and there never has been any. The existing requirements
of legislation practically withdraw the amount kept with the Treasury
for the purpose of current redemption of national bank notes from
the actual uses of the bank and put them out of reach. It is believed
that if the national banks are to continue to issue notes, and so long
as they do, they should be required to provide for the redemption of
their notes on an independent basis, and that the fiction of counting
as reserve something which is not reserve and never can serve that
purpose ought not to be maintained. As the national-bank notes are
retired, through the presentation of 2 per cent bonds for conversion
into threes, the amount of the fund kept on deposit with the Treasury
for the current redemption of national-bank notes will be of less and
less importance, so that such burden as is thrown upon the banks
by the provisions of section 21 will disappear as the banks at their
own option convert their bonds. The section is therefore a further
working out of the ideas carried by section 20, which are in substance that reserve should be either actual cash at home or a balance
with a cooperative institution which is organized for the purpose of
maintaining and safeguarding the solvency of the country ana which
can be relied upon to hold its balances subject to call in case of
necessity.




changes in t h e banking and c u r r e n c y system.

71

SECTION 22.

Section 22 establishes a reserve of 33 J per cent of the outstanding
demand liabilities of each Federal reserve bank, such reserve to be
held in gold or lawful money. In a general way the committee
believes that requirement of a fixed reserve is not a wise or desirable
thing as viewed in the light of scientific banking principle. It believes, however, that in a country accustomed to fixed reserve requirements the prescription of a minimum reserve may have a beneficial
effect, and it therefore has determined upon 33J per cent. This it
regards as a minimum requirement and it firmly believes that the
reserve banks will of their own accord keep as a usual practice considerably more than the amount required. It will be remembered
that in an earlier section (sec. 12) the Federal reserve board was
given power to suspend reserve requirements for 30 days if it saw
fit. Aiid in the present section, with that in mind, it is provided that
if, upon notice of 30 days after being directed by the Federal reserve
board to make good its required reserve so as to bring it up to 33 J per
cent, any Federal reserve bank fails to comply with directions, the
Federal reserve board shall have power to close the bank and appoint
a receiver therefor.
SECTION 23.

In section 23 it is sought to improve upon and strengthen existing
bank examination requirements, m the belief that the latter are not
now sufficiently effective and that existing authorities have not the
power to carry through such examinations either with the thoroughness or the frequency that the circumstances demand. Section 23
therefore provides for a change in the method of compensating bank
examiners and alters in various details the methods now employed in
carrying out the examinations.
In view of the close and intimate relationships which are to be
maintained between Federal reserve banks and their member banks,
and in view of the fact that the Federal reserve banks are authorized
to act as clearing houses for such member banks, the power is bestowed upon the Federal reserve banks subject to the oversight of the
Federal reserve board to carry on examinations of member banks as
it may deem best. These examinations would be similar to those
now conducted by clearing-house associations.
Paragraph 3 of the section authorizes the Federal reserve board to
make an examination not less frequently than four times a year of
national banks in reserve cities. This is in view of the fact that the
reserve cities, if they continue to be such, will have the power of holding bank funds and of conducting all of the functions they now perform. It has been found in the past that the condition of city
banks changed much more rapidly than did that of country banks,
and it is therefore thought to be desirable that specially close oversight should be maintained with regard to this class of banks.
It has been complained that under this section national banks in
reserve cities would be auler examination nearly all the time. No
charge of the sort can be sustained. The Federal reserve board's
examinations of banks in reserve cities, which are to be made four




72

c h a n g e s i n t h e b a n k i n g a n d c u r r e n c y s y s t e m . 72

times a year, are not additional to the two examinations of every
national banking association described in the first paragraph, but
include them. In other words, banks ranked as country banks are
to be examined at least twice and all others at least four times a year
by the Federal reserve board, while, if desired, the reserve bank of
each district may have a system of its own for keeping advised of the
affairs of member banks—a plan employed by clearing-house associations to-day. The specifications with reference to the items to be
shown in the reports of examination of national banks in reserve
cities cover items that have been, it is thought, neglected under past
legislation.
In general the purpose of this section is to convey all reasonable
and necessary power of bank examination, to place it where it can be
most effectively used, and to assume that the power is to be used for
the purpose of strengthening, protecting, but certainly not of annoying or crippling the banks to which it is applied.
SECTION 24.

In this section it is sought to correct a bad practice, all too prevalent, of paying fees to bank examiners in order that they may make
a favorable report upon the condition of a bank; and further to end
the illegitimate practice whereby officers of national banks have heretofore profited at the expense of borrowers by charging a commission
or brokerage for the obtaining of loans. The extent of these practices can not be stated, but that they prevail is certain; and it is
equally clear that they are opposed to public welfare and to sound
banking, besides being wholly at variance with fundamental principles
of honorable personal conduct.
SECTION 25.

In this section it is endeavored to overcome the practice which has
sprung up on the part of dishonest or cowardly national bank stockholders of evading the double liability provision when they have
been informed of the failure of a bank m which they hold shares, by
transferring such shares to some "dummy" who is immune from
recovery under the double-liability provision. It is believed that by
making stockholders who have transferred their shares 60 days before
a bank failure equally as liable as if they had not made such transfer,
the needs of the situation will be met. Some have alleged that the
requirements should be that stockholders be liable whenever and so
long as it could be proven that they had knowledge of the impending
bank failure, but that they should not be liable if in good faith they
transferred their shares within 60 days before a failure. This sounds
plausible but is at variance with the facts of experience. The process
of proving that a stockholder had knowledge is difficult and expensive,
if not impossible in many cases, and it is believed that the 60-day
provision is entirely equitable and far more workable.
SECTION 26.

Loans on improved farm la;nds are provided for in this section under
strict limitations as to the value of the security and the amount of
the loan as compared with the face of the bank s capital. The loans




c h a n g e s i n t h e b a n k i n g and cuRRency system.

73

are limited to a period of twelve months, and are permitted only in the
ease of country banks. This provision has not been made, as seems
to be supposed in some quarters, for the purpose of furnishing a
means of supplying farmers with working capital. It has been made
upon the advice of practical bankers, in recognition of the fact that
in many parts of the country the principal or almost the sole business
of national banks is found in making loans to farmers, and that while
these loans are in every sense commercial in that they are to be paid
back out of the proceeds of a business process then going on—the
raising and marketing of a crop—the only actual security the farmer
can offer is a lien upon his land and its products. To allow the bank
to take this lien enables it to do frankly and truthfully, with due protection to itself, business that it will probably do in some way, even if
not thus authorized, inasmuch as the well-being of the community
and the transaction of its business calls for the extension of loans to
farmers who are engaged in the process of growing and marketing
consumable articles and who need working capital in order to facilitate
their operations. The total amount of such loans which could be
made under the provisions of this section might run as high as
$150,000,000, but is not likely to approximate that sum.
SECTION 27.

Permission to national banks to open departments specifically
designed for the reception of savings deposits and conducted with a
view to the separate investment and protection of such savings
deposits is granted in section 27. For a long time national banks
have found their business encroached upon by the growth of savings
banks and trust companies, and in several hundred instances they are
now found evading the law by the organization of allied concerns
which are carried on as trust companies or savings banks under
technically separate organization, but really under an identical
control. The committee, while strongly believing in the principle of
a corps of commercial closely restricted banks as the basic element in
the country's credit system, believes that with the added strength
afforded by the new Federal reserve banks, Congress may reasonably
relax some of the restrictions now surrounding the business of national
banks and allow to national institutions the savings bank and limited
trustee functions recognized in this section without unduly straining
the essential structure of the national banking system, provided that
savings departments if organized shall be conducted upon an entirely
separate basis from the commercial departments of the national
banks creating them, with segregated reserves and strictly segregated
assets. Some further restrictions have been laid down in the section
which are largely self-explanatory.
SECTION 28.

There has long been a demand for an extension of the powers of
national banks which would permit them to facilitate foreign trade
and do business abroad. The plan upon which the committee has
determined after much consideration and comparison of various
competing propositions calls for permission to national banks having




c h a n g e s iN t h e b a n k i n g a n d c u r r e n c y s y s t e m . 74

a capital of $1,000,000 or over to establish branch banks in foreign
countries whenever they may deem best, subject to regulations to be
prescribed by the Federal reserve board. It is, however, required
that due application shall be made to the reserve board for permission to establish such branches and that in establishing them the
bank in question shall set aside a specified amount of its capital for
use at the said branches and shall submit to suitable examination of
the affairs of the branches. A separate accounting system is ordered
to be maintained at each branch in order that it may be known
exactly how successfully each such independent institution is being
carried on, and in order to prevent unsuccessful operations engaged
in at one point from being covered up in the affairs of the institution
as a whole. Inasmuch as the requirements concerning the creation
of these branches are necessarily general in terms, section 28 naturally specifies that a power of further regulation from the administrative standpoint shall be lodged with the^Federal reserve board
in order that the said board may exercise a suitable control over the
doings of the banks which apply for such permission, and of their
branches.
SECTION 29.

Section 29 is merely the usual provision for repeal of inconsistent
statutory requirements, whatever they may be, that might conflict
with the terms of the legislation now proposed for adoption.
SECTION 30.

Section 30 specifies that Congress retains the right to amend, alter,
or repeal the act—a power reserved, no doubt, in any event, but
which it has been deemed best to express in specific language.




APPENDIX

A.

Daily statement of the United States Treasury at close of business Aug. 5, 1913.
CASH ASSETS AND LIABILITIES.
General fund.

ASSETS.

Cash:
In Treasury officesGold coin
$26,227, 243. 44
Gold certificates
91,276, 790.00
Standard silver dollars
8,565, 931.00
Silver certificates
14,136, 624.00
United States notes
7,944, 142.00
Treasury notes of 1890
4, 538.00
Certified checks on banks..
524, 892.95
National-bank notes
48,810, 159.97
NOTE. — This includes
$44,468,406.97 which the
Treasury has redeemed and
for which it will receive
payment from national
banks.

LIABILITIES.

Current liabilities:
In Treasury officesDisbursing officers' balances
Outstanding warrants
Outstanding
Tresurer's
cheeks
Post Office Department
balances
Postal savings balances
Judicial officers' balances,
etc
National-bank notes: Redemption fund i
National-bank 5 per cent
fund
Assets of failed national
banks
Coupons and interest checks
Miscellaneous (exchanges,
etc.)
Total
Subtract:
cleared

In national-bank depositaries—
To credit of Treasurer
United States
To credit of postmasters,
judicial officers, etc

197,490,321.36
54,574,542.20
6,525,838.30

Available cash in Treasury and
banks
258,590,701.86
Free and available balance in
Treasury and banks:
Available cash. $258,590,701.86
Current liabilities
151,668,167.44
Free balance... 106,922,534.42
In treasury, Philippines—
To credit of Treasurer,
United States
To credit of disbursing
officers
Balances in Treasury offices,
limited tender or unavailableSilver bullion
Subsidiary silver coin
Fractional currency
Minor coin

1,829,953.69
1,654,548.97
2,185,039.91
20,148,879.76
339.19
1,971,510.07

Total cash assets in the
general fund
286,380,973. 45

Checks

not

In national-bank depositaries—
Judicial officers1 balances,
etc
Outstanding warrants

$69,432,075.81
3,754,564.40
9,440,773.90
10,135,920.79
1,504,100.63
8,394,014.25
20,741,483.50
26,871,679.38
5,441,625.28
1,499,769.47
5,075,981.15
162,291,988.56
17,944,501.58
144,347,486.98
6,525,838.30
794,842.16

Current liabilities in Treasury and
banks
151,668,167.44

In treasury, Philippines—
D i s b u r s i n g officers'
balances
Outstanding warrants

1,654,548.97
2,105,704.09

Total liabilities against cash...

155,428,420.50

Net balance in general fund

130,952,552.95

Total liabilities and net
balance
286,380,973.45

i The act of July 14,1890, provides that deposits made by national banks to redeem circulating notes shall
be covered into the Treasury as miscellaneous receipts and that the Treasury shall redeem from the general
cash the circulating notes which come into its possession subject to redemption.




75

76

CHANGES I N T H E B A N K I N G A N D CURRENCY

SYSTEM.

The currency trust funds, the general fund, and the gold reserve fund.
ASSETS.

Currency trust funds:
Gold coin
Gold bullion

LIABILITIES.

*890,041,529.00
202,778,640.00

Total gold
Silver dollars
Silver dollars of 1890

1,092,820,169.00
485,008,000.00
2,645,000.00

Total currency trust funds.... 1,580,473,169.00
General fund:
Total cash assets, as above.. 286,380,973.45

Outstanding certificates:
Gold certificates outstanding. $1,092,820,169.00
Silver certificates outstanding
485,008,000.00
Treasury notes outstanding .
2,645,000.00
Total outstanding certificates 1,580,473,169.00
General fund liabilities and
balance:
Total liabilities, as above....
155,428,420.50
Balance in
eneral
und, as
above
$130,952,552.95
Gold reserve i . . . 150,000,000.00

f

Gold reserve fund:
Gold coin
Gold bullion

100,000,000.00
50,000,000.00

Total net balances

280,952,552.95

Grand total cash assets in
Treasury
2,016,854,142.45

2,016,854,142.45

i Reserved against $316,681,016 of United States notes and $2,045,000 of Treasury notes of 1890.
Cash receipts and payments, Aug. 5, 1918.
GENERAL FUND.
PAYMENTS.

Current receipts:
Customs
Internal revenue—
Ordinary
Corporation tax
Miscellaneous

$1,321,619.83
879,309.21
3,284.53
82,682.90

Total
2,286,956.47
Agency receipts:
National-bank redemptions, postmasters' receipts, etc
5,506,450.65
Total current and agency receipts
7,793,407.12
Public-debt receipts:
Lawful money deposited to retire national-bank notes (act
July 14, 1890)
104,650.00
Proceeds of postal savings bonds.
Panama CanalProceeds of bonds
Total receipts for the day
Excess of payments for the day

7,898,057.12
2,007,430.50

Currency payments:
By Treasury and Subtreasuries.. $2,693,228.31
By national banks
3,827,706.54

Total
National-bank redemptions, postmasters' payments, etc
Total current and agency pay
ments
Public-debt payments:
Lawful money paid for national
bank notes retired (act Julv 14
1890)
:...
United States bonds, certificates
and notes paid
Panama Canal payments:
Disbursements for the canal (in
eluded above in current pay
ments)
Total payments for the day...
Excess of receipts for the day

9,905,487.62

6,520,934.85
1,259,302.77
9,780,237.62
125,250.00

9,905,487.62
9,905,487.62

NOTE.—Both receipts and payments represent transactions which have reached the Treasury this day.
Distant points are, necessarily, a number of days behind.
RECAPITULATION, GENERAL FUND.

Total cash assets in the general
fund, previous day
$288,388,403.95
Receipts this day
7,898,057.12
Payments this day

296,286,461.07
9,905,487.62

Total cash assets in the general
fund at end of this day
286,380,973.45




TRANSACTIONS IN NATIONAL-BANK NOTES.

Notes received for redemption this
day
Month to date:
Thisfiscalyear
Lastfiscalyear
Year to date:
Thisfiscalyear
Lastfiscalyear

$1,241,900.80
8,550,875.70
9,836,666.60
69,801,606.20
69,503,127.50

CHANGES I N T H E B A N K I N G A N D CURRENCY SYSTEM.

77

Bonds held in trust for national banks, Aug. 5, 1913.
Bonds held for national banks.

Kind of bonds.

Rate of Total amount
inter- outstanding.
est.

To secure deposits of
public moneys.
Total.

To secure
circulation.

Value at
par.

GOVEBNMENT.
rU.

S. loan of 1925..at par..
U. S. loan of 1908-1918.do..
U. S. Panama of 1961...do..
U.S.consol of 1930
do..
U.S.Panama of 1936.. .do..
U.S.Panama of 1938. ..do..
Philippine loans
do..
Porto Rico loans
do..
District of Columbia..do..
Territory of Hawaii, 3£ per
II. cent bogds at 90 per cent
of par: all other Hawaiian
bonds at market value,
not exceeding par

0)

$36,821,700
25,603,300
17,580,700
616,225,750
54,128,360
29,472,640
5,927,000
1,801,000
933,000

6,515,000

1,943,000

1,943,000

8,543,000
6,735,000

2
2
2
4
4
3.65

$118,489,900
63,945,460
50,000,000
646,250,150
54,631,980
30,000,000
16,000,000
5,225,900
6,970,650

$33,357,500
22,023,200

898,000
10,000

898,000
10,000

604,591,550
52,854,360
28,945,640

$3,464,200
3,640,100
17,580,700
11,634,200
1,274,000
527,000
5,927,000
1,801,000
933,000

MISCELLANEOUS.

Philippine Railway Co
Manila Railroad Co
III.- At 90 per cent of market
value, not exceeding 90
per cent par.
IV. State, county, and city at
75 per cent2 of market
value, not exceeding par.
Total

(l)

14,831,600
806,236,050

14,831,600
741,772,250

64,463,800

1 Various.
2 For the District of Columbia temporary tax deposits, certain other classes ol securities are also acceptable at this rate and State bonds are acceptable at 85 per cent of market value, not exceeding par.
When banks have occasion to withdraw bonds held by the Treasurer to secure deposits of public moneys,
the following shall be the order of withdrawal: Group IV, Group III, Group II, and Group I.
Bonds within a group may be interchanged by banks if desired, but bonds in a lower group may not be
substituted for those in a higher group, except that an initial substitution of bonds of a lower group for
those of a higher group may be made to an amount not to exceed 30 per cent of the total security value
of bonds held for a particular bank. National bank depositaries which have not as yet taken out the full
amount of circulation authorized by law may withdraw United States 2's and substitute for them bonds
in Group II, provided the 2's as withdrawn shall be used as security for additional circulation.




C H A N G E S I N T H E B A N K I N G A N D CURRENCY S Y S T E M . 78
Current receipts contrasted with pay warrants drawn {exclusive of postal service payable
from postal revenues)—Aug. 5, 1913.
Month to date.

Year to date.

Thisfiscalyear. Lastfiscalyear. Thisfiscalyear. Lastfiscalyear.
Current receipt:
Customs
Internal revenueOrdinary
Corporation tax
Miscellaneous

$3,845,597.68

Pay warrants drawn:
Legislative establishment
Executive Office
State Department
Treasury DepartmentExcluding public buildings
Public buildings i
War DepartmentMilitary
Civilian
Rivers and harbors
Department of Justice
Post Office Department—
Not including postal service—
Postal deficiencies
Navy Department—Naval
Civilian
Interior Department—E x c 1 u ding "Pensions"
and "Indians"....
Pensions
Indians
Department of Agriculture
Department of Commerce
Department of Labor
Independent offices and commissions
District of Columbia
Interest on the public debt

$31,996,058.77

29,337,154.75
1,897,423.04
5,746,692.89

28,368,034.10
1,440,105.21
5,990,714.87

8,258,579.45

68,633,522.90

67,794.912.95

102,627.35
468.97
24,123.44
,

$31,652,252.22

3,635,497.81
86,112.59
677,412.55

8,401,998.78

*..

Total cash receipts

$3,859,556.50

3,616,306.62
44,124.16
895,970.32

130,904.06
9,000.00
35,617.48

1,343,143.83
46,186.66
588,885.90

1,214,593.19
68,355.00
382,498.58

61,422.60
221,245.01
•

109,753.09
55,431.12

4,316,767.05
1,921,198.23

3,832,832.69
1,700,813.68

1,907,407.11

1,014,557.46

346,063.75
29,616.04

426,436.85
31,588.99

16,776,280.11
230,088.02
4,975,390.48
1,380,599.44

12,199,639.90
184,814.53
4,026,133.75
596,761.37
165,422.37
401,947.60
12,688,142.26
75,837.12

132,406.49

25,347.94

326,780.40

1,988,566.71
14.900.00

1,798,159.50
7,233.86

14,311,720.37
87,208.33

380,588.49
120,432.03
3,005,264.59
3,225,894.38
197,125.88
530,760.23
21,506.00
1,997.07
48,625.62 J
3,745.10 /
\

4,834,369.19
4,877,134.34
17,674,638.28
15,774,255.46
1,537,434.72
1,020,043.64
2,860,966.54
1,972,362.62
937,162.08 |
1,061,585.91
349,816.37

69,017.12
61.639.01
111,194.75

583.53
577,333.33
77,705.67

383,986.95
2,574,110.30
3,332,241. 54

339,331.19
2,807,444.19
3,406,007.40

8,998,407.68

7,907,882.74

80,788,974.79

68,795,956.79

405,595.70

444,805.69

2,281,956.65

1,061,662.55

Total pay warrants (net).

8,592,811.98

7,463,077.05

78,507,018.14

67,734,294.24

Excess of current receipts (surplus)
Excess of pay warrants (deficit)

190,813.20

Public debt receipts:
Lawful money deposited to retire
national-bank notes (act July 14,
1890)
Proceeds of postal savings bonds
Proceeds of Panama Canal bonds

334,650.00

50,060.00

1,791,690.00
1,116,880.00

1,502,060.00
854,860.00

334,650.00

50,060.00

2,908,570.00

2,356,920.00

383,900.00

375,950.00

3,143,012.50

3,256,038.00

Total pay warrants drawn
Less unexpended balances
repaid

Total public debt receipts
Public debt payments:
National-bank notes retired
United States bonds, certificates,
and notes paid
Total retirements
Panama Canal payments:
Pay warrants for construction, etc..

795,502.40

9,873,495.24

60,618.71

5,280.00

29,765.00

383,900.00

375,950.00

3,148,292.50

3,285,803.00

1,049,846.50

28,073.06

4,263,207.65

4,185,587.45

Total public debt and Panama
Canal pay warrants

1,433,746.50

404,023.06

7,411,500.15

7,471,390.45

Excess of public debt receipts
Excess of public debt and Panama
Canal pay warrants

1,099,096.50

353,963.06

4,502,930.15

5,114,470.45

14,376,425.39

5,053,851.74

Net excess of all receipts
Net excess of all pay warrants
1

1,289,909.70

441,539.34

Sites, construction, equipment, operation, and maintenance.




CHANGES I N T H E B A N K I N G A N D CURRENCY SYSTEM.

79

Panama Canal (Aug. 5,1913):
Total amount expended on purchase and construction of canal to this date
$322,491,900.66
Amount expended to this date from proceeds of sales of bonds, including premiums.. 138,600,869.02
Balance expended out of general fund of Treasury, reimbursable from proceeds of
bonds not yet sold
183,891,031.64
Total bonds authorized by existing laws for Panama Canal
Total bonds issued to this date
Balance of bonds authorized but not yet issued




375,200,980.00
134,631,980.00
240,569,000.00

APPENDIX

00

B.

O

Abstract of reports of condition of national banks in the United States on Sept. 4 and Nov. 26, 1912, and Feb. 4, Apr. 4, and June 4, 191S.
Feb. 4,1913—
7,425 banks.

Apr. 4, 1913—
7,440 banks.

$6, 040,841, 270.81
20,168, 074.45

724,085, 520.00
46,228, 460.00
32,479, 536.18
7,804, 070.00
7,092, 456.00
039,986. 552.37
240,046, 311.47
28,459; 029.88
452,087, 610.48
188,829, 543.88
812,152, 402.19
37,342, 814.74
296,016, 908.75
48,592, 300.00
3,300, 352.26
713,460, 600.23
182,490, 494.00
35,028, 032.99
6)908, 419.67

$6,058, 982,029.40
26, 493.061.24
728, 482,810.00
46, 165,400.00
33, 029.494.25
7, 737,060.00
7, 059,551.81
1,036, 942,064.36
245, 796,890.28
29, 078,950.21
477, 181,532.05
218, 289,353.55
786, 190,805.24
34, 100,567.74
278, 672.040.53
118,234.00
300,300.97
320,721.71
176, 778,016.00
35, 486,273.80
7, 583.460.54

$6,125,029,165.96
22,307,066.94
730,754,970.00
47,406,310.00
34,742,462.12
6,135,370.00
6,722,651.98
1,043,943,884.13
246,629,609.78
32,070,676.15
473,496,114.13
209,294,468.18
850,478,400.05
36,722,041.76
288,820,252.73
49,747,626.00
3,782,668.19
749,731,848.13
183,685,383.00
34,988,720.82
9,109,576.42

$6,178,096, 379.33
20,077, 156.00
730,424, 030.00
47,598, 470.00
37,524 380.29
7,898 870.00
7,014, 837.88
1,051,481, 767.28
248,570, 244.17
31,934, 222.65
451,758, 116.35
194,311, 338.05
808,364, 504.79
32,680, 725.17
249,893, 991.16
47,751, 533.00
3,895, 212.41
712,906 399.95
175,377! 336.00
35,020 010.39
9,394;

$6,143, 028,132. 94
19, 006,152. 02
735, 226,870. 00
47, 061,690. 00
43, 597,929. 58
6, 338,000. O
LO
6, 876,636. 89
1,050, 587,655. 55
248, 888,953. 95
31, 332,948. 16
439, 021,200. 04
194, 990,066. 54
762, 176,994. 73
37, 092,245. 76
257, 560,492. 57
51, 538,808. 00
3, 580,482. 68
724, 074,627. 77
189, 908,013. 00
35, 394,885. 00
636,971.

10,963,400,760.35

10,965,788,617.68

11,185,599,266.47

11,081,974,333.46

11,036,919,757.04

.,046, 012,580.00
701, 021,452.71
242j 735.174.37
713, 823,118.00
27,701.00
,068, 683,209.81
539, 959,859.28
529, 299.679.38
39, 545,913.62
299,534.51
;,89i' 670,007.00
47, 259,053.42

1,045,092,580.00
701,999,833.53
268,007,255.44
721,502,185.50
27,701.00
1,050,499,032.91
542,198,410.84
465,308,937.81
43,799,304.63
1,035,738.63
5,944,561,069.91
33,594,143.22
15,649,315.87
12,692,478.24

1,048,899,055.00
717,261,016.39
241,828,956.12
717,467,661.50
27,701.00
1,140,270,695.02
578,390,641.93
547,774,013.99
44,154,947.07
1,908,940.52
5,985,432,295.62
39,360,041.72
17,008,709.60
6,664,962.19

1,052,265,581.53
719,673,812.36
255,387,230.68
718,976,684.00
27,701.00
1.078,165,210.58
562,561,795.33
510,828,398.62
40,790,134.91
2,808,131.27
5,968,787,045.04
39,886,857.14
17,687,643.16
6,316,019.43

RESOURCES.

Loans and discounts
Overdrafts
United States bonds to secure circulation
United States bonds to secure United States deposits.
Other bonds to secure United States deposits
United States bonds on hand
Premiums on United States bonds
Bonds, securities, etc
Banking house, furniture, and fixtures
Other real estate owned
Duefromnational banks (not reserve agents)
DuefromState banks and bankers
Duefromapproved reserve agents
Checks and other cash items
Exchanges for clearing house
Bills of other national banks
Fractional currency, nickels, and cents
Specie
Legal-tender notes
Five per cent redemption fund
DuefromTreasurer United States
Total.
LIABILITIES.

Capital stock paid in
Surplus fund
Undivided profits, less expenses and taxes...
National-bank notes outstanding
State-bank notes outstanding
Due to other national banks
Due to State banks and bankers
Due to trust companies and savings banks...
Due to approved reserve agents
Dividends unpaid
Individual deposits
United States deposits
Postal-savings deposits
Deposits of Unitea States disbursing officers.




June 4, 1913—
7,473 banks.

Nov. 26, 1912—
7,420 banks.

Sept. 4, 1912—
7,397 banks.

11,968,274.98

1,056,919,792.
720,606,792.
268,140,962.
722,125,024.
22,415.
1,017,460,873.
528,264,904.
528,940,184.
45,885,609.
1,529,195.
5,953,461,551.
43,118,218.
18,661,875.
6,606,821.

Bonds borrowed
Notes and bills rediscounted
Bills payable
Reserved for taxes
Liabilities other than those above stated
8

Total

w

©

i

05

i




37,913,129.27
15,716,092. C6
66,658,696.96
6,674,012.38
3,133,271.60

38,774,688. 78
10,776,272.59
61,105,295.55
7,447,975.40
1,716,397.83

39,573,476.06
8,001,091.18
43,446,507.41
4,749,175.46
3,379,378.69

42,183,544.32
8,319,078.73
48,213,459.82
5,724,293.54
3,371,712.00

43,215,465.58
14,080,980.36
58,825,794.92
7,030,644.10
2,022,652.99

10,963,400,760.35

10,965,788,617.68

11,185,599,266.47

11,081,974,333.46

11,036,919,757.00

a
W
•

s

C
O

fej
H
w
teJ
W
•

B
Q
•
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Q
d
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Q
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P
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G
G

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82

C H A N G E S I N T H E B A N K I N G A N D CURRENCY S Y S T E M . 82

Changes in the principal items of resources and liabilities of national banks as shown by the
returns on June 4, 1913, as compared with the returns on Apr. 4, 1913, and June 14,
1912.
Since Apr. 4,1913.

Since June 14,1912.

Items.
Increase.
Loans and discounts
United States bonds
Due from national banks, State banks
and bankers, and reserve agents
Specie
Legal tenders
Capital stock
Surplus and other profits
Circulation
Due to national and State banks and
bankers
Individual deposits
United States Government deposits
Postal savings deposits
Bills payable and rediscounts
Total resources
1

$2,705,190.00
11,168,227.82
14,530,677.00
4,654,210.47
13,686,712.07
3,148,340.00
3,522,162.56
974,232.31
16,374,236.73

Decrease.

Increase.

$35,068,246.39

$189,123,701.09
12,584,390.00

Decrease.

58,245,697.88
1,467,806.00
23,349,117.00
37,920,240.46
13,434,431.00
71,793,967.75
15,325,493.92

128,000,377.76

45,054,576.42

$27,903,419.00
32,688,060.36

57,611,846.42

14,300,470.73
175,155,879.89

V9,"220,"94i.*53

Postal savings deposits eliminated from United States deposits.

Total number banks reporting June 14, 1912, 7,372; June 4, 1913, 7,473; increase, 101.




THOMAS P .

Acting

KANE,

Comptroller.

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,
1913.
Resources.
States, Territories, and reserve cities.

Maine
New Hampshire
Vermont
Massachusetts
Boston
Rhode Island
Connecticut

Number of
banks.

69
56
49
163
17
20
79

Loans and discounts.

Overdrafts.

$37,232,949.29
19,186,295.08
18,456,571.80
134,038,075.52
200,240,665.93
29,765,080.46
68,459,304.30

$50,678.67
56,523.26
72,649.18
90,968.01
34,800.25
8,025. 36
81,729.06

United States United States Other bonds United States Premium on
bonds to
to secure
bonds to sebonds on United States
secure circu- cure deposits. United States
hand.
bonds.
lation.
deposits.
$6,033,250
5,056,500
4,512,500
20,009,000
8,557,000
4,722,500
13,533,350

$308,000
343,000
207,900
379,100
783,000
291,000
259,000

$215,855.05
288,688.44
117,663.75
988.554.31
654,606.25
155,477.50
547,913.44

$13,000
25,600

Securities,
judgments,
claims, etc.

21,600

$70,726.59
43,703.77
34,380.00
102,296.58
11,625.00
6,950.00
14,476.36

$14,510,502.63
6,317,761.42
5,119,068.74
28,800,555.44
22,253,252.47
7,174,006.95
15,286,687.35

453

507,378,942.38

395,373.79

62,424,100

2,571,000

2,968,758.74

60,200

284,158.30

99,461,835.00

New York
Albany
Brooklyn
New York City
New Jersey
Pennsylvania
Philadelphia
Pittsburgh
Delaware
Maryland
Baltimore
District of Columbia
Washington

429
3
6
36
200
781
32
23
26
89
16
1
11

292,538,351.19
23,858,319. 68
17,439,699.96
886,966,803.90
154,899,174.55
369,195,464.90
223,191,185.64
144,855,983.38
7,291,322.27
30,958,603.22
63,381,488.20
920,822.62
25,341,167.86

303,010.60
2,190.64
903.84
169,698.77
85,886.63
576,800.03
5,629.28
32,416.93
6,961.81
50,917.44
24,371.08
97. 66
29,697. 86

37,983,560
2,100,000
1,037,000
49,756,300
18,050,070
57,678,640
11,947,000
17,374,000
1,415,250
4,399,740
8,249,000
250,000
5,690,000

1,241,500
150,000
171,000
1,845,000
674,500
847,860
685,000
847,000
81,500
123,500
980,500
1,000
317,000

1,859,446.15
184,378.51
550,992.35
2,326,723.69
1,047,248.37
2.328.468.39
724,083.75
1.840.068.40
46,075.00
69,879.45
146,500.00
205,380.00
4,321,878.61

161,500

247,939.26

996,120
239,180
168,750
1,000
66,000
100
25,760

1,997.30
630,491.35
131,031.82
817,550.82
350,718.17
481,846.62
23,370.13
57,767.96
156,138.56

51,100

182,967.41

96,754,120.27
8,685,690.44
4,685,162.52
177,054,381.65
56,934,199.93
138,976,201.47
36,545,751.02
44,422,822.11
2,721,436.87
10,993,281.48
6,901,981.98
356,501.25
5,543,619.49

Eastern States

1,653

2,240,838,387.37

1,288,582. 57

215,930,560

7,965,360

15,651,122.67

1,709,510

3,081,819.40

590,575,150.48

133
116
73
48
116
2
52
87
33
26
5

105,406,039.26
53,246,521.82
43,092,241.12
28,715,267.63
61,671,439.62
3,384,935.64
35,879,645.10
41,694,835.56
12,916,130.27
18,028,234.23
24,101,549.51

242,791.05
131,688.63
156,284.99
199,438.87
494,769.12
4,122.66
65,077.65
83,226.73
326,593.03
286,493.72
279,248.25

14,838,250
9,039,150
6,904,100
4,969,250
11,153,000
800,000
6,048,750
8,505,050
3,085,300
2,571,250
3,270,000

1,485,410
451,500
442,000
238,000
585,500
105,000
464,000
302,500
144,000
34,000
403,000

479,857.43
180,557.50
118,000.00
43,465.98
112,293.75
71,000.00
140,155.00
94,360.94
108,573.33
19,777.50
66,152.50

52,110
182,500
25,010
9,000
10,000
175,000
49,000
34,000

214,063.20
111,166.40
112,659.83
44,617. 71
94,165.20

5,717,813.91
4,502,834.60
796,060.81
1,728,243.87
1.018.911.10
26,205.00
3.402.947.32
3,387,777.51
2.043.326.33
926,325.04
4.038.584.11

New England States

Virginia
West Virginia
North Carolina
South Carolina
Georgia
Savannah
Florida
Alabama
Mississippi
Louisiana
New Orleans




89,000

33,768.62
125,787.11
15,164.58
47,774.56
14,588.75

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1913—Continued.

Resources.
States, Territories, and reserve cities.

Texas
Dallas
Fort Worth
Galveston
Houston
San Antonio

Waco

Arkansas
Kentucky
Louisville
Tennessee
Southern States
Ohio
Cincinnati
Cleveland
Columbus
Indiana
Indianapolis
Illinois
Chicago
Michigan
Detroit
Wisconsin
Milwaukee
Minnesota
Minneapolis
St. Paul
Iowa
Cedar Rapids
Des Moines
Dubuque
Sioux City
Missouri
Kansas City




Number of
banks.

Other bonds United States Premium on
to secure
bonds to sebonds on United States
secure circu- cure deposits. United States
hand.
bonds.
lation.
deposits.

Loans and discounts.

Overdrafts.

481
5
8
2
6
7
5
49
136
8
107

$133,807,936.43
20,810,446.64
14.775.672.83
3,653,247.53
26,467,433.58
10.236.131.84
6,652,497.47
21,128,105.47
48,330,389.15
26,529,401.56
65,823,284.83

$1,466,597.18
146,826.14
295,692.58
13,480.32
460,330.19
152,420.63
26,827.50
315,204.67
335,456.12
7,668.36
602,567.61

$23,052,660
2,584,000
2,282,000
405,000
4,500,000
2,115,000
1,500,000
2,984,510
11,701,000
4,955,000
10,833,000

$1,304,000
181,000
2,000
100,000
110,000
323,000
40,000
217,500
766,600
1,152,000
629,500

1,505

806,351,387.09

6,092,806.00

138,096,270

357
8
7
8
249
5
448
9
96
3
124
5
261
6
4
325
3
4
3
5
111
11

183,386,621.86
55,135,546.21
61,864,003.73
17,120,672.48
109,303,007.05
28,213,537.90
184,472,430.63
322,383,521.60
73,978,881.34
36,273,099.97
71,528,996.06
45,328,969.26
94,225,311.03
58,430,471.13
34,611,184.11
114,351,365.26
8,545,533.32
14,370,611.46
2,942,033.82
9,795,311.62
30,063,745.40
68,314,742.21

525,956.27
4,683.77
52,607.38
7,557.35
452,135.36
8,879.25
1,549,291.14
141,432.35
124,436.54
7,415.59
302,272.71
40,698.14
536,445.29
22,447.86
10,521.78
1,520,013.10
7,331.42
47,035.23
12,690.55
25,959.47
328,022.49
65,531.30

29,796,180
7,526,600
5,702,500
2,500,000
19,594,920
5,823,140
28,100,010
14,549,000
8,609,750
2,154,000
9,124,970
4,117,000
9,009,510
1,995,000
825,000
15,321,450
525,000
1,384,000
600,000
875,000
5,854,310
4,605,000

Securities,
judgments,
claims, etc.

$263,845.47
169,640.00
100,000.00
30,000.00
125,000.00
55,000.00

$119,270

61,442.50
226,408.78
197,540.50
280,333.10

10,410
211,670
10,000
134,100

$166,910.19
694.80
10,500.00
3,493.75
9,200.98
833.06
11,500.00
18,972.37
39,487.50
102,014.91
164,672.59

9,780,510

2,943,404.28

1,121,810

1,342,036.11

45,618,992.41

744,500
1,214,500
627,000
181,000
1,778,000
221,000
2,936,500
1,229,000
532,820
676,000
236,000
202,000
294,500
311,000
1,125,000
333,000
41,000
165,000
50,000
137,000
133,000
634,000

2,009,124.95
730,000.00
130,000.00
589,894.18
948,625.96
230,200.00
1,599,886.48
550,593.75
1,035,467.46
176,871.60
955,006.78
1,283,940.00
787,432.84
180,950.00
669,000.00
317,566.00
8,000.00
33,000.00
12,184.10
22,000.00
198,783.36
551,330.00

287,680
97,240
100,000
4,220
337,430
33,400
225,650
3,000
26,580
106,900
23,950

226,456.42
28,455.64
12,500.00
2,172.50
160,110.69
93,043.95
191,641.16
73,048.50
15,180.91

36,741,865.34
11,720,444.89
5,498,766.78
4,464,188.78
16,572,532.04
3,154,244.46
31,029,172.62
28.479.997.47
16.664.621.48
4,686,298.11
19,208,107.79
4,084,338.71
6,810,182.45
3,443,149.64
5,980,900.63
5,517,670.85
408,566.90
537,578.73
484,433.75
1,115,985.56
2,078,910.07
2,908,812.49

1,000
9,740

52,500
234,160
220
500
182,710

"5i,579.06
2,257.50
79,258.23
1,725.00
1,250.00
149,824.59
1,500.00
5,450.00
1,837.50
1,010.00
49,397.87
19,532.50

$3,907,631.58
896,527.90
373,598.13
122,624.43
1,127,264.90
191,000.00
20,791.90
848,782.85
2,973,251.70
4,187,692.48
3,380,796.94

00

St. Joseph
St. Louis
Middle Western States
North Dakota
South Dakota
Nebraska
Lincoln
Omaha
South Omaha
Kansas
Kansas City
Topeka
Wichita
Montana
Wyoming
Colorado
Denver
Pueblo
New Mexico
Oklahoma
Muskogee
Oklahoma City
Western States
Washington
Seattle
Spokane
Taeoma
Oregon
Portland
California
Los Angeles
San Francisco
Idaho
Utah
' Salt Lake City
Nevada
Arizona
Alaska1
Pacific States
Hawaii
Total United States




7

106,384,851.17

25,241.77
45,586.05

970,000
17,049,790

119,000
596,000

53,500.00
189,085.00

1,000

84,234.68

87,902.35
5,276,099.98

2,063

1,742,, 026,577.96

5,861,192.16

196,612,13U

14,516,820

13,262,442.46

1,717,140

1,251,466.70

216,954,771.87

144
103
228
4
7
3
205
2
3
3
57
30
117
6
3
40
314
5
6

31,449,390.17
27,246,642.21
55,524,637.04
6,116,458.37
32,289,290.69
6,992,484.62
55,994,817.76
4,136,110.74
2,342,586.08
5,507,498.74
28,922,026.34
12,206,706.14
30,055,073.49
29,411,031.26
5,107,095.03
13,106,114.04
48,850,445.39
4,343,147.86
5,583,081.92

184,932.55
230,610.29
681,158.85
68,216.51
102,079.67
68,862.32
447,409. / 5
2,543.(3
2,545.69
15,112.48
233,703.46
190,395.91
122,458.64
21,736.14
48,132.48
49,031.19
555,952.41
32,056.06
31,312.50

3,971,770
3,283,300
8,657,760
930,500
2,517,500
680,000
8,899,740
399,000
325,000
325,000
3,306,450
1,537,550
5,001,010
3,500,000
480,000
1,679,000
8,404,310
675,000
625,000

280,000
360,500
107,500
81,000
675,000
26,000
621,000
1,000
388,000
3,000
849,500
294,000
255,500
975,000
92,000
306,000
415,400
150,000
212,000

83,035.12
220,864. 75
207,598.51
87,522.89
266,000.00
42,325.00
436,756.86
151,500.00
20,000.00
58,000.00
595,858.35
57,542.40
618,043.00
461,525.15
82,000.00
47,030.00
121,458.30
5,000.00
60,000.00

120
75,400
56,920
1,000
1,500
20,000
104,520

24,837.17
23,372.30
31,421.13
2,250.00
29,312.50
406.25
34,972.85
2,500.00
42,548.96
27,777.17
6,430.45
20,065.26
4,200.00
1,450.28
22,299.69
31,614.06
3,334.38
12,850.00

1.091.014.33
1,811,102.25
1,224,620.14
31,944.86
1,776,017.05
158,001.30
3.634.152.34
347,399.94
575,729.14
396,983.58
1,734,460.24
530,181.46
5,530,286.79
7,867,866.60
1,988,266.28
595,587.40
3,795,941.32
395,196.18
1,153,151.21

1,280

405,184,637.89

3,088,250.23

55,197,890

6,092,400

3,622,060.33

472,380

321,642.45

34,937,902.41

64
6
5
2
78
5
235
8
9
54
17
6
11
13
2

23,781,782.37
27,606,940.58
15,793,244.90
5,962,845.71
23,098,138.37
23,006,217.67
105,084,001.23
49,884,164.00
117,454,717.35
16,386,392.25
6,890,501.84
11,913,019.00
5,809,039.64
6,363,404.67
432,709.43

102,488.50
27,109.65
62,544.77
8,184.55
144,613.81
23,368.05
637,738.91
196,044.02
246,463.23
130,459.64
162,373.87
372,322.50
72,814.05
55,950.35
2,996.53

2,584,850
1,589,000
2,800,000
500,000
3,520,260
2,900,000
17,066,800
5,070,000
21,950,000
2,772,500
923,250
2,400,000
1,579,000
941,510
62,500

365,000
1,200,000
208,500
200,000
205,500
795,000
460,200
357,000
841,000
308,000
102,000
290,000
57,000
261,000
250,000

625,325.20
302,000.00
42,500.00
390,000.00
365,126.65
392,368.80
1,242,904.80
124,000.00
694,110.40
253,572.84
94,282.50
36,336.05
188,052.86
111,000.00

1,500
4,600

5,880.00
28,565.58
12,600.61

53,780
600,000
153,480
213,600
185,000
10,000

24,837.46
31,812.50
137,168.84
17,792.44
271,501.51
20,862.29
400.00
20,032.64
13,450.42
9,016.09
1,000.00

2,837,163.54
3,846,631.60
1,383,248.79
646,208.94
3.077.706.49
4,413,028.05
21,350,588.43
4,096,446.66
15,973,938.62
1.698.509.50
661,575.46
1,242,309.98
762,619.55
833,383.08
54,291.10

515

439,467,119.01

2,245,472.43

66,659,670

5,900,200

4,861,580.10

1,256,960

594,920.38

62,877,649.79

4
7,473

1,781,081.24
6,143,028,132.94

31,474.84
19,006,152.02
1

_

'

306,250
735,226,870

One report for Apr. 4,1913.

235,400
47,061,690

1,666
25,780
25,000
4,000
131,500
1,000
24,640

25,000
10,000

288,561.00

593.55

161,353.59

43,597,929.58

6,876,636.89

o

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6,338,000

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Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1913—Continued.

R esources—Continued.
States, Territories, and reserve cities.

Maine
Massachusetts
Boston
Rhode Island
Connecticut

Number of
banks.

Bankinghouse furniture and fixtures.

69
56
49
163
17
20
79

$1,091,711.08
577,744.95
458,368.72
5,354,989,89
6,451,855.88
531,017.44
4,757,317.17

Other real
estate and
mortgages
owned.

Due from
other national
banks.

Due from
State and private banks
and bankers.

Due from approved reserve
agents.

Checks and
other cash
items.

Exchanges for
clearing house.

$69,365.22
94,145.93
23,000.00
249,235.91
18,870.18
16,274.39
139,640.02

$270,620.26
391,555.44
213,333.48
1,336,206.58
17,700,578.80
384,903.25
1,434,633.03

$170,695.92
100,947.77
32,334.36
352,420.33
8,643,918.64
299,310.03
471,916.01

$5,167,379.61
3,946,833.51
2,483,563.63
18,114,067.50
39,524,391.18
3,531,367.33
11,666,920.96

$208,455.11
367,139.13
167,432.75
659,672.18
916,751.55
27,502.51
541,145.91

366,833.04
12,767,267.92
262,701.12
515,398.26

$185,370.79

453

19,223,005.13

610,531.65

21,731,830.84

10,071,543.06

84,434,523.72

2,888,099.14

14,097,571.13

New York
Albany
Brooklyn
New York City
New Jersey
Pennsylvania
Philadelphia
Pittsburgh
Delaware
Maryland
Baltimore
District of Columbia
Washington

429
3
6
36
200
781
32
23
26
89
16
1
11

7,398,430.83
578,000.00
627,053.68
30,357,838.13
8,852,608.34
22,132,457.15
6,688,085.17
15,426,718.92
538,191.03
1,811,976.53
2,780,350.88
31,500.00
3,181,700.15

1,023,881.76
45,935.68
29,052.75
1,141,138.09
1,087,675.11
2,936,790.04
616,639.26
2,851,695.32
83,398.86
90,325.74
559,185.41

6,218,080.09
2,670,795.54
323,597.59
27,893,343.17
4,143,376.14
1,916,372.44
11,634,100.98
3,966,253.07
74,505.55
301,478.26
1,589,310.91

43,977,711.99
6,510,868.28
2,891,819.50

7,614.32

5,412,459.37
10,560,225.28
343,991.11
58,647,282.69
5,110,800.53
5,385,591.10
35,213,599.55
11,039,189.69
162,227.30
503,678.00
7,387,745.66
9,951.77
2,816,936.01

1,136,435.41

24,358,143.00
58,321,033.11
42,439,416.06
23,680,110.42
1,020,408.36
4,357,085.61
8,213,142.29
156,206.09
3,365,553.11

1,107,209.71
74,049.90
296,697.01
5,988,222.65
1,207,468.12
1,793,203.09
2,561,842.25
346,161.28
13,868.26
161,761.68
423,996.72
3,908.46
349,825.05

1,142,319.16
267,498.33
1,094,081.65
148,523,231.21
1,417,825.53
739,661.70
19,616,174.61
5,947,347.52
38,607.84
9,973.94
3,720,390.65
8,248.41
1,034,104.94

Eastern States

1,653

100,404,910.81

10,473,332.34

142,593,678.06

61,867,649.15

219,291,497.82

14,328,214.18

183,559,465.49

133
116
73
48
116
2
52
87
33
26
5

4,142,185.68
3,491,887.97
1,825,046.78
951,449.30
3,313,967.12
34,673.02
2,070,687.72
1,980,012.71
893,565.91
985,523.24
2,430,604.25

334,459.83
392,969.69
234,101.12
131,556.43
287,123.23

5,188,110.21
2,625,513.17
3,421,773.39
1,355,119.07
2,430,667.14
233,579.69
4,009,777.03
2,368,755.70
456,052.02
857,566.62
1,255,665.06

1,738,597.73
704,686.41
1,485,344.70
719,871.31
2,075,969.91
144,050.40
1,674,702.40
930,134.46
764,028.67
516,387.15
2,254,193.82

9,006,479.99
7,268,062.54
2,544,024.33
1,652,787.28
5,034,482.72
169,296.82
5,101,664.43
4,569,868.69
2,269,763.16
1,826,487.53
3,429,254.66

New England States

Virginia
West Virginia
North Carolina
South Carolina
Georgia
Savannah
Florida
Alabama
Mississippi
Louisiana
New Orleans




188,825.25
290,390.36
120,520.92
150,152.36
36,304.62

467,474.82
286.422.34
403,050.87
190.279.35
344,097.97
2,208.68
248,378.69
192,501.77
84,359.57
115,527.63
81,023.59

1,017,233.01
145,303.63
65,138.01
420,579.02
1,313,715.95
30,146.55
576,775.77
379,076.76
33,888.72
109,774.48
2,184,356.09

00
cd

Texas
Dallas
Fort Worth
Galveston
Houston
San Antonio
Waco
Arkansas
Kentucky
Louisville
Tennessee
Southern States
Ohio
Cincinnati
Cleveland
Columbus
Indiana
Indianapolis
Illinois
Chicago
Michigan
Detroit
Wisconsin
Milwaukee
Minnesota
Minneapolis
St. Paul
Iowa
Cedar "Rapids
Des Moines
Dubuque
Sioux City
Missouri
Kansas City
St. Joseph
St. Louis
Middle Western States
North Dakota
South Dakota
Nebraska
Lincoln
Omaha
South Omaha
Kansas
Kansas City
Topeka
Wichita
Montana




230,396.85
280,543.01
114,811.46
474,716.25

7,386, 390.85
3,077, 750.38
2,799, 793.03
433, 701.12
3,064, 896.25
1,123, 427.79
747, 265.74
1,374, 192.92
694, 881.69
2,528, 621.64
5,718, 809.65

4,350,451.92
527,291.55
357,400.87
154,085.65
1,143,434.71
580,091.77
168,945.12
941,726.06
348,623.52
950,815.52
1,668,101.79

22,835,688.53
2,464,311.25
2,011,136.09
638,839.40
3,868,900.58
1,723,606.66
585,077.80
.3,088,554.11
5,609,022.38
4,306,349.32
7,097,474.81

1,623,515.03
398,043.39
240,066.16
34,120.54
219,428.51
147.130.11
26,829.89
142.113.12
329,818.78
88,315.25
743,776.65

600,864.90
336.353.10
765.387.11
32,254.81
421,811.58
343.712.12
61,356.96
338,833.43
116,867.42
889,319.56
1,169,150.44

40,217,428.84

5,841,708.40

53,152,310.16

24,198,935.44

97,101,133.08

6,408,482.71

11,351,899.42

7,542, 836.22
3,295, 366.52
1,273, 956.84
950, 553.93
3,572, 319.11
1,257, 765.61
7,256, 323.91
2,008, 276.75
3,330, 808.71
170, 000.00
2,733, 147.86
544, 831.40
3,688, 944.98
1,198, 934.45
347, 894.00
4,245, 999.16
174, 634.03
192, 000.00
82, 761.69
271, 933.33
1,437, 417.84.
-1,398, 940. 79,
185, 116.00'
5,565, 128.16

1,147,671.56
112,483.52
34,980.50
56,246.02
524,757.32

2,000, 913.18
1,375 219.10
3,481, 327.46
318, 677.63
973, 136.96
1,937, 821.14
2,715, 511.87
15,034, 601.81
1,510, 154.79
2,801, 328.32
995, 565.35
1,873, 744.23
1,220, 697.30
3,131, 974.47
1,607, 122.50
1,450, 649.15
315, 079.84
257, 083.96
82, 279.55
718, 414.78
856, 907. 72
5,558, 415.63
524, 825.22
7,380, 372.17

28,732,658.12
7,753,162.90
8,793,777.24
2,748,037.57
19,719,441.90
5,636,517.94
30,984,590.63

358,607.43

4,010, 366.60
6,455, 704.89
8,673, 003.44
2,219, 729.97
2,718, 845.61
4,665, 042.58
4,207, 219.31
58,354, 766.19
1,246, 258.24
5,070 ,993.60
826! 946.23
2,904! 344.16
3,903! 575.60
6,924!,823.53
1,924! 189.22
3,522; 976.01
707, 681.08
1,439! 678.47
150; 676. 72
1,053. 555.91
888!,412.98
7,976! 726.89
1,946! 118.14
27,609! 664.62

758, 448.77
81, ,716.72
163; 165.66
67, 883.26
586, 193.31
1,049, 632.40
925, 158.26
649. 430.47
199! 828.18
71 ,473.55
379! 967.25
168, 564.49
474; 613.15
86, 774.70
231 j476.47
697, 268.66
62, 017.18
15, 042.90
37, 378.97
456.04
712.84
092.10
92, 990.33
177. 544.24

743, 732.43
906, 774.00
1,034, 550.43
442, 155.20
331, 197.30
1,140, 991.73
730, 537.59
16,455, 721.50
352. £56.51
816! 974.12
82; 418.28
940, 975.00
202, 113.05
2,488, 852.19
963, 061.60
283, 214.85
133, 138.50
233, 559.97
33, 722.17
195, 482.86
90, 126.90
2,504, 900.67
675, 606.53
3,250, 878.90

2,063

52,725,891.29

6,624,653.33

159,401,299.97

58,121,824.13

210,211,354.59

8,226,829.90

35,033,542.28

144
103
228
4
7
3
205
2

1,632, 313.64
1,418, 133.00
2,366, 173.25
459, 310.30
1,411 423.67
89, 500.00
2,190 006.48
146 000.00
2 8 , 051.87
152, 485.56
1,070, 779.15

732,809. 86
235,014.01
410,180. 72
29,089.39
13,013.35
13,351.49
400,133.66
15,155.81
11,907. 75

1,481, 447.10
1,360, 422.94
1,377, 881.82
1,034, 154.88
3,997, 502.29
1,311 900. 89
1,791, 996.01
1,136, 134.56
755, 095.28
1,734, 460.92
1,908! 054.89

515, 508.08
390, 414.24
394, 170. 76
165, 401.55
1,877, 605.06
531, 197. 72
920, 527.56
380, 950.49
32, 209. 67
108! 181.01
1,076! 298.30

4,832, 598.88
5,341, 512.03
9,805 630.19
572, 693.81
5,301, 112.46
2,049, 528.00
13,045, 599.23
565, 833.19
471 374.83
974 784. 71
7,398 751.84

167,616. 71
175,721.56
282,586.26
67,218.31
423,528.70
618,832.59
245,575.53
8,223.13
14,761.00
12,025.14
93,471.94

73,952.16
88,958.25
111,644.63
191,819.02
1,064,361.26
872,939.22
113.137.44
50,186. 83
59,429.55
142.713.45
211,604.70

481
5
8
2
6
7
5
49
136
8
107

6,462,045.37
876,505.89
1,052,372.58
244,688.50
2,514,235.47
358,671.10
82,077.54
611,498.34
2,340,548.29
315,807.80
3,239,374.26

1,708,391.37
49,706.00
113,453.71
58,765.66
507,214.99
137,305.29

1,505
357
8
7
8
249
5
448
9
96
3
124
5
261
6
4
325

5
111
11
4
7

57

1,155,187.65
43,847.00
290,946.37
70,000.00
147,786.77
45,915.90
1,293,391.32
937,066.18
62,130.04
18,444.41
900.00
303,291.34
21,000.00

333,154. e

8,919, 268.93
7,351, 915.94
12,617, 724.98
6,840, 216.47
15,209, 093.23
6,329, 513.27
4,974, 393.17
17,324, 646.55
1,245, 604.96
2,174, 212.36
541, 177.57
1,729, 223.57
5,856, 899.31
12,467, 122.07
2,262, 155.91

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Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1918—Contini ed.
Resources—Continued.
States, Territories, and reserve cities.

Wyoming
Colorado
Denver
Pueblo
New Mexico
Oklahoma
Muskogee
Oklahoma City
Western States
Washington
Seattle
Spokane
Tacoma
Oregon
Portland
California
Los Angeles
San Francisco
Idaho
Utah
Salt Lake City
Nevada
Arizona
Alaska1
Pacific States
Hawaii
Total United States




Number of
banks.

Bankinghouse furniture and fixtures.

Other real
estate and
mortgages
owned.

Due from
other national
banks.

Due from
State and private banks
and bankers.

Due from approved reserve
agents.

Checks and
other cash
items.

Exchanges for
clearinghouse.

30
117
6
3
40
314
5
6

$492,904.84
1,232,256.58
303,132.76
54,756.96
668,931.45
2,893,192.27
78,200.00
165,815.53

$95,632.53
585,400.33
293,849.62
107,804.42
185,430.97
523,967.81
58,659.64
78,184.89

$581,306.87
1,122,233.60
4,309,537.10
1,570,561.12
1,354,284.96
3,962,013.22
572,882.40
1,635,174.24

$205,282.65
578,155.83
1,655,524.58
68,732.46
253,997.96
588,141.02
35,259.86
186,731.08

$1,877,514.95
8,487,813.89
4,933,629.06
1,015,559.02
2,356,893.79
12,277,466.64
544,044.78
1,228,710.28

$46,777.32
145,764.39
171,776.99
38,838.29
107,902.87
295,819.69
11,337.69
114,995.61

$28,627.18
116,000.43
1,218,263.12
51,116.62
95,586.65
195,285.12
86,728.92
85,488.10

1,280

16,853,367.31

4,122,740.94

32,997,045.09

9,964,289.88

83,081,051.58

3,042,773.72

4,857,842.65

64
6
5
2
78
5
235
8
9
54
17
6
11
13
2

1,242,145.08
232,001.00
1,212,648.68
256,000.00
1,941,614.61
333,958.97
6,276,703.85
745.863.45
4,685,944.19
1,024,485.21
424,252.19
407,824.04
131.592.46
486,269.84
13,000.00

439,901.25
169,297.44
204,829.61
171,857.39
294,106.58
26,904.57
690,486.04
95,722.07
891,943.66
330,921.14
112,322.48
19,078.97
126,517.79
72,568.06
5,074.45

365,348.58
2,709,567.76
1,174,445.26
496,226.58
492,838.47
2,940,207.95
2,726,560.21
5,315,616.80
9,760,472.38
657,872.63
270,355.83
1,451 279.07
183,643.26
588,421.79
8,862.90

682.657.62
2,091,370.28
1,005,551.34
178,791.68
529.646.63
989,746.67
1,806,132.31
2,649,785.74
18,725,416.88
508,876.23
277,974.77
736,497.53
54,507.92
386,533.16
14,784.02

5,958,983.40
4,595,029.89
2,066,643:87
909,944.47
5,263,195.94
2,850,657.19
18,021,544.76
5,223,311.13
14,043,172.73
2,978.189.09
965,668.34
1,201,749.11
1,221,485.30
2,440,067.80
169,219.60

"135,028.87
130,877.74
25,793.76
7,052.02
153,855.33
161,300.16
494,873.81
426.252.62
276.708.63
127,699.44
10,709.62
70,875.90
13,041.17
121,277.50
8,334.86

100,784.61
794,424.93
267,731.72
136,847.09
40,274.05
1,187,730.86
777,323.15
1,828,743.58
2,952,992.26
81,002.97
78,482.91
346,410.77
7,980.73
59,441.97

515

19,414,303.57

3,651,531.50

29,141,719.47

30,638,272.78

67,908,862.62

2,163,681.43

8,660,171.60

50,047.00

8,450.00

3,316.45

127,552.10

• 148,571.32

34,164.68

248,888,953.95

31,332,948.16

439,021,200.04

194,990,066.54

762,176,994.73

37,092,245.76

4 |
7,473

1

One report for Apr. 4,1913.

257,560,492.57

00

00

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1913—Continued.

Resources—Continued.
States, Territories, and reserve cities.

Maine
New Hampshire
Vermont
Massachusetts
Boston
Rhode Island
Connecticut
New England States

Number of
banks.

Bills of other Fractional paper
national
currency, nickels,
banks.
and cents.

Specie.

Legal-tender
notes.

Five per cent
redemption
fund.

Due from
United States
Treasurer.

69
56
49
163
17
20
79

$401,467
300,291
112,823
1,595,227
1,628,531
279,306
987,121

$18,382.00
17,483.63
11,129. 69
112,442.45
87,163.35
20,024.26
46,382.10

$2,707,203.14
1,203,184. 82
936,698.29
6,889,509.86
26,634,789.70
1,498,255.47
4,081,227.41

$523,821
494,699
397,258
3,814,364
4,790,952
506,956
1,500,282

$293,212.50
241,175.00
208,375.00
978,500.00
427,900.00
228,125.00
663,692.50

$3,002.50
3,200.00
10,700.00
70,400.00
899,000.00
127,500.00
154,555.00

Aggregate.

$69,545,648.36
39,056,472.15
33,575,750.39
224,324,018.60
353,026,920.10
49,836,283.07
125,142,691.88

453

5,304,766

313,007.48

43,950,868.69

12,028,332

3,040,980.00

1,268,357.50

894,507,784.55

New York
Albany
Brooklyn
New York City
New Jersey
Pennsylvania
Philadelphia
Pittsburgh
Delaware
Maryland
Baltimore
District of Columbia
Washington

429
3
6
36
200
781
32
23
26
89
16
1
11

2,302,465
237,656
124,007
2,340,064
1,078,283
4,108,722
970,810
1,678,301
58,439
166,263
455,495
1,200
82,565

184,328. 66
7,137.53
25,741.67
142,299.12
131,949. 24
300,360.47
105,546.41
90,179.39
11,310.43
26,365.18
39,980.46
198.51
9,230.49

19,356,594.96
2,555,290.16
2,914,784. 75
242,056,036.02
9,606,742.35
25,493,408.19
31,496,161.60
18,553,115.55
496,074. 75
1,822,971.08
4,798,924.65
74,710.00
2,467,826.22

6,479,357
1,782,316
708,296
50,461,912
4,299,547
8,607,441
3,074,667
4,581,749
172,844
707,996
616,505
12,640
365,847

1,822, 403.00
105,000.00
51,850.00
2,477,065.00
894,353.50
2,719,687.50
598,350.00
831,547.50
63,512.00
207,511.10
412,450.00
12,500.00
284,500.00

209,999.00
65,000.00
3,170,693.46
104,907.50
143,737.44
610,800.00
522,000.00
12,800.00
6,032.50
45,000.00

527,724,668.00
60,375,351.97
33,382,728.68
1,692,944,644.90
294,354,970.66
705,188,200.84
429,074,560.75
299,434,506.10
14,332,203.46
56,852,868.17
110,882,457.45
2,044,864.77
56,579,568.93

Eastern States

1,653

13,604,270

1,074,627.56

361,692,640.28

81,871,117

10,478,729.60

4,890,969.90

4,283,171,594.68

133
116
73
48
116
2
52
87
33
26
5

606,460
670,385
197,341
205,140
718,375
36,900
529,217
1,021,182
100,549
132,096
101,169

65,895.11
44,891.34
30,069.26
29,456.63
73,747.14
2,178.23
25,343.98
41,129.29
15,924.39
17,585.82
11,328.79

4,336,892.86
3,254,723.37
1,444,257.36
818,543.95
2,433,230.70
164,097.00
2,008,966.84
2,840,797.90
851,332.90
1,038,305.50
2,404,338.65

1,784,290
845,649
622,285
342,667
1,004,150
8,334
803,460
351,107
211,230
62,939
357,721

676,614.95
436,385.00
317,895.00
237,692.50
530,711.00
40,000.00
284,145.00
393,942.50
144,613.80
127,662.50
163,500.00

103,701.50
24,911.00
17,933.28
23,248.70
110,284.80
4,002.50
1,600.00
29,251.00
6,303.00
30.00
15,000.00

157,904,730.54
88,037,709.41
64,254,616.85
43,025,674.60
94,810,601.47
5,435,730.19
63,606,887.80
69,615,687.99
24,591,219.60
27,942,892.88
46,897,582.65

Virginia
West Virginia
North Carolina
South Carolina
Georgia
Savannah
Florida
Alabama
Mississippi
Louisiana
New Orleans




00

CO

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday,

1913—Continued.

June 4,

Resources—Continued.
States, Territories, and reserve cities.

Texas
Dallas
Fort Worth
Galveston
Houston
Sail Antonio
Waco
Arkansas
Kentucky
Louisville
lessee
Southern States
Ohio
Cincinnati
Cleveland
Columbus
Indiana
Indianapolis
Illinois
Chicago
Michigan
Detroit
Wisconsin
Milwaukee
Minnesota
Minneapolis
St. Paul
Iowa
Cedar Rapids
Des Moines
Dubuque
Sioux City
Missouri
Kansas City




Number of
banks.

Bills of other
national
banks.

Fractional paper
currency, nickels,
and cents.

Specie.

Legal-tender
notes.

Five per cent
redemption
fund.

Due from
United States
Treasurer.

Aggregate.

481
5
8
2
6
7
5
49
136
8
107

$1,613,677
245,788
130,520
63,880
597,440
237,156
76,895
176.359
524,931
337,926
1,093,287

$143,089.49
8,298.68
19,906.45
1,998.08
40,378.63
14,027.82
6,815.56
21,012.33
29,666.24
10,227.84
49,194.67

$8,167,572.69
1,892,234.00
1,286,698.25
904,168.55
2,493,811.25
1,627,292.95
752,606.88
1,138,083.40
2,664,819.55
2,520,543.00
3,881,762.25

$1,878,146
382,658
658,780
115,920
783,555
318,795
130,640
289,394
591,007
794,477
1,740,062

$1,107,767.50
129,200.00
109,100.00
20,250.00
225,000.00
80,750.00
62,900.00
146,445.50
506,117.50
247,750.00
508,850.00

$27,249.50
16,002.50

13,506.00
57,852.00
31,050.40

$221,993,701.00
35,193,278.22
27,384,077.79
7,037,518.34
48.689.636.62
19,775,092.14
10,956,282.36
34,083,536.92
78.634.615.63
50,304,134.20
109,563,865.24

1,505

9,416,673

702,165.77

48,925,079.80

14,077,266

6,497,292.75

501,481.18

1,329,739,072.44

357
8
7
8
249
5
448

2,791,309
301,725
857,449
222,520
1,431,045
775,510
1,663,064
1,291,480
789,342
377,829
684,722
110.834
664,456
401,490
254,635
793.996
38,043
94,020
27,479
68,035
256,656
538,475

120,918.77
11,866.66
17,500.75
13,148.26
85,130.50
14,519.36
138,937.76
95.637.54
47,512.95
20.425.66
48,851.35
18.387.55
58,142.43
14,848.98
12,855.72
69,754.10
8,508.85
4,234.62
1,630.08
5,465.80
31,494.08
65,303.69

11,855, 381.70
6,045, 256.80
7,533, 008.95
2,315, 052.05
8,015, 040.07
3,450, 033.05
12,699, 435.76
55,424, 322.60
5,204, 449.85
3,104, 755.00
4,972, 972.85
4,480, 274.40
5,831, 883.38
5,862, 567.95
3,995, 373.10
6,382, 245.20
629, 888.30
1,491, 798.40
304, 046.05
1,112, 821.90
1,673, 079.04
7,233, 941.95

4,361,617
1,995,295
2,156,250
832,214
2,248,950
1,519,575
3,445,501
32,144,176
1,847.991
2,962; 202
1,165,149
1,185,025
995,488
1,378,277
1,192,933
1,690,602
226,145
345,705
139,511
343,175
614,446
1,799,859

1,401, 516. 55
373, 025.00
285, 125.00
119, 750.00
935, 145.40
290, 107.00
1,292, 975.00
727j 450.00
416, 135.00
107, 650.00
440, 698.50
205, 850.00
440, 923.00
99. 750.00
4i: 250.00
737i 727.71
26, 250.00
65i 447.50
25. 450.00
43! 750.00
282! 312.75
222, 850.00

84,453.28
11,-300.00
215,500.00
45,509.00
29,313.83
15,400.00
34,005.00
1,464,000.00
33,007.50
188; 500.00
6,229.50
69,300.00
33,312.50
221,616.00
116,670.00
11,205.00

319,270, 208.02
105,176, 366.62
108,506, 973.16
35,221, 182.18
190,317, 277.41
59,530, 361.37
317,353, 029.77
551,103, 303.53
125,176, 297.76
67,194, 632.46
126,533, 062.32
74,447, 466.21
145,811, 773.78
92,524, 166.17
58,884, 710.30
175,892, 400.37
13,103, 922.36
22,922, 808.64
5,547, 736.93
17,603, 980.84
51,442, 743.49
117,844, 076.29

3
124
5
261
6
4
325
3
4
3
5
111
11

7,000.00
9,300.00
3,255.00

5,000.00
107. 50
58,500.00

cd
o

MD L W S E N S A E
I D E ET R T T S
N RH D K T
OT A OA
S UH D K T
O T A OA
N B AK
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LN O N
ICL
O A A
MH
S UH O A A
OT
MH
K NA
ASS
K N A CITY
ASS
TPK
OEA
WC I A
I HT
M NA A
O TN
WYOMING
C L RD
OO A O
DNE
E VR
PEL
UBO
EIO
N W M XC
E
OLH M
KA O A
MSOE
UK G E
O L H M CT
KA O A I Y
W SE N SAE
ET R T T S
WS I GO
A HN T N
S ATE
E TL
SOAE
PKN
TCM
AO A
OEO
RG N
P RL N
O TA D
C LF R I
A I O NA
L S A GLS
O N EE
S N F A CS O
A R N IC
IAO
DH
UA
TH
S L L K CT
AT A E I Y
NVD
EAA
A IO A
RZ N
AAK 1
LS A
P CFC S A E
A II TTS




19,564,341.60
201,128,059.30

5,304. 61
24,163. 50

1,313,012. 90
17,342,171.90

194,388
8,199,971

45,897.50
768,319. 50

117,000.00

2,063

15,197,858

934,543.57

178,272,813.15

72,984,445

9,395,355.41

2,764,929.11

144
103

141.212
215,276
394.213
42,458
213,328
65,905
654,234
48,060
47,990
104,670
375,451
116,596
356,728
678,204
67,665
89,929
537,174
78,802
168,378

25,660.06
24,917.96
32,762.83
4,869.24
7,101.84
2,388.17
47,461.42
1,491.87
2,759.31
3,258.41
21,347.16
6,233.22
27,073.22
16,907.00
1,372.64
7,433.14
67,778.74
4,050.63
8,924.34

1,795, 198.05
1.971, 587.85
3,318, 115.30
555, 309.80
3.972, 877.60
624. 156.10
3,945, 511. 70
563, 533.35
407, 627.85
645, 730.85
3,183, 374.62
966, 903.18
2,821, 813.40
5,746, 566.05
985, 487.40
1,029, 974.65
3,350, 215.85
551, 343.55
587.00

371,247
345,655
500,178
282,388
1,089,280
300,223
803,354
50,510
73,980
65,580
362,759

12,511.08
1,775.90
2,550.00

508,763
1,322,640
73,442
162,032
593,440
85,500
241,405

196,238.35
157,015.00
418,238.00
46,525.00
125,872.50
30,650.00
435,496. 89
19,950.00
15,000.00
11,047.50
161,572.50
71,425.00
246,248.00
175,000.00
23,300.00
83,200.00
394,095.00
33,750.00
29,500.00

1,280

4,396,273

313,791.20

37,317,914.15

7,321,237

2,674,123.74

193,815.70

716,053,429.27

64

22,491.40
32,609.55
11,612.30
4,271.64
17,666.91
17,476.39
60,236.02
25,362.84
27,726.29
9,914.17
2,527.08
3,355.29
2,300.86
3,872.77
388.45

2,168, 610.55

4,463, 463.35
2,405, 014.25
1,195, 806.75
2,758, 554.78
4,751. 021.05
9,915, 420.76
6,253, 137.15
14,009, 510.62
1,560, 811.60
514, 134.35
1,721, 015.30
614, 037.40
741, 023.45
304, 801.29

99,405
75,909
61,400
19,012
39,308
34,175
344,911
493,030
146,239
71,939
44,489
65,000
15,710
97,999
17,060

129, 242.50
79, 450.00
140, 000.00
25, 000.00
174, 783.00
145, 000.00
836, 840.00
253, 500.00
1,097, 500.00
138, 262.50
46, 162.50
98, 500.00
78, 950.00
47, 075.50
3, 125.00

424.00
2.50

2

133,297
. 167,250
177,557
23,742
143,525
130,465
769,561
1,064,051
484,747
104,404
16,910
101,258
147,766
131,750
22,410

41,782, 1.47
50,146, 100.85
29,055, 866.86
11,131, 790.82
42,340, 671.55
45,730, 438.88
188,864, 127.62
84,333, 423.50
224,719, 104.75
29,174, 674.50
11,59 , 372.74
22,521, 864.15
11,079, 509.41
13,766, 565.03
1,370, 557.63

515

3,618,693

241,811.96

53,376,362.65

1,625,586

!, 391.00

275

535.14

538,949.05

30

15,012.50

3,580,482.68

724,074,627.77

189,908,013

35,394,885.00

228

4
7
3
205
2

3
3
57
30
117
6

3
40
314
5

6

5

2

78
5
235
8

9
54
17
6
11

13

HAWAII
T T L U I E STATES....
O A NT D

5,000.00

56,153
707,591

ST. J S P
OE H
ST. L US
OI

7,473

51,538,!
1

O E R P R FR APR. 4 1913.
N EO T O

88,861

21,502.50
" "765." 99
22,000.00
3,240.25
5.00
9,100.00
61,000.00
3,450.00
55,914.98

1,339.47
"16," 652*50"

5,000.00
17,418.47

3,002,100,880.8
49,063,412.31
44,978,195.54
85,905,940.43
10,770,129.93
57,175,209.14
14,498,651.67
94,767,169.17
8,026,083.54
5,617,596.98
10,308,312.35
51,894,635.60
19,404,876.10
57,971,287.85
63,128,389.43
11,857,580.00
22,204,109.76
87,934,265.82
7,744,293.95
12,803,289.70

807,615,377.76
3,731,617.46

9,636,971.86

a
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11,036,919,757.04
QD

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1918—Contini ed.

Liabilities.
States, Territories, and reserve cities.

Maine
New Hampshire
Vermont
Massachusetts
Boston
Rhode Island
Connecticut
New England States...
New York
Albany
Brooklyn
New York Citv
New Jersey
Pennsylvania
Philadelphia
Pittsburgh
Delaware
Maryland
Baltimore
District of Columbia
Washington
Eastern States
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Savannah
Florida
Alabama
Mississippi
Louisiana
New Orleans




Due to State
and private
banks and
bankers.

Surplus fund.

Undivided
profits, less
expenses.

National-bank
notes outstanding.

Due to other
national banks.

$3,756,000.00
3,369,400.00
2,077,101.95
18,014,225.00
19,881,000.00
4,393,100.00
12,111,800.00

$2,696,093.79
1,364,041.96
1,911,809.96
10,062,634.05
13,924,928.08
2,464,252.10
5,889,916.37

$5,900,757.50
4,966,927.50
4,449,937.50
19,643,032.50
8,410,702.50
4,625,202.50
13,169,135.00

$239,018.78
390,883.13
86,338.61
726,440.85
35,499,978.26
351,145.69
937,731.45

$5,989.35
7,667.49
878.44
425,821.04
4,561,868.08
93,628.10
329,311.93

$1,224,598.11
2,008,806.09
1,048,094.52
6,653,065.89
36,841,135.53
1,660,965.64
3,590,163.70

$181,979.96
505,147.55
15,225.95
1,605,222.41
7,527,474.12
432,861.71
754,886.80

101,686,700.00

63,602,626.95

38,313,676.31

61,165,695.00

38,231,536.77

5,425,664.43

53,026,829.48

11,022,798.50

88,478.53

48,742,600.00
2,100,000.00
2,252,000.00
119,700,000.00
22,292,000.00
67,624,040.00
22,055,000.00
29,300,000.00
1,723,975.00
5,192,000.00
11,790,710.00
252,000.00
6,350,000.00

35,114,550.00
2,200,000.00
2,700,000.00
129,105,000.00
22,930.923.34
73,064,949.80
39,760,000.00
24,314,000.00
1,559,600.00
3,834,301.78
7,970,010.00
252,000.00
4,815,000.00

14,380,673.92
660,588.92
994,300.25
47,336,789.37
11,244,265.05
17,094,001.19
5,318,163.14
5,452,703.37
540,879.48
1,367,567.06
2,289,431.71
175,411.53
617,429.25

37,384,430.00
2,070,497.50
1,023,050.00
48,013,312.50
17,641,197.50
56,599,586.50
11,823,682.50
17,102,087.50
1,396,655.00
4,326,437.50
8.149,085.00
243,650.00
5,567,040.00

5,351,908.58
21,527,413.79
254,234.42
320,991,594.73
4,506,184.30
2,896,004.26
75,108,056.56
46,900,484.19
181,305.28
529,920.25
17,450,902.92
15,181.56
3,026,570.12

4,679,537.20
10,894,040.99
3,078,428.89
8,505,764.68
183,053.79
5,595,567.52
103,117,052.40 205,246,651.64
1,351,042.33
10,139,910.97
1,317,101.44
3,065,686.88
15,609,826.72 50,265,626.24
8,844,125.67 30,123,604.08
23,817.08
332,048.88
83,273.13
120,346.75
4,091,103.05
8,571,323.05
1,329.57
22,542.93
314,432.07
2,457,621.18

3,582,718.64
2,622,408.62
127,103.01

107,472,204.24 211,340,711.50

498,739,760.96

142,694,123.34

Capital stock
paid in.

17,740,WOO
5,285,000.00
4,985,000.00
29,842,500.00
28,200,000.00
6,320,000.00
19,314,200.00

339,374,325.00
17,668,500.00
10,158,132.00
8,610,000.00
6,365,000.00
14,318,500.00
900,000.00
7,475,800.00
9,964,500.00
3,585,000.00
3,020,000.00
5,200,000.00

347,620,334.92
11,596,995.93
6,237,600.00
2,880,925.00
2,129,917.76
8,432,482.06
700,000.00
2,967,200.00
5,703,100.00
1,640,653.89
2,294,615.83
3,030,000.00

3,911,711.67
1.565.642.10
2,009,590.72
1.564.241.11
3,474,313.16
208,762.52
1,577,141.49
1,675,271.02
647,324.48
656,897.34
1,005,216.93

14,661,825.00
8,911,685.00
6,890,345.00
4,928,287.50
11,075,722.50
800,000.00
6,010,075.00
8,197,197.50
3,066,387.50
2,549,640.00
3,247,595.00

'

5.594.273.85
1,346,311.71
1,918,133.69
679,072.29
1,570,592.95
489,542.94
2,463,052.67
1.250.831.86
111,808.74
1,090,949.21
3,930,294.83

6,816,833.78
2,163,245.46
3,468,184.69
1,804,183.19
2,113,774.24
153,981.88
4,134,771.52
1,132,706.62
427,923.69
1,625,123.49
2,779,597.05

Due to trust
Due to apcompanies and proved reserve
savings banks.
agents.

Dividends
unpaid.

$10,907.49
10,541.82
3,812.33
32,170.68
6,897.08
4,091.03
20,058.10

52,947.94

328,303.70
1,533.50
656.00
121,151.72
31.909.00
142,273.88
26,019.25
17,726.33
827.88
11,693.63
9,539.20
8, m o o
2,037.00

335,340,735. 79

29,125,908.19

701,879.09

1,201,069.97
396,125.76
159,470.93
361,265.91
451,831.87
63,977.14
407,576.38
167,949.71
416,270.85
633,710.20
2,108,249.82

431,845.69
84,603.26
102,469.56
85,380.24
399,575 78

12,656.97
3,545.25
9,186.17
17,208.56
6,228.00
76.00
3,138.50
3,550.00
2,532.00
15,805.74
2,511.50

3,440,623.27
943,014.20
13,814,442.42
2,765,568.61
66,676.77
80,070.55
1,617,334.16

9,865.23
60,458.39
10,741.33
62,027.88
276,424.67

CO
to

Texas
Dallas
Fort Worth
Galveston
Houston
San Antonio
Waco
Arkansas
Kentucky
Louisville
Tennessee
Southern States
Ohio
Cincinnati
Cleveland
Columbus
Indiana
Indianapolis
Illinois
Chicago
Michigan
Detroit
Wisconsin
Milwaukee
Minnesota
Minneapolis
St. Paul
Iowa
Cedar Rapids
Des Moines
Dubuque
Sioux City
Missouri
Kansas City
St. Joseph
St. Louis
Middle Western States
North Dakota
South Dakota
Nebraska
Lincoln
Omaha
South Omaha
Kansas
Kansas City
Topeka
Wichita
Montana




441,379.44

33,680,000.00
3,400,000.00
3,175,000.00
500,000.00
5,300.000.00
2,350,000.00
1,750,000.00
5,065,000.00
12,270,900.00
5,495,000.00
13,015,000.00

17,449, 794.05
2,500, 000.00
1,760, 000.00
250, 000.00
1,725, 000.00
1,312, 500.00
400, 000.00
2,108, 090.00
5,054, 412.05
2,725, 000.00
5,474, 647.82

8,172,691.22
577,742.70
909,653.58
1?0,636.24
842,495.37
277,937.92
200,445.07
847,547.60
1,393,121.15
1,154,259.65
2,277,990.94

22,855, 597.50
2,563, 200.00
2,268, 145.00
405, 000.00
4,483, 000.00
2,046, 892.50
1,500, 000.00
2,969, 980.00
11,613, 272.50
4,952, 500.00
10,692, 447.50

6,405, 918.56
3,616, 863.93
4,987, 921.81
629, 684.64
6,683, 270.09
1,376, 626.16
790, 463.69
803, 400.76
402, 542.40
5,549, 176.77
3,946, 401.81

4,703, 197.23
1,606, 976.41
1,856, 759. 77
708, 943.70
3,307, 792.28
910, 140.58
401, 706.91
1,970, 471.90
885, 860.91
6,235, 256.58
5,703, 149.65

1,200,125.74

926,750.86
678,597.65
77,550.58
587,464.99
442,646.26
1,332,276.80
820,075.72

16,275.08
72,593.29
1,922.32
35,029.68

11,988.37
3,564.00
258.00
410.00
473.50
28,490.00
106.00
8,568.88
11,779.52
11,265.32
16,672.00

173,066,332.00

88,372,934.39

35,070,633.98

136,688,795.00

55,637,135.36

54,910,581.53

12,595,278.69

2,090,591.84

170,014.28

35,469,100.00
13,900,000.00
9,600,000.00
3,000,000.00
21,458,000.00
6,400,000.00
32,657,935.00
42,750,000.00
10,260,000.00
4,750,000.00
11,470,000.00
6,300,000.00
11,956,000.00
7,500,000.00
5,900,000.00
18,505,000.00
600,000.00
2,350,000.00
600,000.00
950,000.00
6,685,000.00
8,050,000.00
1,100,000.00
20,200,000.00

18,816,625.91
6,450,000.00
4, S O 000.00
C ,
1.668,000.00
9,677,700.18
3,000,000.00
18,124,335.05
26,200,000.00
5,627,900/00
1,750,000.00
4,752,250.00
3,200,000.00
6,449,350.00
6,210,000.00
3,700,000.00
7,645,877.74
410,000.00
700,000.00
130,000.00
510,000.00
2,779,408.34
3,315,000.00
700,000.00
8,940,000.00

7,201,732.03
2.574.620.41
2.354.273.44
393,784.71
3.401.804.65
768,085.57
7,602,541.88
7,369,425.25
2.642.291.66
1.428.212.56
2.656.362.57
1,520,620.08
2.295.665.42
1,435,246.72
1,100,156.17
3,468,072.91
63,531.11
242,545.71
250,642.92
99,656.66
966,906.35
2.669.104.45
128,664.68
1,415,641.71

29,452,120.00
7,463,095.0v>
5,619,000.00
2,487,200.00
19,406,002.50
5,801,237.50
26,819,122.50
14,451,047.50
8,501,085.00
2,102,400.00
9,031,250.00
4,081,595.00
8,913,922.50
1,987,695.00
800,500.00
15,197,182.50
515,450.00
1,325,697.50
596,700.00
864,497.50
5,783,547.50
4,397,595.00
957,095.00
16,668,465.00

1,979,280.27
16,012,418.42
12,055,872.09
1,967,541.92
1,918,487.83
8.456.224.03
2,486,700.48
157,469,434.27
525,885.39
5,033,930.08
416,612.00
5,849,980.72
2,910,231.50
14,190,624.96
8,824,127.29
3.213.993.04
3,151,514.97
4,054,868.92
412,433.08
2,890,926.32
263,011.52
30,708,093.12
3,247,655.21
56,329,310.03

3,327,149.55
8,178,815.98
8,832,317.73
2,109,795.54
4,362,070.09
4,925,272.63
9,092,814.69
74,071,142.88
2,327,621.80
6,226,350.79
3,415,403.36
7,901,808.45
4,743,388.15
14,067,627.34
5,631,792.36
5,052,466.76
2,437,164.87
3,457,497.14
638,966.03
4,100,397.18
2,747,469.86
22,583,794.47
5,978,886.12
27,821,803.95

4.658.613.61
6,263,758.03
15,273,305.09
1,132,590.66
3.311.641.62
1,940,444.97
1,635,011.11
15,682,395.27
1.349.253.63
4,657,571.80
390,445.67
808,701.01
94,970.77
2,485,921.53
1,351,223.31
8,276,682.79
2,702,914.78
2,869,284.94
408,387.09
1,001,644.36
55,182.13
4,243,662.06
490,615.39
3,766,033.73

101,267.24
412,671.91
691,048.40
106,118.64
48,351.44
7,050.34
45,622.54

44,723.66
11,760.00
4,486.00
2,173.35
7,766.05
10,643.00
22,974.87
6,309.50
7,168.05
1,174.04
53,569.25
157.50
16,772.75
4,506.50
1,422.00
15,703.41
60.00
1,240.00
152.00

i62,291.55

54,845.42
36,559.40
8,286.17
638,078.87

144,637.45
259.27

101,439.49
387,520.19

36,179.50
1,912.50
138.00
123,567.75

12,411,035.00

145,556,447.22

54,049,589.62

193,223,502.50

344,369,157.46

234,031,817.72

84,850,255.35

2,783,756. 77

374,559.68

5,210, 000.00
4,185, 000.00
10,486, 200.00
1,000, 000.00
3,700, 000.00
1,100, 000.00
10,892, 500.00
500, 000.00
400, 000.00
500, 000.00
5,135, 000.00

2,076,665.33
1,325,960.07
4,498,643.00
330,000.00
2,850,000.00
505,000.00
4,890,183.33
300,000.00
190,000.00
555,000.00
2,693,700.00

810,763.16
841,835.85
1,531,233.24
309,386.05
915,382.73
192,557.12
2,501,494.14
77,988.78
45,930.17
91,569.83
1,386,866.40

3,952,715.00
3,266,010.00
8,593,212.50
910,650.00
2,517,497.50
663,750.00
8,838,642.50
399,000.00
300,000.00
320,197.50
3,185,620.00

1,087, 192.63
935, 892.66
663, 243.72
1,287, 742.20
11,267, 249.39
2,466, 866. 41
1,200, 503.34
1,210, 722.96
558, 003.98
1,661 276.21
1,441, 779.59

. 41
2,713,
3,504, 360.36
3,567, 731.58
490.66
7,817, 105.05
2,391, 439.02
5,192, 809.98
2,043, 915.77
411, 924.55
2,573, 078.48
1,246, 847.44

106,672.03
112,797.68
259,521.53
127,953.11
188,355.18
122,715.24
188,997.60
147,406.67
5,289.59
56,583.59
192,693.06

1,992. 44
1,985.85

5,597.00
17,592.00
5,795.00
43.00
1,326.00

12,369.89

o

>

M
Q
M
U1

H
J

w
w
•
W
M

*
o

>

d
Q
Cj
W
w
H

%

O
Kj

17,515.33
1,014.00

""1,662.16

7.00
11,002.14

G
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CO
Co

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1918—Contini ed.

Liabilities.
States, Territories, and reserve cities.

Colorado
Denver
Pueblo
New Mexico
Oklahoma
Muskogee
Oklahoma City
Western States
Washington
Seattle
Spokane
Tacoma
Oregon
Portland
California
Los Angeles
San Francisco
Idaho
Utah
Salt Lake City
Nevada,
Arizona
Alaska1
Pacific States
Hawaii
United States




Capital stock
paid in.

Surplus fund.

Undivided
profits, less
expenses.

National-bank
notes outstanding.

Due to other
national banks.

Due to State
and private
banks and
bankers.

Due to trust
Due to apcompanies and proved reserve
savings banks.
agents.

Dividends
unpaid.

$1,710,000.00
6,740,000.00
3,600,000.00
600,000.00
2,215,000.00
12,088,200.00
900,000.00
1,300,000.00

$1,182,000.00
3,151,986.45
3,935,000.00
470,000.00
973,830.00
3,125,336.53
272,000.00
383,000.00

$538,418.18
1,445,604.54
375,618.63
50,148.17
236,288.60
1,923,522.30
91,621.07
111,762.92

$1,515,145.00
4,954,902.50
3,480,395.00
476,500.00
1,657,480.00
8,217,187.50
674,997.50
614,250.00

$442,732.44
603,578.41
8,268 465.90
1,641,409.30
436,216.11
2,295,442.02
614,020.77
1,918,134.58

$593,202.04
503,908.74
2,187,681.54
933,582.06
609,130.50
2,604,778.77
282,688.73
922,239.39

$85,096.82
846,896.60
3,086,063.33
536,144.63
338,188.02

72,261,900.00

33,708,304.71

13,477,991.88

54,538,152.50

40,000,472.62

42,008,873.07

6,414,455.99

115,430.00

86,712.03

4,110,000.00
4,200,000.00
3,400,000.00
500,000.00
4,936,000.00
4,500,000.00
21,423,500.00
6,000,000.00
28,500,000.00
3,370,000.00
1,155,000.00
2,400,000.00
1,768,000.00
1,155,000.00
U00,000.00

2,050,704.20
1,370,000.00
771,465.77
850,000.00
2,236,329.96
2,065,000.00
8,643,863.96
2,900,000.00
16,375,000.00
1,512,111.93
453,686.45
1,030,000.00
526,900.00
642,000.00
60,000.00

721,793.36
735,782.44
418,796.63
120,269.32
877,771.98
615,659.13
4,869,161.23
4,029,252.44
5,564,501.89
606,759.69
287,988.09
359,574.84
86,297.97
369,718.32
29,662.05

2,506,205.00
1,577,595.00
2,715,400.00
480,650.00
3,388,790.00
2,321,392.50
16,627,430.00
4,970,397.50
21,742,465.00
2,740,910.00
914,542.50
2,324,595.00
1,557,540.00
932,107.50
61,900.00

227.152.35
3,093,431.88
2,215,177.41
514,364.14
148,830.40
4,429,747.82
2,633,319.25
6,239,962.75
18,154,581.83
539,418.43
467.206.36
1,739,011.81
27,777.07
46,786.71
4,141.21

636,977.21
3,683,285.15
1,731,936.77
565,908.64
375,458.95
3,432,959.10
2,981,673.06
4,535,792.57
27,315,307.98
818,149.54
606,777.11
1,669,972.91
414,747.52
260,745.34
933.11

288,140.30
2,482,301.98
517,264.06
5.70
294,664.94
1,328,596.57
4,941,003.33
8,323,840.79
16,421,146.63
105,118.45
144.010.35
1,000,593.73
525,102.51
310.466.36

11,278.15

603.33
1,215.00
451.00

3,188.88
378,809.02

64,755.00
762.25
10,228.33
2,098.55
9,391.50
300.00
330.00
15,625.00
746.00
236.00

87,509,500.00

41,487,062.27

19,692,989.38

64,861,920.00

40,480,909.42

49,030,624.96

36,682,261.70

747,120.80

610,000.00

259,082.08

63,877.16

306,247.50

1,900.45

163,219.37

30,367.47

3.66

810.00

720,606,792.54 268,140,962.57

722,125,024.00

1,017,460,873.04 528,264,904.42

528,940,184.47

45,885,609.76

1,529,195.57

1,056,919,792.00

1One

report for Apr. 4, 1913.

4,835.23
8,246.08

$926.00
2,121.43
95,032.23

342,686.94
3,309.63
1,145.33
4,269.07
1,218.29
1,215.49

$4,291.00
75.00
7,910.40
14,371.66
72.50
100.00

106,741.96

CO
rfs*

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1913—Continued.

Liabilities—Continued.
States, Territories, and reserve cities.

Maine
New Hampshire
Vermont
Massachusetts
Boston
Rhode Island
Connecticut-

Individual deposits.

$46,267,316.06
23,141,718.12
18,433,087.03
135,000,103.05
193,139,390.48
28,728,038.86
67,752,671.84

United States
deposits.

Deposits of
Postal savings United States
disbursing
deposits.
officers.

Bonds borrowed. Notes and bills Bills payable.
rediscounted.

$154,614.10
263,550,33
58,907.70
250,795.08
750,822.12
275,961.90
237,038.18

$75,889.31
186.115.16
25,922.28
591,300.61
419.663.17
73,329.60
272,905.57

$106,578.02
7,940.75
162,723.45
511.61
177,712.70
26,501.09
8,404.80

$85,000.00
5,000.00
9,000.00
69,000.00
3,047,000.00

$39,047.01
141,518.44
14,530.00
108,455.41
13,500.00

$985,500.00
393,032.81
268,000.00
1,108,500.00
163,000.00
345,000.00
663,000.00

Reserved for
taxes.

Other
liabilities.

$250.0^
12,100.00
5,413.67
145,357.50
475,000.98
15,121.48
49,142.81

$76,108.88
81.00
20,000.00
44,882.92
3,347.00
27,083.37
28,325.33

509,462,325.44

1,9

9.41

1,645,125.70

490,369.42

3,215,000.00

317,020.8

3,923,032.81

702,386.44

199,828.50

New York
Albany
Brooklyn
New York City
New Jersey
Pennsylvania
Philadelphia
Pittsburgh
Delaware
Maryland
Baltimore
District of Columbia
Washington

360,642,422.94
17,298,578.93
19,626,388.41
704,994,318.24
194,960,116.57
479,401,739.43
192,993,850.59
130,618,008.68
8,255,006.78
40,703,2^.44
43,704,232.56
1,503,541.18
27,784,451.20

903,071.74
281,462.15
258,532.37
2,506,145.26
513,197.40
578,618.42
1,003,429.38
713,505.69
81,359.83
112,770.34
1,121,898.51
71,000.00
2,683,303.97

814,822.70
12,224.99
270,129.90
786.102.14
429,194.27
857,995.26
215.100.15
83,189.40
3,612.53
10,872.44
32,863.62

97,403.06

1,159,000.00

336,220.99

2,696,554.46

72,644.47
293,657.97
104,178.65
47,082.96
170,714.50
93,308.49
20,927.98

218,304.76
5,000.00

8,433,750.00
23,000.00
39,612.01
75,000.00
925,000.00

65,000.00
392,350.04
193,447.43
187,354.41
1,893,460.71

8,853.51

949,000.00

18,768.75
77,000.00

335,000.00
4,108,500.00
1,215,500.00
620,000.00
100,000.00
143,000.00
445,000.00
3,010,000.00

398,104.32
11,450.00
25,068.54
1,759,602.93
36,916.10
46,196.53
24,294.89
187,733.38

Eastern States

2,221,985,884.95

10,828,295.06

88,317,172.61
56,337,416.69
32,495,822.74
19,978,246.22
44,654,693.63
1,598,824.98
36,692,315.87
38,655,704.83
14,025,319.27
14,832,407.07
21,930,855.05

1,342,222.25
323,370.60
474,663.42
229,542.14
522,222.77
138,993.54
376,326.52
225,688.01
50,090.52
6,000.00
370,720.48

New England States.

Virginia
West Virginia
North Carolina
South Carolina
Georgia
Savannah^.
Florida
Alabama
Mississippi
Louisiana
New Orleans




71,032.96
3,587,140.3
104,502.44
58,188.20
13,619.89
9,549.25
30,578.97
4,941.07
92,298.46
42,859.33
80,522.32
18,141.26
40,963.77

3,073.36
38,702.16

139,516.00
209,461.87
61,350.65
4,000.00
2,510.97
543.19
468.00

230,000.00

26,915.31

1,033,834.52

14,060,087.01

3,163,602.33

12,903,554.46

2,558,057.52

641,155.44

306,579.35
41,699.50
23,109.89
10.900.98
236,330.32
12,580.12
45,784.28
34,760.88
71.017.99

1,885,000.00
163,000.00
266,000.00

1,641,703.99
33,800.00
1,179,516.75
1,106,852.21
1,608,204.36

2,126,513.27
201,654.76
3,751,263.33
3,707,000.00
5,857,000.00
298,050.00
889,500.00
1,863,400.00
403,263.81
765,000.00
1,701.901.60

126,078.92
11,689.12

159,244.85

125,062.93

52,851.95

2,'455,725*66'

56,000.00
66,000.00
284,500.00
36,800.00
152,600.00
41,000.00
1,131,400.00

148^458.04
579,709.58
69,365.72
250,476.81

21,597.09
750.00
28,592.28
13,503.24
22,514.55
81,098.05
89,000.00

2,315.07
27,430.15
1,800.86
491.56
7,697.02
7,882.94

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1913—Continued.

Liabilities—Continued.
States, Territories, and reserve cities.

Texas
Dallas
Fort Worth...
Galveston
Houston
San Antonio
Waco
Arkansas
Kentucky
Louisville
Tennessee
Southern States
Ohio
Cincinnati
Cleveland
Columbus
Indiana
Indianapolis
Illinois
Chicago
Michigan
Detroit
Wisconsin
Milwaukee
Minnesota
Minneapolis
St. Paul
Iowa
Cedar Rapids
Des Moines
Dubuque
Sioux City
Missouri
Kansas City




Deposits of
Postal savings United States Bonds borrowed. Notes and bills Bills payable.
disbursing
deposits.
rediscounted.
officers.

Individual deposits.

United States
deposits.

$121,992,525.16
20,605,291.43
12,027,117.39
4,112,057.29
23,961,558.71
10,343,009.53
5,576,231.70
18.517.333.92
43,348,401.42
21.172.364.93
63,878,623.83

$556,499.26
149,258.37
2,000.00
76,259.93
150,000.00
14,479.12
39,114.61
44,296.86
652,863.89
1,112,987.47
618,324.75

$156,478.98
105,409.73
32,372.36
13,026.63
43,375.29
49,477.79
104,380.03
91,992.98
132,098.02
182,455.09

87,754.20
89,843.66
203,580.84

10,000.00
995,700.00
327,000.00
25,000.00

715,053,294.27

7,475,924.51

1,407 , 231.86

1,963,864.62

6,038,651.11

211,234,297.40
38.359.928.39
46,034,766.02
21,569,385.41
123,635,112.02
25,110,720.47
213,207,817.39
208,391,727.56
91.984.937.56
40.214.635.57
93,362,170.30
42,292,119.33
107,292,299.25
43,784,579.94
29,930,256.02
112,451,468.89
3,195,803.58
7,689,589.56
2,452,894.77
7,039,628.19
31.464.229.40
40,278,975.25

638,155.32
1,353,978.91
601,754.50
223,085.59
1,591,585.21
79,538.27
2,779,238.82
1,384,115.14
454,159.10
228,313.20
194.486.44
484,217.07
176,322.53
158.111.31
879,673.99
230.129.32
25,383.27
179,659.88
44,469.91
119,429.42
17,000.00
629.448.45

893.541.45
433,340.41
70,822.39
336,486.75
412,835.53
87,187.71
692.485.46
232,028.16
437,071.57
296,476.82
368,077.08
305,032.62
380,934.37
165,657.68
637,718.92
107,068.74
974.39
23,446.49
5,974.39
20,230.63
146,539.65
282,439.44

56,208.95
5,736.83
31,512.04
21,020.91
62,972.61
428,207.86
36,223.52
164,778.57
24,856.69
222,102.71
89.387.64
183,015.10
16,878.13
64.788.65

3,986,441.65
3,674,000.00
2,376,000.00
180,000.00
503,100.00
2,483/700.00
170,000.00
2,259,000.00
15,600.00
200,000.00
19,000.00
11,000.00
395,000.00

4,603.15
866.12
2,445.65

1,400.00

$409,247.03
28,148.96

$33,651.11

21,499.91

200,000.00
365,000.00

288,174.76

7,570.58
68,i74.68

$550,255.36

Reserved for
taxes.

Other
liabilities.

$3,243,500.00

$41,960.93

200,000.00

2,558.33

500,000.00
75,000.00
120,000.00
775,165.00
976,367.65

128,671.59

$88,891.06
36,822.69

471,868.66

2,007,400.00

58,437.19
13,005.26
2,500.00
11,366.75
106,778.76
13,182.68
66,525.36

8,549,348.39

29,461,979.42

711,138.51

475,342.68

117,313.02

1,215,050.00

61,065.19
82,242.33
55,515.46
23,998.70
124,086.66
32,049.02
56,202.19
671,899.43
96,306.75
46,905.49
86,955.19
82,140.46
88,203.36
74,406.54
127,840.24
76,158.84

17,522.77

342,483.33
98,163.80
244,011.85
224,477.93

100,000.00
64,000.00

305,392.40

132,804.80

1,584,700.00

493,500.07

350,000.00

61,294.37
18,727.48

130,000.00
800,000.00
348,000.00

122,000.00

1,345,000.00

16,760.87
183.30
3,150.72

6,300.00
26,368.62
206,499.47
23,815.07
27,512.28
99,107.57
34,954.83

26,532.85
7,116.74
13,000.00
33,536.25

5,000.00

347,750.00
150,000.00

30,763.94
44,820.43

315.81

zo

St. Joseph

62,195,253.78

§> North Dakota
co South Dakota
° Nebraska
Lincoln
H
Omaha
•
South Omaha
pj Kansas
(
D
Kansas City
X
Topeka
Wichita
§ Montana
Wyoming
g Colorado
y
Denver
M
Pueblo
New Mexico
I Oklahoma
L
Muskogee
Oklahoma City
Western States
Washington
Seattle
Spokane
Tacoma
Oregon
Portland
California
Los Angeles
San Francisco
Idaho
Utah
Salt Lake City
Nevada
Arizona
Alaska 1
Pacific States
Hawaii
United States




84,504.98

28,570.29

2,756,290.00

13,216,144.92

6,451,675.20

1,519,920.68

19,077,067.90

32.465.297.44
30,010,746.51
55,266,962.09
4,765,703.59
27,028,641.69
6,990,527.93
59.858.594.77
3,145,144.28
3,308,644.58
4,513,249.92
35,148,490.96
12,946,684.41
38,953,187.61
37.111.306.78
6,994,267.91
15.271.583.45
55,597,272.15
4,716,498.20
7,110,223.46

143,846.74
338,177.89
77,409.46
105,901.36
645,207.55
26,000.00
441,312.88
1,000.00
140,321.54
3,000.00
686,137.48
247,135.10
147,194.19
525,375.72
72,069.79
245,905.97
254,503.69
144,504.83
202,000.00

30,795.72
122,803.76
98,483.59
18,863.37
149,337.52
15,000.27
213,236.18
111,863.10
20,62&.43
28,316.26
437,050.43
41,016.85
411,148.85
236,008.37
50,025.50
41,222.29
174,512.97
3,486.62
50,542.97

62,813.59
4,772.80
2,417.56
3,315.40
33,471.39

1,000.00
19,000.00

202,509.15

46,819.72

87,500.00

113,854.93

233,872.16
85,000.00

2,000.00
26,000.00

4,500.00
37,000.00
20,000.00

267,500.00
63,000.00
95,000.00

7,000.00
61,380.41

112,015.92

148,000.00
867,060.85
25,000.00

4,447,004.19

2,254,344.05

1,086,625.83

353,880.41

527,672.45

30,353,777.72
31,700,739.42
17,046,436.34
7,609,533.44
29,448,069.65
25,962,891.00
122,449,952.57
46,436,001.62
88,736,533.51
18,728,112.94
7,323,844.34
11,482,746.50
6,012,025.13
9,716,618.63
875,090.20

261.072.97
1,040,490.02
143.679.98
156,739.12
87,271.66
735,710.94
275,693.07
262,984.43
852,354.12
175,859.97
139,796.19
255,021.34
62,551.47
235,844.53
215,212.42

403,843.96
191,692.87
42,800.95
284,544.09
222,692.61
231,560.89
785.171.54
175,251.53
534,134.89
227.931.55
18,927.17
13,343.49
93,169.01
91,293.75

4,053.08
54,734.24
9,077.43
43,260.88
26,747.40
59,180.01
5,734.80
90,474.08
8,181.35
15,887. 78

17,000.00

453,882,373.01

4,900,282.23

3,316,358.30

354,419.03

1,876,445.06

261,877.73

5,953,461,551.12

Middle Western States.

639,008.71

1,609,998,200.66

441,203,027.73

St. Louis

43,118,218.05

1 One report for Apr. 4,1913.

159,609137
1,114,639.74

6,575,892.40

2,054,821.64

442,396.42

37,792.45

325,500.00
229,000.00
597,323.99

981.75
66,841.96
29,218.17
2,081.19
61,635.14
24,795.68
32,820.77
3,000.00
2,500.00
6,033.56
17,145.59
1,500.00
64,861.86
36.200.02
23.555.03
15,617.36
93,564.72
14,568.50
32,703.25

30,828.62
15,404.00
5,050.00

o

4,141.65
27.98

o
M
G
G

2,936,257.00

529,624.55

102,700.26

20,000.00

148,578.83

37,800.00

5,074.45

129,000.00

317,979.15
77,000.00

127,464 76

2,257,500.00
200.000.00

49,571.20

235,000.00
55,000.00

21,129.01
14,832. 85
43,380.52
6,515.49
2,015.67
46,978.67
17,547.03
90,220.66
162,819.11
32,233.39
21,916.77
9,880.61
173.66
4,972.00

234,353.14
35,079.80
227.09
1,207.25
286,199.14
1,967.21
6,468.92
367,512.82

150,000.00

14,000.00
7,000.00

17,229.85
565.18
200.00
19,092.95

200,000.00
6,586.18

470, 779.15

408,696.59

3,025,078.83

43,215,465.58

14,080,980.36

58,825,794.92

474,615.44

*2,220.55
1,718.17
593.85
57.11
42,571.28
87.05

56,210.00
118,096.52
146.58
1,196.08
4,109.42
575.89
3,310.20
183, 644.69

157,786.98
18,661,875.47

6,606,821.08

M
•

H
w
tei
w
•
w
M
S
O
>
o
o
d
§

s

Q
K
G
O
K!
02

a

K

2

7,030,644.10 2 2,045,067.99

Includes $21,947 State bank notes outstanding.

cp

Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,

1918—Contini ed.

Classification of deposits.
States, Territories, and reserve cities.

Maine
New Hampshire
Vermont
Massachusetts
Boston
Rhode Island
Connecticut

Individual deposits subject to
check.

Demand certificates of deposit.

Time certificates
of deposit.

Certified checks.

Cashier's checks
outstanding.

4,970.00
149,495.00

$16,932.35
28,518.47
21,977.22
418,560.35
1,931,349.92
55,298.32
421,629.76

$164,519.64
238,723.19
70,995.69
316,388.84
1,770,460.79
170,256.93
197,794.47

143,376,590.32
18,043,903.23
16,846,033.86
130,463,685.71
186,847,606.24
24,922,304.49
65,437,586.08

$2,237,765.77
1,747,789.37
893,148.88
3,469,708.23
2,589,973.53
3,575,209.12
1,546,166.53

$471,507.98
82,783.86
600,931.38
331,759.92

Total.

$46,267,316.06
20,141,718.12
18,433,087.03
135,000,103.05
193,139,390.48
28,728,038.86
67,752,671.84

485,937,709.93

16,059,761.43

1,641,448.14

2,894,266.39

2,929,139.55

509,462,325.44

New York
Albany
Brooklyn
New York City
New Jersey
Pennsylvania
Philadelphia
Pittsburgh...
Delaware
Maryland
Baltimore
District of Columbia
Washington

307,625,148.38
17,151,208.36
18,929,641.83
611,288.726.67
185,560,237.48
365,897,071.58
186,211,385.15
125,219,584.24
7,428,165.35
33,615,701.15
41,245,557.31
1,002,546.67
27,262,185.07

50,047,274.43
12,087.18
56,736.20
7,688,543.41
5,171,933.59
53,893,557.22
1,284,985.79
1,482,913.14
457,119.26
5,024,694.61
418,370.85

1,785,370.97
791,382.27
2,259,283.91
58,098,440.38
291,520.61
1,437,577.71
355,171.97
2,008,780.35
841,000.00

423,919.00
15,064.57
372,142.18
21,556,227.39
728,016.62
974,799.16
4,757,468.46
1,690,669.67
2,567.33
18,620. 78
478,469.08

335,639.15

19,195.86

760,710.16
120,218.82
267,868.20
63,669,438.50
1,240,644.97
537,871.09
448,490.58
787,263.92
11,982.87
35,432.55
720,835.32
994.51
113,532.80

53,898.32

360,642,422.94
17,298,578.93
19,626,388.41
704,994,318.27
194,960,116.54
479,401,739.43
192,993,850.59
130,618,008.68
8,255,006.78
40,703,229.44
43,704,232.56
1,003,541.18
27,784,451.20

Eastern States

1,928,437,159.24

125,873,854.83

67,887,724.03

68,715,284.29

31,071,862.56

2,221,965,884.95

73,161,827.87
37,258,785.19
23,896,619.14
18,075,844.03
39,350,195.10
1,484,144.61
33,180,773.00
34.745.817.69
10,876,734.03
12.427.945.70
20,793,077.81

9,095,763.87
2,721,027.60
3,246,102.54
795,136.51
1,455,693.03
24,163.02
1,044,503.43
1,202,881.45
268,745.41
1,103,879.51
' 467,771.98

5,533,331.72
16,139,055.69
5.103.757.25
1,016,401.80
3,417,755.12
88,656.47
2,196,794.66
2,578,315.33
2,809,308.00
1.202.616.26
346,676.86

292,086.71
24,708.05
26,576.38
25,611.83
101,604.13
1.795.58
61,244.10
43,921.32
9,439.37
28,664. /8
177,781.29

234,162.44
193,840.16
222,767.43
65,252.05
329,446.25
65.30
209,000.68
84,769.04
61,092.46
69,300.82
145,547.11

88,317,172.61
56,337,416.69
32,495,822.74
19,978,246.22
44,654.693.63
1.598.824.98
36,692,315.87
38,655,704.83
14,025,319.27
14,832,407.07
21,930,855.05

New England States

Virginia
West Virginia
North Carolina
South Carolina
Georgia
Savannah
Florida
Alabama
Mississippi
Louisiana
New Orleans




CO
oo

Texas
Dallas
Fort Worth
Galveston
Houston
San Antonio
Waco
Arkansas
Kentucky
Louisville
Tennessee

-

Southern States
Ohio
Cincinnati
Cleveland
Columbus
Indiana
Indianapolis
Illinois
Chicago
Michigan
Detroit
Wisconsin
Milwaukee
Minnesota
Minneapolis
St. Paul
Iowa
Cedar Rapids
Des Moines
Dubuque
Sioux City
Missouri
Kansas City
St. Joseph
St. Louis
Middle Western States
North Dakota
South Dakota
Nebraska
Lincoln
Omaha
South Omaha
Kansas
Kansas City
Topeka
Wichita
Montana




109,859, 259.90
19,603, 375.78
11,426, 557.22
3,798, 236.66
21,446, 315. 74
9,680, 465.00
!. 43
5,357,
14,738, 326.42
36,541, 842.52
15,353, 743.57
49,192, 557.81

4,006,508.37
62,215.87
408,085.70
252,194.28
955,439.90
60,249.27
8,102.77
2,174,31o.31
1,439,730.99
1,078,569.11
7,104,230.59

7,008,860.90
394,076.18
56,193.49
53,557.71
1,132,657.63
454,381.07
195,406.15
1,485,551.34
5,305,905.31
4,446,570.88
7,090,301.19

98.531.28
96,744.58
18,657.18
2,378.10
99.510.29
11,331.95
6,039.05
26.057.57
27,693.89
86.988.58
192,251.80

1,019,364. 71
448,879.02
117,623.80
5,690.54
327,635.15
136,582.24
8,991.30
93,083.28
33,228.71
206,492.79
299,282.44

121,992, 525.16
20,605, 291.43
12,027, 117.39
4,112, 057.29
23,961, 558.71
10,343, 009.53
5,576, 231.70
18,517, 333.92
43,348, 401.42
21,172, 364.93
63,878, 623.83

602,250,137.22

38,975,310.51

8,056,131.01

1,459,617.81

4,312,097.72

715,053,294.27

148,461, 311.51
36,805, 376.63
45,011,
.55
16,155, 776.26
81,017, 674.63
23,198, 137.06
144,231, 183.01
194,990, 676.26
67,037, 362.50
35,386, 076.16
50,998, 010.70
33,632, 910.70
51,047, 620.90
38,527, 186.12
25,281, 596.09
55,287, 333.76
2,052, 434.53
6,917, 977.07
1,534, 452.85
4,913, 936.91
24,202, 697.34
31,628, 825.26
5,261, 231.62
50,807, 638.91

39,580, 722.57
1,017, 022.23
510, 525.18
1,204, 520.68
34,378, 814.54
1,533, 485.37
28,541, 180.03
2,965, 271.43
20,315, 851.14
4,502, 459.12
12,952, 398.90
6,889, 823.00
1,526, 285.79
2, 746, 681.03
3,881, 914.97
19,264, 249.72
76, 873.23
737, 672.56
19, 014.92
49, 820.16
572, 781.02
3,213, 198.39
616, 845.29
16, 167.24

22,676,658.92

880,175.07
2,003,292.20
6,523,662.00
4,332,826.44
782,455.40
9,565,812.44

264,934.15
145,261.64
208,856.12
78,634.24
145,830.55
56,761.52
219,619.39
2,281,161.99
85,661.90
52.793.30
73,719.60
231,967.38
126,179.22
226,454.21
157,348.52
123,361.87
8,815.42
27,799.06
2,140.35
17.580.31
5,654.57
84,326.10
3;538.70
5,092.94

250, 670.25
392, 267.89
277, 978.17
26, 137.65
197, 439.18
322, 336.52
511, 735.01
4,447, 459.95
43, 995.65
273, 306.99
634.72
387.58
1,268, 724.34
980, 582.96
314, 240.49
255, 875.84
21, 095.03
6, 140.87
17, 111.58
54, 998.61
159, 434.47
1,019, 799.06
161, 533.60
1,800, 542.25

211,234,297. 40
38,359,928.
46,034,766.
21,569,385.
123,635,112.
25,110,720.
213,207,817.
208,391,727.
91,984,937.
40,214,635.
93,362,170.
42,292,119.
107,292,299.
43,784,579.
29,930,256.
112,451,468.
3,195,803.
7,689,589.
2,452,894.
7,039,628.
31,464,229.
40,278,975.
6,825,604.
62,195,253.

1,174,388,513.33

187,113,578.51

230,590,187.11

4,633,493.05

13,272,428.66

1,609,998,200.66

15,105, 008.42
13,436, 907.77
28,343, 873.98
4,099, 640.57
20,967, 259.89
4,333, 540.87
39,838, 100.76
2,563, 473.29
3,022, 915.78
3,718, 000.94
22,711, 291.62

1,150,866.35
1,168,722.09
6,520,860.73
127,976.91
144,151.91
166.18
6,351,804.02
490,448.82
259,049.70
473,871.42
2,929,153.23

15,955, 592.80
15,213, 602.91
20,187, 522.82
414, 993.83
5,127, 943.29
1,645, 420.95
13,464, 661.92
44, 796.93
1, 240.00
266, 876.84
9,294, 272.14

26,320.00
4,104,316.58
7,895,353.12
39,704,099.95
3,707,157.93
4,502,066.37
29,238,406.38
1,168,030.67
53,323,489.00
1,303,675.62
295,155.95
37,520,647.70
1,036,585.37

44,880.97
42,221.59
52,459.17
19,447.94
192,398.57
3,771.59
37,770.13
2,301.86
10,050.63
8,161.98
39,063.81

208,948.90
149.292.15
162,245.39
103,644.34
596,888.03
1,007,628.34
166,257.94
44,123.38
15,388.47
46,338.74
174.710.16

32,465,297.44
30,010,746.51
55,266,962.09
4,765,703.59
27,028,641.69
6,990,527.93
59,858,594.77
3,145,144.28
3,308,644.58
4,513,249.92
35,148,490.96

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Abstract of reports of the national banking associations of the United States, showing their condition at the close of business on Wednesday, June 4,
1918—Continued.
Classification of deposits.
States, Territories, and reserve cities.

Wyoming
Colorado
Denver
Pueblo
New Mexico
Oklahoma
Muskogee
Oklahoma City
Western States
Washington
Seattle
Spokane
Taooma
Oregon
Portland
California
Los Angeles
Sail Francisco
Utah
Salt Lake City
Nevada
Arizona
Alaska
Pacific States
Hawaii
United States




Individual deposits subject to
check.

Demand certificates of deposit.

Time certificates
of deposit.

Certified checks.

$9,951.37
18,090.51
98,337.01
2,135.47
6,251.03
114,469.43
71,983.74
6,970.89

$54,990.67
174,253.51
427,241.55
98,952.49
179,508.94
571,833- 01
66,046.79
100,348.37

$12,946,684.41
38,953,187.61
37,111,306.78
6,994,267.91
15,271,583.45
55,597,272.15
4,716,498.20
7,110,223.46

Cashier's checks
outstanding.

Total.

17,947,029.09
25,412,501.44
27,014,319.20
4,103,020.15
10,133,296.42
45,959,825.02
3,385,716.86
6,450,679.85

$97,880.24
4,113,260.16
377,351.82
1,145,095.69
184,545.02
2,661,258.78
166,448.78

$4,936,833.04
9,235,081.99
9,194,057.20
1,645, C64.11
4,767,982.04
6,289,885.91
1,192,750.81
385,776.07

288,446,401.92

28,362,911.85

119,264,355.60

780,717.19

4,348,041.17

441,203,027.73

24,906,859.28
25,986,052.14
14,897,363.31
6,909,508.49
23,436,986.24
23,652,322.48
100,943,500.69
40,396,544.77
81,400,257.21
13,789,116.00
5,360,285.87
9,631,763.09
4,280,059.28
8,607,650.18
786,328.86

1,222,616.36
390,610.19
1,936,155.47
84,075.62
1,792,966.93
1,254,752.45
7,869,714.54
2,517,806.30
2,280,416.77
1,709,809.28
60,631.11
35,814.27
809,163.28
209,851.03
20,256.90

4,120,698.48
4,661,921.81
48,752.19
518,805.72
4,090,585.17
435,462.07
10,905,544.33
1,796,393.30
3,321,609.13
2,994,^02.37
1,722,035.61
1,653,272.68
874,602.06
812,964.68
58,643.85

45,508.56
247,850.86
48,931.67
76,203.67
21,269.31
216,587.81
269,044.37
457,075.51
878,684.18
26,711.95
15,576.27
16.830.45
627.36
14.546.46
241.56

58,095.04
414,304.42
115,233.70
20,939.94
106,262.00
403,766.19
2,462,148.64
1,268,181.74
855,566.22
207,873.34
165,315.48
145,066.01
47,573.15
71,606.28
9,619.03

30,353,777.72
31,700,739.42
17,046,436.34
7,609,583.44
29,448,009.65
25,962,891.00
122,449,952.57
46,436,001.62
88,736,$83.51
18,728,112.94
7,323,844.34
11,482,746.50
6,012,025.13
9,716,618.63
878,090.20

384,984,597.89

22,194,640.50

38,015,893.45

2,335,689.99

6,351,551.18

453,882,373.01

1,736,879.10

81,620.16

53,125.22

4,766.28

54.30

1,876,445.06

4,866,181,398.63

418,661,677.79

525,508,864. £6

80,823,835.00

62,285,775.14

5,953,461,551.12

o
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Specie and circulation of national banks on June 4,

1913.
Circulating notes.

Specie.
NumCities, States, and Ter- ber of
ritories.
banks.

$4,332,011.24 $114,855,720 $22,050,000 $55,450,000
9,44$ 000
4,023,595.00
1,715,000
20,731,880
1,611,515.00
450,000
10,587,580

New York City..
Chicago
St. Louis
Central reserve
Boston
Albany
Brooklyn
Philadelphia....
Pittsburgh
Baltimore
Washington
Savannah
New Orleans
Dallas
Fort Worth
Galveston
Houston
San Antonio
Waco
Louisville
Cincinnati
Cleveland
Columbus
Indianapolis
Detroit
Milwaukee
Minneapolis
St. Paul
Cedar Rapids...
Des Moines
Dubuque
Sioux City
Kansas City, Mo
St. Joseph




Gold coin.

Gold Treas- Clearingury certifihouse
Gold
cates to
certificates
Treasury
order (act
certificates. of Mar. 14, (sec. 5192,
R. S.).
1900).

52

9,967,121.24

146,175,180

24,215,000

64,895,000

800,941.00
571,845.00
171,680.00
1,758,310.00
2,769,713.00
339,341.50
47,817.50
4,960.00
39,477.50
243,082.50
591,412.50
141,105.00
258,557.50
286,502.50
152,162.50
602,445.00
543,490.00
1,940,037.50
1,045,274.50
1,045,785.00
1,196,485.00
940,532.50
3,056,942.50
1,608,752.50
95,080.00
530,264.90
141,170.00
201,635.00
1,122,369.00
447,400.00

12,145,510
1,810,830
1,217,320
8,935,450
8,098,720
1,546,160
1,631,550
39,500
1,123,750
1,119,550
296,130
573,850
1,545,170
782,220
268,000
877,000
3,028,240
3,957,350
699,240
1,704,660
836,990
1,476,220
1,218,780
339,380
342,550
661,010
85,000
323,600
3,319,500
589,500

45,000
60,000

5,415,000

7,170,000
460,000
100,000

""326*666'
6,865,000
2,920,000

500,000

560,000
1,050,000
60,000

740,000
745,000

1,160,000
300,000
120,000
110,000
500,000

1,090,666

1,130,000

Silver
dollars.

Silver
Treasury
certificates.

Fractional
silver coin.

Total.

Received
from
comptroller.

On hand.

Outstanding.

$48,577 $44,016,186 $1,303,541.78 $242,056,036.02 $49,756,300 $1,742,987.50 $48,013,312.50
97,952.50 14,451,047.50
572,061.60 55,424,322.60 14,549,000
220,599 18,716,187
381,325.00 16,668,465.00
107,255.90 17,342,171.90 17,049,790
4,475,944
109,877
379,0
6,991
4,296
3,651
162,860
260,369
38,354
9,063
24,350
28,685
109,944
136,340
40,570
212,887
194,801
100,726
71,331
74,024
65,375
115,586
120,298
70,840
52,207
226,803
103,175
25,558
61,240
7,452
28,521
118,358
46,647

67,208,317
7,865,985
65,385
1,065,036
5,908,339
4,035,554
2,282,460
618,636
56,100
678,248
318,820
109,863
65,056
308,024
229,243
100,208
360,833
1,270,307
736,844
331,563
509,989
169,211
1,959,562
37,995
473,407
24,410
76,551
62,116
31,069
1,366,205
201,961

1,982,859.28 314,822,530.52

81,355,090

2,222,265.00

79,132,825.00

26,634,789.70
2,555,290.16
2,914,784.75
31,496,161.60
18,553,115.55
4,798,924.65
2,467,826.22
164,097.00
2,404,338.65
1,892,234.00
1,286,698.25
904,168.55
2,493,811.25
1,627,292.95
752,606.88
2,520,543.00
6,045,256.80
7,533,008.95
2,315,052.05
3,450,033.05
3,104,755.00
4,480,274.40
5,862,567.95
3,995,373.10
629,888.30
1,491,798.40
304,046.05
1,112,821.90
7,233,941.95
1,313,012.90

8,551,800
2,100,000
1,037,000
11,947,000
17,374,000
8,249,000
5,690,000
800,000
3,270,000
2,584,000
2,282,000
405,000
4,500,000
2,115,000
1,500,000
4,955,000
7,526,600
5,702,509
2,500,000
•5,823,140
2,154,000
4,117,000
1,995,000
825,000
525,000
1,384,000
596,700
875,000
4,605,000
970,000

141,097.50
29,502.50
13,950.00
123,317.50
271,912.50
99,915.00
122,960.00

8,410,702.50
2,070,497.50
1,023,050.00
11,823,682.50
17,102,087.50
8,149,085.00
5,567,040.00
800,000.00
3,247,595.00
2,563,200.00
2,268,145.00
405,000.00
4,483,000.00
2,046,892.50
1,500,000.00
4,952,500.00
7,463,095.00
5,619,000.00
2,487,200.00
5,801,237.50
2,102,400.00
4,081,595.00
1,987,695.00
800,000.00
515,450.00
1,325,697.50
596,700.00
864,497.50
4,397,595.00
957,095.00

355,362.70
42,934.16
137,097.75
696,197.60
468,759.55
132,609.15
60,759.72
39,187.00
34,178.15
100,837.50
152,952.75
83,587.55
169,172.75
134,526.45
131,510.38
48,934.00
79,195.80
93,402.45
63,388.55
69,301.05
86,229.00
51,752.90
162,047.45
80,658.60
22,290.30
52,732.50
8,308.05
27,996.90
177,509.95
27,504.90

22,405.00
20,800.00
13,855.00
17,000.00
68,107.50
2,500.00
63,505.00
83,500.00
12,800.00
21,902.50
51,600.00
35,405.00
7,305.00
24,500.00
9,550.00
58,302.50
10,502.50
207,405.00
12,905.00

Specie and circulation of national banks on June 4, 1913—Continued.

o
to
CR U A I G N T S
I C L TN O E .

C T E , S A E , A D T RNUM-F
I I S TTS N E -E O
BR
RT RE .
IO IS
B N S GL C I .
A K.
O D ON

$278, 236.00
1,011, 435.00
332, 650.00
141 282.50
125, 865.00
131, 500.00
3,265, 055.00
452, 460.00
106, 585.00
199, 597.50
2,915. 410.00
879, 137.50
757, 867.50
3,728, 040.00
4,733, 365.00
9,677, 542.50
1,164, 499.75

O H R R S R E CITIES..
T E EE V

1,657,360
46,400
161,600
94,570
192,670
2,219,460
470,210
274,040
388,320
470,850
205,700
46,010
107,230
174,780
672,190
413,100

52,595,104.65

LN O N
ICL
O A A
MH
S UH O A A
OT
MH
K N A CITY, KANS
ASS
TPK
OEA
" I HT
WC I A
DNE
E VR
Pueblo
MSOE
UK G E
O L H M CT
KA O A I Y
S ATE
E TL
SOAE
PKN
TCM
AO A
P RL N
O TA D
L S A GLS
O N EE
S N FRANCISCO...,
A
S L L K CT
AT A E I Y
A L R S R E CTE
L EE V I I S

G L T E S C E RN OD R AU Y C R I I LO S G
R E TF- HA I
SL E
IVR
UE
GL
OD
RCI NL
V
C T S O E TFC T S SL R
A
A Y F A TO A
TES R
R A U Y O D E (T T C R I I A E DIL E S T E S R
O L R. C R I IUT S SL E C I .
A
R R
E TFC E . I V R ON
R A
C R I I A E . O M R C (SEC. 5192,
E TFC T S F EA A 14,
.
R. S.).
1900).

68,350,020

$162,800

$10,000
100,000

200,000

120,000

180,000

1,011,000
2,260,000

$802,000
324,000
717,000
1,000,000
838,000

$29,154
121,477
79,296
20,958
19,112
21,319
161,381
15,405
41,038
119,960
81,650
89,063
16,627
67,132
82,562
150,960
68,546

$42,714
1,065,587
46,528
30,265
19,571
98,308
53,084
29,972
93,501
120,817
17,892
63,377
21,248
9,770
33,697
58,286
12,801

TTL
OA.

RCIE
E EV D
FO
RM
C MO P
T OL R
R LE .

$930,500
$555,309.80
$42,405.80
107,018.60 3,972,877.60 2,517,500
624,156.10
680,000
19,282.10
563,533.35
399,000
9,427.85
407,627.85
28,509.85
300,000
645,730.85
• 21,933.85
325,000
47,586.05 5,746,566.05 3,500,000
985,487.40
17,440.40
480,000
551,343.55
36,179.55
675,000
882,587.00
53,892.50
625,000
175,661.35 4,463,463.35 1,589,000
156,736.75 2,405,014.25 2,800,000
30,054.25 1,195,806.75
500,000
121,849.05 4,751,021.05 2,900,000
228,733.15 6,253,137.15 5,070,000
352,532.12 14,009,510.62 21,950,000
62,068.55 1,721,015.30 2,400,000

15,576,000 23,406,000 3,706,942 33,136,398 5,302,237.33 202,072,701.'

o
H

ON H N .
AD

O TT N I G
U S A DN .

GO

$19,850.00
2.50
16,250.00
4,802.50
19,605.00
3,500.00
2.50
10,75O! 00
11,405.00
84,600.00
19,350.00
578,607.50
99,602.50
207,535.00
75,405.00

$910,650.00
2,517,497.50
663,750.00
399,000.00
300,000.00
320,197.50
3,480,395.00
476,500.00
674,997.50
614,250.00
1,577,595.00
2,715,400.00
480,650.00
2,321,392.50
4,970,397.50
21,742,465.00
2,324,595.00

164,599,740 2,697,772.50 161,901,967.50

367 62,562,225.89 214,525,000 39,791,000 88,301,000 4,085,995 100,344,715 7,285,096.61 516,895,232.50 245,954,830 4,920,037.50 241,034,792.50
971,660
255,700
298,790
1,718,890
605,660
880,220

3,000

26,813
24,019
31,774
114,624
3,599
65,845

449,074
302,675
130,825*
2,145,767
373,843
1,094,577

130,773.55
116,869.50
86,736.35
643,270.31
87,100.07
329,675.11

6,016,650
5,056,500
4,512,500
6,889,509.86 20,009,000
1,498,255.47 4,717,000
4,081,227.41 13,533,350

2,707,203.14
1,203,184.82

115,892.50 5,900,757.50
89,572.50 4,966,927.50
62,562.50 4,449,937.50
365,967.50 19,643,032.50
91,797.50 4,625,202.50
364,215.00 13,169,135.00

79

1,128,882.59
503,921.32
388,572.94
2,263,958.55
428,053.40
1,690,910.30

N W E G A D S A E 436
E N LN TTS

6,404,299.10

4,730,920

20,000

3,000

266,674

4,496,761

5,449,538.58
1,770,269.43
9,807,566.82
105,663.00

6,271,030
3,733,570
8,677,550
106,570

925,000
60,000
360,000

695,000

342,384
116,560
754,497
21,549

586,630.00 37,384,430.00
995,107.38 19,356,594.96 37,971,060
4,678,535
401,872.50 17,641,197.50
594,317.92 9,606,742.35 18,043,070
3,332,025
4,564,442 1,314,352.37 25,492,408.19 57,618,040 1,018,453.50 56,599,586.50
18,595.00 1,396,655.00
45,993.75
496,074.75 1,415,250
216,299

MIE
AN
NEW H M S I E
A P HR
VR O T
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M SA H S T S
AS C UE T
R O E IL N
H D SA D
C N E TC T
O NCI U
NWYR
E
OK
N W J RE
E E SY
PN SLA I
E N Y V NA
DLWR
EA A E




56
49
163
20

429
200

781

20,000

"15,666"

1,394,424.8

§

17,316,078.99 53,845,000 1,090,007.50 52,754,992.50

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District of Columbia...
Eastern States
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
Kentucky
Tennessee
Southern States
Ohio
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa
Missouri
Middle States
North Dakota
South Dakota
Nebraska
Kansas
Montana
Wyoming
Colorado
New Mexico
Oklahoma
Western States
Washington
Oregon
California
Idaho
Utah
Nevada




122,600*. 14
1,350.00

710,000

1,260,274

13,211,841

3,073,721.56

56,850,501.33 119,697,160

14,000

193,915
119,912
130,131
79,370
233,523
220,106
305,145
70,933
116,640
890,347
112,561
139,265
330,301

771,309
601,619
329,766
160,726
630,101
369,093
516,008
93,089
156,964
993,495
138,320
326,952
781,846

330,131.91
170,130.98
135,550.01
200.475.45
377,465. 77
205,024.51
237,073. 69
64,883.55
129,468.35
846.242.46
120,395.40
130,230.70
230,420.75

4,336,892.86 14,838,250
3,254,723.37
9,013,400
1,444,257.36
6,904,100
818,543.95
4,969,250
2,433,230. 70 11,153,000
2,008,966.84
6,035,000
2,840,797.90
8,480,050
851,332.90
3,085,300
1,038,305.50
2,571,250
8,167,572.69 23,046,410
1,138,083.40
2,984,510
2,664,819.55 11,699,350
3,881,762.25 10,783,000

3,177,493.53

34,879,289.27 115,562,870

1,140,407.50 114,422,462.50

547,974. 43
350.656.57
675,454.40
218,237.51
226,129.60
300.635.58
310,769.13
120,001.74

11,855,381.70 29,796,180
8,015,040.07 19,594,920
12,699,435. 76 27,08t, 140
8,609,750
5,204,449.85
9,124,970
4,972,972.85
8,988,260
5,831,883.38
6,382,245.20 15,308,200
5,844,310
1,673,079.04

344,060.00 29,452,120.00
18S, 917.50 19,406,002.50
262,017.50 26,819,122.50
8,501,085.00
108,665.00
9,031,250.00
93,720.00
8,913,922.50
74,337.50
111,017.50 15,197,182.50
5,783,547.50
60,762.50

7,127,022

2,749,858.96

56,634,487.85 124,347,730

1,243,497.50 123,104.232.50

128,858
105,670
197,208
303,387
91,205
44,790
139,041
53,619
348,869

188,851
185,052
250,442
422,688
126,649
55,721
203,102
94,280
381,134

166,879.35
112,751.75
169,762.50
224,490.95
164,669.22
49,588.38
120,800.65
54,153.15
321,453.74

30,000

1,526

17,628,424.77

19,591,240

1,375,000

133
116
73
48
52
87
33
26
481
49
136
107

1,400,936.95
1,343,031.39
439,730.35
220,952.50
517,790.93
597,453.33
685,841.21
155,587.35
237,613.15
2,397,048.23
409,387.00
799,721.85
1,067,004.50

1,626,600
1,020,030
409,080
157,020
634,350
617,290
1,096,730
376,840
347,620
3,040,440
337,420
818,650
1,432,190

20,000
450,000
40,000

1,457

10,272,098. 74

11,914,260

650,000

54,000

2,942,149

357
249
448
96
124
261
325
111

4,469,350.27
3,194,143.50
4,592,180.36
2,393,066.34
1,980,427.25
3,035,899.80
2,597,026.07
783,279.30

3,786,100
2,708,510
4,179,520
1,715,800
1,289,620
1,274,280
1,948,000
364,260

635,000
80,000
885,000
50,000
770,000
340,000
525,000
60,000

206,000

645,326
446,036
562,191
201,887
210,835
287,359
391,484
150,026

1,565,631
1,235,694
1,805,090
625,459
495,961
593,709
609,966
195,512

17,266,090

3,345,000

206,000

2,895,144

1,971

23,045,372.8

40,000
90,000
50,000

~144
103
228
205
57
30
117
40
314

628,059.70
785.264.10
1,486,472.80
1,715,635.75
1,603,351.40
473,793.80
1,435,879.75
427,062.50
893.659.11

682,550
742,850
939,230
1,219,310
1,197,500
343,010
922,990
400,860
1,325,100

1,238

9,449,178.91

7,773,400

1,412,647

1,907,919

64
78
235
54
17

1,567,403.00
2,258,351.66
7,645,433.50
919,717.50
425,562.50
456,227.50

285,610
216,500
870,890
271,560
20,770
111,550

124,964
102,694
423,346
69,647
23,297
15,983

46,320
31,882
181,917
49,725
15,655
3,654

11

4,326,437.50
243,650.00

412,180

746,970
55,550

116

73,302.50
6,350.00

24,794
490

86,426.94
8,960.00

Maryland

40,000
275,000
60,000

170,000

20,000
149,500

1,384,549. €
144,313.55
149,127.12
603,834.26
100,662.10
28,849.85
26,622.90

1,822,971.08
74,710.00

4,399,740
250,000

2,105,203.50 117,591,956.50
176,425.00
101,715.00
13,755.00
40,962.50
77,277.50
24,925.00
282,852.50
18,912.50
21,610.00
190,812.50
14,530.00
86,077.50
90,552.50

14,661,825.00
8,911,685.00
6,890,345.00
4,928,287.50
11,075,722.50
6,010,075.00
8,197,197.50
3,066,387.50
2,549,640.00
22,855,597.50
2,969,980.00
11,613,272.50
10,692,447.50

1,795,198.05
1,971,587.85
3,318,115.30
3,945,511.70
3,183,374.62
966,903.18
2,821,813.40
1,029,974.65
3,350,215.85

3,971,770
3,283,300
8,639,760
8,899,740
3,306,450
1,537,550
5,001,010
1,679,000
8,338,030

19,055.00
17,290.00
46,547.50
61,097.50
120,830.00
22,405.00
46,107.50
21,520.00
120,842.50

3,952,715.00
3,266,010.00
8,593,212.50
8,838,642.50
3,185,620.00
1,515,145.00
4,954,902.50
1,657,480.00
8,217,187.50

22,382,694.60

44,656,610

475,695.00

44,180,915.00

2,168,610.55
2,758,554.78
9,915,420.76
1,560,811.60
514,134.35
614,037.40

2,584,850
3,517,460
16,941,300
2,772,500
923,250
1,579,000

78,645.00
128,670.00
313,870.00
31,590.00
8,707.50
21,460.00

2,506,205.00
3,388,790.00
16,627,430.00
2,740,910.00
914,542.50
1,557,540.00

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Specie and circulation of national banks on June 4,

1913—Continued.

O

Specie.
Cities, States, and Ter- Number of
ritories.
banks.

Arizona
Alaska1
Pacific States
Island possessions
(Hawaii)
Total States, etc

Gold coin.

13
2

$415,232.00
228,469.54

474

13,916,397.20

2,011,940

4

484,661.00
81,200,432.61

63,288,110

o
H

$170,000

6,015,000

$169,500

Fractional
silver coin.

$46,991
6,031

$38,398.45
11,880.75

$741,023.45
304,801.29

$941,510
62,500

$9,402.50
600.00

$932,107.50
61,900.00

823,693

382,175

1,103,688.98

18,577,394.18

29,322,370

592,945.00

104

19,627.05

538,949.05

306,250

2.50

306,247.50

>

28,729,425.00

34,297

260

7,106

Received
from
comptroller.

Silver
Treasury
certificates.

$59,242
4,520

$181,160
53,900

Total United States. 7,473 143,762,658.50




Gold Treas- ClearingGold
ury certifihouse
cates to
Treasury
certificates. order (act certificates
(sec. 5192,
of Mar. 14,
R. S.).
1900).

Circulating notes.

Silver
dollars.

1,142,500 9,634,878

Total.

On hand.

Outstanding.

32,995,110 12,903,364.66 207,179,395.27 487,737,990 6,647,758.50 481,090,231.50

277,813,310 45,806,000 89,443,500 13,720,873 133,339,825 20,188,461.27 724,074,627.77 733,692,820 11,567,796.00 722,125,024.00
i One report for Apr. 4,1913.

§
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Deposits and reserve of national banks on June 4, 1913.
Reserve required, and the amount and per cent held.

Cash on hand, due from
reserve agents, and in the
redemption fund.

Held.
Cities, States, and
Territories.

Net deposits subject to reserve requirements.

Required.
Specie.

New York City
Chicago
St. Louis
Central reserve cities
Boston
Albany
Brooklyn
Philadelphia
Pittsburgh
Baltimore
Washington
Savannah
New Orleans
Dallas
Fort Worth
Galveston
Houston
San Antonio
Waco
Louisville
Cincinnati
Cleveland
Columbus
Indianapolis
Detroit
Milwaukee
Minneapolis
St. Paul
Cedar Rapids
Des Moines
Dubuque




Legal
tenders.

$1,093,896,154.20 $273,474,038.55 $242,056,036.02
363,020,439.98
90,755,109.99 55,424,322.60
111,170,462.55
27,792,615.64 17,342,171.90

$50,461,912
32,144,176
8,199,971

392,021,764.18 314,822,530.52

90,806,059

26,634,789.70
2,555,290.16
2,914,784.75
31,496,161.60
18,553,115.55
4,798,924.65
2,467,826.22
164,097.00
2,404,338.65
1,892,234.00
1,286,698.25
904,168.55
2,493,811.25
1,627,292.95
752,606.88
2,520,543.00
6,045,256.80
7,533,008.95
2,315,052.05
3,450,033.05
3,104,755.00
4,480,274.40
5,862,567.95
3,995,373.10
629,888.30
1,491,798.40
304,046.05

4,790,952
1,782,316
708,296
3,074,667
4,581,749
616,505
365,847
8,334
357,721
382,658
658,780
115,920
783,555
318,795
130,640
794,477
1,995,295
2,156,250
832,214
1,519,575
2,962,202
1,185,025
1,378,277
1,192,933
226,145
345,705
139,511

1,568,087,056.73
235,937,447.19
39,297,953.26
23,836,325.80
279,772,336.64
196,116,426.28
62,246,492.72
28.568.018.15
1,857,723.80
25,217,548.95
21,629,510.24
14,981,247.51
4.760.174.05
29,642,962.90
11,052,476.24
5.788.341.06
29,537,728.00
60,188,629.74
68,629,965.00
23,639,013.72
31,915,589.99
46,914,596.64
51,591,648.49
61,364,504.08
40,873,142.66
10,293,775.07
16.043.138.16
3,618,675.53

58,984,361.80
9,824,488.32
5,959,081.45
69,943,084.16
49,029,106.57
15,561,623.18
7,142,004.54
464,430.95
6,304,387.24
5,407,377.56
3,745,311.88
1,190,043.51
7,410,740.73
2,763,119.06
1,447,085.27
7,384,432.00
15,047,157.43
17,157,491.25
5,909,753.43
7,978,897.50
11,728,649.16
12,897,912.12
15,341,126.02
10,218,285.67
2,573,443.77
4,010,784.54
904,668.88

Redemption
fund.

Available with
reserve agents,
not exceeding
50 per cent of
net reserve
required.

$2,477,065.00
727,450.00
768,319.50
3,972,834.50
427,900.00 $29,278,230.89
105,000.00
4,859,744.15
51,850.00
2,891,819.50
596,350.00 34,673,367.08
831,547.50 23,680,110.42
412,450.00
7,574,586.59
284,500.00
3.365.553.11
40,000.00
169,296.82
163,500.00
3,070,443.61
129,200.00
2,464,311.25
109,100.00
1,818,105.93
20,250.00
584,896.76
225,000.00
3,592,870.36
80,750.00
1,341,184.53
62,900.00
585,077.80
247,750.00
3,568,341.00
373,025.00
7,337,066.21
285,125.00
8.436.183.12
119,750.00
2.748.037.57
290,107.00
3,844,395.24
107,650.00
5.810.499.58
205,850.00
6,346,031.06
99,750.00
6,329,513.27
41,250.00
4,974,393.17
26,250.00
1,245,604.96
65,447.50
1,972,668.52
25,450.00
439,609.44

Total amount.

Per
cent.

Amount.

$294,995,013.02
88,295,948.60
26,310,462.40

26.97
24.32
23.68

$294,995,013.02
88,295,948.60
26,310,462.40

409,601,424.02

26.12

409,601,424.02

61,131,872.59
9,302,350.31
6.566.750.25
69,840,545.68
47,646,522.47
13,402,466.24
6,483,726.33
381,727.82
5.996.003.26
4.868.403.25
3,872,684.18
1,625,235.31
7.095.236.61
3,368,022.48
1,531,224.68
7,131,111.00
15,750,643.01
18,410,567.07
6.015.053.62
9,104,110.29
11,985,106.58
12,217,180.46
f3,670,108.22
10,203,949.27
2.127.888.26
3,875,619.42
908,616.49

25.91
23.67
27.55
24.96
23.98
21.53
22.70
20.54
23.78
22.50
25.85
34.14
23.93
30.48
26.45
24.14
26.17
26.83
25.45
28.53
25.55
23.68
22.27
24.96
20.67
24.16
25.11

71,378,032.88
10,953,474.44
6,566,750.25
77,606,594.66
47,646,522.47
14,041,021.94
6.483.726.33
381,727.82
6.354.814.31
4.868.403.25
4.065.714.34
1,679,177.95
7,371,266.83
3.750.444.61
1,531,224.68
7.869.119.32
16,166,739.70
18,768,161.19
6.015.053.62
10,896,232.99
13,526,522.94
12,711,365.87
13,670,108.22
10,203,949.27
2.127.888.26
4,077,163.26
1,010,184.62

Deposits and reserve of national banks on June 4,

1913—Continued.

0
01

Reserve required, and the amount and per cent held.

Cash on hand, due from
reserve agents, and in the
redemption fund.

Held.
Cities, States, and
Territories.

Net deposits subject to reserve requirements.

Required.
Specie.

Sioux City
Kansas City, Mo
St. Joseph
Lincoln
Omaha
South Omaha
Kansas City, Kans
Topeka
Wichita
Denver
Pueblo
Muskogee
Oklahoma City
Seattle
Spokane
Tacoma
Portland
Los Angeles
San Francisco
Salt Lake City

Legal
tenders.

Redemption
fund.

$12,997, 107.50
81,566! 939.40
13,335; 196.44
6,656, 099.11
39,128; 378.20
9,189, 605.77
4,932, 871.80
3,389, 138.20
6,692, 169.82
42,731, 063.75
8,355, 239.10
4,844, 442.25
7,883, 172.09
35,198, 357.96
18,885, 980.26
7,854, 204.57
29,906, 806.26
54,679, 499.16
119,056! 019.87
13,276; 773.65

$3,249,276.87
20,391,734.85
3,333,799.11
1,664,024.78
9.782.094.55
2.297.401.44
1,233,217.95
847,284.55
1.673.042.45
10,682,765.94
2,088,809.77
1.211.110.56
1,970,793.02
8,799,589.49
4,721,495.06
1,963,551.14
7.476.701.57
13,669,874.79
29,764,004.97
3,319,193.41

$1,112, 821.90
7,233, 941.95
1,313, 012.90
555, 309.80
3,972, 877.60
624, 156.10
563, 533.35
407, 627.85
645, 730.85
5,746, 566.05
985, 487.40
551, 343.55
882, 587.00
4,463, 463.35
2,405, 014.25
1,195, 806.75
4,751, 021.05
6,253, 137.15
14,009, 510.62
1,721, 015.30

$343,175
1,799,859
194,388
282,388
1,089,280
300,223
50,510
73,980
65,580
1,322,640
73,442
85,500
241,405
75,909
61,400
19,012
34,175
493,030
146,239
65,000

$43, 750.00
222, 850.00
45, 897.50
46, 525.00
125, 872.50
30, 650.00
19, 950.00
15, 000.00
11, 047.50
175, 000.00
23, 300.00
33, 750.00
29, 500.00
79, 450.00
140, 000.00
25, 000.00
145, 000.00
253, 500.00
1,097, 500.00
500.00

Other reserve cities.. 1,945,874,457.03

486,468,614.26

202,072,701.98

40,221,479

8,089,744.50

All reserve cities

3,513,961,513.76

878,490,378.44

516,895,232.50

131,027,538

46,898,653.28
22,268,769.99
19,218,246.04
140,721,736.97
29,917,010.63
69,821,700.52

7,034,797.99
3,340,315.50
2,882,736.90
21,108,260.55
4,487,551.59
10,473,255.08

2,707,203.14
1,203,184.82
936,698.29
6,889,509.86
1,498,255.47
4,081,227.41

523,821
494,699
397,258
3,814,364
506,956
1,500,282

328,846,117. 43

49,326,917.61

17,316,078.99

Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
New England States




7,237,3

Available with
reserve agents,
not exceeding
50 per cent of
net reserve
required.
$1,602, 763.43
10,084, 442.42
1,643, 950.80
572, 693.81
4,828, 111.02
1,133, 375.72
565, 833.19
416, 142.27
830, 997.47
4,933, 629.06
1,015, 559.02
544, 044.78
970, 646.51
4,360, 069.74
2,066; 643.87
909, 944.47
2,850; 657.19
5,223, 311.13
14,043, 172.73
1,201, 749.11

Total amount.

Per
cent.

Amount.

Per
cent.

0
M
•

1

m
H
3

w

$3,102,510.33
19,341,093.37
3,197,249.20
1,456,916.61
10,016,141.12
2,088,404.82
1,199,826.54
912,750.12
1,553,355.82
12,177,835.11
2,097,788.42
1,214,638.33
2,124,138.51
8,978,892.09
4,673,058.12
2,149,763.22
7,780,853.24
12,222,978.28
29,296,422.35
3,086,264.41

23.87
23.71
23.98
21.88
25.60
22.73
24.32
26.93
23.21
28.50
25.11
25.07
26.95
25.50
24.74
27.37
26.02
22.36
24.60
23.25

$3,228, 970.47
21,723, 773.02
3,815, 454.31
1,456, 916.61
10,489, 142.56
3,004, 557.10
1,199,
.54
967, 982.68
1,697, 143.06
12,177, 835.11
2,097, 788.42
1,214, 638.33
2,382, 202.28
9,213, 852.24
4,673, 058.12
2,149, 763.22
7,780, 853.24
12,222, 978.28
29,296, 422.35
3,086, 264.41

21.88
26.81
32.69
24.32
28.56
25.36
28.50
25.11
25.07
30.22
26.18
24.74
27.37
26.02
22.36
24.60
23.25

232,799,679.6

483,183,605.16

24.83

515,600,808.37

26.50

12,062,579.00

232,799,679.68

892,785,029.18

25.41

925,202,232.39

26.33

293,212.50
241,175.00
208,375.00
978,500.00
228,125.00
663,692.50

4,044,951.29
1,859,484.29
1,604,617.14
12,077,856.32
2,555,655.95
5,885,737.54

7,569,187.93
3,798,543.11
3,146,948.43
23,760,230.18
4,788,992.42
12,130,939.45

16.14
17.06
16.37
16.88
16.01
17.37

8,691,616.25
5,885,892.33
4,025,894.92
29,796,441.36
5,764,703.80
17,912,122.87

18.53
26.43
20.94
21.17
19.27
25.65

2,613,080.00

23,028,302.53

55,194,841.52

16.78

72,076,671.53

21.92

24.84
26.63

fet

28.61

B

tet
o
•
t*
o

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*
B

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O

New York
New Jersey
Pennsylvania
Delaware
Maryland
District of Columbia
Eastern States
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
Kentucky
Tennessee
Southern States...
Ohio
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa
Missouri
Middle States
North Dakota
South Dakota
Nebraska
Kansas
Montana
Wyoming
Colorado
New Mexico
Oklahoma
Western States
Washington
Oregon
California
Idaho




370,193,609. 43
202,574,593.74
475,471,735.41
8,513,102.98
40,554,108.05
1,031,403.06

55,529,041.41
30,386,189.06
71,320,760.31
1,276,965.45
6,083,116.21
154,710.46

19,356,594.96
9,606,742.35
25,493,408.19
496,074.75
1,822,971.08
74,710.00

6,479,357
4,299,547
8,607,441
172,844
707,996
12,640

1,822,403.00
894,353.50
2,719,687.50
63,512.00
207,511.10
12,500.00

32,223,983.04
17,695,101.33
41,160,643.68
728,072.06
3,525,363.06
85,326.27

59,882,338.00
32,495,744.18
77,981,180.37
1,460,502.81
6,263,841.24
185,176.27

16.18
16.04
16.40
17.16
15.44
17.95

71,636,066.95
39,158,785.85
95,141,569.80
1,752,839.11
7,095,563.79
256,056.09

19.35
19.33
20.01
20.59
17.49
24.83

1,098,338,552.67

164,750,782.90

56,850,501.33

20,279,825

5,719,967.10

95,418,489.44

178,268,782.87

16.23

215,040,881.59

19.58

14,057,962.56
8,424,067.34
4,944,860.61
3.030.209.75
6,382,152.55
5,537,797.20
5.584.461.76
2,083,066.58
2,496,625.40
18,116,475.05
2,860,860. 62
6,519,752.12
9,707,933.01

4,336,892.86
3,254,723.37
1,444,257.36
818,543.95
2,433,230. 70
2,008,966.84
2,840,797.90
851,332.90
1,038,305.50
8,167,572.69
1,138,083.40
2,664,819.55
3,881,762.25

1,784,290
845,649
622,285
342,667
1,004,150
803,460
351,107
211,230
62,939
1,878,146
289,394
591,007
1,740,062

676,614.95
436,385.00
317,895.00
237,692.50
530,711.00
284,145.00
393,942.50
144,613.80
127,662.50
1,107,767.50
146,445.50
506,117.50
508,850.00

8,028,808.56
4,792,609.40
2,544,024.33
1,652,787.28
3,510,864.93
3,152,191.31
3,114,311.55
1,163,071.66
1,421,377.74
10,205,224.52
1,628, 649. 07
3,608,180. 77
5,519,449.80

14,826,606.37
9,329,366.77
4,928,461.69
3.051.690.73
7,478,956.63
6,248, 763.15
6,700,158.95
2,370,248.36
2.650.284.74
21,358, 710.71
3,202,571.97
7,370,124.82
11,650,124.05

15.80
16.61
14.95
15.11
17.58
16.93
18.00
17.07
15.92
17.68
16.78
16.96
18.00

15,804,277.80
11,804,819.91
4-, 928,461.69
3,051,690.73
9.002.574.42
8,198,236.27
8,155, 716.09
3,476,939.86
3,055,394.53
33,989,174. 72
4,662,477.01
9.370.966.43
13,228,149.06

16.86
21.02
14.95
15.11
21.16
22.21
21.91
25.04
18.36
28.14
24.45
21.56
20.44

10,526,386

5,418,842. 75

50,341,550.92

101,166,068.94

16.91

128,728,878.52

21.52

1,401,516.55
935,145.40
1,292,975.00
416.135.00
440,698. 50
440,923.00
737,727.71
282,312.75

18,213,400.22
10,940,902.89
18, 766,869.29
8,058,947.35
8,290,135.38
9,548,461.91
10,635,725.39
2,762,389.42

35,831,915.47
22,140,038.36
36,204,781.05
15,527,523.20
14,868,955.73
16.816.756.29
19.446.300.30
5,332,227.21

16.92
17.32
16.67
16.82
15,64
15 42
15.79
16.37

46,351,173.37
30,918,577.37
49,422,502.39
16,387,844.78
19,196,545.33
22,477,387.61
26,135,221.46
8,426,737.10

21.89
24.19
22.30
17.75
20.20
20.61
21.23
25.87

93,719,750.42
56,160,448.92
32,965,737.40
20,201,398.31
42,547,683. 67
36,918,647. 97
37,229,745.07
13,887,110.55
16,644,169.34
120, 776,500.33
19,072,404.12
43,465,014.17
64,719,553. 41

q
h

«

o
w

«

W
w

w

598,308,163.68

89,746,224.55

34,879,289.27

211,714,557.24
127,799,890.35
217,140,603.31
92,318,092.81
95,050,605.39
109,033,507.97
123,092,911.33
32,575,300.80

31,757,183.58
19,169,983.55
32,571,090.50
13,847, 713.92
14,257,590.81
16,355,026.20
18,463,936.70
4,886,295.12

11,855,381.70
8,015,040.07
12,699,435. 76
5,204,449.85
4,972,972.85
5,831,883.38
6,382,245.20
1,673,079.04

1,008,725,469.20

151,308,820.38

56,634,487.85

16,369,744

5,947,433.91

87,216,831.85

166,168,497.61

16.47

218,315,989.41

21.64

34,156,079.53
32,524,541.88
57,484,779.56
62,990,129.91
34,569,197.15
13,135,898.01
38,730,570.50
15,082,617.80
55,268,368.49

5,123,411.93
4,878,681.28
8,622,716.93
9,448, 519.49
5.185.379.57
1,970,384.70
5.809.585.58
2,262,392.67
8,290,255.27

1,795,198.05
1,971,587.85
3,318,115.30
3,945,511.70
3,183,374.62
966,903.18
2,821,813.40
1,029,974.65
3,350,215.85

371,247
345,655
500,178
803,354
362,759
88,861
508,763
162,032
593,440

196,238.35
157,015.00
418,238.00
435,496.89
161,572.50
71,425.00
246,248.00
83,200.00
394,095.00

2,956,304.14
2,832,999.76
4,922,687.36
5,407,813.55
3,014,284.24
1,139,375.82
3,338,002.54
1,307,515.60
4,737,696.16

5,318,987.54
5,307,257.61
9,159,218.66
10,592,176.14
6,721,990.36
2.266.565.00
6,914,826.94
2,582,722.25
9.075.447.01

15.57
16.32
15.93
16.82
19.45
17.25
17.86
17.12
16.42

7,195,282.28
7,815, 769.88
14,042,161.49
18,229,961.82
11,106,457.96
3,004,704.13
12,064,638.29
3,632,100.44
16,615,217.49

21.07
24.03
24.43
28.94
32.13
22.87
31.15
24.08
30.06

343,942,182.83

51,591,327.42

22,382,694.60

3,736,289

2,163,528.74

29,656,679.17

57,939,191.51

16.85

93,706,293.78

27.24

w
K{
U1
H
El
K

30,235,417.25
29,327,686.13
127,304,756.39
18,842,253.16

4,535,312.59
4,399,152.92
19,095,713.46
2,826,337.97

2,168,610.55
2,758,554.78
9,915,420.76
1,560,811.60

99,405
39,308
344,911
71,939

129,242.50
174,783.00
836,840.00
138,262.50

2,643,642.05
2,534,621.95
10,955,324.07
1,612,845.28

5,040,900.10
5,507,267.73
22,052,495.83
3,383,858.38

16.67
18.78
17.31
17.96

8,356,241.45
8,235,841.72
29,118, 716.52
4,749,202.19

27.64
28.08
22.87
25. 21

o

4,361,617
2,248,950
3,445,501
1,847,991
1,165,149
995,488
1,690,602
614,446

w

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Deposits and reserve of national banks on June 4,

o
GO

1913—Continued.

Reserve required, and the amount and per cent held.

Cash on hand, due from
reserve agents, and in the
redemption fund.

Held.
Cities, States, and
Territories.

Net deposits subject to reserve requirements.

Required.

Legal
tenders.

Specie.

Utah
Nevada
Arizona
Alaska i
Pacific States
Island possessions
(Hawaii)
Total States, etc
Total United States.




Redemption
fund.

Available with
reserve agents,
not exceeding
50 per cent of
net reserve
required.

Q
w
>

%

Total amount.

Per
cent.

Amount.

Per
cent.

$7,899,595.98
6,587,718.61
9,520,662.66
852,680.20

$1,184,939.40
988,157. 79
1,428,099.40
127,902.03

$514,134.35
614,037.40
741,023.45
304,801.29

$44,489
15,710
97,999
17,060

$46,162.50
78,950.00
47,075.50
3,125.00

$683,266.13
545,524.67
828,614.33
74,866.21

$1,288,051.98
1,254,222.07
1,714,712.28
399,852.50

16.31
19.04
18.01
46.89

$1,570,454.19
1,930,182.70
3,326,165.75
494,205. 89

19.88
29.30
34.94
57.96

230,570,770.38

34,585,615.56

18,577,394.18

730,821

1,454,441.00

19,878,704.69

40,641,360. 87

17.63

57,781,010.41

25.06

1,941,602.46

291,240.37

538,949.05

30

15,012.50

148,571.32

702,562. 87

36.18

702,562.87

36.18

3,610,672,85& 65

541,600,928.79

207,179,395.27

58,880,475

23,332,306.00

310,689,129.92

600,081,306.19

16.62

786,352,288.11

724,074,627.77

189,908,013

35,394,885.00

543,488,809.60

1,492,866,335.37

W

21.78

7,124,634,372.41 1,420,091,307.23

o
w
ITt

i One report for Apr. 4,1913.

20.95 | 1,711,554,520.50

24.02

H
w

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o
o
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P

CHANGES I N

T H E B A N K I N G AND CURRENCY

SYSTEM.

109

Abstract of the reports of condition of national banks in the United States on June 4,1913,
arranged by classes.
Central reserve
Other reserve
city banks (52). city banks (315).

Country banks
(6,806).

Total (7,173).

RESOURCES.

$1,315,735,176.67 $1,640,317,608.33 $3,186,975,347.94 $6,143,028,132.94
Loam and discounts
Overdrafts.
356,717.17
3,183,861.62
15,465,573.23
19,006,152.02
United States bonds to secure
81,355,090.00
circulation
489.238.540.00
164,633,240.00
735,226,870.00
United States bonds to secure
24,844,190.00
3,670,000.00
18,547,500.00
47,061,690.00
United States deposits
Other bonds to secure United
3,066,402.44
23,408,628.10
17,122,899.04
States deposits
43,597,929.58
1,000,120.00
3,603,080.00
1,734,800.00
6,338,000.00
United States bonds on hand...
Premiums on United States
787,774.53
4,098,850.81
1,990,011.55
6,876,636.89
bonds
210,810,479.10
604.586.627.01 1,050,587,655.55
235,190,549.44
Bonds, securities, etc
Banking house, furniture and
37,931,243.04
65,751,006.40
145,206,704.51
248,888,953.95
fixtures
1,543,592.52
7,769,305.11
22,020,050.53
31,332,948.16
Other real estate owned
Due from national banks (not
194,344,454.86
144,611,713.50
100,065,031.68
439,021,200.04
reserve agents)
Due from State banks and
53,034,760.41
50,308,317.15
91,646,988.98
bankers, trust companies, etc.
194,990,066.54
Due from approved reserve
496,960,111.84
762,176,994. 73
agents
265,216,882.89
18,374,495.47
37,092,245.76
6,815,197.36
11,902,552.93
Checks and other cash items—
15,970,425.19
257,560,492.57
73,360,235.77
Exchanges for clearing house... 168,229,831.61
32,405,907.00
51,538,808.00
4,339,135.00
14,793,766.00
Bills of other national banks...
Fractional currency, nickels,
262,100.16
869,677.72
2,448,704.80
3,580,482.68
and cents
314,822,5? 0.52
202,072,701.98
207,179,395.27
Specie.
724,074,627. 77
90,806,059.00
Legal-tender notes
40,221,479.00
58,880,475.00
189,908,013.00
3,972,834.50
8,089,744.50
23,332,306.00
Five per cent redemption fund.
35,394,885.00
Due from Treasurer of United
States other than 5 per cent
fund
3,311,012.00
1,574,266.40
4,751,693.46
9,636,971.86
Total

2,445,176,007.73

3,062,070,278.12 5,529,673,471.19

11,036,919,757.04

LIABILITIES.

Capital stock paid in
Surplus fund
Undivided profits, less expenses and taxes
National-bank notes outstanding
State-bank notes outstanding..
Due to national banks (not reserve agents)
Due to State banks and bankers
Due to trust companies and
savings banks
Due to approved reserve agents
Dividends unpaid
Individual deposits
United States deposits
Postal savings deposits
Deposits of United States disbursing officers
Bonds borrowed
Notes and bills rediscounted
Bills payable
Reserved for taxes
Liabilities other than those
above stated
Total




182,650,000.00
164,245,000.00

264,217,710.00
187,736,975.77

610,052,082.00
368,624,816.77

1,056,919,792.00
720,606,792.54

56,121,856.33

63,689,642.05

148,329,464.19

268,140,962.57

79,132,825.00
16,516.00

161,901,967.50
468.00

481,090,231.50
5,431.00

722,125,024.00
22,415.00

534,790,339.03
205,009,999.23

411,957,865.59
216,121,788.43

70,712,668.42
107,133,116. 76

1,017,460,873.04
528,264,904.42

227,697,703.81
76,547,400.02
31,431,888.90
14,453,720.86
191,478.77
1,086,687.83
1,435,930,189.14 3,541,950,062.40
19,291,072.78
19,297,876.16
6,379,859.18
11,179,381.01

528,940,184.47
45,885,609.76
1,529,195.57
5,953,461,551.12
43,118,218.05
18,661,875.47

224,695,080.64
251,028.97
975,581,299.58
4,529,269.11
1,102,635.28

6,606,821.08
43,215,465.58
14,080,980.36
58,825,794.92
7,030,644.10

487,006.83
13,449,040.00
65,000.00
335,000.00
2,591,111.73

3,018,281.21
19,110,361.25
2,898,462.25
8,274,951.60
2,153,119.72

123,000.00

66,492.17

1,833,160.82

2,022,652.99

j 2,445,176,007.73 3,062,070,278.12

5,529,673,471.19

11,036,919,757.04

3,101,533.04
10,656,064.33
11,117,518.11
50,215,843.32
2,286,412.65

CHANGES I N T H E B A N K I N G A N D CURRENCY S Y S T E M . 110
Number of national banks showing savings deposits and amount of savings deposits as
shown by call of June 4, 1918.

States.

Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut

Total
number
of banks.

Number
showing
savings
deposits.

56
49
180
20
79

43
15
31
35
5
14

453

143

New Yark
New Jersey
Pennsylvania
Delaware
Maryland
District of Columbia

474
200
836
26
105
12

240
152
624
15

Eastern States

1,653

1,115

133
116
73
48
118
52
87
33
31
514
49
144
107

90
70
42
39
48
42
41
11
15
62
15
27
41

1,505

543

380
254
457
99
129
271
340
133

167
71
240
88

New England States

Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
Kentucky
Tennessee
Southern States
Ohio
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa
Missouri
Middle States
North Dakota
South Dakota
Nebraska
Kansas
Montana
Wyoming
Colorado
New Mexico
Oklahoma
Western States
Washington
Oregon
California
Idaho
Utah
Nevad
Arizona
Alaska
Pacific States




154
132

2,063
144
103
242
213
57
30
40
325

47
50
47
54
21
12
39
8
57

1,280

335

126

77
83
252
54
23
11
13
515

Island possessions (Hawaii)
United States

110

35
106
30
17
4
2
1
254
3

7,473

3,385

CHANGES I N

T H E B A N K I N G AND CURRENCY

SYSTEM.

111

APPENDIX C.

The bill as reported to the House is as follows:
A BILL To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to
afford means of rediscounting commercial paper, to establish a more effective supervision of banking
in the United States, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That the short title of this
act shall be the "Federal reserve act."
FEDERAL RESERVE

DISTRICTS.

SEC. 2. That within ninety days after the passage of this act, or
as soon thereafter as practicable, the Secretary of the Treasury, the
Secretary of Agriculture, and the Comptroller of the Currency,
acting as "The Reserve Bank Organization Committee/' shall
designate from among the reserve and central reserve cities now
authorized by law a number of such cities to be known as Federal
reserve cities, and shall divide the continental United States into
districts, each district to contain one of such Federal reserve cities:
Provided, That the districts shall be apportioned with due regard
to the convenience and customary course of business of the community and shall not necessarily coincide with the area of such
State or States as may be wholly or in part included in any given
district. The districts thus created may be readjusted and new
districts may from time to time be created by the Federal reserve
board hereinafter established, acting upon a joint application made
by not less than ten member banks desiring to be organized into a
new district. The districts thus constituted shall be known as
Federal reserve districts and shall be designated by number according to the pleasure of the organization committee, and no Federal
reserve district shall be abolished, nor the location of a Federal
reserve bank changed, except upon the application of three-fourths
of the member banks of such district.
The organization committee shall, in accordance with regulations
to be established by itself, proceed to organize in each of the reserve
cities designated as hereinbefore specified a Federal reserve bank.
Each such Federal reserve bank shall include in its title the name
of the city in which it is situated, as " Federal Reserve Bank of Chicago," and so forth. The total number of reserve cities designated
by the organization committee shall be not less than twelve, and
the organization committee shall be authorized to employ counsel
and expert aid, to take testimony, to send for persons and papers,
to administer oaths, and to make such investigations as may be
deemed necessary by the said committee for the purpose of determining the reserve cities to be designated and organizing the reserve
districts hereinbefore provided.
Every national bank located within a given district shall be
required to subscribe to the capital stock of the Federal reserve bank
of that district a sum equal to twenty per centum of the capital stock
of such national bank, fully paid in and unimpaired, one-fourth of
such subscription to be paid in cash and one-fourth within sixty days
after said subscription is made. The remainder of the subscription
or any part thereof shall become a liability of the member bank,
subject to call and payment thereof whenever necessary to meet the




CHANGES I N THE BANKING AND CURRENCY SYSTEM. 112

obligations of the Federal reserve bank, under such terms and in
accordance with such regulations as the board of directors of said
Federal reserve bank may prescribe: Provided, That no Federal
reserve bank shall commence business with a paid-up and unimpaired capital less in amount than $5,000,000. The organization
committee shall have power to appoint such assistants and incur
such expenses in carrying out the provisions of this act as it shall
deem necessary, and such expenses shall be payable by the Treasurer
of the United States upon voucher approved by the Secretary of the
Treasury, and the sum of $100,000, or so much thereof as may be
necessary, is hereby appropriated, out of any moneys in the Treasury
not otherwise appropriated, for the payment of such expenses.
STOCK ISSUES.

SEC. 3. That the capital stock of each Federal reserve bank shall
be divided into shares of $100 each. The outstanding capital stock
shall be increased from time to time as member banks increase their
capital stock or as additional banks become subscribers, and shall be
decreased as member banks reduce their capital stock or cease to be
members. Each Federal reserve bank may establish branch offices
under regulations of the Federal reserve board at points within the
Federal reserve district in which it is located: Provided, That the
total number of such branches shall not exceed one for each $500,000
of the capital stock of said Federal reserve bank.
FEDERAL RESERVE BANKS.

SEC. 4. The national banks in each Federal reserve district uniting
to form the Federal reserve bank therein, hereinbefore provided for,
shall under their seals make an organization certificate, which shall
specifically state the name of such Federal reserve bank so organized,
the territorial extent of the district over which the operations of said
Federal reserve bank are to be carried on, the city and State in
which said bank is to be located, the amount of capital stock and the
number of shares into which the same is divided, the names and places
of doing business of each of the makers of said certificates and the
number of shares held by each of them, and the fact that the certificate is made to enable such banks to avail themselves of the advantages of this act. The said organization certificate shall be acknowledged before a judge of some court of record or notary public; and
shall be, together with the acknowledgment thereof, authenticated
by the seal of such court, or notary, transmitted to the Comptroller
ot the Currency, who shall file, record, and carefully preserve the
same in his office. Upon the filing of such certificate with the Comptroller of the Currency as aforesaid, the said Federal reserve bank
so formed shall become a body corporate, and as such, and in the
name designated in such organization certificate, shall have power
to perform all these acts and to enjoy all those privileges and to
exercise all those powers described in section fifty-one hundred and
thirty-six, Kevised Statutes, save in so far as the same shall be limited
by tne provisions of this act. The Federal reserve bank so incorporated shall have succession for a period of twenty years from its organization, unless sooner dissolved by act of Congress.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

113

Every Federal reserve bank shall be conducted under the oversight and control of a board of directors, whose powers shall be the
same as those conferred upon the boards of directors of national
banking associations under existing law, not inconsistent with the
provisions of this act. Such board of directors shall be constituted
and elected as heieinafter specified and shall consist of nine members, holding office for three years, and divided into three classes,
designated as classes A, B, and C.
Class A shall consist of three members, who shall be chosen by and
be representative of the stock-holding banks.
Class B shall consist of three members, who shall be representative
of the general public interests of the reserve district.
Class C shall consist of three members, who shall be designated by
the Federal reserve board.
Directors of class A shall be chosen in the following manner:
It shall be the duty of the chairman of the board of directors of the
Federal reserve bank of the district in which each such bank is situated to classify the member banks of the said district into three general groups or divisions. Each such group shall contain as nearly as
may be one-third of the aggregate number of said member banks of
the said district and shall consist, as nearly as may be, of banks of
similar capitalization. The said groups shall be designated by number at the pleasure of the chairman of the board of directors of the
Federal reserve bank.
At a regularly called directors' meeting of each member bank in
the Federal reserve district aforesaid, the board of directors of such
member bank shall elect by ballot one of its own members as a district
reserve elector and shall certify his name to the chairman of the board
of directors of the Federal reserve bank of the district. The said
chairman shall establish lists of the district reserve electors, class A,
thus named bv banks in each of the aforesaid three groups, and shall
transmit one list to each such elector in each group. Every elector
shall, within fifteen days of the receipt of the said list, select and certify to the said chairman from among the names on the list pertaining
to his group, transmitted to him by the chairman, one name, not his
own, as representing his choice for Federal reserve director, class A.
The name receiving the greatest number of votes, not less than a
majority, shall be designated by said chairman as Federal reserve
director for the group to which he belongs. In case no candidate
shall receive a majority of all votes cast in any district, the chairman
aforesaid shall establish an eligible list, consisting of the three names
receiving the greatest number of votes on the first ballot, and shall
transmit said list to the electors in each of the groups of banks established by him. Each elector shall at once select and certify to the
said chairman from among the three persons submitted to him his
choice for Federal reserve director, class A, and the name receiving
the greatest number of such votes shall be declared by the chairman
as Federal reserve director, class A. In case of a tie vote the balloting
shall continue in the manner hereinbefore prescribed until one candidate receives more votes than either of the others.
Directors of class B shall be chosen by the electors of the respective groups at the same time and in the same manner prescribed for
directors of class A, except that they must be selected from a list of
names furnished, one by each member bank, and such names shall
in no case be those of officers or directors of any bank or banking
SS29°—H. Kept. 69, 63-1




8

CHANGES IN THE BANKING AND CURRENCY SYSTEM. 114

association. They shall not accept office as such during the term of
their service as directors of the Federal reserve bank. They shall be
fairly representative of the commercial, argicultural, or mdustrial
interests of their respective districts. The Federal reserve board
shall have power at its discretion to remove any director of class B
in any Federal reserve bank if it should appear at any time that
such director does not fairly represent the commercial, agricultural,
or industrial interests of his district.
Three directors belonging to class C shall be chosen directly by the
Federal reserve board, who shall be residents of the district for
which they are selected, one of whom shall be designated by said
board as chairman of the board of directors of the Federal reserve
bank of the district to which he is appointed and shall be designated
as "Federal reserve agent." He shall be a person of tested banking
experience; and in addition to his duties as chairman of the board of
directors of the Federal reserve bank of the district to which he is
appointed he shall be required to maintain under regulations to be
established by the Federal reserve board a local office of said board,
which shall be situated on the premises of the Federal reserve bank
of the district. He shall make regular reports to the Federal reserve
board, and shall act as its official representative for the performance
of the functions conferred upon it by this act. He shall receive an
annual compensation to be fixed by the Federal reserve board and
paid monthly by the Federal reserve bank to which he is designated.
Directors of Federal reserve banks shall receive, in addition to any
compensation otherwise provided, a reasonable allowance for necessary expenses in attending meetings of their respective boards, which
amount shall be paid by the respective Federal reserve banks. Any
compensation that may be provided by boards of directors of Federal
reserve banks for members of such boards shall be subject to review
by the Federal reserve board.
The reserve bank organization committee may, in organizing
Federal reserve banks for the first time, call such meetings of bank
directors in the several districts as may be necessary to carry out
the purposes of this act and may exercise the functions herein conferred upon the chairman of the board of directors of each Federal
reserve bank pending-the complete organization of such bank.
At the first meeting of the full board of directors of each Federal
reserve bank after organization it shall be the duty of the directors of
classes A and B and C, respectively, to designate one of the members
of each class whose term of office shall expire in one year from the
first of January nearest to date of such meeting, one whose term of
office shall expire at the end of two years from said date, and one
whose term of office shall expire at the end of three years from said
date; Thereafter every director of a Federal reserve bank chosen as
hereinbefore provided shall hold office for a term of three years; but
the chairman of the board of directors of each Federal reserve bank
designated by the Federal reserve board, as hereinbefore described,
shall be removable at the pleasure of the said board without notice,
and his successor shall hold office during the unexpired term of the
director in whose place he was appointed. Vacancies that may
occur in the several classes of directors of Federal reserve banks may
be filled in the manner provided for the original selection of sucn
directors, such appointees to hold office for toe unexpired terms of
their predecessors,




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

115

INCREASE AND DECREASE OF CAPITAL.

SEC. 5. That shares of the capital stock of Federal reserve banks
shall not be transferable, nor be hypothecated. In case a member
bank increases its capital, it shall thereupon subscribe for an additional
amount of capital stock of the Federal reserve bank of its district
equal to twenty per centum of the bank's own increase of capital, ten
per centum of said subscription to be paid in cash in the manner hereinbefore provided for original subscription, and ten per centum to
become a liability of the member bank according to the terms of the
original subscription. A bank applying for stock in a Federal reserve
bank at any time after the formation of the latter must subscribe for
an amount of the capital of said Federal reserve bank equal to twenty
per centum of the capital stock of said subscribing bank, paying therefor its par value in accordance with the terms prescribed by section
two of this act. When the capital stock of any Federal reserve bank
has been increased either on account of the increase of capital stock of
member banks or on account of the increase in the number of member
banks, the board of directors shall make and execute a certificate to
the Comptroller of the Currency showing said increase in capital, the
amount paid in, and by whom paid. In case a member bank reduces
its capital stock it shall surrender a proportionate amount of its holdings in the capital of said Federal reserve bank, and in case a member
bank goes into voluntary liquidation it shall surrender all of its holdings of the capital stock of said Federal reserve bank. In either case
the shares surrendered shall be canceled and such member bank shall
receive in payment therefor, under regulations to be prescribed by the
Federal reserve board, a sum equal to its cash paid subscriptions on
the shares surrendered.
SEC. 6. That if any member bank shall become insolvent and a
receiver be appointed the stock held by it in said Federal reserve
bank shall be canceled and the balance, after deducting from the
amount of its cash-paid subscriptions all debts due by such insolvent
bank to said Federal reserve bank, shall be paid to the receiver of
the insolvent bank. Whenever the capital stock of a Federal reserve
bank is reduced, either on account of a reduction in capital stock of
any member bank or of the liquidation or insolvency of any such
member bank, the board of directors shall make and execute a
certificate to the Comptroller of the Currency showing such reduction of capital stock and the amount repaid to such bank.
DIVISION OF EARNINGS.

SEC. 7. That after the payment of all necessary expenses and taxes
of a Federal reserve bank, the member banks shall be entitled to
receive an annual dividend of five per centum on the paid-in capital
stock, which dividend shall be cumulative. One-half of the net
earnings^ after the aforesaid dividend claims have been fully met,
shall be paid into a surplus fund until such fund shall amount to
twenty per centum of the paid-in capital stock of such bank, and of
the remaining one-half sixty per centum shall be paid to the United
States and forty per centum to the member banks m the ratio of their
average balances with the Federal reserve bank for the preceding




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 116

year. Whenever and so long as the surplus fund of a Federal reserve
bank amounts to twenty per centum of the paid-in capital stock and
the member banks shall nave received the dividends at the rate of
five per centum per annum hereinbefore provided for, sixty per
centum of all excess earnings shall be paid to the United States and
forty per centum to the member banks in proportion to their annual
average balances with such Federal reserve bank : all earnings derived
by the United States from Federal reserve banks shall constitute a
sinking fund to be held for the reduction of the outstanding bonded
indebtedness of the United States, said reduction to be accomplished
under regulations to be prescribed by the Secretary of the Treasury.
Should a Federal reserve bank be dissolved or go into liquidation,
the surplus fund of said bank, after the payment of all debts and
dividend requirements as hereinbefore provided for, shall be paid to
and become the property of the United States.
Every Federal reserve bank incorporated under the terms of this
act and the capital stock therein held by member banks shall be
exempt from Federal, State, and local taxation, except in respect to
taxes upon real estate.
SEC. 8. That an^ national banking association heretofore organized
may upon application at any time within one year after the passage
of this act, and with the approval of the Comptroller of the Currency,
be granted, as herein provided, all the rights, and be subject to all
the liabilities, of national banking associations organized subsequent
to the passage of this act: Provided, That such application on the part
of such associations shall be authorized by the consent in writing of
stockholders owning not less than a majority of the capital stock of
the association. Any national banking association now organized
which shall not, within one year after the passage of this act, become
a national banking association under the provisions hereinbefore
stated, or which shall fail to comply with any of the provisions of
this act applicable thereto, shall be dissolved; but such dissolution
shall not take away or impair any remedy against such corporation,
its stockholders or officers, for any liability or penalty which shall
have previously been incurred.
SEC. 9. That any bank or banking association incorporated by special law of any State or of the United States, or organized under the
general laws of any State or the United States, and having an unimpaired capital sufficient to entitle it to become a national banking
association under the provisions of existing laws, may, by the consent
in writing of the shareholders owning not less than fifty-one per centum of the capital stock of such bank or banking association, and with
the approval of the Comptroller of the Currency, become a national
banking association under its former name or by any name approved
by the comptroller. The directors thereof may continue to be the
directors of the association so organized until others are elected or
appointed in accordance with the provisions of the law. When the
comptroller has given to such bank or banking association a certificate that the provisions of this act have been complied with, such bank
or banking association, and all its stockholders, officers, and employees, shall have the same powers and privileges, and shall be subject to
the same duties, liabilities, and regulations, in all respects, as shall
have been prescribed by this act or by the national banking act for
associations originally organized as national banking associations.




CHAKGES IK THE BAKKIKG AKD CURRENCY SYSTEM.

117

STATE BANKS AS MEMBERS.

SEC. 10. That from and after the passage of this act any bank or
banking association or trust company incorporated by special law of
any State, or organized under the general laws of any State or the
United States, may make application to the Federal reserve board
hereinafter created for the right to subscribe to the stock of the Fed-&
eral reserve bank organized or to be organized within the Federal6
reserve district where the applicant is located. The Federal reserve
board, under such rules and regulations as it may prescribe, subject
to the provisions of this section, shall permit such applying bank to
become a stockholder in the Federal reserve bank of the district in
which such applying bank is located. Whenever the Federal reserve board shall permit such an applying bank to become a stockholder in the Federal reserve bank of the district in which the applying bank is located, stock shall be issued and paid for under the rules
and regulations in this act provided for national banks which become
stockholders in Federal reserve banks.
It shall be the duty of the Federal reserve board to establish
by-laws for the general government of its conduct in acting upon
applications made by the State banks and banking associations and
trust companies hereinbefore referred to for stock ownership in Federal reserve banks. Such by-laws shall require applying banks not
organized under Federal law to comply with the reserve requirements
and submit to the inspection and regulation provided for in this and
other laws relating to national banks. No such applying bank shall
be admitted to stock ownership in a Federal reserve bank unless it
possesses a paid-up unimpaired capital sufficient to entitle it to
become a national Danking association in the place where it is situated, under the provisions of the national banking act, and conforms
to the provisions herein prescribed for national banking associations
of similar capitalization and to the regulations of the Federal reserve
board.
If at any time it shall appear to the Federal reserve board that a
banking association or trust company organized under the laws of
any State or of the United States has failed to comply with the provisions of this section or the regulations of the Federal reserve board,
it shall be within the power of the said board to require such banking
association or trust company to surrender its stock in the Federal
reserve bank in which it holds stock upon receiving from such Federal
reserve bank the cash-paid subscriptions to the said stock in current
funds, and said Federal reserve bank shall, upon notice from the
Federal reserve board, be required to suspend said banking association or trust company from further privileges of membership, and
shall within thirty days of such notice cancel and retire its stock and
make payment therefor in the manner herein provided.
FEDERAL RESERVE BOARD.

SEC. 11. That there shall be created a Federal reserve board,
which shall consist of seven members, including the Secretary of the
Treasury, the Secretary of Agriculture, and the Comptroller of the
Currency, who shall be members ex officio, and four members chosen
by the President of the United States, by and with the advice and




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 118

consent of the Senate. In selecting the four appointive members of
the Federal reserve board, not more than one of whom shall be
selected from any one Federal reserve district, the President shall
have due regard to a fair representation of different geographical
divisions of the country. The four members of the Federal reserve
board chosen by the President and confirmed as aforesaid shall devote
their entire time to the business of the Federal reserve board and
shall each receive an annual salary of $10,000, together with an allowance for actual necessary traveling expenses, and the Comptroller of
the Currency, as ex officio member of said Federal reserve board,
shall, in addition to the salary now paid him as comptroller, receive
the sum of $5,000 annually for his services as a member of said board.
Of the members thus appointed by the President not more than two
shall be of the same political party, and at least one shall be a person
experienced in banking. One shall be designated by the President
to serve for two, one for four, one for six, and one for eight years,
respectively, and thereafter each member so appointed shall serve
for a term of eight years unless sooner removed for cause by the
President. Of the four persons thus appointed, one shall be designated by the President as manager and one as vice manager of the
Federal reserve board. The manager of the Federal reserve board,
subject to the supervision of the Secretary of the Treasury and Federal reserve board, shall be the active executive officer of the Federal
reserve board.
The Federal reserve board shall have power to levy semiannually
upon the Federal reserve banks, in proportion to capital stock, an
assessment sufficient to pay its estimated expenses for the half year
succeeding the levying of such assessment, together with any deficit
carried forward from the preceding half year.
The first meeting of the Federal reserve board shall be held in
Washington, District of Columbia, as soon as may be after the passage of this act, at a date to be fixed by the reserve bank organization committee. The Secretary of the Treasury shall be ex officio
chairman of the Federal reserve board. No member of the Federal
oeserve board shall be an officer or director of any bank or banking
institution or Federal reserve bank nor hold stock in any bank or
banking institution; and before entering upon his duties as a member
of the Federal reserve board he shall certify under oath to the Secretary of the Treasury that he has complied with this requirement.
Whenever a vacancy shall occur, other than by expiration of term,
among the four members of the Federal reserve board chosen by the
President, as above provided, a successor shall be appointed by the
President, with the advice and consent of the Senate, to fill such
vacancy, and when chosen shall hold office for the unexpired term of
the member whose place he is selected to fill.
The Federal reserve board shall annually make a report of its
fiscal operations to the Speaker of the House of Representatives, who
shall cause the same to be printed for the information of the Congress.
Section three hundred and twenty-four of the Revised Statutes of
the United States shall be amended so as to read as follows: "There
shall be in the Department of the Treasury a bureau charged," except
as in this act otherwise provided, with the execution of all laws passed
by Congress relating to the issue and regulation of currency issued by
or through banking associations, the chief officer of which bureau




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

119

shall be called the Comptroller of the Currency, and shall perform his
duties under the general direction of the Secretary of the Treasury,
acting as the chairman of the Federal reserve boardProvided,
however, That nothing herein contained shall be construed to affect
any power now vested by law in the Comptroller of the Currency or
the secretary of the Treasury.
SEC. 12. That the Federal reserve board hereinbefore established
shall be authorized and empowered:
(a) To examine at its discretion the accounts, books, and affairs
of each Federal reserve bank and to require such statements and
reports as it may deem necessary. The said board shall publish
once each week a statement showing the condition of each Federal
reserve bank and a consolidated statement for all Federal reserve
banks. Such statements shall show in detail the assets and liabilities
of such Federal reserve banks, single and combined, a>nd shall furnish
full information regarding the character of the lawful money held as
reserve and the amount, nature, and maturities of the paper owned
by Federal reserve banks.
(b) To permit or require, in time of emergency, Federal reserve
banks to rediscount the discounted prime paper of other Federal
reserve banks, at least five members of the Federal reseive board
being present when such action is taken and all present consenting
to the requirement. The exercise of this compulsory rediscount power
by the Federal reserve board shall be subject to an interest charge
to the accommodated bank of not less than one nor greater than three
per centum above the higher of the rates prevailing in the districts
immediately affected.
(c) To suspend for a period not exceeding thirty days (and to
renew such suspension for periods not to exceed fifteen days) any and
every reserve requirement specified in this act: Provided, That it
shall establish a graduated tax upon the amounts by which the
reserve requirements of this act may be permitted to fall below the
level hereinafter specified, such tax to be uniform in its application
to all banks; but said board shall not suspend the reserve requirements with reference to Federal reserve notes.
(d) To supervise and regulate the issue and retirement of Federal
reserve notes and to prescribe the form and tenor of such notes.
(e) To add to the number of cities classified as reserve and central
reserve cities under existing law in which national banking associations are subject to the reserve requirements set forth in section
twenty of this act; or to reclassify existing reserve and central
reserve cities and to designate the banks therein situated as country
banks at its discretion.
(f) To suspend the officials of Federal reserve banks and, for cause
stated in writing with opportunity of hearing, require the removal of
said officials for incompetency, dereliction of duty, fraud, or deceit,
such removal to be subject to approval by the President of the
United States.
(g) To require the writing off of doubtful or worthless assets upon
the books and balance sheets of Federal reserve banks.
(h) To suspend, for cause relating to violation of any of the provisions of this act, the operations of any Federal reserve bank and
appoint a receiver therefor.
(i) To perform the duties, functions, or services specified or implied
in this act.




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 120
FEDERAL ADVISORY COUNCIL.

SEC. 13. There is hereby created a Federal advisory council,
which shall consist of as many members as there are Federal reserve
districts. Each Federal reserve bank by its board of directors shall
annually select from its own Federal reserve district one member of
said council, who shall receive no compensation for his services, but
may be reimbursed for actual necessary expenses. The meetings
of said advisory council shall be held at Washington, District of
Columbia, at least four times each year, and oftener if called by
the Federal reserve board. The council may select its own officers
and adopt its own methods of procedure, and a majority of its
members shall constitute a quorum for the transaction of business.
Vacancies in the council shall be filled by the respective reserve
banks, and members selected to fill vacancies shall serve for the
unexpired term.
The Federal advisory council shall have power (1) to meet and
confer directly with the Federal reserve board on general business
conditions; (2) to make oral or written representations concerning
matters within the jurisdiction of said board; (3) to call for complete
information and to make recommendations in regard to discount
rates, rediscount business, note issues, reserve conditions in the
various districts, the purchase and sale of gold or securities by
reserve banks, open-market operations by said banks, and the general affairs of the reserve banking system.
REDISCOUNTS.

SEC. 14. That any Federal reserve bank may receive from any
member bank or, solely for exchange purposes, from other Federal
reserve banks deposits of current funds in lawful money, nationalbank notes, Federal reserve notes, or checks and drafts upon solvent
banks, payable upon presentation.
Upon tne indorsement of any member bank any Federal reserve
bank may discount notes and bills of exchange arising out of commercial transactions; that is, notes and bills of exchange issued or
drawn for agricultural, industrial, or commercial purposes, or the
proceeds of which have been used, or may be used, for such purposes,
the Federal reserve board to have the right to determine or define
the character of the paper thus eligible for discount, within the
meaning of this act, but such definition shall not include notes or
bills issued or drawn for the purpose of carrying or trading in stocks,
bonds, or other investment securities; nor shall any thing herein contained be construed to prohibit such notes and bills of exchange,
secured by staple agricultural products or other goods, wares, or
merchandise from being eligible for such discount. Notes and bills
admitted to discount under the terms of this paragraph must have a
maturity of not more than ninety days.
Upon the indorsement of any member bank any Federal reserve
bank may discount the paper of the classes hereinbefore described
having a maturity of more than sixty and not more than one hundred
and twenty days when its own cash reserve exceeds thirty-three and
one-third per centum of its total outstanding demand liabilities exclusive of its outstanding Federal reserve notes by an amount to be




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

121

fixed by the Federal reserve board; but not more than fifty per centum
of the total paper so discounted for any member bank shall have a
maturity of more than ninety days.
Upon the indorsement of any member bank any Federal reserve
bank may discount acceptances of such banks winch are based on
the exportation or importation of goods and which mature in not
more than six months and bear the signature of at least one member
bank in addition to that of the acceptor. The amount so discounted
shall at no time exceed one-half the capital stock of the bank for
which the rediscounts are made.
The aggregate of such notes and bills bearing the signature or
indorsement of any one person, company, firm, or corporation
rediscounted for any one bank shall at no time exceed ten per centum
of the unimpaired capital and surplus of said bank; but this restriction shall not apply to the discount of bills of exchange drawn in
good faith against actually existing values.
Any national bank may, at its discretion, accept drafts or bills of
exchange drawn upon it having not more than six months' sight to
run and growing out of transactions involving the importation or
exportation of goods; but no bank shall accept such bills to an
amount equal at any time in the aggregate to more than one-half the
face value of its paid-up and unimpaired capital.
OPEN-MARKET OPERATIONS.

SEC. 15. That any Federal reserve bank may, under rules and
regulations prescribed by the Federal reserve board, purchase and
sell in the open market, either from or to domestic or foreign banks,
firms, corporations, or individuals, prime bankers' bills, and bills of
exchange of the kinds and maturities by this act made eligible for
rediscount, and cable transfers.
Every Federal reserve bank shall have power (a) to deal in gold coin
and bullion both at home and abroad, to make loans thereon, and to
contract for loans of gold coin or bullion, giving therefor, when necessary, acceptable security, including the hypothecation of United
States bonds; (b) to invest in United States bonds, and bonds issued
by any State, county, district, or municipality; (c) to purchase from
member banks and to sell, with or without its indorsement, bills of
exchange arising out of commercial transactions, as hereinbefore
defined, payable in foreign countries; but such bills of exchange must
have not exceeding ninety days to run and must bear the signature of
two or more responsible parties, of which the last shall be that of a
member bank; (d) to establish each week, or as much oftener as
required, subject to review and determination of the Federal reserve
board, a rate of discount to be charged by such bank for each class
of paper, which shall be fixed with a view of accommodating the commerce of the country; and (e) with the consent of the Federal reserve
board, to open and maintain banking accounts ifi foreign countries
and establish agencies in such countries wheresoever it may deem
best for the purpose of purchasing, selling, and collecting foreign bills
of exchange, and to buy and sen with or without its indorsement,
through such correspondents or agencies, prime foreign bills of exchange arising out of commercial transactions which have not exceeding ninety days to run and which bear the signature of two or more
responsible parties.




CHANGES I N THE BANKING AND CURRENCY SYSTEM. 122
GOVERNMENT DEPOSITS.

SEC. 16. That all moneys now held in the general fund of the
Treasury shall, upon the direction of the Secretary of the Treasury,
within twelve months after the passage of this act, be deposited m
Federal reserve banks, which banks shall act as fiscal agents of the
United States; and thereafter the revenues of the Government shall
be regularly deposited in such banks, and disbursements shall be
made by checks drawn against such deposits.
The {Secretary of the Treasury shall, subject to the approval of the
Federal reserve board, from time to time, apportion the funds of
the Government among the said Federal reserve banks, distributing
them, as far as practicable, equitably between different sections, and
may, at their joint discretion, charge interest thereon and fix, from
month to month, a rate which shall be regularly paid by the banks
holding such deposits: Provided, That no Federal reserve bank shall
pay interest upon any deposits except those of the United States.
No Federal reserve bank shall receive or credit deposits except
from the Government of the United States, its own member banks,
and, to the extent permitted by this act, from other Federal reserve
banks. All domestic transactions of the Federal reserve banks involving a rediscount operation or the creation of deposit accounts
shall be confined to the Government and the depositing and Federal
reserve banks, with the exception of the purchase or sale of Government or State securities or of gold coin or bullion.
NOTE ISSUES.

SEC. 17. That Federal reserve notes, to be issued at the discretion
of the'Federal reserve board for the purpose of making advances to
Federal reserve banks as hereinafter set forth and for no other purpose, are hereby authorized. The said notes shall be obligations of
the United States and shall be receivable for all taxes, customs, and
other public dues. They shall be redeemed in gold or lawful money
on demand at the Treasury Department of the United States, in the
city of Washington, District of Columbia, or at any Federal reserve
bank.
Any Federal reserve bank may, upon vote of its directors, make
application to the local Federal reserve agent for such amount of the
Treasury notes hereinbefore provided for as it may deem best. Such
application shall be accompanied with a tender to the local Federal
reserve agent of collateral security to protect the notes for which
application is made equal in amount to the sum of the notes thus
applied for. The collateral security thus offered shall be notes and
bills accepted for rediscount under the provisions of section fourteen
of this act, and the Federal reserve agent shall each day notify the
Federal reserve board of issues and withdrawals of notes to and by
the Federal reserve bank to which he is accredited. The said Federal
reserve board shall be authorized at any time to call upon a Federal
reserve bank for additional security to protect the Federal reserve
notes issued to it.
Whenever any Federal reserve bank shall pay out or disburse
Federal reserve notes issued to it as hereinbefore provided, it shall
segregate in its own vaults and shall carry to a special reserve account
on its books gold or lawful money equal in amount to thirty-three and
one-third per centum of the reserve notes so paid out by it, such




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

123

reserve to be used for the redemption of said reserve notes as presented; but any Federal reserve bank so using any part of such reserve to redeem notes shall immediately carry to said reserve account
an amount of gold or lawful money sufficient to make said reserve
equal to thirty-three and one-third per centum of its outstanding
Treasury notes. Notes so paid out shall bear upon their faces a distinctive letter and serial number, which shall be assinged by the Federal reserve board to each Federal reserve bank. Whenever Federal
reserve notes issued through one Federal reserve bank shall be received by another Federal reserve bank they shall be returned for
redemption to the Federal reserve bank through which they were
originally issued, or shall be charged off against Government deposits
and returned to the Treasury of the United States, or shall be presented to the said Treasury for redemption. No Federal reserve
bank shall pay out notes issued through another under penalty of a
tax of ten per centum upon the face value of notes so paid out.
Notes presented for redemption at the Treasury of the United States
shall be paid and returned to the Federal reserve banks through
which they were originally issued, and Federal reserve notes received
by the Treasury otherwise than for redemption shall be exchanged
for lawful money out of the five per centum redemption fund hereinafter provided and returned as hereinbefore provided to the reserve
bank through which they were originally issued.
The Federal reserve board shall have power, in its discretion, to
require Federal reserve banks to maintain on deposit in the Treasury
of the United States a sum in gold equal to five per centum of such
amount of Federal reserve notes as may be issued to them under the
provisions of this act; but such five per centum shall be counted and
included as part of the thirty-three and one-third per centum reserve
hereinbefore required. The said board shall also have the right to
grant in whole or in part or to reject entirely the application of any
Federal reserve bank for Federal reserve notes; but to the extent and
in the amount that such application may be granted the Federal
reserve board shall, through its local Federal reserve agent, deposit
Federal reserve notes with the bank so applying, and such bank shall
be charged with the amount of such notes and shall pay such rate of
interest on said amount as may be established by the Federal reserve
board, which rate shall not be less than one-half of one per centum per
annum, and the amount of such Federal reserve notes so issued to any
such bank shall, upon delivery, become a first and paramount lien on
all the assets of such bank.
Any Federal reserve bank may at any time reduce its liability
for outstanding Federal reserve notes by the deposit of Federal reserve
notes, whether issued to such bank or to some other reserve bank,
or lawful money of the United States, or gold bullion, with any
Federal reserve agent or with the Treasurer of the United States,
and such reduction shall be accompanied by a corresponding reduction in the required reserve fund of lawful ixioney set apart for the
redemption of said notes and by the release of a corresponding amount
of the collateral security deposited with the local Federal reserve
agent.
Any Federal reserve bank may at its discretion withdraw collateral
deposited with the local Federal reserve agent for the protection of
Federal reserve notes deposited with it and shall at the same time
substitute other collateral of equal value approved by the Federal




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 124

reserve agent under regulations to be prescribed by the Federal
reserve board.
It shall be the duty of every Federal reserve bank to receive on
deposit, at par and without charge for exchange or collection, checks
and drafts drawn upon any of its depositors or by any of its depositors
upon any other depositor and checks and drafts drawn by any depositor in any other Federal reserve bank upon funds to the credit of
said depositor in said reserve bank last mentioned, nothing herein
contained to be construed as prohibiting member banks from making
reasonable charges to cover actual expenses incurred in collecting
and remitting funds for their patrons. The Federal reserve board
shall make and promulgate from time to time regulations governing
the transfer of funds at par among Federal reserve banks, and may
at its discretion exercise the functions of a clearing house for such
Federal reserve banks, or may designate a Federal reserve bank to
exercise such functions, and may also require each such bank to
exercise the functions of a clearing house for its member banks.
SEC. 18. That so much of the provisions of section fifty-one hundred and fifty-nine of the Revised Statutes of the United States, and
section four of the act of June twentieth, eighteen hundred and
seventy-four, and section eight of the act of July twelfth, eighteen
hundred and eighty-two, and of any other provisions of existing statutes, as require that before any national Danking association shall
be authorized to commence banking business it shall transfer and
deliver to the Treasurer of the United States a stated amount of
United States registered bonds be, and the same is hereby, repealed.
REFUNDING BONDS.

SEC. 19. That upon application the Secretary of the Treasury shall
exchange the two per centum bonds of the United States bearing
the circulation privilege deposited by any national banking association with the Treasurer of the United States as security for circulating
notes for three per centum bonds of the United States without the
circulation privilege, payable after twenty years from date of issue,
and exempt from Federal, State, and municipal taxation both as to
income and principal. No national bank shall, in any one year,
present two per centum bonds for exchange in the manner hereinbefore provided to an amount exceeding five per centum of the total
amount of bonds on deposit with the Treasurer by said bank for
circulation purposes. Should any national bank fail in any one year
to so exchange its full quota of two per centum bonds under the terms
of this act, the Secretary of the Treasury may permit any other
national bank or banks to exchange bonds in excess of the five per
centum aforesaid in an amount equal to the deficiency caused by the
failure of any one or more banks to make exchange in any one year,
allotment to be made to applying banks in proportion to their holdings
of bonds. At the expiration of twenty years from the passage of this
act every holder of United States two per centum bonds then outstanding shall receive payment at par and accrued interest. After twenty
years from the date of the passage of this act national-bank notes still
remaining outstanding shall be recalled and redeemed by the national
banking associations issuing the same within a period and under regulations to be prescribed by the Federal reserve board, and notes still
remaining in circulation at the end of such period shall be secured by
an equal amount of lawful money to be deposited in the Treasury of




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

125

the United States by the banking associations originally issuing such
notes. Meanwhile every national bank may continue to apply for
and receive circulating notes from the Comptroller of the Currency
based upon the deposit of two per centum bonds or of any other bonds
bearing the circulation privilege; but no national bank shall be permitted to issue other circulating notes except such as are secured as
in this section provided or to issue or to make use of any substitute
for such circulating notes in the form of clearing-house loan certificates, cashier's checks, or other obligation.
BANK RESERVES.

SEC. 20. That from and after the date when the Secretary of the
Treasury shall have officially announced, in such manner as he may
elect, the fact that a Federal reserve bank has been established in any
designated district, every banking association within said district
which shall have subscribed for stock in such Federal reserve bank
shall be required to establish and maintain reserves as follows:
(a) If a country bank as de&ned by existing law, it shall hold and
maintain a reserve equal to twelve per centum of the aggregate amount
of its deposits, not including savings deposits hereinafter provided
for. Five-twelfths of such reserve shall consist of money which
national banks may under existing law count as legal reserve, held
actually in the bank's own vaults; and for a period of fourteen
months from the date aforesaid at least three-twelfths and thereafter
at least five-twelfths of such reserve shall consist of a credit balance
with the Federal reserve bank of its district. The remainder of the
twelve per centum reserve hereinbefore required may, for a period of
thirty-six months from and after the date fixed by the Secretary of
the Treasury, as hereinbefore provided, consist of balances due from
national banks in reserve or central reserve cities as now defined by
law. From ^nd after a date thirty-six months subsequent to the
date fixed by the Secretary of the Treasury, as hereinbefore provided,
the said remainder of the twelve per centum reserve required of each
country bank shall consist either m whole or in part of reserve money
in the bank's own vaults or of credit balance with the Federal reserve
bank of its district.
(b) If a reserve city bank as defined by existing law, it shall hold
and maintain, for a period of sixty days from the date fixed by the
Secretary of the Treasury as hereinbefore provided, a reserve equal
to twenty per centum of the aggregate amount of its deposits, not
including savings deposits hereinafter provided for, and permanently
thereafter eighteen per centum. At least one-half of such reserve
shall consist of money which national banks may under existing law
count as legal reserve, held actually in the bank's own vaults.
After sixty days from the date aforesaid, and for a period of one
year, at least three-eighteenths and permanently thereafter at least
five-eighteenths of such reserve shall consist of a credit balance with
the Federal reserve bank of its district. The remainder of the
reserve in this paragraph required may, for a period of thirty-six
months from and after the date fixed by the Secretary of the Treasury
as hereinbefore provided, consist of balances due from national banks
in central reserve cities as now defined by law. From and after a
date thirty-six months subsequent to the date fixed by the Secretary
of the Treasury as hereinbefore provided, the said remainder of the
eighteen per centum reserve required of each reserve city bank shall




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 126

consist either in whole or in part of reserve money in the bank's
own vaults or of credit balance with the Federal reserve bank of its
district.
(c) If a central reserve city bank as defined by existing law, it shall
hold and maintain for a period of sixty days from the date fixed by the
Secretary of the Treasury as hereinbefore provided a reserve equal to
twenty per centum of the aggregate amount of its deposits, not including savings deposits hereinafter provided for, and permanently
thereafter eighteen per centum. At least one-half of such reserve shall
consist of money which national banks may under existing law count as
legal reserve, held actually in the bank's own vaults. After sixty
days from the date aforesaid, and thereafter for a period of one year,
at least three-eighteenths and permanently thereafter at least fiveeighteenths of such reserve shall consist of a credit balance with the
Federal reserve bank of its district. The remainder of the eighteen
per centum reserve required of each central reserve city bank shall
consist either in. whole or in part of reserve money actually held in
its own vaults or of credit balance with the Federal reserve bank of
its district.
SEC. 21. That so much of sections two and three of the act of June
twentieth, eighteen hundred and seventy-four, entitled "An act
fixing the amount of United States notes, providing for a redistribution of the national bank currency, and for other purposes," as provides that the fund deposited by any national banking association
with the Treasurer of the United States for the redemption of its
notes shall be counted as a part of its lawful reserve as provided in
the act aforesaid, be, and the same is hereby, repealed. And from
and after the passage of this act such fund of five per centum shall in
no case be counted by any national banking association as a part of
its lawful reserve.
SEC. 22. That every Federal reserve bank shall at all times have
on hand in its own vaults, in gold or lawful money, a sum equal to
not less than thirty-three and one-third per centum of its outstanding demand liabilities.
The Federal reserve board may notify any Federal reserve bank
whose lawful reserve shall be below the amount required to be kept
on hand to make good such reserve; and if such bank shall fail for
thirty days thereafter so to make good its lawful reserve, the Federal
reserve board may appoint a receiver to wind up the business of
said bank.
BANK EXAMINATIONS.

SEC. 23. That the examination of the affairs of every national
banking association authorized by existing law shall take place at
least twice in each calendar year and as much oftener as the Federal
reserve board shall consider necessary in order to furnish a full and
complete knowledge of its condition. The Secretary of the Treasury
may, however, at any time direct the holding of a special examination.
The person assigned to the making of such'examination of the affairs
of any national banking association shall have power to call together
a quorum of the directors of such association, who shall, under oath,
state to such examiner the character and circumstances of such of
its loans or discounts as he may designate; and from and after the
passage of this act all bank examiners shall receive fixed salaries,
the amount whereof shall be determined by the Federal reserve
board and annually reported to Congress. But the expense of the




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

127

examinations herein provided for shall be assessed by the Federal
reserve board upon the associations examined in proportion to
assets or resources held by such associations upon a date during the
year in which such examinations are held to be established by the
Federal reserve board. The Comptroller of the Currency shall so
arrange the duties of national-bank examiners that no two successive
examinations of any association shall be made by the same examiner.
In addition to the examinations made and conducted by the Comptroller of the Currency, every Federal reserve bank may, with the
approval of the Federal reserve board, arrange for special or periodical examination of the member banks within its district. Such examination shall be so conducted as to inform the Federal reserve bank
under whose auspices it is carried on of the condition of its member banks and of the lines of credit which are being extended by
them. Every Federal reserve bank shall at all times furnish to the
Federal reserve board such information as may be demanded by the
latter concerning the condition of any national banking association
located within the district of the said Federal reserve bank.
The Federal reserve board shall as often as it deems best, and in
any case not less frequently than four times each year, order an
examination of national banking associations in reserve cities. Such
examinations shall show in detail the total amount of loans made by
each bank on demand, on time, and the different classes of collateral
held to protect the various loans, and the lines of credit which are
being extended by them. The Federal reserve board shall, at least
once each year, order an examination of each Federal reserve bank,
and upon joint application of ten member banks the Federal reserve
board shall order a special examination and report of the condition
of any Federal reserve bank.
SEC. 24. That no national bank shall hereafter make any loan or
grant any gratuity to any examiner of such bank. Any bank offending against this provision shall be deemed guilty of a misdemeanor
and shall be fined not more than $5,000*ana a further sum equal to
the money so loaned or gratuity given; and the officer or officers of a
bank mating such loan or granting such gratuity shall be likewise
deemed guilty of a misdemeanor and shall be fined not to exceed
$5,000. Any examiner accepting a loan or gratuity from any bank
examined by him shall be deemed guilty of a misdemeanor and shall
be fined not more than $5,000 and a further sum equal to the money
so loaned or gratuity given, and shall forever thereafter be disqualified from holding office as a national-bank examiner. No nationalbank examiner shall perform any other service for compensation
while holding such office.
No officer or director of a national bank shall receive or be beneficiary, either directly or indirectly, of any fee (other than a legitimate fee paid an attorney at law for legal services), commission, gift,
or other consideration for or on account of any loan, purchase, sale,
payment, exchange, or transaction with respect to stocks, bonds, or
other investment securities or notes, bills of exchange, acceptances,
bankers7 bills, cable transfers, or mortgages made by or on behalf of
a national bank of which he is such officer or director. Any person
violating any provision of this section shall be punished by a fine of
not exceeding $5,000 or by imprisonment not exceeding five years, or
both such fine and imprisonment, in the discretion of the court
having jurisdiction,




CHANGES IN

THE BANKING AND CURRENCY SYSTEM. 128

Except so far as already provided in existing laws this provision
shall not take effect until six months after the passage of tins act.
SEC. 25. That from and after the passage of this act the stockholders of every national banking association shall be held individually
responsible for all contracts, debts, and engagements of such association, each to the amount of his stock therein, at the par value thereof
in addition to the amount invested in such stock. The stockholders
in any national banking association who shall have transferred their
shares or registered the transfer thereof within sixty days next before
the date of the failure of such association to meet its obligations
shall be liable to the same extent as if they had made no such transfer;
but this provision shall not be construed to affect in any way any recourse wnich such shareholders might otherwise have against those
in whose names such shares are registered at the time of such failure.
Section fifty-one hundred and fifty-one, Revised Statutes of the
United States, is hereby reenacted except in so far as modified by
this section.
LOANS ON FARM LANDS.

SEC. 26. That any national banking association not situated in a
reserve city or central reserve city may make loans secured by improved and unencumbered farm land, and so much of section fiftyone hundred and thirty-seven of the Revised Statutes as prohibits
the making of such loans by banks so situated shall be, and the same
is hereby, repealed; but no such loan shall be made for a longer time
than twelve months, nor for an amount exceeding fifty per centum
of the actual value of the property offered as security, and such
property shall be situated witnin the Federal reserve district in which
the bank is located. Any such bank may make such loans in an
aggregate sum equal to twenty-five per centum of its capital and
surplus.
The Federal reserve board shall have power from time to time
to add to the list of cities iji which national banks shall not be permitted to make loans secured upon real estate in the manner described
in this section.
SAVINGS DEPARTMENT.

SEC. 27. That any national banking association may, subsequent
to a date one year after the organization of the Federal reserve
board, make application to the Comptroller of the Currency for
permission to open a savings department. Such application shall
set forth that the directors of said national bank have by a majority
vote apportioned a specified percentage of their paid-in capital
and surplus to said savings department, and to that end have segregated specified assets for the purposes of said department, or that
cash capital for the said savings department has been obtained
by subscription to additional issues of the capital stock of said
national bank: Provided, That the sum in assets or in cash thus
set apart for the uses of the proposed savings department aforesaid
shall in no case be less than $ 2 5 , 0 0 0 , or than a sum equal to twenty
er centum of the paid-up capital and surplus of the said national
ank.
In making the application aforesaid any national banking association may further apply for power to act as trustee for mortgage
loans, subject to the conditions and limitations herein prescribed or
to be established as hereinafter provided.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

129

Whenever the Comptroller of the Currency shall have approved any
such application as hereinbefore provided, he shall so inform the
applying bank, and thereafter the organization and business conducted or possessed by said bank at the time of making said application, except such as has been specifically segregated for the savings
department, and subsequent expansions thereof shall be known as
the commercial department of the said bank. National banks may
increase or diminish their capital stock in the manner now provided
by law, but whenever such general increase or reduction of the capital
stock of any national bank operating upon the provisions of this
section shall be made such increase or reduction shall be apportioned
between the commercial and savings departments of the said bank
as its board of directors shall prescribe, notice of such increase or
reduction, and of the apportionment thereof, being forthwith given
to the Comptroller of the Currency; and any such national bank
may increase or diminish the capital already apportioned to either
its savings or commercial department to an extent not inconsistent
with the provisions of this section, notifying the Comptroller of the
Currency as hereinbefore provided. The savings department for
which authority has been solicited and granted shall have control
of the cash or assets apportioned to it as hereinbefore provided, and
shall be organized under the rules and regulations to be prescribed
by the Comptroller of the Currency.
Both the savings and commercial departments so created shall,
however, be under the control and direction of a single board of
directors and of the general officers of said bank.
All business transacted by the commercial department of any such
national bank shall be in every respect subject to the limitations and
requirements provided in the national banking act as modified by
this act, and such business shall henceforward be known as commercial business.
The savings department of each such national bank shall be authorized to accumulate and loan the funds of its depositors, to receive deposits of current funds, to loan any funds in its possession upon personal or real estate security, and to collect the same with interest,
and to declare and pay dividends or interest both upon demand and
time deposits. The Federal reserve board is hereby authorized to
exempt the savings departments of national banking associations
from any and every restriction upon classes or kinds of business laid
down in the national banking act, and it shall be the duty of the said
board within one year after its organization to prepare and publish
rules and regulations for the conduct of business by such savings departments. The said regulations shall require every national bank
which shall conduct a savings department and a commercial department to segregate in its own vaults the cash and assets belonging to
such departments respectively and shall prescribe the general forms
of separate books of account to be used by each such department for
its exclusive and individual use. The regulations aforesaid shall
further specify the period of notice for the withdrawal of deposits
made in the said savings department and shall forbid the acceptance
of deposits by one department of such national bank from the other
department of such bank. The Federal reserve board shall make
and publish at its discretion lists of securities, paper, bonds, and other
forms of investment, which the savings departments of national banks
8829°—H. Kept. 69,63-1




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 130

shall be authorized to buy; and said lists need not be uniform throughout the United States, but shall be adapted to the conditions of business in different sections of the country.
It shall be the duty of every national bank to maintain, with respect
to all deposit liabilities of its savings department, a reserve in money
which may "under existing law be counted as reserve, equal to not less
than five per centum of its total deposit liabilities, and every national
bank authorized to maintain a savings department is hereby exempted
from the reserve requirements of the national banking act and of this
act in respect to the said deposit liabilities of its savings department,
except as in this section provided. Every regulation made in pursuance of this section shall be duly published, and also posted in every
member bank having a savings department.
Every officer, director, or employee of any national bank who shall
knowingly or willfully violate any of the provisions of this section, or
any of the regulations of the Federal reserve board, or of the Comptroller of the Currency, made under and by virtue of the provisions of
this section shall be guilty of a felony, and on conviction thereof shall
be punished by a fine not exceeding $ 5 , 0 0 0 or by imprisonment not
exceeding two years.
FOREIGN BRANCHES.

SEC. 28. That any national banking association possessing a capital
of $1,000,000 or more may file'application with the Federal reserve
board, upon such conditions and under such circumstances as may
be prescribed by the said board, for the purpose of securing authority
to establish branches in foreign countries for the furtherance of the
foreign commerce of the United States and to act, if required to do so,
as fiscal agents of the United States. Such application shall specify,
in addition to the name and capital of the banking association filing
it, the foreign country or countries or the dependencies of the United
States where the banking operations proposed are to be carried on
and the amount of capital set aside by the said banking association
filing such application for the conduct of its foreign business at. the
branches proposed by it to be established in foreign countries. The
Federal reserve board shall have power to approve or to reject such
application if, in its judgment, the amount of capital proposed to be
set aside for the conduct of foreign business is madequate or if for
other reasons the granting of such application is deemed inexpedient.
Every national banking association which shall receive authority
to establish branches in foreign countries shall be required at all times
to furnish information concerning the condition of such branches to
the Comptroller of the Currency upon demand, and the Federal
reserve board may order special examinations of the said foreign
branches at such time or times as it may deem best. Every such
national banking association shall conduct the accounts of each
foreign branch independently of the accounts of other foreign branches
established by it and of its home office and shall at the end of each
fiscal period transfer to its general ledger the profit or loss accruing
at each such branch as a separate item.
SEC. 29. That all provisions of law inconsistent with or superseded
by any of the provisions of this act be, and the same are hereby,
repealed.
SEC. 30. That the right to amend, alter, or repeal this act is hereby
expressly reserved.




APPENDIX D .

Reserve required under H. R. 7837, based on deposits reported June 4, 1913.

Cities, States, and Territories.

New York City
Chicago
St. Louis
Central reserve cities
Boston
Albanjr
Brooklyn
Philadelphia
Pittsburgh
Baltimore
Washington
Savannah
New Orleans
Dallas
Fort Worth
Galveston
Houston
San Antonio
Waco
Louisville
Cincinnati
Cleveland
Columbus
Indianapolis
Detroit
Milwaukee
Minneapolis
St. Paul
Cedar Rapids
Des Moines
Dubuque
Sioux City
Kansas City, Mo
St. Joseph
Lincoln
Omaha
South Omaha
Kansas City, Kans
Topeka
Wichita
Denver
Pueblo
Muskogee
Oklahoma City
Seattle
Spokane
Tacoma
Portland
Los Angeles
San Francisco
Salt Lake City

Optional
under H. R.
7837 (per
cent cash or
balances).

Net deposits subject to reserve
requirements.

Cash requirement under
H. R. 7837.

Balance in
reserve banks
under H. R.
7837.

$1,093,896,154.20
363,020,439.98
111,170,462. 55

$98,450,654.00
32,671,840.00
10,005,341.00

$54,694,807.00 $43,755,845.00
18,151,022.00 14,520,819.00
5,558,523.00
4,446,818.00

1,568,087,056.73

141,127,835.00

78,404,352.00

62,723,482.00

235,937,447.19
39.297,953.26
23; 836,325. 80
279,772,336.64
196,116,426.28
62,246,492.72
28.568.018.15
1,857,723.80
25.217.548.95
21,629,510.24
14,981,247.51
4.760.174.05
29.642,962.90
11,052,476.24
5.788.341.06
29,537,728. 00
60.188.629.74
68,629,965.00
23,639,013.72
31,915,589.99
46,914,596. 64
51.591.648.49
61,364,504.08
40,873,142. 66
10,293,775.07
16.043.138.16
3,618,675.53
12.997.107.50
81,566,939.40
13,335,196.44
6,656,099.11
39 128 378.20
9,189,605.77
4,932,871.80
3,389,138.20
6,692,169. 82
42.731.063.75
8,355,239.10
4,844,442.25
7,883,172.09
35.198.357.96
18,885,980.26
7,854,204.57
29,906,806.26
54,679,499.16
119,056,019.87
13,276,773.65

21,234,370.00
3,536,816.00
2,145,270.00
25,179,512.00
17,650,439.00
5,602,184.00
2,571,123.00
167,195.00
2,269,581.00
1,946,658.00
1,348,314.00
428,415.00
2,667,868.00
994,724.00
520,952.00
2,658,396.00
5,416,977.00
6,176,698.00
2,127,512.00
2,872,404.00
4,222,313.00
4,643,249.00
5,522,805.00
3,678,584.00
926,442.00
1,443,884.00
325,683.00
1,169,740.00
7,341 026.00
1,200,169.00
599,048.00
3,521,555.00
827,065.00
443,959.00
305,024.00
602,295.00
3,845,797.00
751,973.00
436,000.00
709,486.00
3,167,854.00
1,699,739.00
706,878.00
2,691,614.00
4,921,156.00
10,715,044.00
1,194 912.00

11,796,872.00
1,964,897.00
1,191,816.00
13,988,617.00
9,805,821.00
3,112,324.00
1,428,401.00
92,886.00
1,260,878. 00
1,081,476.00
749,062.00
238,008.00
1,482,148. 00
552,624.00
289,417.00
1,476,887.00
3,009,431.00
3,431,498.00
1,181,950.00
1,595,779.00
2,345,729.00
2,579,582.00
3,068,225.00
2,043,657. 00
514,688.00
802,157.00
180,934.00
649,856.00
4,078,347.00
666,759.00
332,804.00
1,956,419.00
459 480.00
246,643. 00
169,457.00
334,608.00
2,136,553.00
417,762.00
242,222.00
394,158.00
1,759,918.00
944,299.00
392,710.00
1,495,340.00
2,733,975.00
5,952,801.00
663,838.00

9,437,497.00
1,571,918.00
953,453.00
11,190,894.00
7,844,657.00
2,489,859.00
1,142, 722.00
74,309.00
1,008,703.00
865,181.00
599,249.00
190,406.00
1,185,719.00
442,099.00
231,534. 00
1,181,510.00
2,407,545.00
2,745,199.00
945,560. 00
1,276,623.00
1,876,583.00
2,063,666.00
2,454,580.00
1,634,927.00
411,750.00
641,726.00
144,748.00
519,885.00
3,262,678.00
533,407.00
266,243.00
1,565,135.00
367,584.00
197,315.00
135,566.00
267,686.00
1,709,242.00
334,210.00
193,778.00
315,326.00
1,407,934.00
755,440.00
314,168.00
1,196,272.00
2,187,180.00
4,762,242.00
531,071.00

97,293,723.00

77,834,979.00

Other reserve cities

1,945,874,457.03

175,128,702.00

All reserve cities

3,513,961,513.76

316,256,536.00

46,898,653.28
22,268,769.99
19,218,246.04
140,721,736.97
29,917,010.63
69,821,700.52

2,344,932.00
1,113 438.00
960,913.00
7,036,087.00
1,495,851.00
3,491,085.00

2,344,932.00
1,113,438.00
960,913.00
7,036,087.00
1,495,851.00
3,491,085. 00

937,972.00
445,377.00
384,364.00
2,814,435.00
598,340.00
1,396,434.00

328,846,117.43

16,442,306.00

16,442,306.00

6,576,922.00

Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
New England States




175,698,075.00 140,558,460.00

131

CHANGES IN THE BANKING AND CURRENCY SYSTEM. 132
Reserve required under H. R. 7887, based on deposits reported June 4,

Cities, States, and Territories.

New York
New Jersey
Pennsylvania
Delaware
Marvland
District of Columbia
Eastern States
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
Kentucky
Tennessee
Southern States
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Missouri
Middle States
North Dakota
South Dakota
Nebraska
Kansas
Montana
Wyoming
Colorado
New Mexico
Oklahoma
Western States
Washington
Oregon
Calilornia
Idaho
Utah
Nevada
Arizona
Alaska
Pacific States
Island possessions (Hawaii)
Total States
Total United States




Net deposits sub- Cash requirement under
ject to reserve
requirements.
H. R. 7837.

1913—Contd.

Optional
Balance in
reserve banks under H. R.
7837 (per
under H. R. cent cash or
7837.
balances).

$.370,193,609.43 $18,509,681 00 $18,509,681.00 $7,403,872.00
202,574,593.74 10,128,729.00 10,128,729.00 4,051,492.00
475,471,735.41 23,773,587.00 23,773,587. 00 9,509,434.00
8,513,102.98
425,655.00
425,655.00
170,262.00
40,554,108.05
2,027,705.00
2,027,705.00
811,082.00
1,031,403.06
51,570.00
51,570.00
20,028.00
1,098,338,552.67

54,916,927.00

93,719,750.42
56,160,448.92
32.965.737.40
20,201,398.31
42,547,683.67
36,918,647.97
37,229,745.07
13,887,110.55
16,644,169.34
120,776,500.33
19,072,404.12
43,465,014.17
64.719.553.41

4,685,987.00
2,808,023.00
1,648,288.00
1,010,069.00
2,127,385.00
1,845,932.00
1,861,487.00
694,356.00
832,208.00
6,038,825.00
953,621.00
2,173,250.00
3,235,977.00

4,685,987.00
2,808,023.00
1,648,288. 00
1,010,009.00
2,127,385. 00
1,845,932.00
1,861,487.00
694,356.00
832,208.00
6,038,825.00
953,621.00
2,173,250.00
3,235,977.00

1,874,395.00
1,123,209.00
659,314.00
404,027.00
850,954.00
738,373.00
744,594.00
277,743.00
332,884.00
2,415,531.00
381,449.00
869,301.00
1,294,390.00

54,916,927. 00 21,966,770.00

598,308,163.68

29,915,408.00

29,915,408.00

11,966,164.00

211,714,557.24
127,799,890.35
217,140,603.31
92,318,092.81
95,050,605.39
109,033,507.97
123,092,911.33
32,575,300.80

10,585,728.00
6,389,995.00
10,857,030.00
4,615,905.00
4,752,530.00
5,451,675.00
6,154,645.00
1,628,765.00

10,585,728.00
6,389,995.00
10,857,030.00
4,615,905.00
4,752,530.00
5,451,675.00
6,154,645.00
1,628,765.00

4,234,292.00
2,555,998.00
4,342,812.00
1,846,362.00
1,901,011.00
2,180,670.00
2,461,857.00
651,506.00

1,008,725,469.20

50,436,273.00

50,436,273.00 20,174,508.00

34,156,079.53
32,524,541.88
57,484,779.56
62,990,129.91
34,569,197.15
13,135,898.01
38,730,570.50
15,082,617.80
55,268,368.49

1,707,804.00
1,626,227.00
2,874,239.00
3,149,507.00
1,728,459.00
656,795.00
1,936,528.00
754,132.00
2,763,418.00

1,707,804.00
1,626,227.00
2,874,239.00
3,149,507.00
1,728,459.00
656,795.00
1,936,528.00
754,132.00
2,763,418.00

683,122.00
650,490.00
1,149,695.00
1,259,803.00
691,383.00
262,717.00
774,613.00
301,652.00
1,105,369.00

343,942,182.83

17,197,109.00

17,197,109.00

6,878,844.00

30,235,417.25
29,327,686.13
127,304,756.39
18,842,253.16
7,899,595.98
6,587,718.61
9,520,662.66
852,680.20

1,511,771.00
1,466,384.00
6,365,238.00
942,113.00
394,979.00
329,386.00
476,033.00
42,634.00

1,511,771.00
1,466,384.00
6,365,238.00
942,113.00
394,979.00
329,386.00
476,033.00
42,634.00

604,708.00
586,554.00
2,546,096.00
376,846.00
157,990.00
131,754.00
190,414.00
17,054.00

230,570,770.38

11,528,538.00

11,528,538.00

4,611,.416.00

1,941,602.46

97,080.00

97,080.00

38,832.00

3,610,672.858.00 180,533,642.00 180,533,642.00 72,213,457.00
7,124,634,372.00 496,790,179.00 356,231,717.00 212,771,917.00

VIEWS OF THE MINORITY.
The undersigned regret that when the Committee on Banking and
Currency met finally to consider H. R. 7837 they found the majority
members of the committee so bound by their caucus action that they
could not consider amendments to the bill which, if adopted, would
have eliminated its unsound and questionable provisions.
Su?h changes, while comparatively few in number, in our opinion
are fundamental and vital. The majority members of the committee
refused to favorably consider them on the ground that they involved
matters of Democratic party policy settled by the caucus.
COMPULSORY PURCHASE OF STOCK.

One objection to the proposed law goes to the provision which
compels national banks to subscribe for the capital stock of the Federal reserve banks on pain of forfeiture of their charters. We believe this forfeiture provision is of doubtful constitutionality and
wholly unnecessary and inexpedient. If the plan proposed by the
bill proves to be a good one, the mercantile, manufacturing, and agricultural interests of the country, which control the banks, can be
depended upon to appreciate its advantages, and the banks will naturally and voluntarily join in trying to make it a success. At least
time enough should be allowed for a gradual and natural development to fully demonstrate that the new system is a success before
force should be applied, by way of quasi penal or forfeiture provisions, to compel reluctant banks to come into it.
If, on the other hand, the plan proposed by the bill should prove
to be too cumbersome or not workable, the tying up of so vast n
quantity of the reserves as the bill proposes to compel would cause
the borrowing public great hardship, and the vast business interests of the country would be imperiled. Should the national banks
of the country, or a large majority of them, elect to forfeit their
present charters rather than come into the new system, our currency
supply would be greatly curtailed, all business would be disastrously
affected, and our national banking system would be destroyed.
FEDERAL RESERVE NOTES.

Another fundamental objection is to the provision (p. 28, line 19)
that the notes to be issued to or through the Federal reserve banks
" shall be obligations of the United States." Section 17, in which
this provision is found, practically creates a Government central bank
or board of issue, which may issue notes on application without
limit at its discretion for the sole accommodation of the banks and




133

CHANGES I N THE BANKING AND CURRENCY SYSTEM. 134

not to meet the necessities of the Government. In times of serious
crises the Government obligation to pay these notes might, and
probably would, lead to very serious complications involving the
credit of the Government, as the history of all such experiments
amply proves.
FEDERAL RESERVE BOARD.

The powers of the Federal reserve board are, in our judgment, too
great. This board should be given supervision, but not actual management of the banking business of the country. We also believe that
while an effort has been made to make the board somewhat nonpartisan, there is still great danger as the bill is now drawn that the
banking business of the country may be used for partisan political
advantage. Every possible provision should be incorporated to
prevent a result which every right thinking man would greatly
deplore. Those who will most suffer from political management of
this board will be the small merchant and the borrowing public.
There is also a clear impropriety in allowing the Comptroller of the
Currency, who is charged with the supervision and administration of
the whole national banking system, to serve on this board.
There are other imperfections in the bill which will be pointed out
during its consideration on the floor of the House.




E . A . HAYES.
FRANK E . GUERNSEY.
JAMES F . B U R K E .
FRANK P . ' W O O D S .
EDMUND PLATT.

Mr.

LINDBERGH

submitted the following

MINORITY VIEWS.
T H E GLASS BILL, H . R . 7 8 3 7 .

The Glass bill, as drafted, is merely a new form for the administration of a false old system. It leaves the worst of all features
in the present financial scheme unchanged; that is, the burden of
excessive interest. It provides upon its face for a financial stringency and possible panic in its inception as a result of the forced
shifting of cash and resultant transfer, and therefore a disturbance
of credit. After the shift would be made and the adjustment was
finally completed, with the exception of a provision for the issue
of asset currency, it would be an improvement over the present
method of finances. The disadvantage that would arise by shifting
of cash balances and early disturbance of credits may be remedied
by simple amendments.
The most disappointing thing about the bill is that it provides
no relief from existing economic evils. That relief is due to begin
with an improved money system. The Glass bill proposes to incorporate, canonize, and sanctify a private monopoly of the money
and credit of the Nation—to remove all the people's money from
the United States Treasury and place it in the vaults of the banks
to be used by them for private gain. It violates every principle
of popular, democratic, representative Government and every
declaration of the Democratic Party and platform pledges from
Thomas Jefferson down to the beginning of this Congress.
Those of the committee who favor the bill have worked diligently
with earnestness and ability to modify the details in dealing with
finances, but have done nothing to correct the grossly false basis
on which finance is now operated; that is, the fact that financing in
the present way is a burden instead of an assistance to trade and commerce. Severe as my criticism of the bill may seem, still 1 believe
that with some few amendments the system that the Glass bill
would put into operation would be less severe on the people than
our present system. I do not object to it because of unfavorable
comparison with that now practiced, but base my objections on the
ground that now, while we are at it, we should instead pass a good
bill.
In submitting a minority report I have two purposes in view:
(a) To offer suggestions for amendments in the Glass bill that would
make it simple, more responsive, and less expensive to operate;
Q ) to offer a new bill to form the basis for an American financial
>
policy to place public and private enterprise, industry, and exchanges
upon a sound economic basis and destroy the power of private
operators to monopolize the mediums of exchange.
Those who are responsible for the draft of the Glass bill undoubtedly
hope through its enactment to remove from finance the frequent




135

CHANGES IN THE BANKING AND CURRENCY SYSTEM. 136

stringencies and occasional panics that develop. The plan they
offer, once it became operative and adjusted to, would probably
remove some of the clanger elements that in the past have driven
the country mto frequent money stringencies and occasional panics;
but as an effective remedy it is inadequate. The very basis of the
system that is sought to be patched is false.
The Glass bill would make a change in the administration of the
present system, but no change in the money basis. The design of the
bill is to lessen the immoderate and violent fluctuations that result
from the present method of financing. For that reason a Member
who does not consider the bill satisfactory may vote for it nevertheless.
We should first do all we can to secure the enactment of a good bill.
This is not a good bill, but with a few amendments it may be better
than no bill.
Business is now operated under a highly technical credit system
based on a small amount of lawful money. Twenty-five and possibly
more dollars of credit exchanges, on the average, for each dollar of
actual cash paid, but credit as a rule is directly related to the location
of actual money. It is through the banks that most of the credit
extensions occur. The cash is in reserve for the final balances. Comparatively little of the cash in the banks moves at all. It lies in the
vaults year after year without going out on any mission of business.
This bill proposes to shift a very considerable part of the bank cash.
It would require several months at the very least to adjust credits to
the shift. The volume of credit would be disturbed to a very much
greater extent than the shift of cash. Business would be disturbed
by the change unless provision were made to keep credit from being
interfered with.
The general public gets no direct connection with the Glass bill for
purposes of securing either credit or cash. The public will still be
forced to go to the banks. Therefore if the bill is to become operative,
the banks will have to come under it. The national banks would
only be compelled to do so, but if they alone do, it will hardly be
satisfactory, because they do only about one-third of the banking
business.
SOME ACTUAL CONDITIONS TO BE MET.

On April 4, 1913, the deposits held by national banks required
them to hold a reserve of $891,794,905. They were $15,691,784
short—below the reserve requirements. If they had been compelled
to subscribe for Federal reserve bank stock under those conditions,
what would have happened? Their capital stock was approximately $1,050,000,000, which would have required them to pay
$105,000,000 for stock within 60 days. This sum would be transferred
to an entirely new field of financial development. In addition to
that, under the law they would have been required to make good the
$15,691,784 shortage in reserve within 30 days; an old provision
which is carried into this bill. The State banks were practically in
the same condition, and if they, too, came in, as the bill contemplates,
the demand for ready money would have exceeded $200,000,000 for
Federal reserve bank stock alone, and a much greater shift of deposits would be required. All things considered, it is not improbable
that a shift of near half a billion dollars would have to be made.




CHANGES IN THE BANKING AND CURRENCY
A MONEY

STRINGENCY A N D POSSIBLE

SYSTEM.

137

PANIC.

The contraction which would come about in making such a change—
that is, in the shifting of cash from its old moorings and the still greater
credit disturbance—would result seriously and bring about a great loss
to the people. A statement of some actual facts will illustrate sufficiently. In a general way the results would be the same from an
analysis of any bank report made in the last 10 years, but to be
specific I take the banks' reports to the Comptroller of the Currency
September 4, 1912. I call attention merely to a single bank in each
of the States having a representative on the Banking and Currency
Committee. I show the capital stock, the amount it would have to
pay under this bill, and the actual lawful money contained in its
vaults, as follows:
Capital.
Barnesville National Bank, Minnesota
Peoples' National Bank, Virginia
Whitland National Bank, Indiana
People's National Bank, Rollesburg, W. Va
First National Bank, Hudson, Ohio
First National Bank, Almena, Kans
Irving National Bank, Irving Park, 111
Athol National Bank, Athol, Mass
Commanche National Bank, Commanehe, Tex
First National Bank, Perry, Ark
First National Bank, Wellington, Colo
Heard National Bank, Jacksonville, Fla
First National Bank, Alex, Okla
Gafliney National Bank, South Carolina
First National Bank, Vacaville, Cal
Union National Bank, Brunswick, Me
Grange National Bank, Chester, Pa
Farmers & Mechanics' National Bank, Jefferson, Iowa
First National Bank, Baldwinsville, N. Y

Assessment.

$25,000
50,000
25,000
25,000
50,000
50,000

$2,500
5,000
2,500
2,500
5,000
5,000
10,000

100,000
25,000
25,000
1,000,000
25,000
150,000
50,000
50,000

Money in
bank.

10,000
2,500
2,500
100,000
2,500
15,000
5,000
5,000

100,000
100,000

100,000

40,000

100,000

10,000

10,000

4,000

io;ooo

These responsible banks, on the date named, did not have sufficient
lawful money in their vaults to meet the requirements of the Glass
bill. Many of the banks have more cash than is necessary, but the
banks listed above are not isolated cases. Substantially the same
condition exists in all the States. Hundreds and hundreds of banks
would be required to pay out, within 60 days after the organization
commenced, all the cash in their vaults, and many more of them
would have barely enough. In the aggregate they would not have
enough.
Instancing this condition, in South Carolina there were 46 national
banks on September 4, 1912. On that date 6 of them did not have
enough lawful money in their vaults to pay for the stock they would
be compelled to take. What would happen under such conditions ?
These banks would, of course, draw on their reserve banks for the
money due from them. Simultaneously the reserve banks would be
called on to return to the other banks their reserves and pay for
Federal reserve bank stock.
Let us take the National City Bank of New York as an example.
It is a central reserve bank, required by law to keep 25 per cent
lawful money reserve. On September 4, 1912, its deposits were
$239,669,430. It required a legal reserve of $59,917,357, but it had
only $48,364,892 lawful money in its vaults. It was owing to other




138

CHANGES IN THE BAfrKltfG A K b CURfeEtfCY SYSTEM.

banks, included in the $239,669,430, approximately $100,000,000.
These banks, under the operation of the bill, would be compelled to
draw on the National City Bank for money to pay subscriptions for
Federal reserve bank stock, and also to cover in these banks within
60 days a 3 per cent reserve. The country banks do not, as a rule,
carry more reserve cash in their vaults than the law requires and
could not draw directly from their vaults. In addition to that, the
National City Bank would be required to pay $2,500,000 for capital
stock. The statement of September 4 shows that the National City
Bank had not sufficient lawful money to meet any such demand. It
may be suggested that it had $38,296,647 checks and exchanges outstanding; but, admitting that, and that these come in rapidly, as
many more are put out in the regular course of business. The commerce of the country demands transmission through the mails,
express, and in clearance agencies enormous sums. Under the terms
of the bill this one bank would probably be compelled to transfer
more than $100,000,000. I do not plead for that bank. Its stockholders have fleeced the people of this country, but what applies to
the demands that are to be made on that bank applies to the demands
that would be made on banks generally in the proportion of their
business. A scramble would take place among the banks to get in
shape to meet their obligations. Naturally they would demand payment of the borrowers. A stringency woulcl result, and possibly a
panic. In such an emergency the borrowing people would suffer,
because they are absolutely tied to the banks, and tlie Glass bill
would make no change in tnat respect. If everybody would remain
perfectly calm and make no demand for impossible things, the shift
could be made under the stress without an actuM panic.
COMPENSATING PROVISIONS TO THE BANKS.

There are some compensating provisions in the Glass bill that
would aid the banks in changing from the present system to the
proposed system, provided that no excitement would arise until they
were made effective. The Federal reserve board may suspend for
30 days, and renew the suspension for periods of 15 days, any and
every reserve requirement contained in the bill. Aid would also be
given to the banks by a deposit of all the funds in the Government
Treasury. Still further aid might be provided by a loan of United
States cijrrency. But the organization would have to be complete
before that could be loaned. Much loss might occur in the meantime.
It is claimed by this bill to give considerable control and management of the banks to the Government, but it reserves no power in
the Government to aid those who need money to do business with.
Those who actually use the money to carry on business are compelled to go to those who use money simply for the purpose of charging a profit out of handling it. That is, the banks and monejT loaners
make a profit out of those who use money. The latter have no other
purpose whatever. This bill makes the bankers the "go-between''
between the Government and those who use money only as a means
to deal in the material and social exchanges that are essential to
civilization, the only true purpose of money. This bill provides for




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

139

the continuation of an actual extortion fostered by the Government
against the freedom of business intercourse among the people. It
recognizes the superior sovereignty of the embodied institutions of
money over any power of government, so that neither the Government in its sovereign capacity nor the people, or their representatives, can initiate the placement of one dollar of monetary function
into actual exchanges among the people, except through the agency
of organized money loaners with purely selfish interests. The Glass
bill positively abolishes the United States Treasury and the public
money of the people, and substitutes the so-called Federal reserve
banks, which by the terms of the bill are to be the exclusive stock of
the bankers. It reduces the people's Treasury Department and the
Bureau of Printing and Engraving to the position of a job printing
house for the private use of the bankers.
It is an advantage to the banks to have the Government print and
engrave the money, so long as the banks may have a monopoly of its
distribution. This bill continues and affirmatively gives them that
monopoly. They have held it for a long time in the past, and now
Congress is about to bow its subserviency in more positive express
terms of a statute than heretofore. Ask, Where will the people go to
borrow money after this bill goes into effect ? Congress has been
slipped into the halter by the money lenders, and they seem to have
supplied themselves with a double hold—a chain in addition to the
strap.
Those who wish to use money for the purpose of its service to a
freedom of trade by the people among themselves find no Government-supported source of supply except the exclusive monopoly
granted to the banks. These oanks have the means and do compel
the people to pay for the use of money a rate of interest that forces
the majority of mankind into needy circumstances, and deprives all
but a few of a proper compensation for their lives' efforts. No one
should assume because of all this, and because the bankers get the
lion's share of profits, that bankers are disposed to be vicious. We
should change the system and not blame the bankers. In the process
of changing the system the people should address themselves first to
a subservient Congress.
The Glass bill, being distinctively a banker's bill, and all who are
not bankers being compelled to go to the banks for accommodations,
we should at least make it easy for the banker to help borrowers
whenever he is willing. If this bill is passed without some minor
amendments, to make the transfer from the old to the new system
easy, the bankers will be compelled to retrench until they can adjust
to this new system. They will not only be compelled to withhold
further credit during that period, but many borrowers will be called
on to pay notes while the adjustment is going on. For that reason,
if the general plan of the bill is to be adopted, some amendments can
and should be made to obviate the tendency to create a stringency.
The banks will not wait for help, but will help themselves by calling
on borrowers to pay. It evidently is the opinion of those who favor
the bill that the Federal Reserve Board will waive the affirmative
requirements to enable bankers to shift from the old to the new
system without disturbance. Admitting that the board would do
so is not sufficient to the business world. Bankers are cautious




CHANGES I N THE BANKING AND CURRENCY SYSTEM. 140

business men and will resolve all doubts in favor of safety and therefore call in loans until they are prepared to meet the most difficult
provisions of the bill. The bill should be made right to start with
so far as human foresight can make it and still have the saving
clauses to meet any oversight.
FEDERAL RESERVE BANK STOCK ASSESSMENT.

Instead of making a call for 5 per cent instanter and 5 per cent
within 60 days, it should be made in several smaller calls distributed
over a period of a year. There is, however, no need of so much centralized capital as would occur in these banks. The security of
the depositors in a bank depends on the good management more
than on the amount of its capital stock. The funds in the control
of a good management in a bank are usually several times greater
than its capital. A 5 per cent assessment on the capital and surplus
for the establishment of the Federal reserve banks would serve the
country better than a larger assessment upon the capital alone.
I believe that 3 per cent on the combined capital and surplus would
be still better, because that would leave more money for use in the
proximity of its origin, where it belongs.
ASSESS COMBINED CAPITAL AND SURPLUS.

Assessments should be made both on the capital and surplus. The
surplus of a bank is as much a part of its capital as the capital itself is.
It would be an injustice to the smaller banks unless the assessment is
made on both capital and surplus. The 37 national banks in New
York City, for example, had September 4, 1912, a capital of
$120,200,000 and a surplus of $128,255,000, while taking, for instance,
the first 37 banks listed in Minnesota, which is a fair average for country banks generally, their aggregate capital on the same date was
$1,425,000 and their surplus $458,615. Now, if this new system is to
be a protection to the banks or if it is to be a burden to them, in either
case, let them pay for the one or the other in a proper proportion.
The bill should be amended to have the assessment made on the capital
and surplus both.
BANK RESERVES.

The reserve requirements should be reduced immediately to 20 per
cent for all reserve banks. That would help the banks to meet the
demands of the country banks for a return of their funds. As the bill
is, the reserve banks would simultaneously be compelled to press collections—first, in order to meet the demands from the country banks
for their reserves; second, to subscribe for stock in Federal reserve
banks; and, third, to transfer a part of their own reserves to the latter. The period of adjustment should be more graduated and the
reserve requirements reduced. Since the banks have absolute control
of the distribution of money to borrowers, they should not be prevented from loaning at times and in places when and where the money
is needed. The formative period of adjustment to the requirements
of this bill would prevent that unless amendments are made.




CHANGES I N THE BANKING AND CURRENCY SYSTEM.

141

CAPITAL CAN NOT BE SIMULTANEOUSLY PROVIDED FOR 12 FEDERAL
RESERVE BANKS, WHICH MIGHT RESULT IN THERE BECOMING ONE
CENTRAL BANK.

On page 3 the Glass bill provides for not less than 12 Federal
reserve banks with capital equal to 20 per cent of the capital stock of
the banks subscribing, and for one-fourth to be paid in cash, and also
that no Federal reserve bank shall begin business until $5,000,000 has
been paid in. Since the Federal reserve banks would be started by
the national banks alone, as they alone would be forced to join, they,
with an aggregate capital stocK of less than $1,100,000,000, even if
they should all join, could not start 12 Federal reserve banks on a 5
per cent assessment with each a paid-in capital of $5,000,000, as the
bill requires. Furthermore, it would be impossible to equalize to
approximately equal the capital in all districts. It is necessary,
therefore, to amend on page 3. The bill would serve the country
better by making the stock of the Federal reserve banks equal to 3
per cent of the unimpaired combined capital stock and surplus of the
subscribing banks and permit them to begin business when $1,000,000
is paid in. Under the provisions of the bill the Federal reserve
board may name the 12 Federal reserve districts, and the cities for
their banks. The city of New York should and of course would be
named as one of the 12. Chicago would be another. The influence
of the moneyed interests could easily prevent all of the districts
except New York City from completing the organization unless the
provision forcing banks to become members is held constitutional,
which is somewhat questionable. The larger banks would have to
join in order to have capital enough for 12 reserve banks. The
larger banks are controlled by stockholders who support the Wall
Street system. Anyone who has investigated the influence of that
system knows that its influence in a case of this kind would be all
powerful. The New York district under that condition might complete its organization and the rest drop out by default. Then there
would be one -central bank controlled by Wall Street stockholders.
The Federal reserve board would have some influence, but not
sufficient to help the general public out of the difficulty that would
arise from sucn a condition. It is not within the power of the
Federal reserve board to complete a single organization if the banks
do not affirmatively act.
INCREASE AND DECREASE OF CAPITAL STOCK.

Sections 5 and 6 provide that when banks reduce their capital, or
dissolve, or become, insolvent, the Federal reserve bank shall pay
therefor a sum equal to their cash paid subscriptions on shares surrendered. In times of panic or financial stress this provision would
weaken the Federal reserve banks. The banks holding the stock
could dissolve, reduce their capital stock, or go into insolvency, thus
not only avoiding the whole or a part of the responsibility to carry
the Federal reserve banks throughfinancialstorms, but actually thereby reenforce their individual holdings by reducing those of the Federal
reserve banks. This should be so amended that payment for shares
surrendered would be made at such time as the Federal reserve




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 142

board from time to time provides. No solvent bank should be permitted to surrender its stock at a period when in the opinion of the
Federal reserve board the general public interests, on account of
financial stringency, require the Federal reserve banks to have all
their resources available to meet the more general demand.
SMALL BANKS SHOULD BE ADMITTED.

The second paragraph of section 10 should be amended so as to
provide that no bank should be excluded from becoming a member
bank of a Federal reserve bank because of the amount of its capital
stock, so long as its capital stock and surplus remained unimpaired,
if in every other respect such bank was qualified. The welfare of the
whole people requires the thrift of every community. The small
communities are as essential as the large ones, and their banks should
receive the same treatment as those of the larger cities.
FOREIGN AGENCIES.

The last paragraph of section 15 should be amended so as to prevent instead of permit Federal reserve banks opening accounts or
establishing agencies in foreign countries. Since it is proposed by
this bill to turn over to the Federal reserve banks the Nation's funds,
we should not entangle them further by permitting the Federal reserve banks to establish agencies in foreign countries for speculation.
The foreign banks authorized by section 28 of the Glass bill would
attend to foreign business.
GOVERNMENT DEPOSITS.

It may be questionable whether it is constitutional to deposit Government funds in the banks, except in consequence of appropriations
made by law. Funds that have not been appropriated must remain
in the Treasury. Subdivision 7 of section 9, article 1-, reads:
No money shall be drawn from the Treasury but in consequence of appropriations
made by law; and a regular statement and account of the receipts and expenditures
of all public money shall be published from time to time.

It may be that any funds that have actually been appropriated can
legally be deposited in the banks. However, passing that question,
the adoption of a policy to continually keep on deposit all the public
funds in the banks is at least doubtful. The bankers claim that the
money is being taken out of business to pay the Government demands
and should be deposited in the banks in order to pass back into business. If its doing so were confined to legitimate business, and did not
enter into speculating and gambling, there would be more virtue in
the claim.
A concrete illustration exists at the present time to show the effect
of the use of the public funds. The first $10,000,000 that the present
Secretary of the Treasury deposited in the summer (1913) in the
banks on 2 per cent interest basis, probably did no good, because it was
immediately absorbed by Wall Street and used to exploit the people.
The bank statements show that it quickly gravitated to Wall Street.
I do not make the statement in criticism of the Secretary. It did not
happen to be a good time to make the deposit. On the other hand,




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

143

the later and larger deposits being made by the Secretary of the
Treasury in the banks in the South and West come at an opportune
time. It will help to move the crops and to steady conditions and
prevent financial stringency.
The undesirability of keeping all the public funds on deposit in the
banks all the time is, I think, manifest. At certain periods there is a
great demand for money to move crops. When crops have been
moved the demand for money weakens and it piles up in the banks.
The banks loan it out then at lower rates of interest. The speculators
have taken advantage of those conditions in the past years to reduce
the price of farm products when the farmers sell their crops. They
hold the money tight then, but when the farmers buy what they
require the speculators would have the money market easy so as to
make the farmers pay high prices. In that way the speculators have
practically fixed prices. When the farmer sells he is compelled to
take the price the speculator offers; when the farmer buys he gives
the price the speculator demands. That is one of the troubles with
the present system and this Glass bill does not furnish a sufficient
remedy.
If the banks are given all the public funds at all times, as the Glass
bill provides, there will be times when they will not be in demand for
legitimate commercial business. They will then be loaned to the
speculators, who will exploit the people. Then when the demands of
legitimate trade come again the money market will become tight.
The farmer, the merchant, the manufacturer, and others will be compelled to compete with the speculators to borrow money. The interest
rates will be raised. There will be no place then to give relief like
that at the present time being extended to some sections of the
country by the Secretary of the Treasury. The discovery that such
relief can be given has come too late, for we will hardly have more
than a sample of its effect until the Glass bill will become a law and
will take the public funds and place them where they will be available
to speculators in competition with legitimate commerce. It may be
contended by those favoring the bill, that the banks can secure
Government note issues at any time they wish. That is true if the
Federal reserve board would approve, as very likely it would if the
public interest required, but that is a protection available to the
banks alone. They may apply if they wish, but neither the Federal
reserve board nor the public at large could force such an application
to be made. The banks are in the business solely for profit. It is
for their interest to keep the rates of interest as high as they can, and
it will make no difference how much the public may be in need of
more money, the banks will make no application for Government
note issues till such time as the public is willing to pay a larger profit
than the banks can make without. The banks can bring out the note
issues if they wish but no one else can.
NOTE ISSUES MADE ASSET CURRENCY.

For more than a half century the money loaners have ridiculed the
issue of United States currency based on the credit of all the people.
Now they ask the United States to issue notes on the credit of the
people, but not for the people, nor in their interest. Instead it is
proposed to organize the private banks into 12 or more special cor-




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 144

porations and issue this currency on the security of notes, bills of
exchange, acceptances, Government, State, and municipal bonds. In
other words, it is to be a form of asset currency supported by the Government but given to special interests to be vested by Congress with
full and complete authority to scalp from the people and generally
exploit them.
By section 7 in this bill the Government is to divide the profits
that the Federal reserve banks get out of the people; that is, the
Government is to print and engrave currency for tnese private corporations and give them the monopoly of loaning it, and whatever
they are able to force the people to pay for the use of it such proceeds;
after the corporations have first taken out the expenses and 5 per cent
profit for themselves, the excess will be divided between these coporations and the Government. Considering section 7 in connection with
the note issues which the Government is supposed to charge for, and
also in connection with the charge to be made upon Government
deposits, this section 7 establishes a vicious principle. Upon the
note issue as well as the Government deposits, the policy of making
a reasonable charge, can not be reasonably questioned. That is
clearly within the Government right as well as a fair policy, but this
section goes further, and provides that after the special private
corporations to which Government note issues and Government
deposits have been furnished and a proper charge made, that after
these corporations have gotten out of the people a reasonable return,
that is 5 per cent as fixed by the bill, then whatever in addition to
that that can be extorted from the people the Government will
divide with the banks.
No one other consideration in connection with the business dealings
of the people with each other is so important as the money and
credit system. The authority for the money, as well as the support
of credit, depends for its stability on the Government. In the extension of the advantages sought to be derived from the use of
money and a practical use of credit the power of the Government
is absolutely essential. Any proper considerations by Congress of
this subject are necessarily national in their scope.
It is the acme of absurdity for Congress to place between the
people and the Government itself an agency in the absolute control
of the distribution of money and the use of credit that would be
valueless without the guaranty of the Government, and yet that is
the identical thing that has been done by Congress, and the Glass
bill emphasizes the absurdity.
Why should Congress place a controlling agency, employed for private gain, between the people and the Government of the United
States? That is what has been done by giving to the banks the
exclusive privilege of the use of the Government credit. Why is it
proposed that the banker should take the merchants', the manufacturers', and others' notes, as well as the bonds of towns, villages,
cities, States, and even the Nation's bonds, to the Government and
get currency, and at the same time refuse the producers themselves,
the makers of those notes and obligations, an equal privilege ? The
absurdity of the Government giving away its own credit to corporations to exploit the people is incomprehensible. The bankers are not
to blame. Congress is to blame for giving away the people's rights
and bestowing them upon the banks.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

145

It is true that Congress possesses the authority and has the power
to strip the banks of their exclusive monopoly, but the most of us
have not the courage, and therefore we have the absurdity of the
Congress of the United States giving to special interests the Government credit—the credit of the people—thereby forcing the people to
borrow at exorbitant rates of interest the very money that their own
Government issues on their own credit. The fiat of the Government
is stamped upon the coins and the currency and then given to special
interests and used as a means to pauperize the people. If the exclusive privilege were not given to the banks, then they would become
the people's natural agents, but with the exclusive monopoly they
become the people's masters.
The notes, bills of exchange, acceptances, bonds, etc., are the limited currency of those giving them—limited in its circulation by the
credit that one or more persons are willing to give to it. By this
Glass bill it is proposed to give the credit of the Government to these
and create an endless chain by means of which the Government is
to manufacture asset currency for the banks.
GOVERNMENT FURNISHES CAPITAL.

The Glass bill proposes to deposit all the Government funds in the
banks. In the past the funds have been approximately $250,000,000
and the sum increases with the growth of Government business. Of
this first sum of the people's own money to be taken.from the United
States Treasury the banks may loan to the people two-thirds and
keep one-third on reserve. They will get the people's notes, bonds,
etc., for approximately $165,000,000. Then, under section 17 of the
Glass bill, they will be allowed to take these notes and bonds to the
United States and deposit them and get United States currency.
This currency they will take out and loan to the people and get an
additional supply of notes and bonds. In the meantime they will
have collected a lot of interest on the first installment, and, with that
reloaned to the people, they take all the notes and bonds they get
and come back to the United States Treasury for another supply of
United States currency, and, as previously, they run out again and
reloan that currency to the people, and now again they have still
more interest collected from the people which they will have reloaned,
so they add that and come back to the United States for still another
supply of currency. If it were only the Treasury funds they were
to have it would be hampered some by the reserve required to be
back of the note issues, but they also get the deposits from member
banks and can do the same with those.
Thus we see that the specially created interests which the Glass bill
proposes to make will get the funds in the United States Treasury
ana a large part of the individual deposits of the people, loan them out
to their owners, the people, get the people's notes and. bonds drawing
interest, and keep returning over and over, again and again, for United
States currency to loan. Thus it is to continue " world without end,"
the people encumbered without end. It is to be a never-ending
pulley, with boxes attached, leading from the banks into the Treasury
of the United States, taking into the boxes the people's money, bringing it out from the Treasury of the people and into the banks, to be
8829°—H. Kept. 69, 63-1




10

CHANGES IN THE BANKING AND CURRENCY SYSTEM. 146

loaned to the people themselves at a price to be in the exclusive control of the banks. The Glass bill proposes to protect the individual
bank that rediscounts with the Federal reserve from exorbitant
interest rates, but none but member banks can apply and the bill gives
no individual borrower any protection as against an unreasonable
charge of interest by the bank.
In accordance with the legislative and executive policy, and upheld
by judicial decrees, running through their official acts, to be found in
statutes, department orders, and judicial decrees, the people have
been given into bondage. In less than 100 years the expense of
administering the investment of the money that this Glass bill alone
authorizes to be taken by the banks out of the United States Treasury,
plus the compounding of interest, at the rates that banks charge and
collect from the people, would absorb the equal of every dollar's worth
of property now in existence and still leave a deficiency on which to
declare the people bankrupt. I challenge any honest person to compute the cost to the people. If he does, he must admit the truth of the
statement. A somewhat similar process to that which this bill makes
possible for the pyramiding of loans from the use of currency authorized to be given to the banKs has existed for a long time by the use of
deposits and credits for loans based on bank accounts, and we are paying
now in the high cost of living partly because of that practice. A vast
majority of the people have no property, but live from hand to mouth
on the little part they get from the results of their daily toil. The
rest is absorbed to pay the toll that the Government practically provides for the banking and other special interests.
THE ABSORBING POWER OF INDIVIDUAL

FORTUNES.

By reason of the policy followed by the legislative and executive
departments, and supported by the judicial, there are several individuals in these United States, each of whose fortunes are now large
enough so that 6 per cent annual interest compounded as is the custom, computed for 100 years, would furnish the owners with all the
luxuries and extravagances of life, such as the families of the wealthy
usually indulge, and in addition enable them and their successors to
their fortunes to absorb the equal of the whole wealth now existing
in this country. There are more than a thousand others who in
twos, threes, fours, fives, and sixes could do the same thing. They
are all levying a tax, burden, or whatever you wish to call it on us
e v e r y day of our lives.
It is a fact that any and all the legislation that has been advocated
by the political leaders will have.mighty little influence in solving the
cost of living. It is not in the tariff bill, nor is it in the currency bill.
It will not come out of a bill that comes out of secret meetings and
closed caucuses. There can be only one purpose for doors being
closed to the public, and that is to whip subservient Members into
supporting something that does not give the people that to which
they are really entitled. This Glass biu is an example of that. Those
who provide us with bread and butter and with the clothes that we
put on our backs and the shelter for our bodies are the last to be
served. These, who are the source and very basis for the supply of
life's necessities, are deferred to a future period, while the Glass bill
that we are called on to enact continues the system which gives to




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

147

special interests a monopoly control of the distribution of money.
Those who toil must support it, and must appeal to these special
interests and pay them the toll for its use, with not one word m the
entire bill placing a limit on that toll.
It is generally pretended that the reason the money supply is out
of proper commercial adjustment at certain periods is because of the
extra demand for the movement of the crops. It is true that there
is a farmer's demand, but the trouble with the reformers is that they
do not intend to give the farmers the remedy. The farmer is put off
till the last. His rural credit system can wait. The speculating
interests are to be first supplied with funds to speculate on the farmers' products. This bill, in one of its sections, is expressly against
the farmer. It offers a sop in section 26 by permitting the national
banks to loan on improved farms for nine months, which would be of
little if any value to a farmer. The farmer, unless in desperate
straits, would be foolish to mortgage his farm for so short a period,
but section 17 of the bill discredits the farmer's note by refusing to
permit it to be used as security for United States currency, but allows
most other kinds of paper to be taken. There is nothing better than
a note secured by a farm mortgage. Farm-mortgage notes should be
accepted the same as merchants' notes and others when they have
the same period to run before maturity. A large amount of farmmortgage notes are coming due within 60 and 120 days all the time;
that is,.a farm mortgage, after it has run to within a period of 60 or
120 days of maturity, it makes no difference how long it was made for
originally, even if 10 years, is as good as any other short-time note,
and the bill should be amended to take such notes.
While I regret it, I am not surprised that the President might advocate a bill that he* could not possibly have had time to study, for his
multifarious duties make it impossible for him to give detail study
to these matters, but Members of Congress have time and are not
excusable for submitting a bill so weak in its value to the public. It
may be better than what we have now in practice, but the people are
entitled to a bill worth 100 cents on the dollar.
Various other amendments of lesser importance could be made to
the Glass bill, improving it, to which I shall not call attention in this
report, rather leaving them to be considered on the floor of the House.
In suggesting the amendments that I have, it is not with the intention of approving the bill even if the amendments are adopted. The
amendments would improve the bill, and with them in I could vote
for the bill when all things possible had first been done to adopt a
good bill.
The Glass bill is unfitted to an adjustment of the greatest financial
problems that now confront the people for solution. If it were to be
amended so as to meet the necessities of the present times, even the
title would have to be stricken out, another substituted, all the
sections rewritten, and there would be nothing left to resemble the
original.
NEW LEGISLATION AND NOT PATCHWORK IS NEEDED.

Congress was called into extra session to legislate with a view to
reduce the cost of living. All honest people must commend the purpose. Earnest efforts have been ajid still are being made to accom-




CHANGES I N THE BANKING AND CURRENCY SYSTEM. 148

plish that result, but oil account of peculiar partisan practices and
false rules for the government of Congress, for which men and not
parties are at fault, Congress does not nave presented to it in form to
vote oh measures suited to the people's most urgent needs. Secret
committee meetings and secret caucuses frame bills, bind and gag the
attending members, and by a system of evading record votes on separate important provisions, prevent the passage of legislation that
would result in a substantial reduction of the cost of living.
Unless some sudden change takes place in the government of Congress, that is not apparent at this time, nothing that is here being done
will reduce materially the cost of living to those who earn it by their
daily work. The reason why may be easily understood by anyone
who will carefully study the conditions. Such a study will reveal to
anyone the leading cause for the high cost of living. When one understands those, he will know that the two bills which by the rules governing Congress are permitted to be acted upon, will not accomplish
the result demanded.
In the hopes that the people, as well as their representatives in
Congress, may give this most serious matter attention early enough
to change the course of things here to give them a better turn, I have
labored to point out a few things that must be done if we would
give the people any material relief. I am not given sufficient time
to state all the facts that I wish to in this report. I have no greater
capacity than other Members, but I have put in the time to investigate carefully the conditions. I have gone out among the people
and seen the rich and poor in actual operation in business and work
and have studied them there as well as in their homes. I have had
enough experience in various ways to enable me to understand quite
well why it is. that a few people are now getting all the wealth that
results from the labor of people generally, and what is more important, I know that the power of the few to outrageously extort from
the people generally can be prevented. For the information of any
Member who has not had time to make the investigation for himself
and who wishes to study the subject further from my viewpoint and
so informs me, I will furnish a book which I have just published on
Banking and Currency and the Money Trust, and also a speech which
I delivered in the House August 2, 1912.
THE LOWER COST OF LIVING AND ITS RELATION TO MONEY AND CREDIT
AND TO INTEREST, DIVIDENDS, RENTS, AND PROFITS.

We must have food, clothes, and shelter, and require the instruments with which to ply our daily work. These are the prime
necessities, and are made available only as the product of labor.
They determine the initial cost in living. When the means of the
individual units in our social order—that is, of the people—are safeguarded and kept unencumbered while they provide their prime
necessities, their securing benefits from the social order in excess
of such prime requirements will be assured as a consequence. A
few concrete illustrations will make that clear.
It must be kept in mind that the Government of the United States
and of the several States has established a policy supported by
general practice, by statutes, and the decrees of courts, that the
owners of property are legally entitled to a rate of interest or divi-




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

149

dends or profit return, that in and of itself encumbers all people.
The people must have the use of the property or the products from
its use and therefore are compelled to pay the interest. The power
of its enormous burden I show in the following interest table compiled by a former Librarian of Congress. This table shows the
growth of $1 by compounding interest in the manner of the banks.
One dollar loaned for 100 years would grow as follows:
Interest at—
6 per cent per annum would amount to
8 per cent per annum would amount to
10 per cent per annum would amount to
12 per cent per annum would amount to
18 per cent per annum would amount to
24 per cent per annum would amount to

$340
2, 203
13, 808
84,075
15,145, 007
2, 551, 798, 404

I shall cite a few individual cases from which Members of Congress
can easily determine that not only on paper and in theory is the
Government supporting a policy of pauperizing the people, but it is
actually pauperizing them by its support of this practice. Use the
table above, and from it the tremendous power of interest and dividends to oppress the plain producers may be seen. The individual
fortunes are stacked up against the people's daily energy, so that
from the products of their toil the interest, dividends, and rents must
be paid. It means that dead capital is stacked up against human
life so as to make humanity subservient to so-called " vested rights,"
by law privileged to take an extortionate toll for the use of substance which has been produced by the people's own toil. That is the
incumbrance to which I referred as being directly and indirectly
responsible for the high cost of living. No bill that would properly
deal with this problem has been permitted by the so-called "leaders"
in this Congress to get a fair hearing. On the contrary the "leaders"
have appropriated the public committee rooms and the Halls of
Congress as well, corralled subservient Members, locked the doors to
keep the other Members and the public out, and produced bills that
Members have been coerced to support under the guise of harmony in
a party.
The following cases to which the table of interest may be applied
is illuminating:
From the testimony given by George F. Baker (president of the
First National Bank of New York City) before the committee
appointed to investigate the Money Trust we learn that the operations of a single bank produced in 50 vears profits equal to $86,000,000,
or 172 times its original capital. It that bank continues to do business and is allowed to pile up profits in that geometrical progression
it alone, on an original investment of $500,000, in less than 100
years would have the power to extort from' the people more than the
equal value of all the existing property in the United States, and
that bank is but one of the 30,000 banks operating on an uneconomic system.
The capital stock of the national banks alone, in 1912, was
$1,046,012,580. The dividends paid for the year ending June 30,
1912, averaged 11.66 per cent, which was in addition to the accumulation of a large surplus. Going at that rate, compounded as the
banks do, they would have the equal of the entire present valuation
of the country absorbed in less than 50 years and would have the




CHANGES I N THE BANKING AND CURRENCY SYSTEM. 150

surplus from year to year to do anything they wish with. These
dividends are over and above all the expenses which include pay
for the clerks and high salaries for the officers connected with the
banks. That is not all; the bank officials have unusual opportunities, and most of them do speculate in various ways, and m the
aggregate they get greater profits from deals that make no return
to the banks than the actual dividends declared. What I have
named includes the national banks alone. There are more than
twice as many other banks, loan and trust companies of the different
kinds. These do about twice as much business as the national
banks. That is just one great interest, the banking and financial.
There are the railways, the steel and iron companies, the oil companies, the coal companies, the telegraph and telephone and numerous other companies, besides a thousand or more great individual
fortunes, that concentrate into very limited control the principal part
of the active capital in the country. This is held on one side by the
so-called capitalists, protected by the "vested rights doctrine/'
which means law, that enables them to extort from the people in what
are called dividends, interest, rents, and profits, an amount that, as
shown by the interest table given before, is absolutely sure to keep
the cost of living high and to keep the people working to support
that system. By that system any person who can get a few thousand
dollars can live in idleness or as a spendthrift on the interest that
the working people of this country are forced to pay.
Members of Congress are intelligent. What I have already stated
is sufficient to show any intelligent person that our present system is a
fraud on the people. No intelligent, self-respecting people can long
tolerate a governmental system which by its established and expressed policy places an unnecessary burden on the citizenship. I
shall not multiply the examples showing the injustices created by the
policy of Government. A word to the wise is sufficient. To others
it would be hopeless to pile up examples.
W E REQUIRE TO LIBERATE THE PEOPLE FROM EXCESSIVE

INTEREST.

Under the Glass bill the amount of money that would be exclusively within the control of the banks within a few months after its
becoming a law would be increased. The bankers' powers to collect
interest would be considerably augmented. It is on that account
that- the Glass bill does not provide a remedy to meet the people's
greatest necessity.
There is but one way to meet the financial necessities of the people,
and that is to have the Government support all the people in whatever useful industry they may be engaged. The Government must
withdraw from the banks the exclusive monopoly control of financing
the people and give to every legitimate and necessary enterprise
impartial governmental support. It is absolutely necessary to an
independent people that the Government should stand ready to do
that. Then the bankers, seeing that they no longer have an exclusive monopoly, would exercise the office of an agency instead of
holding the hand of mastery. With that purpose in view, and to
pave the way for very early permanent relief to the people, I offer
the following amendments to the Glass bill:




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

151

Strike out the title of the Glass bill and substitute the following for
its title:
A BILL To amend the national banking laws, to provide a revenue system by which
the Government taxing powers shall be represented by United States currency
drawn on the people of the United States to be disbursed through the governmental
agencies on appropriations by Congress for services rendered or to be rendered the
Government, to inaugurate, develop, and maintain an American financial policy
and currency system which will liquidate and eventually abolish debt, National,
State, and municipal, and put the public and private enterprises, industries, and
exchanges upon a sound economic basis, and remove the power of private interests
to monopolize the mediums of exchange, and for other purposes.

Also strike out all of the Glass bill following the enacting clause,
except sections 26, 28, and 29, and renumber said sections so as to
be numbered sections 18, 19, and 20, respectively, and in lieu of the
part thus struck out insert after the enacting clause the following:
FISCAL DEPARTMENT.

SECTION 1. That there is hereby established a new fiscal department of the United
States as an adjunct to and within the jurisdiction of the Treasury Department of the
United States. The board of said fiscal department shall consist of eight members.
This number shall include the Secretary of the Treasury, who shall be member ex
officio, but without voting power except as specifically in this act provided, and seven
others, nonpartisan, to be selected by the President, by and with the advice and consent of the Senate, and whose term of office shall be for ten years: Provided, That in
naming the first board one shall be named for two years, one for four years, one for
six years, one for eight years, and three for ten years, and always subject to removal by
and with the consent of the Senate. The salaries of the seven members thus appointed
shall be fixed by Congress annually in the appropriation bills. The Secretary of
the Treasury shall be the chairman of said board and shall select a first and second
vice chairman, who shall, in the order named, preside at meetings in the absence of
the Secretary of the Treasury. The Secretary of the Treasury shall have no vote
except in case of a tie vote, when he may vote to break the tie. Five members shall
constitute a quorum. The seven members on the board appointed by the President
and confirmed by the Senate shall devote their entire time to the business of the fiscal
department and do the principal part of the work in order to establish in practical
working order a new fiscal department; that said board shall have authority to
employ such assistance and incur such expenses as may be necessary in the performance of their duties, and for such purpose there is hereby appropriated $100,000, or
so much thereof as may be necessary, to be paid out of the moneys in the Treasury not
otherwise appropriated upon vouchers approved by the Secretary of the Treasury.
UNITED STATES CURRENCY.

SEC. 2. That in aid of Congress in pursuance of the power conferred by the Constitution upon Congress to coin money and regulate the value thereof the fiscal department
is hereby authorized to issue a new United States currency, which shall be in the form
of public-service certificates, and these shall state upon their face in substance that the
bearer has performed a public service of the value stated in the certificate, that each
separately is issued and circulated for value received under the provisions of this act,
and the same shall be the lawful money of the United States and shall be receivable
at par for all debts, dues, and demands, public and private, within the jurisdiction
of the United States, created after the passage of this act; that the same shall be printed
and engraved by the Bureau of Printing and Engraving from plates and dies devised
by the fiscal department, and shall be issued from time to time in such quantities
and in such denominations as the public interests require, and in all cases, except
where otherwise provided in this act, shall first be placed in circulation by being
earned in public service of the Government or in the supply of some material needed
for Government use, and then for its full par value, and shall not after returning to the
Government be again reissued or circulated except for a like purpose.
DISTRIBUTION OF UNITED STATES CURRENCY.

SEC. 3. That to carry out the appropriations made by Congress, thefiscaldepartment
shall issue the United States currency authorized by this act to the various departments of Government for all public purposes that require or may require the expendi-




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 152
ture of public funds. That when funds have been appropriated by Congress and the
United States currency is issued to cover such appropriations, the fiscal department,
for the convenience in the transaction of business through the Government disbursing
agencies, may deposit such currency, as well as checks, drafts, and other receipts of the
Government, in national and other banks, or in postal savings banks, for checking
accounts, but banks shall not be required to pay interest on such accounts. Deposits
of checks, drafts, and other evidences of dues to the Government may be made in the
banks, but otherwise the United States currency only shall be deposited in the banks
by the Government, which currency when so deposited shall be held as a specific
fund to special deposit, but checks and drafts and other evidences of dues to the Government deposited by the Government shall not be distinguished from or have any
privileges or preference over other deposits of individuals, whether private or otherwise,
in the same banks. No deposits shall be made in banks for the purpose of creating
surplus therein but merely to facilitate the transaction of public business. The
banks shall, so long as there remains a credit to the Government's general account, pay
checks drawn by the Government agehcies out of the general account, and the use of
the special deposits of United States currency in payment of such checks is hereby prohibited until the general account shall have been exhausted, in which case payment
may be made out of the'special deposit.
CANCELLATION OF EXISTING

CURRENCY.

SEC. 4. That from and after the passage of this act all United States notes, currency,
gold and silver certificates, and national-bank notes shall be full legal tender for all
debts and dues, public and private, in the United States, its Territories, and possessions, except debts or contracts existing at the time of the passage of this act, which
by their terms are payable in some other form of money or material, but while in
circulation the present money and currency aforesaid, as well as all existing coins,
shall not be deprived of its present qualifications, and the outstanding United States
notes, currency, gold and silver certificates, and bank notes shall be redeemed on
demand in such other form of money as now provided by law; and as soon as practicable after any United States notes, currency, gold and silver certificates, and bank
notes come into the possession of the Secretary of the Treasury for redemption the
sam$ shall be canceled and destroyed: Provided, That when such redemption is of
national-bank notes the amount canceled shall operate in liquidation or an equal
amount of United States bonds securing the same, except that any national bank
may, by giving the fiscal department such notice as the said department may require,
have the national-bank notes redeemed, reissued by complying with the laws as to
the maintenance of security, and no such notes, currency, or other certificates shall
be reissued except as in this act provided. All existing laws for reissuing or recirculating any such notes, currency, or certificates are hereby repealed. That when
gold or silver becomes the property of the United States their legal-tender quality,
except as to subsidiary coin required for circulatory purposes for small change, shall
cease and the gold be reserved for use in the redemption of outstanding obligations
and for use and in aid of interstate exchanges when the Government shall m any
way be interested. That the fiscal department may purchase gold from time to
time at the marketable value, if necessary, for either of said purposes, and also when,
in its judgment, the national debt can thereby the better and the sooner be extinguished, and except as authorized by this act, the United States shall receive gold
for coinage only, the purpose being solely to affix the governmental stamp of weight
and fineness to such coins, but all coins so made after the passage of this act shall
have no legal-tender quality. A charge equal to the cost of coining the same shall
be made, which coin shall forthwith be removed by whoever it may have been
coined for, and no department of Government shall hereafter give storage facilities
to any gold bullion or coins not belonging to the United States and shall issue no
more gold or silver certificates.
SEC. 5. That on and after three years from the passage of this act a storage charge
equal to the cost of maintaining the same shall be charged and collected on all gold
and silver held against outstanding certificates, it being the ultimate purpose and
policy of this act to remove the Government fiat from all metals and reduce metals
to their commercial commodity value.
AID TO THE STATES.

SEC. 6. That all States of the Union whose laws now or hereafter confer upon them,
or their executive or other State functionary, the power to borrow money on the credit
of the State or to guarantee the obligations and debts of their counties, towns, boroughs,




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

153

villages, cities, municipalities, school districts, or political divisions for any just and
recognized public use, may apply to the Secretary of the Treasury to secure loans of
United States currency for the purpose of defraying the current expenses of the State
or any of its political subdivisions aforesaid for which the people of the State or political division aforesaid are taxed. The Secretary of the Treasury shall certify to
Congress as often as practical, not less than once annually at the beginning of each session and oftener when practical, an abstract of such applications and the details so
far as practicable in regard thereto, to the end that Congress may in its discretion
appropriate United States currency in such sums as it deems best for the use of such
State or States applying therefor, and to be loaned by the Federal Government to the
States only. Before any such loans shall be made the fiscal department shall recommend uniform rules and regulations, so that Congress may not discriminate or allow
discriminations by the fiscal department in making such loans, and shall prevent
the States, in the use of the funds secured, from allowing any discrimination in the
administration of the system. Such proposed rules and regulations shall provide for
a uniform expenditure by the States, so that the issue of United States currency and
the volume shall conform to the demands of business, public and private, avoiding
alike redundancy and insufficiency, and shall provide that no State shall pay out
said currency secured from the Federal Government except for the full face value of
the same in service to the public for public purposes for which the people are annually
taxed, so that the currency may be returned in the payment of such taxes through the
usual methods; and before any State shall be extended a loan it shall establish and
submit to the fiscal department the rules by, which it would be governed in the expenditure, which rules must be satisfactory to the fiscal department. All rules and
regulations thus proposed shall be referred to Congress for such action as Congress may
adopt.
SEC. 7. That the charge for loans to the States and the manner of guaranty by the
States and the form of guaranty to insure the proper expenditure of the same shall be
adopted by the fiscal department and shall in every respect be uniform to the States
and subject to review and confirmation by the Senate.
NATIONAL PUBLIC WORKS AND IMPROVEMENTS.

SEC. 8. That the fiscal department shall devise a plan whereby Congress may be
guided in the enacting of legislation to authorize the fiscal department to establish a
system of national public works and improvements adapted at all times to give immediate relief to all congested labor conditions within the territorial jurisdiction of the
United States and render available all surplus labor and insure against enforced idleness and the ills incident thereto by means of the inherent powers of the Government
to establish justice and promote the general welfare, and shall report such plans and
the outlines of a policy to Congress with recommendations.
AID TO THE AGRICULTURAL AND HORTICULTURAL INTERESTS.

SEC. 9. That the fiscal department shall proceed with all reasonable expedition to
communicate and cooperate with the authorized representatives, organized and
unorganized, of the agricultural and horticultural interests of the Nation, with a view
to the adoption of a plan and policy of systematizing the production, storage, transportation, and distribution of agricultural and horticultural products, to the end that
both the producers and consumers of such products may have complete emancipation
from the present extortions of speculators and manipulators in these products and of
organized and trustified storage, elevator, and transportation combinations now monopolizing the same and controlling and manipulating the prices of such products both to
the producers and cons mers, and shall, if practical, propose such an extension and
enlargement of the postal savings system, and if need be, increased issue of United
States currency in aid thereof as will provide for a system of Government loans to
owners and operators of improved agricultural and horticultural lands, upon such
terms as will amply insure the repayment of such loans, at a rate of interest not to
exceed four per centum, payable semiannually. Snch interest shall be reduced to a
nominal interest barely sufficient to reimburse the Treasrry as soon as the national
debt can be extinguished, and such plan shall be reported to Congress with recommendations.
GOVERNMENT LOANS TO W A G E

EARNERS.

SEC. 10. That the fiscal department shall proceed with all reasonable expedition to
communicate and cooperate with the organized and unorganized wage earners to
consider and devise a plan and policy for a system of Government loans to wage




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 154
earners at the lowest rate of interest consistent with the cost and integrity of the
service, which loans will enable them to provide homes independent of real-estate
speculators with an adjunct and department of wage and salary advances to further
protect wage and salary workers from the overcharge made by loan agencies. These
plans shall be submitted to Congress with recommendations.
AID TO MANUFACTURING

INDUSTRIES.

SEC. 11. That the fiscal department shall proceed with all reasonable expedition to
an inquiry into the conditions of the manufacturing industries of staple products in
the United States and Territories with a view to ascertain the state of such industries
and devise plans for the inauguration of a policy to aid and assist such of those manufacturing interests as are not involved in monopolistic combinations, or are able
and disposed to extricate themselves from existing monopolies, which plans shall
involve a system of Government loans and advances to such manufacturing interests
as are ablfc to insure the repayment with the lowest rate of interest consistent with
the cost and the integrity of the service, which plans shall also be reported to Congress with recommendations.
IN GENERAL.

SEC. 12. That it shall be the duty of the fiscal department to investigate into the
financial conditions of all legitimate industry, work, and enterprise of whatsoever
character, the pursuits and results of which, under proper conditions, promote the
general welfare, and ascertain what plan or plans, if any, can be contrived for their
aid by extending Government loans to them or such of them as require aid. The
fiscal department shall report to Congress from time to time thereon with recommendations.
SEC. 13. That the fiscal department in its administration shall take notice' of the
economic fact that payment by the Government for a service to the Government
involves a collection from the people of an equal amount plus the expense of collection, and that the issue of United States currency in payment of Government expenses
creates a demand on the part of the people equal to the currency required to be returned to the Government in cancellation of taxes or dues; and further, that economic
private enterprise (eliminating speculation) for the production of commodities or the
rendering of services for the use of others legitimately involves the return of commodities or services of equal value, whether the same is accomplished by direction or indirection, and that whenever actual commodities or services are not immediately or
directly exchanged in a cancellation of the respective obligations, then a credit representative is necessary, and so far as possible, in a practical sense, when applied to the
affairs of the people as they exist, the obligations of credit should be liquidated without
the burden of a greater charge than is consistent with the cost and integrity of an honest
and just system. Therefore in the supply of United States currency guaranteed by
the credit of the people as a medium oi exchange, the volume to be placed in circulation should conform to the needs of commerce, avoiding alike both redundancy and
insufficiency, and with that as the purpose the fiscal department shall make estimates
and report to Congress, for under the Constitution no money shall be drawn from the
Treasury but in consequence of appropriations made by law.
AUTHORIZING NATIONAL BANKS TO BORROW

RESERVES.

SEC. 14. That the national-bank act is hereby amended so as to permit national baifks
to borrow from their own reserves by complying with the provisions of this section.
That any national bank having its capital and surplus unimpaired may apply to the
fiscal department to borrow from its cash reserves maintained in its own vaults. The
bank so applying shall set forth in detailed description the securities it proposes to
deposit with the fiscal department for the loan, which securities shall be of the same
character as is by law and practice now required or as may be hereafter required for
the deposit of Government funds in banks. If in the opinion of the fiscal department
the public interests require the extension of any such loan or loans, the same shall
be authorized by said department to the extent it deems wise; but before a bank
authorized to borrow from its reserves shall be allowed to do so its securities shall be
approved and deposited with the fiscal department in such amounts as the fiscal
department shall demand, and the bank or banks having complied with all the rules
and regulations of thefiscaldepartment, on order from said department, there shall be
transmitted from the nearest subtreasury to the bank or banks to which such authority
is extended United States currency to the extent of the amount authorized to be
borrowed from the reserves, and the bank shall specifically retain the United States




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

155

currency thus received in its vaults, and then may loan or pay to its depositors or
pay its other obligations from its other cash reserves held in its vaults to the extent
authorized, and shall substitute the United States currency thus paid out to be kept
as reserves and for the benefit of the bank's creditors to the extent of the actual amount
of the reserves that have been borrowed and paid out by the bank, as herein authorized. Any bank thus borrowing shall pay interest to the fiscal department on the
amount of United States currency loaned to it under the provisions of this section
at a rate which shall not be in excess of four per centum per annum for the first three
months, which rate shall be increased thereafter monthly at the rate of one per centum
per annum for each additional month until paid, but subject to the fiscal department
requiring the payment when in its opinion the public interests require it. For the
special purpose of carrying out the provisions of this section and the following section there is hereby appropriated, in addition to all other sums appropriated by this
act, the sum of $1,500,000,000 of United States currency, authorized by this act to
be specifically retained by the fiscal department for said purpose, and to be specifically retained by the fiscal department for said purpose, and to be printed and engraved
in advance in such amounts only as are necessary to insure a sufficiency immediately
when required.
STATE BANKS.

SEC. 15. That from and after the passage of this act any bank or banking association
or trust company organized or incorporated by special law of any State, or organized
under the general laws of any State, or of the United States, and whose capital and
surplus is unimpaired, may make application to the fiscal department for the right
to borrow from its cash reserves maintained in its own vaults on complying with this
act and the rules and regulations of the fiscal department: Provided, That the same
shall be consistent with the laws of the State under which such bank or trust company is organized: And provided further, That a majority of the stockholders in the
bank or trust company of such applicants shall sign in writing their consent with
the fiscal department to bring the banks so applying within the laws, rules, and
regulations that govern national banks in securing such loans, except that no bank
shall be refused the privileges and advantages in regard to such loans on account of
the amount of its capital and surplus so long as the same remains unimpaired. All
such banks having complied with the provisions named shall be entitled to like
privileges accorded to national banks.

The substance of what I offer in amendment above is embodied in
a bill that I introduced August 8, 1913. Sections 14 and 15 provide
for an emergency currency that would absolutely relieve the banks
of difficulty to furnish funds to move the crops, and would save the
Nation from the burden of establishing another retinue of officials
for 12 or more central banks, such as the Glass bill provides. With
these amendments that I offer enacted into law, the many economic
evils now existing in our social conditions would directly cease.
Furthermore, the bankers would then be instrumental in carrying
out the great reform. Once their exclusive privilege and monopoly
is taken from them, we shall have the benefit without the burden of
their practical dealings.
The bill that I have offered as a substitute for the Glass bill has all
the elements of a complete system, and would reach its perfection
through the work of the board of the fiscal department, which board
would give all its time to that purpose. It would not discard the
present system, but would require it to stand on its own merits. If
the old system would respond to the demands of freedom in trade,
that system would continue in use, but if it failed, the new system
would respond. The issue of currency would be scientifically regulated to meet the demands of trade. It would be controlled by the
Government instead of by the banks. While this is not a party
question the following plank in the Progressive Party platform states
the correct principle:
The issue of currency is fundamentally a Government function and the system
should have as basic principles soundness and elasticity. The control should be




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 156
lodged with the Government and should be protected from the domination of manipulation by Wall Street or any special interest.
GOLD STANDARD RESPONSIBLE FOR MANY OF THE SOCIAL EVILS.

It will be objected to my bill that it discredits the gold standard.
It is difficult to remove a prejudice such as that existing in tavor of
the gold standard.
On March 14, 1910, after an adroit campaign carried on by the
special interests covering a considerable period, Congress passed an
act which called for the permanent establishment of the so-called
"gold basis" for all of our money. Since then there have been new
inventions made for mining gold, which make the available amount
more plentiful, with the result that the "gold basis" is puzzling the
Money Trust. But there is a still further complication and that is
that the people are becoming familiar with the fallacy of the "gold
standard and they are becoming dissatisfied in proportion to their
understanding of its bad effects.
The dollar is worth less now than it was in 1900; that is, it will buy
less. That fact, particularly, does not satisfy the creditor class. They
have had enormous interest returns, but they have lost a part of that
advantage because of the depreciation of the purchasing power of the
dollar. To a greater or less extent all of the people are dissatisfied
with it; many for selfish reasons; and they only desire a remedy to
be adopted which will help them alone, but there are fewer of these
than there are of those who seek a reform which will better the conditions of all.
We have seen many comments in the press lately in regard to a
plan devised by Prof. Irving Fisher, of Yale University. Mi. Fisher
is no doubt an honest and earnest worker who is trying to reform the
gold standard. He has arrived at the inevitable conclusion that every
capable student must finally adopt, and that is that the present gold
standard is not the standard by which we can secure honest money.
Prof. Fisher has given a most thorough analysis of the production
and supply of gold and shown quite extensively the effect of its present
use as a money standard upon the prices of commodities. I have
given below a synopsis of his plan as stated in the Boston News Bureau
of December 28, 1912. It is as follows:
Prof. Fisher is one of the most distinguished economists in this country, if not in
the world. He is eminently practical and not merely theoretical in all his work and
writing.
All who have to do with long-time contracts recognize the desirability of a monetary
unit of fixed purchasing power.
The following is Prof. Fisher's plan for converting the gold dollar into such a comosite unit, thus standardizing the dollar. Such standardization would be effected
y increasing or decreasing the weight of gold bullion constituting the ultimate dollar
in such a way that the dollar shall always buy the same average composite of other
things.
Every dollar in circulation derives practically its value or purchasing power from
the gold bullion with which it is intercontrovertible. Every dollar is now intercontrovertible with 25.8 grains of gold bullion (nine-tenths fine), and is therefore worth
whatever this amount of bullion is worth.
The very principle of intercontrovertibility with gold bullion which we now employ could be used to maintain the proposed standardized dollar. The Government
would buy and sell gold bullion just as it does at present, but not at an artificially
and immutably fixed price.
At present the gold miner sells his gold to the mint, receiving $1 in (say) gold certificates for each 25.8 grains of gold, while on the other hand the jeweler or exporter




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

157

buys gold of the Government, paying $1 of certificates for every 25.8 grains of gold.
By thus standing ready to either buy or sell gold on these terms ($1 for 25.8 grains),
the Government maintains exact parity of value between the dollar and the 25.8
grains of gold. Thus the 25.8 grains of gold bullion is the virtual dollar.
The same mechanism could evidently be employed to keep the dollar equivalent
to more or less than 25.8 grains of gold, as decided upon from time to time.
The change in the virtual dollar (bullion weight of gold intercontrovertible with
the dollar) would be made periodically, or once a month, not by guesswork or at anybody's discretion, but according to an exact criterion. This exact criterion is found
in the now familiar "index number," which tells us whether the general level ot
price is, at any time, higher or lower than it was. Thus, if in any month the index
number was 1 per cent above par, the virtual dollar would be increased 1 per cent.
Thus the dollar would be " compensated " for the loss in the purchasing power of each
grain of gold by increasing the number of grains which virtually make the dollar.

Prof. Fisher has performed a great service to his country and to the
world by discrediting the gold standard so convincingly. When a man
of his prominence and ability has the courage to state his beliefs, the
more timid of those holding like views, of which there are many, ought
to take an active part in supporting the indictment of the gold
standard.
While the professor has clearly indicted the gold standard and conclusively shown that it is a false one, I do not agree with the remedy
that he proposes. Instead of proposing to abandon gold as a standard
and relegating it to its natural place among the articles of commerce,
he advocates its reform and would still retain is as a standard by
making the weight of the dollar variable and determining its value
from time to time according to a commodities index. The professor
is surely correct in his assumption that commodities have actual value
worth considering in connection with the establishment of a true
exchange system based upon the actual value of services and commodities. It is to be regretted that Prof. Fisher has complicated the
conclusions he arrives at by continuing to consider the gold standard
entitled to any greater recognition than is accredited to commodities
in general. After proving its falsity he should have suggested the
abandonment of the gold standard.
If we were compelled to change the weight of the dollar monthly,
quarterly, or even annually, as we would have to do with a commodity
dollar; if we tried to keep it of the same purchasing power all of the
time, it would give us more trouble than we now have in changing the
tariff schedules; but while Prof. Fisher has performed a world service
in being instrumental in giving general publicity to the falsity of the
gold standard, that publicity is pushed by the influence of selfish
interests, because they are pleased with the remedy he proposes. If
he had not proposed to standardize the gold dollar, his proof that it
is not an honest measure of value would have received no publicity
greater than he himself and his friends and a few others could give to
it. It would have been ridiculed if he had not proposed a remedy
that suited the interests, for the money sharks demand some measure
that is favorable to them and not fair to the people. They have
always sought to make the world believe the gold standard to be
sacred and, therefore, that the people were bound to support it, no
matter how much it wronged them. These selfish interests have simply seized on this proposed remedy, which I believe Prof. Fisher to
have erroneously suggested without his having given as much thought
to the remedy as he had to the facts which conclusively prove gold to
be a false money standard.




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 158

It may seem strange to some people that this remedy suggested by
Prof. Fisher should be advertised all over the world now, but there is
nothing strange about it, for the all-powerful Money Trust interests
are quick to observe anything that might be made use of by them, and
immediately upon its appearance they seized upon the idea of standardizing the gold dollar and were instrumental in having the plan
advertised in order, if possible, to induce the people to accept it as a
remedy.
It may not be generally realized by the people that this is a critical
period in the establishment of governmental policies, but the interests
are especially alert to that fact. Everything is being done to make
the people accept some worthless makeshift, and in some * cases
actually harmful, so-called " remedies," which, if accepted, will
delay the adoption of real substantial remedies until another generation shall enter public life. It is because of that fact that I fear the
Glass bill may delay a true remedy. Simultaneously, in all countries
where they have the gold standard—and that is in most countries, and
in the others equally unjust standards are used—articles were published which were substantially the same in substance as the following
which was published in a Washington paper on April 12, 1913:
TO ASK INTERNATIONAL GOLD-DOLLAR AGREEMENT.

One of the features of the proposed currency legislation which will be considered
by Congress is the initiation of a movement for an international agreement for the
purpose of preventing the depreciation of the gold dollar.
Such action has been suggested by eminent economists. It is widely held that
the enormous increase in gold supply and the consequent depreciation of the gold
dollar is the real cause of the high cost of living and high prices.
Democratic leaders, especially Senator Owen, chairman of Banking and Currency,
feel that if the cost of living is to be reduced the gold situation must be taken into
account.

Not all of the articles appearing in the press directly discuss the
gold standard, but many of them are adroitly written in order to
impress the reader and prepare him to receive the information that
the gold dollar is not now a good standard, but further designed to
make the reader come to a wrong conclusion on the question of a
remedy. When the first half of an argument is true, unless the reader
is very careful it goes far toward making him believe that the second
half is also true, and that is frequently the case even when the conclusions are wholly erroneous, as long as the material is adroitly
handled. That is where the danger comes in the discussion of the
gold standard from the side of the special interests alone. Innumerable articles are now published, in fact the plan is systematically advertised for that very purpose. But there are other
articles which are written and published in good faith, and in these
there is no intention to deceive. An article was published in Collier's Weekly, also on the date of April 12, 1913, which I quote:
THE DISCOURAGEMENT OF THRIFT.

The people of the United States have now saved up well over a hundred billions,
as measured by current money standards. The aggregate is amazing, and, while the
amount per capita is not large, nothing like it was ever known before in any country.
This saving takes on many forms—the largest, of course, being in the rearing of
children, which shows itself in the steady increase in the value of land. The next
is ownership of enormous amounts of securities of railway and industrial companies




CHANGES IN THE BANKING AND CURRENCY

SYSTEM.

159

and the like. Then probably comes life insurance. The savings in banks are relatively
smalL The increment in land values goes to much less than one-half of the population,
even in theory, and a comparatively small number of people get the benefit which is
made up of the efforts of all. The larger amount of the securities outstanding represents a more or less fixed value. The eighteen billions of insurance in force is of absolutely fixed value- While these securities and insurance obligations were being
created the relative worth of the dollar has been rapidly declining. The forehanded
folk who saved and loaned this money get for it an average return of less than 5 per
cent, and if they received back the principal now it would buy of land or food
one-third less than 12 or 15 years ago. This is a savage penalizing of thrift. We
believe that events will soon focus public attention upon this serious problem. The
procedure of the insurance companies, which in part is enforced by law, is of special
interest. The companies collect above $600,000,000 annually from policyholders,
and from this loan largely on long-time notes. They act simply as money brokers,
but with this effect, that with the rapid depreciation of the currency in the last 15
years, they are now returning to their policyholders, on death claims or matured
E o l i c i e s , relatively far less than the average amount of money which the policyolders have paid in. Roughly speaking, the policyholder has been paying in
$1 bills; he will get back 66-cent pieces. Theoretically, the compounding of the
interest on premiums ought to pay the companies' expenses and yield the policyholders a profit on the average payment. In point of fact, with the extravagance
of the companies and the decline in the purchasing power of the dollar, there is a
serious loss. This is not as it should be. A remedy might lie in a radical change of
investment™ A larger part of the insurance money is loaned directly or indirectly on
land. Actual ownership of the land ought to be as safe as loans, and, if gold inflation
is to continue, more profitable. It is something to think about.

Surely Colliers states the truth when it says that it is something
to think about. We have indeed been buncoed long enough—so long
that we ought to think about it seriously. It is up to Congress right
now.
I believe that the remedy is necessarily twofold: First, and concurrent with the establishment of a new system, the old system should
be so amended that some of its most serious administrative defects
will be diminished. It should then serve as a vehicle for carrying out
the equitable relations and obligations already existing as a result
of the legitimate business based upon it.
Second, an entirely new system should be instituted, which shall
be founded upon the natural demands of commerce and trade and
divorced from personal favor or property preference. This new
system should be the basis for the establishment of a permanently
solid and equitable means of exchange.
In order to completely accomplish the latter, we will have to cease
monetizing gold. But that prohibition would not prevent, nor should
we desire to prevent, the use of gold as a means of exchange. The
Government, on being paid the cost of stamping, may properly stamp
the weight and quality on any commodity of commerce and let it
pass in exchange on a basis of its own intrinsic value. Anyone who
demands more than that privilege for the use of a metal or other
commodity is intentionally unfair to the rest of us, or ignorant. In
most cases it is because the persons accept seeming facts without
actually understanding the conditions which surround them. If the
owner of gold, silver, or other commodity desires to pay the Government the expense of the operation, there need be no objection. To
so stamp gold and make it legal tender is simply to decrease the
value of our labor, and of our property—if we have any, unless we
also possess gold enough to offset, which most of us do not.
The owners of gold claim that it has an intrinsic value which
makes it the most practicable commodity to use as money.. Because




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 160

of its small bulk it is a convenient commodity to ship and store.
But it can be used as a means of exchange without making it legal
tender. The Government could still stamp its weight and fineness,
and then it could be exchanged in the same way that it now is if it
really is intrinsically worth what they say. If it is not, then it should
be exchanged for only what it is worth. When the owners of gold ask
anything more, they, in effect, admit that it becomes more valuable
with the legal-tender privilege than without. They would not demand
it if that were not true. It can not be made legal tender except by
governmental act. A governmental act is the act of the people, and
there is no reason why the people should stamp gold or any other
commodity that belongs to individuals with a special privilege.
This results in a tax against themselves. Let gold be weighed and
tested and given credit only for what it is. Existing coins will retain
their legal tender while in circulation, but when the Government
acquires any such, their legal-tender character should be removed, and
after that bullion should be stamped with its weight and quality and
should become an article of commerce standing on its own merits.
If the owners of gold are correct in their statement that gold circulates on its intrinsic value, instead of partly op. that and partly on
the additional value it acquires by reason of the demand created by the
legal-tender stamp, it is useless for them to ask that it be made legal
tender, and if gold is not commercially worth what it circulates for as
legal tender, then the owners are unjust in asking the public to support the value added to gold by the Government stamp. Let them
take whichever side of the proposition they wish. In the one case
the legal-tender quality would be useless. In the other it would be a
burden placed upon the public and supported for the benefit of the
owners of gold.
To cease monetizing gold or metal is to drop a practice long indulged in for the benefit of the money loaners. The people have
become accustomed to paying them for the credit supported by
themselves. I can not say that it can be entirely stopped. There
are many practices that injure the people generally, but are nevertheless followed. I simply call attention to certain facts that can not
be successfully disputed. I know, and so does any careful student
know, whether he admits it or not, that the fact that the Government
stamps legal-tender privileges on gold creates an increased and artificial demand for it, and consequently a merchantable value that is
very much in excess of what it would be if the gold did ot have
impressed upon it this legal-tender privilege. It now partakes of the
character of monopoly. Every additional cent of credit given to it
above intrinsic worth as an article of commerce, by reason of the
Government's stamping it legal tender, is first extorted from the
people's own credit, next accumulated in the form of so-called
'capital," and after that becomes the basis for charging them compound interest for generations—perpetually—if they shall not
emancipate themselves by an abandonment of this false practice. As
far as the principle is concerned, there is no difference between the
Government stamping gold as legal tender and giving the owner the
advantage of its increased value, and the same stamping process
being applied to plain paper.
Under the present practice all value in excess of what gold is
actually worth as an ordinary article of commerce is fiat credit added




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

161

to it by the people. If the same stamp were affixed to paper, it
would all be fiat. It is simply a question of degree, and neither can
be extended to the individual as a free privilege without robbing the
people of all that is added by their credit.
The whole problem simply reduces itself to a question of how long
will the people submit to remaining industrial slaves to the system.
The gold owners ridicule fiat greenbackers, yet they themselves are
fiatists. If they are not, why do they object to gold circulating on
its own commercial merits ? Why do they wish to coin it with any
other designation than its weight and fineness and why force the
people to take it as legal tender ? They are inconsistent in claiming
a special privilege for gold. If gold is worth all they claim for it, it
needs no extra function. If, on the other hand, it is not able to
retain its present relative value without being legal tender, then that
is positive proof that it should not be made legal tender. In the one
case it is unnecessary; in the other case it is unjust. The Government will have to cease monetizing gold or any other metal as soon
as the people generally realize its present imposition on them.
You may say that some losses would be suffered in a readjustment.
That will of course be admitted, but the losses would not begin to
equal those that are continually taking place now. The excessive
interest and expense of maintenance resulting from the use of the
false system under which we operate is so great that, notwithstanding
all of the modern inventions that have immensely increased the
people's productive energy, most of us fail to secure the ordinary advantages that are due from this civilization to every honest, industrious person. The interest, dividend, and rent charges alone,
compounded as they are now, are absolutely sure to keep the greatest
number of people in want and many in misery.
I do not say demonetize gold. I simply say cease to monetize it.
Coin no more metal with the legal-tender character attached except
that required for small change. Our gold will circulate in foreign
markets on its weight and quality equally well without the legaltender privilege as long as foreigners will use it for their legal tender.
Gold will do that as an article of commerce, and foreign nations may
convert it into their own legal tender if they like, but any nation that
uses gold as legal tender after a great nation like our own ceases to do
so will be adding additional burdens to the present burdens of its
people. "Whatever gold we have in excess of what we need for the
sciences and arts we can dispose of for such articles of commerce as
we actually require, and it will be that much to our advantage as
against the present practice of hoarding it. We have more gold than
any other nation, and if we cease to monetize it the other nations will
soon do the same. The common intelligence of the people generally
has reached a point where they ought to take the lead in forwarding
a plan which will prove the use of any commodity as legal tender to be
a fallacy and result in the eventual discontinuance of such a practice.
America should lead in doing this.
Let us consider in concrete form the effect that the money loaners'
dollars (which, by the way, are the dollars that we use) have on the
cost of things—and when 1 say cost I mean the expenditure in human
toil necessary to acquire the necessaries, conveniences, advantages,
and luxuries appropriate to human life. I shall not burden anyone
8829°—H. Kept. 69, 63-1




11

CHANGES IN THE BANKING AND CURRENCY SYSTEM. 162

with detailed figures, because a mere statement will satisfy those who
are sufficiently interested to study the present practices in the light of
their own observation and experience. I have examined the table of
prices of various staple articles for a period covering 45 years and have
come to the conclusion that the money loaders' dollar is not a measure fitted to the requirements of a people desiring equitably relations
with each other. It is simply a gambling dollar, and prices are regulated by a manipulation of it instead of by the intrinsic value the commodities possess as articles of necessity. The people who are engaged
in useful occupations producing commodities or serving other demands
of society are prevented from making the natural interchange of their
products and services, because of the injection into their commerce of
a fake currency and banking system, by the use of which speculators andfinanciers,so called, are able to pillage on all the exchanges.
The system built up by these pillagers is an unnatural and unjust one.
It often happens that the aggregate value in money of a large
quantity of a useful commodity will command less in one year than
tnat of a smaller quantity brought in another year. Who, for
instance, will claim that 3,000,000,000 bushels of wheat (supposing
that to be the world's crop) is worth less in the aggregate for food
and seed than 2,700,000,000 bushels, other things being equal,
except money, which seldom is? No one claims that 3,000,000,000
bushels of wheat is actually worth less than 2,700,000,000. It is
a fact, however, that the lesser quantity will often sell for as much,
and sometimes more, than the larger quantity. A difference of
10 cents a bushel will accomplish that- result, if the 3,000,000,000
sold for 90 cents and the 2,700,000,000 sold for $1. Illustrative
of that fact, let me quote the following from the Saturday Evening
Post of March 15, 1913:
THE VICIOUS CIRCLE'.

We harvested bumper crops last year, you remember, May wheat at Chicago is
worth 10 cents a bushel less than a year ago; corn and oats about 15 cents less. Yet
commodity prices, as a whole, have declined scarcely at all. The index number,
which compounds the price of many leading articles, is almost as high as ever, which
means the cost of living is still about at the top notch.
The bumper crops stimulated trade in many lines, and that usually brings higher
prices; while wheat went down, iron and steel products went up. What you saved
on flour you lost on the pan to bake it in. And Wall Street echoes with complaints
that investors, spurred on by higher cost of living, are demanding more interest,
thereby raising the cost of manufacturing and transportation. This higher cost must
be offse by higher prices, to overcome which investors must demand still more interest.
Mean 7hile labor, so to speak, chases its own tail, demanding higher wages, which
result i. higher prices that consume the increased wages—which naturally induces a
demanc for still higher wages that result in still higher prices.

Every farmer knows that a difference of 10 cents a bushel between
the price a commodity brings in one year and the price it brings a
different year is not uncommon, but the railways charge full price for
shipping every bushel, and the larger the crop the more they get,
while the farmer must handle the additional wheat and get less for it.
A farmer having the equivalent of 300 bushels of wTheat to sell in a
year when crops are general^ abundant, expects to receive a little less
per bushel than he would receive per bushel for 270 bushels in a year
when crops were not abundant, but he does not expect to give away
the 30 bushels difference because he has more wheat than the year
before. If that were to be the result, it would pay him, from his own




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

163

individual financial standpoint, to burn up a part of his crop when it
was abundant. In fact, the cotton farmers of the South started to do
that a few years ago when there was a large crop, and the price was
very low. If the credit of the people had been coined into their own
money instead of into the money-loaner's money, no thought of so
destructive a nature would ever have occurred to the cotton growers
or to any other producer of commodities.
rl here should be no legal tender other than that issued by the Government, and no individual ought to be able to obtain it without
giving its equivalent in return. If such were the case the problem of
interest (as a disturbing factor) would cease, and a new era would
dawn upon the world. The present difficult problems created by our
arbitrary and ridiculous banking and currency system would then
give place to natural selection. I use the term "natural selection77
in its scientific sense, because we can not run the Government in the
interest of the people unless we follow the supreme laws that will
unquestionably govern in the end. When we do there will be no
choking up of the system by the arbitrary acts of the financial kings,
for they are but a product of the arbitrary and unnatural practices
that the people have fallen into the habit of using as a means of conducting tneir business, nor will the majority of men be paying penalties in the form of overwork, worry, and discouragement.
The bankers have a true system of clearing exchanges. As an
example of that, I call attention to the fact that in 1911 there was
cleared through the 140 clearing-house associations $92,420,120,092.
Their scheme is a good one for taking care of the exchanges of the
country, and it helps the country as long as we have not a better one.
By its use only $47.80 of actual cash was required in order to handle
each $1,000,000 (of checks on the banks) that passes through the clearing houses. But unfortunately for us, the fees the bankers charge
for putting our own credit on their books, before we are even enabled
to draw checks, is so great that the people generally are overburdened
by reason of it.
Of course these exchanges should go on wherever they serve the
general welfare, and since we ourselves have not provided a better
method we are under obligations to the bankers for having honored
and made current and merchantable our own credit. But since
these exchanges relate to our business and are used directly by most
of us at some time, and indirectly by all of us all of the time, we should
establish a system that will give us the least costly service. The main
thing for us to do is to eliminate most of the interest charges and make
it practicable for the human family to thrive by industry by having
industry available to all people who wish to be and are industrious.
That does not mean that the banks should be superseded by new exchange agents, but it does mean that the banks should be required
to adjust to a new system that will cost the people less. It means
also that there would be fewer banks, because under any economic
system of exchange there would be no more necessity for several
banks in cities of less than ten or twenty thousand people than there
would be a need for several post offices in towns of that size.
Let us take up the discussion from still another viewpoint in order
that no one shall possibly misunderstand. Money as such is not a
thing of prime necessity. It is merely a convenience which enables




CHANGES IN THE BANKING AND CURRENCYSYSTEM.164

us to make such exchanges as we may wish without the cumbersome
handling of property.
The banks have taught us to use checks instead of the actual money,
and it is true that they cash these, but, as we observed before, we can
not draw checks until we have arranged with our banker, and in order
to make that arrangement, unless we have the real money, we must
pay him interest at a rate that makes the greatest number of men poor
and a few enormously rich. The fact that the bankers can make
exchanges that represent hundreds of billions of dollars annually,
when, as a matter of fact, there never was at any one time as much
as $1,700,000,000 in all of the banks combined, and of the money they
do actually hold, which is approximately $1,500,000,000, two-thirds
of it or more is lying dead in their vaults as reserves and is never used.
We are under obligations to the banks for teaching us this economy
in the use of money and credit. But, after all, as we observed before,
the credit is supported and maintained by the resources of the people
and the daily application of their energy. The banks have simply
filled the office of making it current and merchantable. We do not
owe that tribute to the bankers, and, thanking them for the good that
they have done, but for which they have been overpaid, we are now
prepared as a people in our national capacity to pass the necessary
laws and to perform the governmental function laid down by the
Constitution, u To coin money, regulate the value thereof" (and "of
foreign coin" when used in our country) in behalf of all the people
of these United States. We should profit by the example of the
banks in copying somewhat after some parts oi the system they have
used for making exchanges, but as a Government we ought to furnish
the advantage to all of the people on equality and with the least
expense practicable. The Government can do what the banks are
doing and save to the people as much as the banks make in excessive
dividends, besides the still greater profits that are made on speculation on the side.
The Government shall "coin money and regulate the value thereof." That is the constitutional provision. The great special interests have been sticklers for following the Constitution whenever it
has blocked the way to the people's progress if that might in any way
interfere with the practice of the interests, but whenever the special
interests find it to their advantage to follow any practice profitable
to them, the fact that such practice may be in contravention to the
Coi^stitution and the laws does not in the least embarrass or hinder
them, as long as the people do not invoke the law. When the people
do, every possible dilatory tactic is resorted to by the interests to
delay compliance. The consequence has been that the Constitution
has often been used as an instrument to prevent the people from
enforcing their rights.
"Sound money" will be the song that will be sung to you by every
advocate of the special interests. I have shown, and they have
already stated and proved, that what they have in the past called
"sound money" is not "sound." By doing that they aid me. By
that admission they disclose the fact, and it is a fact, that they have
defrauded all of the people by their so-called "sound money." Their
kind of sound money has enabled them to become wealthy and independent, but it has prevented the people generally from doing what




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165

they have a right to do; and should have done, namely, retained the
fruits of their own labor.
The kind of exchange that we should use is the kind that anybody
who has value to give can get without paying usury. That kind will
be the sound money of the people—the nonest money. Those who
wish gold may have it—there will be nothing to prevent their buying it. We, the people, on their presenting it, will stamp its weight
and fineness for anyone who will pay the cost of doing so. We will
do that to insure to the people who wish the gold the amount the
Government stamp certifies that there is in any given piece of metal.
That is honest, and to do anything more is dishonest to the people,
but the Government could not say that it was legal tender and tnereby
give it a special quality that it did not possess in itself. We can do
the same with any commodity that it is practicable to use as a thing
of exchange. The demand for commodities of all kinds will be in proportion to the service they may render to the people, and no one
should complain when absolute justice is to be done. As a consequence the Government would create no more "commodity" money
either for itself or for the people, because it would not only be unjust
to do so but unnecessary and ridiculous. When anyone wishes
commodities let them buy them as such.
Everybody knows that we must have money, and now the question arises as to what kind it shall be. "Honest money," of course,
instead of what we have now and are told is "sound money," whereas
in truth it is the opposite of "honest money," and should have
been named accordingly. We want a kind of money the buying
and selling properties of which remain respectively constant. In
other words, we want a kind of money that wall buy the exact equivalent of what it cost us to get it. We want the kind of money that
serves the same office among the people in their commercial and
social relations with each other as the drafts and checks serve in
the business transactions entered into by the bankers. We do not
intend that the bankers shall have a better system for themselves
than we have for ourselves. We expect to pay those whose duty
it will be to help make the exchanges. The bankers will be able
to give as effective and valuable service in this other up-to-date
system as they have given us heretofore, but the past service has
been altogether too expensive and therefore not sufficiently effective.
We have no prejudice to vent upon the bankers. As the system
stands they serve the people, generally, the best they can. There
are . always, of course, a few isolated exceptions. But the time
for us to do for ourselves what the bankers are doing for themselves
is here and now^, and we should hasten to adopt a system of exchange
under which it will cost the people no more to make their commercial exchanges between each other than it costs the banks to
make exchanges between the bankers and their cash customers.
It is just as simple for us as it is for them, and we have the indisputable right. We owe it to ourselves, to our children, and to all
posterity to have an efficient, self-sustaining, and effective system.
The people are the Government. Therefore the Government
should, as the Constitution provides, regulate the value of money.
There is no other real sovereign power, because all authority emanates




CHANGES IN THE BANKING AND CURRENCY SYSTEM. 166

from the people. Money is the means of exchange among all people. Its regulation is absolutely a governmental function, and the
Government has no natural inherent power that enables it to impart
to money any other property or quality than that of making it the
agent of exchange.
Congress is not justified in passing an act that does not do com1)lete justice to all. Merely to improve a false old system, but still
eave it in operation, to continually force a sacrifice of the people's
very life energies, is criminal. The Glass bill is a living picture of
the deplorable effects of the treasonable caucus system and the gag
rules by means of which a few leaders control legislation. As a result
the outrageous policy of extorting usury from the people to pay
monopoly is to be continued. It is not conceivable that the Members
of this House, if freed from the caucus gag? would stand' for the Glass
bill to continue a false system simply by providing 12 new houses for
it to operate in. By the failure of Congress to enact a proper bill
an overwhelming majority of the people will still be compelled to
work too many hours per day, receive too small pay for what they
do, and pay too much for what they buy, and therefore have but
few of the advantages that the present-day civilization owes to them.
And all this is done for the purpose of allowing those who control the
material productions of the people, and the credit supported by the
people, to charge them excessive interest, rents, and dividends,
which when compounded by the usages of business, impoverish the
people generally. Do the Members of this House expect that such a
system can stand in the face of the growing intelligence of a nation
of self-respecting people? The Members who have, by the caucus
and the rules that gag, prevented the presentation to the House of a
bill in every respect true to the people, on which a record vote of the
Members unfettered would force adoption, will have to answer. The
people will reply with the truth when they learn what Congress has
done. This monetary legislation is a test case to divide those who
favor from those who do not favor measures suited for the general
welfare, but unfortunately many a Member will be able to hide behind
the curtain cast around him by the secrecy of the caucus.
C. A .

LINDBERGH.

N O T E . — A t the last meeting of the committee my objections as to
the amount of reserves required were met by amendments. Therefore my objections as to the reserve requirements are removed.




C. A .

o

LINDBERGH.


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