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Federal Reserve Act, 1913
McFadden Act, 1927
Banking Act of 1933
Banking Act of 1935
Bank Holding Company Act, 1956

COMMITTEE ON BANKING AND CURRENCY
HOUSE OF R E PRE SEN TATIV ES
E IG H T Y -F IF TH CONGRESS

F E B R U A R Y 10, 1958
3

S

UNITED STATES
GOVERNMENT PRINTING OFFICE
20366 0




W ASHINGTON : 1958

COMMITTEE ON BANKING AND CURRENCY
B R E N T SPENCE, Kentucky, Chairman
PAUL B R O W N , Georgia
W R IG H T P A T M A N , Texas
A L B E R T RAINS, Alabama
A B R A H A M J. M U L T E R , New York
H U G H J. AD D O N IZIO , New Jersey
W IL L IA M A. B A R R E T T , Pennsylvania
L EONOR K. SU LLIVAN, Missouri
H E N R Y S. REUSS, Wisconsin
M A R T H A W . G RIFFITH S, Michigan
T H O M AS L. A SH LE Y , Ohio
CH ARLES A. V A N IK , Ohio
JAMES C. H E A L E Y , New York
J. T. R U TH E R FO R D , Texas
M E R W IN CO A D , Iowa
L e R O Y A. A N D ER SO N , Montana
J. F L O Y D B R E E D IN G , Kansas

H E N R Y O. T A L L E , Iowa
C L A R E N C E E. K IL B U R N , New York
GORDON L. M cD O N O U G H , California
W IL L IA M B. W ID N A L L , New Jersey
JACKSON E. B E TTS, Ohio
W A L T E R M . M U M M A , Pennsylvania
W IL L IA M E. M cV E Y , Illinois
E D G AR W . H IE S T A N D , California
PER K INS BASS, New Hampshire
HORACE SE E L Y -B R O W N , Jr ., Connecticut
E U G EN E SILER, Kentucky
JOHN E. H EN D E R SO N , Ohio
CH ARLES E. C H A M B E R L A IN , Michigan

L. C a r d o n , Clerk and General Counsel
E. B a r r i e r e , Majority Staff Member
O r m a n S. F i n k , Minority Staff Member

R obert
Jo h n

n




CONTENTS
Act, 1913

F ederal R eserve

(H. R. 7837)
House Report No. 69, 63d Congress, 1st session.
Senate Report No. 133, 63d Congress, 1st session (3 parts).
Conference Report, 63d Congress, 2d session.
Public Law No. 43, 63d Congress.
Index to Federal Reserve Act.
T

he

M

cF a d d e n

A

ct,

1926

(H. R. 2)
House Report No. 83, 69th Congress, 1st session.
Senate Report No. 473, 69th Congress, 1st session.
Conference Report No. 1481, on H. R. 2, 69th Congress, 1st session.
Conference Report No. 1796, 69th Congress, 2d session.
Public Law No. 639, 69th Congress.
B a n k in g A

ct

of

1933

(S. 4412)
Senate Report No. 584, 72d Congress, 1st session (2 parts).
Senate Report No. 77, 73d Congress, 1st session (S. 1631).
House Report No. 150, 73d Congress, 1st session (H. R. 5661).
Conference Report No. 254, 73d Congress, 1st session (H. R. 5661).
Public Law No. 66, 73d Congress.
B a n k in g

A

ct

of

1935

(H. R. 7617)
House Report No. 742, 74th Congress, 1st session.
Senate Report No. 1007, 74th Congress, 1st session.
Conference Report No. 1822, 74th Congress, 1st session.
Public Law No. 305, 74th Congress.
Bank

H

o l d in g

C ompany A

ct o f

1955

(H. R. 6227— S. 2577)
House Report No. 609, 84th Congress, 1st session.
Senate Report No. 1095, 84th Congress, 1st session (2 parts).
Public Law No. 511, 84th Congress.




m

FEDERAL RESERVE ACT, 1913




63d

C on gress,

1st'Session.

1 HOUSE OF R E P R E SE N T A T IV E S.!

R ep ort

J

No. 69.

[

CHANGES IN TH E BAN KIN G AND CURREN CY SYSTEM OF
TH E U N ITED STATES.

S e p te m b e r

Mr.

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

G lass,

from the Committee on Banking and Currency, submitted
the following

REPORT.
TOGETHER WITH VIEW S OF THE MINORITY AND MINORITY VIEW S.
[To accompany H. R. 7837.]

The Committee on Banking and Currency, to which was referred
the bill (H. R. 7837) to provide for the establishment of Federal re­
serve banks, to furnish an elastic currency, to afford means of redis­
counting commercial paper, to establish a more effective supervi­
sion of banking in the United States, and for other purposes, having
had the same under consideration, report it back to the House
with certain amendments and recommend that the bill as amended
do pass.
AM ENDM ENTS.

The amendments to the bill are almost without exception mere
alterations o f 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 b ill; 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 $5,000,000,
the original provision being that no Federal reserve bank should
“ be organized” with a paid-up and unimpaired capital less than
$5,000,000. This alteration is considered desirable by reason of the
fact that member banks are permitted to pay their stock subscrip­




2

CH ANGES

IX

TH E

BAN KIN G

AND

CU RREN CY

SY STE M .

tions in two installments, covering a period of 60 days, and it is not
deemed advisable to permit the Federal reserve banks to begin busi­
ness 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,” in line 9, page 5, is stricken out and the words in italics
substituted in order to make plainer the method of organization pre­
scribed 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 is
inserted making provision for the contingency of a tie vote in ballot­
ing 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 Fed­
eral 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 “ A ct”
is stricken out and a comma substituted, and in line 9, after the word
“ 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 o f shift­
ing 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 reduc­
tion 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 in 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 o f time deposits.



CHANGES IN THE BANKING AND CURRENCY SYSTEM.

8

NA T U R E A N D PURPOSE OF II. R . 7837.

H.
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 ioeal standpoint, be deemed desirable.
DEM AND FOR ACTION*

There has for a great while been strong public demand for remedial
legislation on banking and currency. This demand was partly ob­
scured 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 amend­
ment of the national banking act. This took form in various volun­
tary organizations and in actions by bankers’ associations as well as
by organizations of business ana commercial interests. It was
ractiially universally admitted from 1898 onward that one of the
asic 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
bceh 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 banning system under which they
have sprung up. Nowhere in the world to-day can there be founa
a banking system similar or analogous to that of the United States,
or a situation as to credit which could bo compared to that pre­
vailing in this country at the present moment.

E

REASON S FOR A C T IO N .

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 viow. In the opinion of the com­
mittee tlioro can be no doubt whatover with rogard 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 now system subsequently
developed into the national banking system. The essential elements
in this system were three in number: (1) The maintenance of the
rinciple of free banking through the unrestricted organization of
anking institutions; (2) the refusal to allow the extension of sys­
tems of banking throughout the country by the organization of
branch banks; and (3) the adoption of a peculiar system of note issue

C




4

CHANGES IN THE BANKING AND CUBBENCY SYSTEM.

whereby the banks were required to buy a minimum of national
bonds when chartered and subsequently to deposit with the Treas­
ury bonds to protect a1 currency received by them for circulation.
1
The different elements in this system will be fully considered at other
points in the present report. It is enough now to suggest the gen­
eral 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 rodepositing of roserves 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 oven 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 tneir combined resources temporarily
at the service of the public and of one another, but they havo 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 sproading to tne centers, or to defend its own resources against
the monetaiy demands of foreign nations or against the infection
duo to bad financial conditions m countries with which we 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 havo been numer­
ous among the national banks, as must necessarily be the case in
any system of numerous and highly individualized l>anks, 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 aggre­
gate a very small percentage of the total deposits held by the banks.
The country has teen 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 neces­
sary for large groups of banks practically to suspend specie payments.
They have done so as the result of concerted action, and one feature
of tne 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, t£e failure of
firms, corporations, and individuals has been necessitated, and the
loss of wealth has been tremendous. We think it is axiomatic that




CHANGES IN THE BANKING AND CUBRENCY SYSTEM.

5

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 many
merits, has not proved responsive to the seasonal needs of the com­
munity. 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 market­
ing of the country’s annual crops has been slow, difficult, and expen­
sive, and it has frequently happened that various sections of the Nation
have been obliged to depend too largely upon the limited exten­
sion of credit to them by Danks 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 em­
ployment 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.
N A T U B E OP E X IS T IN G 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 com­
mon to the country at large, certainly to all close or careful observers
of existing conditions. In the reserve centers to-day 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 they 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 tne 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 be­
tween different parts of the country, and which will furnish loans
upon an inexpensive but absolutely safe basis was never more ur­
gently demanded than it is to-day. It is this condition of affairs
that has most strongly moved tke Committee on Banking and Cur­
rency in its effort to press a measure of relief upon the attention of
the 1louse.
LACK OF rnOTKCTION A G A IN ST P AN IC S.

Reference lias 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 Jiem.
This fact has received more attention than has thus far been given
to any other in the whole range of the banking and currency dis­
cussion, 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 tlie batiks 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 ami temporary as this remedy has been,
it neveijheless has proven effective while in use, and after the panic
of 1007 an attempt was made to provide for a permanent resort to
this so-called clearing-house currency by passing the act of May 30,
190S, ordinarily known as the Aldrich-Vreeland law. This law will
expire automatically on June 30, 1014, 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 diflicultv 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 Xational Currency Asso­
ciations, which are to be allowed to take out notes under certain
conditions.
It is worth observing that up to date the Aid rich-Vreeland associa­
tions have been an entire dead letter. The situation regarding them
was dearly sketched by the Comptroller of the Currency in his last
annual report, in which he said:
Uruler authority of the act of May :*(), 190S, providing for tho issue of “ additional
currency” secured otherwise than by I'nited States bonds. IS national currency
associations have been formed, all of which, with the exception of the Los Angeles
association, wore formed prior to the cunvnt year. Each association has an aggre­
gate capital and surplus <t at least $5,000,000. and is composed of at least. 10 national
»
hanks having an unimpaired capital and an unimpaired surplus of not. less than 20
per cent of the capital, and having Tinted States l>onds > deposit to secure circula­
n
tion to the extent «»f at least «0 per cent of its capital. There are 28ti national hanks
forming these is national currency associations, tneir capital aggregating $321.105,710
and surplus $2*1.544.722. The capital represented is slightly in excess of 30 per
cent of the paid-in c apital stock ot all national banks, as shown by the reports for
September 4 hist.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

7

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

National currency associations.
Associations.

Number
of banks.

Capital.

National Currency Association of Washington, I). C..............................
National Currency Association of the city of New York, N. Y .............

10
33

$5,702,000
117,052,000

National
National
National
National
National

Surplus.

Currency
Currency
Currency
Currency
Currency

Association of the State of LouisLuia................ .
Association of Boston, Mass......................................
Association of Georgia.................................................
Association of Chicago.................................................
Association of St. Louis, Mo......................................

10
14
28
10
10

6,100,000
26.700.000
8,206,000
42.750.000
19.510.000

$4,792,512
127,175,000
O i uoO |U|
A IU WU
<}up 2Cf UW
4.030.000
18.950.000
6.434.000
25.950.000
9.095.000

National Currency
National Currency
National Currency
National Currency
National Currency

Association of Detroit.................................................
Association of Albany, etc.........................................
Association of Kansas City, etc.................................
Association of B:Utiiuore............................................
Association of Cincinnati...........................................

15
11
10
18
10

National Currency Association of Alabama..............................................
National Currency Association of Denver, etc..........................................

25
15
12

6.325.000
3,560, 000
6.650.000
12,340,710
14,300,000
3 f 760 000
O # uw
5.700.000
4.700.000
6 025 000

3,101,200
3.385.000
3.800.000
7,752,010
6.450.000
i f inn} nnn
O A UU U
U U
3.497.500
4.991.500
2 <n fU U
831 000
iI U

286

321,105,710

281,544,722

Total

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

14
li

14

1(1 7*5/1 (W )
V

o yiHOf WW
nnn
«
F

In accordance with the terms of the Aldrich-Y’ reeland Act, $500,(XX),000 in currency
has been printed and is now ready, in blank, for issue in case of a call from anv 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 muni­
cipal 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 ob­
tain notes equal to 7/> per cent of the face value of commercial paper left with them by
the constituent banks of the association.
One reason why th* 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 require^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 clearor the inadequate character of the
Aldrich-'Vreeland Act or its purely temporary character. It is a weak
makeshift, soon to expire.
R ECOGN ITION OP S IT U A T IO N .

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 unemploy­
ment 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 tlu* aeeommodat.ion of the pnhlie and not for the eotit r«»l of husin<>8s.
All h»!jislation on the subject of banking; and nirrenev should have for its purpose the
Beenrinj; of these aeeommodations on terms of absolute seeuritv to the pnhlie and of
complete protection from the misuse of the power that wealih giv«*s to those who
possess it.

That this plank constitutes a direct claim upon tin1 party, challeng­
ing its immediate attention, is the opinion of tin* Banking and Cur­
rency Committee. The claim is the more urgent because then* has
been a most lamentable failure to face the banking situation fairly
in past legislation.
PREPARATIONS FOR W O R K .

Believing that there would he 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 o f party
ledges, past and present.
In that Congress a suheommittce o f the
R
tanking and Currency C om m ittee- was directed to begin a stu dy of
the question o f reform legislation. This subeom m itlee conducted
[>rclimiuarv inquiries during the summer and autumn o f 11M2, and
laving thus marked out the lines of necessary work undertook
hearings during January and February,
for the purpose o f
obtaining tfie views o f qualified members of the com m u nity with
regard to what ought to be done. The subcom m ittee extended
invitations at that time to representatives of labor organizations, to
agricultural associations, to the bankers o f the country, to voluntary
Associations o f citizens interested in quest ions o f banking, m on ey,
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 subcom m ittee failed to accept, the
majority did so, and practically all the essential phases of the situation
were thoroughly canvassed, besides bolding these hearings, the com mittce sent to m any economists, bankers, and expert persons ques­
tions bearing upon the currency and banking problem and received
responses giving the views of those who wen* thus appealed to.
11. R . 7S:57 was drafted as the result o f these investigations and thus
represents, all told, the results of approxim ately H» months* work.
The Banking and Currency Commit tee as at present organized held
its first meet ing on June
191.;, and since that date the commit tec has
devoted almost continuous work to tin* discussion of the bill. Th e
outcom e of its deliberations has been to approve tin* essential features
of the bill II. II. 7s:*7, with some modifications which are embodied
in the measure as now reported.
WORK OF M O N E TAR Y COM M ISSION.

The com mittee, in undertaking to pre|iare 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 neeii m ade avail­
able. Th e most recent collect ion o f such material available is that
prepared under the auspices o f the National Monetary Commission.
\Vhile the Republican Party refused to take any affirmative action,
except the act oi May .*{(> WON, it did undertake what was called ail
,
investigation of monetary and banking conditions. The act o f




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

9

May 3 0 ,190S, known as Iho Aidrich-Vreelnnd Act, already referred to,
rovided for the appointment of a body known as the National
lonetary Commission, in the following language:

S

A P PO IN T M E N T O P M O N ET AR Y TOM MISSIO N.

S ec. 17. That a commission is hereby ereat«*<l. to be ralhnl (ho “ National Mono*
tarv ('ommission.** to be coni|test'd of nine members of tin* Senate, to l»o appointed by
the* Presiding Otlieer thereof. and nine Members of the House of Representatives, to be
appointed by the Speaker thereof: and any vacancy on the eonimissioii shall l>e tilled
in the same Winner as the original appointment.
PO W E R S OK COM M ISSION-

COM M ISSION TO R E P O R T TO C O N G R E SS .

Sec. is. That it shall be the duty of this eommission to inquire into anti report
to Congress at the earliest date practicable what changes are necessary or desirable in
the monetary system of the I'nited States or in the laws relating to banking and cur­
rency, ami for ihis purpose they are authorized to sit during the sessions or reeess of
Congress, at such times ami 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 otlieer and *uch vcretaries. experts, stenographers, messengers,
and other assistants as shall be necesxiry to carry out the purposes lor which said com­
mission 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.
E X P E N S E S O F CO M M ISSION .

Sec. 10. 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 Ik*conclusive and binding upon all departments as to the
correctness of the accounts of such commission.
W H E N ACT E X P IR E S B Y LIM ITA TIO N .

S ec . 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 bv
the Natiotml Monetary Commission prepared a large series of hook*
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. 'I his
measure was at once introduced into Congress by Senator Theodore K.
Burton, himself a member of the commission, and was referred to
the Senate Finance Committee, but-never received ollictal considera­
tion.
The monetary commission provided for as just described spent a
large sum of money in costly t ravels, including journeys to Kuropc and
outlays for printing. In answer to a request for information made by
the Senate in 1911, Secretary MaeVcagh, then in charge of tin* Treas­
ury Department, sent to the House n letter in which lie fixed the
cost of the commission to May 12, 1911, at $207,130.




10

CH ANGES

IN

TH E

BANK ING

AND

CU RRE N CY

SYSTEM .

VALITE OF COM M ISSION’ S W O R K .

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
Unitea 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 b}^ 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 com­
mission, 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 ot it. This bill has
often been spoken of as a poisonous theoretical novelty and at other
times as an ingenious 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 manv 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” (II. It. 23707,60th Cong., 1st Sess.), and by Hon. Maurice
L. Muhleman, in his “ Flan 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 desir­
able 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 asso­
ciation which was to do business only with banks, while the Govern­
ment 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 com­
mittee objects to the plan fundamentally on the following points:
1. Its entire lack of adequate governmental or public ccfntrol of the
banking mechanism it sets up.
2. Its tendency to throw voting cont rol 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 sub­
serve 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.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

11

5. The extreme danger o f inflation o f currency inherent in the
scheme.
6. The clumsiness o f the whole mechanism provided by the measure.
7. The insincerity o f 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 o f the bill.
E S S E N T IA L F E A T U R E S O F R E FO R M .

The other plans before the committee or examined by it have like­
wise 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 meas­
ures and o f the Aldrich bill, common to all, which should be recognized
and provided for in any new plan because representing the funda­
mentals o f legislation. It is believed that these are as follows:
1. Establishment o f a more nearly uniform rate of discount through­
out. the I'nited States, and thereby the furnishing of a certain kind of
preventive against o v e r e x p a n s io n of credit which should be similar
in all parts
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 exist­
ing bond-secured note issue in whole or in part, and the substitution
of a freely issued and adequately protected svstem of bank notes
which should be available to all institutions which lnul the proper class
of paper for presentation.
4. Management and commercial use of the funds of the Govern­
ment which are now isolated in the Treasury and subtreasuries in
large amounts.
o.
General supervision o f the banking business and furnishing o f
stringent and careful oversight.
0. ( Yeat ion o f 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 con­
sideration of various alternative courses which might be pursued.
CE N TR A L B A N K Q U E ST IO N .

At the outset of the committee’s work it was met by a well-defined
sentiment in favor of a central Imnk. This idea appeared to have
become rooted with a large section of tin* banking community, and
was 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 insti­
tution 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
O

5 8 -------1




12

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

characteristic of that term. The idea of the monetary commission
biU 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 readied
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 applica­
tion of this idea that there should be one single central bank whose
activities should bo coterminous with the limits of a nation’s ter­
ritory.
3. Equally good results can be obtained by the federating of exist­
ing banks ana banking institutions in groups sufficiently large to*
afford the strength or cooperating power whicn 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,
btit 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 insti­
tutions and conditions was it to be given a place in the ultimate
findings.
BR A N CH B A N K IN G SY ST E M .

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 prac­
tice 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 anv weak element in a banking system that m^y have
been subjected to attack at a given moment. It is clear that Canada,




CHANGES

IX

TH E

BANKING

AND

CURRENCY

SY STE M .

13

for example, with her 27 banks and thousands of branch banks, rep­
resents a distinctly different type of banking from that which is
exemplified by the national banning system with its 7,473 independ­
ent 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 Amer­
ican 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 abandon­
ment 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 corre­
sponding 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
cohditions in the United Statas. 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 thereforo led to the aban­
donment 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.
QU ESTION OF NOTE ISSUES.

Very early in it-s inquiries the committee was necessarily con­
fronted with the question whether a mere reconstruction of thenoteissue 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 cur­
rency, anclit 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 aliko in their belief that the whole trouble with
wcisting banking lay in a difficulty in securing proper supplies of
currency when needed and of withdrawing them when 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 tho proper treatment
of tho paper currency question solely were accepting a superficial




14

CH ANGES

IN

THE

BANKING

AND

CU RRE N CY

SY ST E M .

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 “ deposit” or (2) by tno issuing of notes. There is no
essential difference between these two forms of credit, if they are
rotected by similar reserve funds, except that they are likely to
ave a different term of existence, tho 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 cur­
rency, whether by the Government or by the banks, would not meet
the need for a more efFectivo 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 bo 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 mado prerequisite to the obtaining of means of
payment. It was felt therefore that a return to tho older conception
of banking reform as being primarily a problem of securing easily
expansible supplies oftfiotes would not meet the needs of t he situation
to-day, and even though it should prove to bo of some temporary
value in times of special stress would not constitute that permanent
and reliable support to business credit that was sought. It waa
therefore concluded that while a proper issuo of note currency should
necessarily be included as a feature in any measure to be recom­
mended it could not be taken as tho sole or even the primary purposo
of such legislation.

E

C L E A R IN G -H O U S E O R G A N IZ A T IO N .

Another typo of plan that has been frequently urged by students
of banking conditions in tho United States is that of cloaring-houso
organization. It has been suggested that inasmuch as the clearing­
house associations of tho 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 now 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-Yreeland law, already frequently referred to, was a partial
application of this idea although before tho act was finally adopted
it nad 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 bo incorporated and over which the Govern­
ment should exercise a measure of control. To these incorporated
clearing houses, it has been suggested, could be committed the func­
tion of issuing “ emergency currency" based upon the joint assets




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

15

of the banks, thus providing for regular and authorized employment
of the method o f 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 ex­
amination to attempt any dovico of this sort. If tho clearing houses
as thus recognized and authorized perform their functions of credit
extension only occasionally and sporadically thov remain an emer­
gency expedient. Tho committeo is convinced that what is needed
is not a means of remedying emergencies after thoy have arisen but
a plan for guarding against tho development of such emergencies
and for so protecting the community that it will not be undor the
nocossity o f 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 bo defended. From no point of view, therefore, has the plan
suggested commendod itself. This does not signify that tho idea of
cooperative effort embodied in tho clearing-house plan is unsatis­
factory, but, as will be seen later, quite the contrary. It does mean
that tne use of oxisting clearing-house machinery for tho purpose of
granting accommodation under oxceptional conditions does not seem
to tho committee to be a wise mothod of providing tho crodit resources
that are needed in affecting a thorough reform of tho banking and
currency system of the country.
O TH E R P LAN S IN A D E Q U A T E .

Of the multitude of other plans, some beyond tho confine of rea­
sonableness, 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 whicli, 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 tne
present conditions. The committee does not feel that the legislar
tion 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 thereforo put aside
many schemes of reform which, however desirable they might ab­
stractly be, do not conform to tho standards already outlined. It
has limited itself to the fundamental necessities of tho present situa­
tion 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 tho base of further
improvement. It has deferred the thorough reform of the nationalbank act on its administrative side, and it has determined to post­
pone, in like manner, the question of long-term agricultural credit,
firmly believing that neither of these subjects can be adequately
dealt w
rith until the substructure of banking organization has been
remodeled.




16

CHANGES IN THE BANKING AND CURRENCY SYSTEM.
FUNDAM ENTAL

F EATU R ES OF REFORM .

After looking oyer the whole ground, and after examining the
various suggestions for legislation, some of which have just been
outlined, tne Committee on Banking and Currency is fifmly of the
opinion that any effective legislation on banking must include the
following lundamental elements, which it considers indispensable in
any moasure 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, aad
industrial demands on the part of their clientele.
2. Ultimate retirement oi 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 conauct of their operations.
Beyond those cardinal and simple propositions the committee has
not (teemed it wise at this time to make any recommendations, save
that in a few particulars it has suggested the amendment of existing
provisions in tne national-bank act, with a view to strengthening that
measure at points where experience has shown the necessity of
alteration.
PROPOSED P L A N .

In order to meet the requirements thus sketched, the committee
proposes a plan for the organization of reserve or rediscount institu­
tions to which it assigns the name “ Federal resorve banks.” It rec­
ommends that theso be established in suitable places throughout the
country to the number of 12 as a beginning, ana that they be assigned
the function of bankers’ banks, under the committee s plan these
banks would bo 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
joint or federated organization. It rocommends that these bankers’
banks shall be given a definito capital, to be subscribed and paid by
their constituent mombor banks which hold their shares, and that
they shall do business only with the banks aforesaid, and with the
Government. Public funds, it recommends, shall be deposited in
those new banks which shall thus acquire an essentially public char-,
acter, 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 pur­
sue a banking policy which shall be uniform and harmonious for the
country as a whole, the committee proposes a general board of man­
agement intrusted with the power to overlook and diiect 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




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

17

for circulation paid at the end o f 20 years, and that in the meantime
they may turn in these bonds by a gradual process, receiving in
exchange 3 percent bonds without the circulation privilege.
In lieu o f 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 o f the United States, but
to be paid out solely through Federal reserve banks upon the applica­
tion o f the latter, protected by commercial paper, and with redemp­
tion assured through the holding of a reserve of gold amounting to
33% per cent o f 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 pur­
pose of facilitating the fiscal operations o f the United States Govern­
ment. Finally and lastly, the committee suggests the amendment of
the national-bank act in respect to two or three essential particulars,
the chief o f which are bank examinations, the present conditions
under which loans are made to farming interests, and the liability of
stockholders o f 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 B A N K S .

The Federal reserve banks suggested by the committee as just
indicated would be in effect cooperative institutions, carried on for
the benefit o f 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 o f 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
for and be granted admission to the new system as stockholders in
the reserve banks can not be confidently predicted. It may, how­
ever, be fair to assume at this point that the total capital of the
reserve banks will be in the neighborhood of $100,000,000. The bill
recommended by the committee provides for the transfer o f the
present funds o f the Government included in what is known as the
general fund to the new Federal reserve banks, which are there­
after 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 o f time be transferred




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 o f the reserve banks.
I f 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 o f at least $200,000,000. 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. Confining 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. I f 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 o f the reserves just referred to would
be transferred to the reserve banks in cash; and if this were done the
total amount o f funds which they would have in hand would be at
least $550,000,000. This would create a reservoir o f liquid funds far
surpassing anything o f 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 individu­
ally controlled, each holding the fluid funds o f the region in which it
is organized and each ordinarily dependent upon no other part o f the
country for assistance. The only factor o f 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 o f inspecting existing banking institutions and o f regu­
lating relationships between Federal reserve banks and between them
and the Government itself. Careful study o f the elements o f the
problem has convinced the committee that every element of advan­
tage 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 possi­
bilities o f undue control o f the resources of one section by another
will be avoided. Local control o f banking, local application o f
resources to necessities, combined with Federal supervision, and lim­
ited by Federal authority to compel the joint application o f bank
resources to the relief of dangerous or stringent conditions in any
locality are the characteristic features of the plan as now put for­
ward. The limitation of business which is proposed in the sections
governing rediscounts, and the maintenance o f all operations upon
a footing o f relatively short time will keep the assets of the proposed
institutions in a strictly fluid and available condition, and will insure
the presence o f the means of accommodation when banks apply for
loans to enable them to extend to their clients larger degrees of as­
sistance 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


CHANGES IN THE BANKING AND CURRENCY SYSTEM.

19

tioAs of banking which require detailed knowledge of local and indi­
vidual credit and which determine the actual use of tho funds of the
community in any given instance. In other words, the reserve-bank
lan retains to the Government power over the exercise of the
roader banking functions, while it leaves to individuals and pri­
vately owned institutions the actual direction of routine.

C

TR A N SF E R OF R E SE R V ES.

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 por cent, 12£ 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 rcquirod that such banks
shall nominally keep 15 per cent of the’u deposit liabilities, of which
*
6 per cent is H in cash in their vaults ana 9 per cent may be held
eld
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 fluids 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 times
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 numbor. Tho law has almost necessarily
been liberal in recognizing tho power to increase the number of such
centers, with tho result that wnereas but few existed iust after the
organization of the national bank act, there being then 3 central
reserve and 13 reserve cities, there are to-day 3 central reserve
and 47 reserve cities. Even had this ox tension of the number of
centers not occurrod, the system established under the national
banking act would still have been unsatisfactory. As matters have
developed, it has been vicious in tho extreme. Coupled with the
inelasticity of the bank currency, tho 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 tit to do so, because of the rigidity of tine bondsecured currency, have redeposited such funds with other banks in
reserve and central reserve cities raid have thus built up the balances
which they were entitled to keep there as a part o f their reserves.




20

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

Moreover, the practice of thus redeposit mg funds having been once
established, it has 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 o f 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 tanks which put them there.
The result has been an effort on the part of the national banks, par­
ticularly 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 simul­
taneously. 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 difficul­
ties of the case, seek to protect themselves by an unnecessary accumu­
lation of cash which tney draw from their correspondents, thereby
weakening the latter ana 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,
pre m fact scattered and entirely loso 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 pay­
ments by banks and by the substitution of unauthorized and extralegal substitutes for currency in the form of cashiers’ checks, clearing­
house 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 bettor than actual
disaster.
H OLD IN G OF F U N D S.

The committee believes that the only wfcy 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 whoso
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
>rovide for will afford such a type of institutions and that they may
>e 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

1




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

21

that every bank which shall become a stockholder in the new reserve
banks shall place with the Federal reserve bank of its district a por­
tion 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 oi 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
hanks 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 eaual 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 tnus recommended is of funda­
mental 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 ana are presented as a series of computa­
tions in connection with the section of the proposed bill which pro­
vides for the revision of reserve requirements. Final analysis of tnese
figures may be deferred until that point. It is enough to say at this
popit that a sufficient amount of reserve has been released, as com­
pared 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 tne old in the matter oi reserve
requirements, when a margin has been allowed for contributions of
capital and for possible accessions of State banks to the system.
O p, 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 countrv will probably be from
$100,000,000 to $150,000,000, a sum which is believed to be ample.
Neealess 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 CtJEEENCY 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.
R E T IR E M E N T OP B O N D -S E C U R E D C U R R E N C Y .

There are several important reasons for the retirement of bondsecured currency. The most obvious is that bond-secured notes are
not ‘ ‘ clastic.” 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 stu­
dents 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 ana 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 tiiat 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 Govern­
ment 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 con­
sideration 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 supply­
ing of currency, even when there weie enough bonds in the market
to furnish all the backing for notes that might be desired. This shows
why, apart from the special and peculiar difficulties that attend any­
thing 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 »s, therefore, generally admitted to be
the abandonment of the bond-securitv plan and the introduction of
somctliing else in its place.
D IF F IC U L T Y OF BOND HOLD IN G S.

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 tho 2 per cent consolidated debt
and these 2 per cent bonds were subsequently sold at premiums




CHANGES IN THE BANKING AND CURBENQY SYSTEM.

23

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 capi­
tal, 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, ana something like $30,000,000 has, ac­
cording 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 t’ 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 nigher 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 Governments
present borrowing power. The $50,000,000 Panama bonds last sold
brought a premium of between 2 and 3 per cent, but 3 per cent
interest without the circulation privilege represents the minimum
interest that mu^t be paid (in round numbers) upon any future issue
which is to be floated upon an investment basis. In order to safe­
guard 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 De simpler,
and the former would probably cost a little more. Either plan would
entail an increase in tne 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, how­
ever, 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 tnat 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 effectea. 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 stich 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.




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 bo 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 agree­
ment 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 organi­
zation. 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 arc very important has also been stimulated by the expe­
rience in this country with clearing-house certificates, which are often
spoken of as if they wcro 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 con­
trol 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.
CO M M ITTE E ’ S N O TE P L A N .

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
reserv e Treasury notes.”
In its essence the plan now recommended
by the committee for a new note issue contains the following points:
1. Ultimate withdrawal of the circulation privilege from the Gov­
ernment 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 out­
standing 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 pay­
ment of the bonas at maturity and a definite statement to that effect.




CHANGES IN THE BANKING ANJ> CURRENCY SYSTEM.

25

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 circula­
tion 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 thev
choose, entirely free themselves from circulation. In order to enabfo
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 commit tee proj)oses 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 or the action of the banks in surrendering the circula­
tion privilego 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 circu­
lation 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
nation al-bank notes into the proposed new issue of Federal reserve
Treasury notes.
COST TO TH E GOVERNM ENT.

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, bo an excellent invest­
ment for the Government. The committee has arranged to givo 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 an v 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 sul>stantial 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
woukl be a profitable one for the Government.
Whatever may l>e the ultimate earnings of the banks, however,
the committee is convinced that the conversion of the bonds and the




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 cur­
rency at once satisfactory and efTectivo, 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 a first lion on the assets of the Federal reserve banks
issuing them, while they havo also been immediately protected by the
hypothecation of first-class commercial paper in tne hands of an
agent of tho 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) pro­
vision 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 \ percent of ntonev shall have been segregated
in tho vaults of the issuing institution for the purpose of paying such
notes upon presentation by any holders. The banks aro left to pro­
vide this fund, and are both vested with tho 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 issuo and those
issued by other Federal reserve hanks, whenever tho notes may be
presented to them from any sourco; while, as a central point of redemp­
tion, it is provided that the Treasury Department shall pay the notes
out of a fund of money (constituting part of tho 33$ per c->nt referred
to) which shall be placed in their hands by the several banks. This
means that the Fcueral reserve Treasury notes will be redeemable in
money at each of the 12 banks and at the Treasury, whilo the require­
ment that the notes shall be payable to the Government and to any
bank for deposit purposes will be tantamount to a ouasi-redemption
at every point where banking is carried on. In orcter to insure the
prompt presentation of the notes for redemption, thereby avoiding
danger tliat 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 tho reserves of Federal reserve
batiks.
Provision is also made whereby they will bo prevented from accu­
mulating in the Treasury or any of its subtrcasuries even in small
quantities. It is believed thai these provisions will insure the
prompt return of the notes, thereby producing genuine flexibility
m the currency. The notos will be taken out whenover business
paper eligible for presentation to Federal reserve banks for rediscount
1 created; and as such paper matures, is paid off, and shrinks in
9
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-




CH ANGES

IN

THE

BANKING

AND

CU RRENCY

SY STE M .

27

demption of the notes, owing to the operation of the provisions for
exchanging them for money already sketched.
U SE OF G O V E R N M E N T F U N D S.

One feature of the proposals for legislation contained in the com­
mittee’s bill is the recommendation that the funds of the Government
of 1he 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 reservo banks, the latter institutions
to act as iiscal agents for the Government in all of its transactions
thenceforw ard. This rocommendation Is of fundamental importance
The Independent Treasury system of the United States unaer 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. \Vhatever may be thought of the idea of actual specie pay­
ments 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 sus­
pend the Independent Treasury system, practically speaking, when
the rivil 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 thom even
for a short time. At times it has been found expedient, if not absolutelv necessary, to temporize with the law ana 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 tnat 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 sys­
tem and of the present method of making public deposits has indeed
been fully recognized by 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 hold­
ing reserves and acting as the intermediaries through which a new
currency is issued, yet unable to be trusted as custodians of Gov­




28

CHANGES I N THE BANKING AND CTJBBENCY 8Y8TEM.

ernment funds. Both for economic reasons and because of considera­
tions 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
of tho community which created them and which is responsible for
the solvency and activity of the business processes that afford the
basis of taxation and thereby supply the fundamental resources of
the public Treasury.
B E N E F IT 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 with­
drawals 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 assignea 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 Governs
ment funds in the banks has been that by so do mg 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 tho 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 accord­
ing to their necessities. This is as it should be, since it amply pro­
tects 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.




CHANGES

IN

TH E

BANKING

AND

CURRENCY

SY ST E M .

29

There is another aspect of this Treasury deposit system that de­
serves 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 sucn Danks 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 bpard over rediscounts and rates of
mterest as well as over reserves.
E Q U A L IZ IN G R E SE R V E F U N D S.

It is evident that tho Federal reserve board and the Secretary of
the Treasury could, by shifting the deposits of tho Government from
place to place as occasion demanded, meet conditions of stringency
and difficulty in tho market, or furnish exchange funds as occasion
appeared to require. The power would naturally bo 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 satis­
factory as a means of equalizing resources than tho exercise of the com­
pulsory 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
rust 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 con­
ditions of various kinds. What lias just been said does not in the least
weaken tho force of the general observation thus restated. The
harm resulting from past efforts of tliis 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 tho
country.
The evil which came from these efforts was duo to the lack of
adaptation to existing conditions. Under the proposed plan the
funds of tho Government will never be removed from tho uses of
the commercial community, but they will continue in the general
regions of the country where they originated, while those who are
to bo charged with the duty of overseeing tho management of Gov­
ernment 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 tho vicious and wholly artificial state of
things existing under the present typo of Treasury organization, but
will substitute for it a helpful system whereby definite governmental
authority, closely informed concerning b a n k in g conditions and
constantly in touch with the development o f credit in all parts o f the




30

CHANGE® 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 chan­
nels 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 senso of the word it will be in that business,
neither under the necessity of interfering with normal trade opera­
tions nor of artificially interposing to bolster up weak banks in any
part of the country.
B A N K IN G F A CILITIES FOR FOR EIG N T R A D E .

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 in­
stitutions. 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 tho
kind of work in which they propose to engage and are found by tho
Federal reserve board to be m proper condition for undertaking such
an enterprise. The proposed plan is simple and, it is believea, suf­
ficiently effective for the purpose. Under it national banking institu­
tions 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.




CHANGES IN

T H E B A N K IN G A N D C U R R E N C Y S Y S T E M .

31

E X A M IN A T IO N S OF N A T IO N A L B A N K S .

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, whilo it also feels tne 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 Foderal reserve board, ana 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 land trustworthy enough
to exercise it, not because, as some have assorted, it is desired to have
bank examinations constantly in progress, and not because of any
belief that such examinations would be in fact much more froquent
than they now are, but because it is believed that the exorcise of the
power to examine whenever necessary is essentially a fundamental
and desirable power, and one whoso exercise, if judiciously carried
out, will rosult in the early detecting of dangerous conditions and their
correction before they have reached a desperate stage. It is belioved,
moreover, that the provisions with reference to bank examinations,
if properly carried out, will largely if not wholly obviate any necessity
for tne clearing-house examinations, which are carriod on at the
resent time in behalf of associations of banks and of which there has
een 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 belioved
that the new system of placing all such examinations under authorized
control and supervision will eliminato 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.

E

D E T A IL E D R E V IE W

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 1.

Section 1 creates a short title which may be used for convenience,
sake hi the future in referring to the act. It needs no further dis­
cussion.
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 pur­
pose 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 sucli discounts may be afforded. Without going more into
tne theory of this proposition, already thoroughly well covered, it
may be stated that the medium through which the present bill pro­
poses to attain these ends is the organization of a reserve bank to be
entitled a “ Federal reserve bank” in each ono of the Federal reserve
districts to be established as provided in section 2 /Win 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 110 difference between the services per­
formed 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 110 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 witn
them that it is now proposed to have the reserve’ banks to be organ­
ized under this act do 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 minks 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 discus­
sion goes on, one sucli 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 geo­
graphical 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




CHANGES IN THE BANKING AND CURRENCY SYSTEM.
•

88

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 riven 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 adeauate provision
tor its needs. It is proper to say frankly that mucn 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 institu­
tions, 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 fol­
io wing data:
1.
The committee has asked a considerable number of bankers
their views as to the proj^r 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 snould be one in each clearing­
house district (hearings, p. 10); Sol. Wexler, who thought that tne
number should be about 15 (h earin gs, p. 623); Victor Morawetz, who
fixed the number at 1 in each dearing-house district (hearings,
p. 48); Sir Edmund Walker, who thought the number might run as
nigh 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).




34

CHANGES IN THE BANKING AND CURRENCY 8Y8TEM.

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 o f the national banks to-day is some­
what 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 capitaliza­
tion of $1,500,000,000. It, will be shown later m the present dis­
cussion 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 De roughly assumed that one-third of the
proposed banks would be near the lower limit of $5,000,000 capitaliza­
tion, 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
leit 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 an 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 wiu
receive very sharp criticism from banking mterests 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 num­
ber 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 rediscount­
ing of paper. The figure fixed 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




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

35

leave this analysis of business conditions for which there are at pres­
ent 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, sub­
ject 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.
s e c t io n

S.

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 there­
fore 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 recogniz­
ing 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 provi­
sions 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 estab­
lish 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 in fact be chairmen of the boards of directors, but as in the oase
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 pro­
posed by the committee has sought in section 4 to furnish a demo­
cratic 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 tho
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 tho 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 rep­
resentative of tl^eir 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 e*ch group of banks will preserve its
autonomy and secure due hearing on the board of directors.




CHANGES IN THE BANKING AND CUBBENCY SYSTEM,

37

SECTION 5.

Section 5 deals entirely with the method of increasing and decreas­
ing the capital stock of Federal reserve banks and the effect thereon
of corresponding changes in the stock of member banks. The gen­
eral 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 suflicient to
unpair the capital of the reserve bank. Should such a loss occur
the reserve bank would presumably have called suflicient of the un­
paid 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 organiza­
tion composed of members contributing in a like pro rata propor­
tion 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 tne 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 insol­
vent bank to the reserve bank and paying the rest to the receiver of
the failed bank. This, in elfect, 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 prin­
ciple involved in requiring the member banks to subscribe 20 per
cent, although they pay up but 10 per cent of their cjash 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 (iovernnient 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




88

CHANGES IN THE BANKING AND CUBRENOY BYSTEM.

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 pro­
posed 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 tneir capital for this
subscription but will devote a part of their current funds to it. The
real question then is whether tne rate of 5 per cent represents about
the normal rate of return from current bank: investments. Consider­
ing the high character of the security offered we are of the opinion
that it does do so.
(h) 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 fur­
nish 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 Dalances of the original capital subsc riptions 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 o f the bank. The remaining one-half is to be divided in the
proportion of three-fifths to the Government ami two-fiftlis to the
Dank’s 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 ot all earnings after the surplus is taken care
of to the Government and two-fifths to the member banks in propor­
tion to their annual average balances as before.
It is worth while to consider with some care what this plan of dis­
tribution 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 coun­
try, or, roughly, 9 per cent. Taking 9 per cent as the figure, this would
mean that with a toted capital o f $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 reauirements. This would leave $4,000,000,
of which $2,000,000 would oe 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 turn out, since it can not
be definitely stated what balances they would carry with the reserve
banks.
T H E G O VE R N M EN T ’ S SH AR E.

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




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do so: (1) It vests the Federal reserve banks witli tie sole and ex­
clusive function of note lending, from which all other banks are de­
barred ; (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 oi deposit balances would
give to the Government a large share of the profits in any case and
when the present national-bank notes shall nave 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 reduc­
tion 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 Gov­
ernment 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 ana at the same time to
eflf^ * a gradual reduction of the outstanding indebtedness as well as,
t
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 cor­
responding proportion of the funds of member banks from the pay­
ment of taxes to which they would otherwise be subjected.
SECTION

8.

The essential features of section 8 are:
1. The grant o f a years 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 o f the proposed bill; and
2. The provision that in the event of an adverse decision on this sub­
ject 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, (6) become a State bank under State laws, or (c) leave the busi­
ness entirely. It is evident that any measure o f legislation which
imposes substantial responsibilities and burdens upon banks will be
opposed by some o f 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 CUBBBNOT SYSTEM.

a voluntary choice between their present condition and that proposed
for them, elect to continue as at present. No matter how advan­
tageous a plan proposed by Congress might be, many banks would
refuse to go into it out of "sheer inertia. This was tho 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 oanks. 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.
Q U ESTION OP “ C OM PULSION .”

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 tnat 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 “ uncon­
stitutionality ” 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 char­
ters. 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 sim­
ply because Congress was within its legal rights in so doing. The
general considerations which make it entirely warrantable tor Con­
gress to impose certain burdens upon banking institutions as condi­
tions precedent to the grant of national charters to such institu­
tions are quite evident . They appear in all of the various more or
less stringent and onerous conditions laid down in tho nat-ional-bank
act for the guidance of the conduct of banking associations. They
are also seen in the restrictions imposed by practically all foreign Gov­
ernments upon the conduct of tne bankmg 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 ema­
nating from itself, naturally is authorized to make these privileges
contingent upon the acceptanceof 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
wav: B y the terms of the national banking act banks must, in order
to become national banks, purchase and deposit with tho Treasurer of
the United States Government bonds as security for circulation. This
requirement is nominally 25 per cent of capitalization for banks lip
to $150,000 capital and $50,000 for all above that level. In reality




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

41

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 necessair
if the banks are to meet the needs of their customers even in a mod­
erate 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 oi the amount now
invested in bonds. Inasmuch as the proposed bill allows the conver­
sion 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 from the latest date set for the subscriptions to the capital stock
a bank owning bonds eaual to capital woula 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 Dear 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 id*A of
a
“ compulsion,” instead of being a noveltv 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’B
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 comulsion. National banks after the passage of the proposed bill will
e 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.

E

SECTION

9.

Section 9 is a general permission to any State bank tq become a
national bank ana 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 con­
ditions under which such conversion may occur subsequent to tho
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 tiiat of
the new system. Tho 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 other­
wise be. On the other hand, the cominitteo has doubted whether,
from the standpoint of the banks themselves, it would be acting
fairly were it to debar them from membership in the now 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 tho advantages open to national banks which are stockholders
unless such banks were subject to practically as hirfi a standard
of banking requirement as the national banks witn which they
compete. It has been felt that the particulars in which greatest care
should be exercised on this score are (a) capital and (b) 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 ante­
cedent to tho 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
bc?ieved, however, tnat the principal requirements will thus be met
and that the provisions of the section are about as far as tho measure
can reasonably go with certainty of being held legal and at tho saitie
time of proving feasible and available in practice. As a necessary
povrer in connection with this question oi membership section 10
confers upon the Federal reserve board the power to establish by­
laws for the general government of its conduct m acting upon applica­
tions 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 the provisions ol the act are
violated, and to secure the cancellation and retirement of their stock,
returning tho value thereof to the banks so suspended.
SECTION 11.

In this section provision has been made for the creation of a general
board of coiitrol. acting on behalf of the National Government for
thtf^urpose of ovfirsemnq; the reserve banks and of adjusting the
banking transactions of one portion of the country, as ^ell as the




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Government deposits therein, to those of other portions. The num­
ber of members of this board has been fixed at seven, after careful
consideration of other possible memberships, and it has been deter­
mined 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 whofee 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 tho 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 tho 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 hill. The causes fur the selection of the two officers
thus named are therefore self-evident. Tho 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
o f 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 ot the Government being naturally engaged in large degree
in the discharge of their ordinary iunctions. It is therefore important
to piuvi*1 for tho 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 dis­
tributed 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 com­
mittee 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 01 politi­
cal bias or one-sidedness, it has been deemed expedient to provide i^
the law against a preponderance of members of one party.
The provision tnat the President in making his selections shall so
far as possible select them in order to represent the -different geo­
graphical regions of the country has been inserted in very general
language in order that, while it might not be njinutely mandatory,
it should be the expressed wish of the Congress that no undue pre­
ponderance 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.
2<WM O— 5S------- 4
'i




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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 expe­
rienced 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 prob­
ability 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 wont. The Comptrollers of the Currency in times past nave
not always been bankers in the technical sense, and some 01 the most
efficient among them have had least technical experience in banking
at the time when 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 otvious reasons it is considered wise that
every member of the Federal reserve board designated by the Presi­
dent 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 desig­
nate 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 * ederal reserve board the
bill aims to preserve the general concept of official responsibility and
duty which is fundamental to the conception of tnis board.. In
ordinary 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 Comp­
troller of the Currency in all respects answerable to the Federal’
reserve board, thereby giving this uoard the practical connection it
needs with the national banlus of the country which are under the
direct supervision of the Comptroller of tne 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 o f 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 nothing in this grant of authority or in this imposition of respon­
sibility to reduce the functions of the comptroller as at present under­
stood 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.

' ' i n 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 sec*
t'ion 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 nafiiirif oTtEe case
requires. The powera thus bestowed are identical with those granted
to the supervisuig boards In control of the central banks of Europe.
(BY In paragraph (b) 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 pos­
sessing 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 bf other portions or for the purpose of safe­
guarding them at critical times if its managers deem sucn 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 recog­
nition 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 bin, the exer­
cise of such a power is subjected to restrictions which would mani­
festly and unquestionably make its use sporadic and exceptional,
in so far as it resulted from the exercise of a power to compel the redis­
counting 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 occa­
sional 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
Xational 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 baifks should be
allowed to deal with one another freely if they choose. The com­
mittee 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.
X j (< ) Paragraph (c) grants the Federal reserve board the power to
*
suspend tho reserve requirements of the act for designated periods
if in its judgment such action may be deemed wise. Tnere 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 per­
mit national banks to go below their reserve for ^0 days. In practice
this power is constantly exercised by him subject to his judgment.
The power is suggested by the1process of “ suspending the bank act”
in England, and is a desirable administrative function in every case
ywhere 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.
(e) In paragraphs (e), (/), (g), (A), 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 organizafionX'
^trr 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:
P O W E R S OF TH E F E D E R A L R E S E R V E

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 (V of the nine members of the board of directors of each
)
Federal reserve bank, one ol 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 (bv the President), one shall be desig­
nated 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 othcer of the Federal reserve board.
To levy a semiannual assessment ui>on 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 Dank.




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47

To suspend, for a period not exceeding 30 days (and to renew such suspension
for periods not to exceed 15 d a y s), any and every reserve requirement specified in
this act.
To supervise and regulate the issue and retirement of Treasury notes to Fed­
eral 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 incompetencv,
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 perforin 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 ac­
count 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 $1,000,000or more capital for
the establishment of branches in foreign countries, to reject or accept such appli­
cations, 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 func­
tions of this board are wholly advisory and it would amount merely




48

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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, ana 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 accept­
ance.
SECTION

14.

In section 14 is set forth the fundamental businessjpurpose 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 sec­
tion 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, tne pro­
posed bill first of all provides that notes and bills having a maturity
of not over 90 days and drawn for agricultural, industrial, or com­
mercial purposes or the proceeds of which have been used for such
purposes shall be admitted to rediscount. The meaning of this pro­
vision is briefly that any paper drawn for a legitimate business pur­
pose of any kind may oe rediscounted when within 90 days of ma­
turity. 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 thau it may adjust the definition to the prac­
tices prevailing in different parts of the country in regard to the trans­
action 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.




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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 tne bank for which the rediscounts are made. In
the sixth paragaph, national banks are authorized to accept drafts
or biUs 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:
‘ *The fundamental difference between European and American bank­
ing has its origin in the dissimilarity between the evidences of indebt­
edness 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 indebtea 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 obliga­
tion 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-r-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 in 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 cus­
tomer'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 nim 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 reauire the sig­
nature 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




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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.
“ In the United States the national-bank act does not permit banks
to accept time bills drawn on them. Although the act does not specifi­
cally prohibit such acceptances, the courts have decided that national
banlcs 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. Grad.ually, however, many concerns, finding that their needs were out­
stripping 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 tney could satisfactorily invest at home. It
is this method of borrowing which is now largely employed. In other
words, tho prohibition of bank acceptances has led to the creation of
a vast amount of promissory notes instead of time bills of exchange.
The difference between these two classes of insti aments accounts to
a great extent for the difference between European and American
banking. In the case of time bills of exchange drawn on and ac­
cepted 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, tne strength of the paper depending on
the standing of miscellaneous mercantile and industrial concerns.
“ It is this uniformity of security on the one hand which makes pos­
sible a public discount market; it is the lack of it in singlo-name paper
which makos 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 tho 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 bal­
anced against the demand for and supply of money. If trade is
active, the supply of bills becomes large, rapidly absorbing the loanable
funds of the oanks. 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 tne 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.




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“ The striking difference, however, between European discount rates
and the New York call-loan rates is that the former are compara­
tively stable and the latter subject to moct violent oscillations. For­
eign discount rates as bank reserves become depleted advance hy
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.”
A M O U N T OF R E DISCO UNTS.

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 bocause 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. Tho 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
oased 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 tho Currency, which gives a compact survey of the classes of paper
which might theoretically bo available for rediscount under the
provisions of the act as already explained:
1

Date.

2

3

On de­
mand, pa­
per with
Num­
one or
ber of more in­
banks. dividual
or firm
names.

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, 1 9 1 1 ............ ......... i
June 14, 1912....

4,601
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
i 428.2
395.9
1
! 441.5
! 524.3
j
529.7
571.3
j
1

4
On de­
mand, se­
cured by
stocks,
bonds, and
other per­
sonal secu­
rities.

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

5

6

7

On time,
On time, secured by
On time,
single­
stocks,
paper with name paper bonds, and
two or
(one person other per­
more indi­
or firm)
sonal secu­
vidual or
without
rities, or on
firm names. other secu­ mortgages
or other
rity.
real estate
security.
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
971.5
1,008.3
1,124. 7
1,198. 5

Millions.
$642.4
655.4
699.7
753.0
818.1
869.2
997.5
1,060.1
1,093.0
1,117. 5
1,225.3

8

Total.

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 8, 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 o f an aggregate o f notes and bills bearing the signature or




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indorsement of any one person or concern, this being a repetition of
the prohibition o f 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
exemptioi has long been asked for in the interest of legitimate busi­
ness transactions. Obviously when a bill of cxchango 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 pro­
tected 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 nafional banks, except that it
more carefully limits the length of the paper to be rediscounted and
the purpose for which it is drawn, wnile it opens the acceptance
business to national banks and permits the rediscount of acceptance
paper. 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 work­
ing of the idea owing to lack of experience with this type of credit.
s e c t io n

15.

It will have been observed that tho transactions authorized in sec­
tion 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 wert> slack and when there­
fore there might have been accumulation of funds in the reserve banks
without any motive on the part of member banks to apply for redis­
counts 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 o f the face of the paper less discount, whereas rediscount
operations would require simply the holding o f a reserve o f 33% per
cent behind the notes issued or deposit accounts created in the course




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of the rediscount operation. Apart from this fundamental permis­
sion, 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
incident 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 for­
eign 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 pay­
ments and collections abroad.
SECTION

16.

Section 16 provides for the transfer of all moneys now held in the
eneral fund of the Treasury to the reserve banks, disbursements to
e thereafter made by check upon such banks. The general philos­
ophy 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 compara­
tively low state o f 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 tho 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.

G

s e c t io n

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 g;ov£mment Treasury notes, obligations of tho
United States and receivable for all taxes, customs, ana 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

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

Recognizing, moreover, that the regulation of the volume of cur­
rency in circulation— as distinct from the underlying money of ulti­
mate 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 applica­
tion 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 segre­
gated reserve fund of 33§ 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) Govern­
ment 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 segre'ated for their protection; (4) claim on 33$ per cent of money drawn
rom 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 whole of the issue, and the question at
once arises, Out of what will such reserve bank redeem the notes
should a great auantity be thrown in upon it? The section provides
that such a banK may, if it chooses, (1) pay the notes out o f the 33$
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 33 § 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 bamc, through which they were origi­
nally issued. In addition to these provisions, of course, it is required

?




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

55

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 tnere remains the general question whether the
pubnc requirement of elasticity has been met and provided for.
Elasticity must be considered from two standpoints— tnat of expan­
sion ana 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
w ilf 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 alter the need for them nad passed,
the bill makes the following provisions: (1) The notes can not be
used in bank reserves; (2) the notes are not to bo 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 receiv­
ing the note of another reserve bank, to (a) either send it direct to
the >ank that issued it, (6) to send it to the Treasury, charging it
off against deposits, or (c) to present it to the Treasury for redemp­
tion m 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 puipose,
and then to send them home for ultimate redemption. Tho belief is
freely expressed that these provisions will maintain the notes at par
everywhere and will also prevent them from expanding or remainmg
out after the need for them has gone b y4
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 oi 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 ot 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 THE BANKING AND 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 pro­
vide 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 may be 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.
8EC T IO N S 18 A N D 19.

Sections 18 and 19 may best be treated together, as they jointly
provide for the disposal of existing national-bank notes ana for the
refunding of the bonds now held by the banks behind these not&.
The general views entertained by the committee with respect to bank*
note 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 pre­
sent one-twentieth of their bona holdings each year for conversion
into 3 per cent bonds, and in the event tney 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 o f the com­
pulsory bond purchase now required. Precisely how great a limita*'
tion of the bond demand this would furnish can not be precisely
stated. For tho last year for which full report was made by the Comp­
troller of the Currency (1912) the net amount of bonds purchased by
national banks to protect circulation was about $16,000,000. This,




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however, was far in excess o f the amount o f 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 o f 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 speak­
ing, $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 f>e 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 sufficient 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 Gov­
ernment share of reserve bank earnings to the redemption of bonds.
As a corollary of the bond-refunding juan 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
note's which have heretofore done duty in times of panic under the
form of clearing-house certificates, cashiers * checks, and various sub­
stitutes for actual money which have been illegally paid out by banka
to their creditors in lieu of the payment in the usual forms of cur­
rency employed by them during normal times. No such expedients
would have been permitted save under severe stress, and witn a suit­
able provision for an elastic note issue based upon commercial paper
they should not longer be suffered to continue in use.




58

CHANGEIS IN

THE

BANKING

AND

CU RREN CY

S Y ST E M .

The amount of 2 per cent and other bonds now held behind cir­
culation and affected by the provisions of sections 18 and 19 may be
recapitulated as follows:
Bonds hsld in trust for national banks, Sept. 2, 191S.
Bonds held for national banks.

Kind of bonds.

Rate

of in-

Total
amount
outstanding.

To secure deposits of
public moneys.
Total.

To secure
circulation.

Value at
par.

Value at
rate ap­
proved by
depart­
ment.

ooruunfSNT.
TJ. S. loan of 1925..at par..
U. 8. loan of 1909-1918,
atpar.............................
C . 8. Panama of 1961, at
J
par.
C . S. consol of 1980.at par..
J
U. S. Panama of 1988, at
par................................
C . S. Panama of 1938, at
J

II.

p C pi>ine loans...at par..
_
Porto Rico loans___do_
Dbtrict of Columbia.do__
Territory of Hawaii, 3* per
cent bonds at 90 per cent
of par; all other Hawai­
ian bonds at market
▼alue, not exceeding par.

4
3
3
2

8118,489,900 837,689,400 834,181,700 83,487,700 83,487,700
22,182,200

3,646,700

3,646,700

50,000,000 17,110,200
646,250,150 615,921,100 003,773,900

17.110.200
12.147.200

17.110.200
12.147.200

63,945,460

25,828,900

2

54,631,980

54,242,360

52,982,860

1,279,500

1,279,500

2
4
4
3.65

30.000.000
16.000.000
5,225,000
6,970,650

29,444,140
5.967.000
1.821.000
933,000

28,897,140

547.000
5.967.000
1.821.000
933.000

547.000
5.967.000
1.821.000
933.000

6,515,000

1,978,000

1,978,000

1,930,900

8.551.000
6.735.000

808,000

898,000

588,571
6,750

17,951,137

17,951,137

11,747,904

67, 776,437

61,213,425

(•
)

MBCSLLAXBOUB.

fPhilippine Railway Co_
_
Manila Railroad Co...........
III. At 90 per cent of market
value, not exceeding 90
per cent par.
IV. State, county, city, and
other securities *........... .
Total.........................

0)

10,000

,

809 774,237

10,000

741, 907,800

1Various.
* 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 valus.
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 Ilf, 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 authorised by law may withdraw United States 2s and substitute for them bonds
in Group II, provided the 2s as withdrawn snail be used as security for additional circulation.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.
SECTION

59

20.

Section 20 seeks to readjust the reserve requirements now pro­
vided by the national banlang act in such a way as to make tnem
conform to the dictates of scientific banking, and to adjust them
to the provisions of the proposed bill. The following mam objects
have been had in mind:
1 . To abolish entirely the present system of redeposited or “ pyra­
mided” 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 i f 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 sur­
veying the situation a beginning may be made by considering with
care the reserve requirements of the national bank act. These are
as follows:
R E S E R V E CITIES A N D R E S E R V E R E Q U IR E M E N T S .

120.
S ec. 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 Fran­
cisco, 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
Wits notes in circulation and\ its deposits; and every other association shall at all times
nave on hand, in lawful money of tie United States, an amount equal to at least fifteen
per centum of the aggregate amount %of its notes in circulation anrf] of its deposits.
Whenever the lawful money of any association in any of the cities named shall be
below the ajnount of twenty-five per centum of its f [circulation anc/J deposits, and
whenever the lawful money of any other association shall be below fifteen per centum
o* 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 ite Woutstandina notes of circulation aiidj
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 uie concurrence of the Secretary
of the Treasury, appoint a receiver to wind up the business of the association, as pro­
vided in section fifty-two hundred and thirty-four.
N o t e . —This section is amended by the act of June 20, 1874, section 2, which pro­
vides 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

20366 O— 58-------5




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 MAT B * COUNTED AS RESERVE.

121. S ec . 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, avail­
able for the redemption of its circulating notes, from associations approved by the
Comptroller of the Currency, organized under the act of June three, eignteen hundred
and sixty-four, or under this title, and doing business in the cities o f Albany, Balti­
more, Boston, Charleston, Chicago, Cincinnati, Cleveland, Detroit, Louisville, Mil­
waukee, 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 belong­
ing to such clearing house, holding and owning such certificate, within the preceding
section.
N ot * . — 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 m said cities as reserve agents,

LAWFUL MONET RESERVE TO BE DETERMINED BY DEPOSITS.

ACT JUNE 30, 1874.

122. S ec . 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 liand any amount of money whatever, by reason of the amount of their respec­
tive 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.
N ot*.—Section 31 of “ the national-bank act” is incorporated in sections 6101, 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 MAT 30,1906.

123. S ec . 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 pufelic moneys by the United States m designated
depositaries.
PROVISIONS FOR REDEEMING CIRCULATION— FIVE PER CENT REDEMPTION FUNDACT JUNE 20, 1874.

124. S ec . 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 redemp­
tion 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 asso­
ciations, assorted or unassorted, shall be presented for redemption, in sums of one
thousand dollars, or any multiple thereof, to the Treasurer of tne 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 redemp­
tions for any association shall amount to the sum of five hundred dollars, such asso­
ciation 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 re­
deemed. 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




CHANGES

IN

TH E

BANKING

AND

CURRENCY

SY ST E M .

61

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 engrav­
ing 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 pro­
vided 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 tho requirements which are thus laid
down by existing national-bank legislation those which are estab­
lished in the proposed legislation. In tho 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.

Total reserve required............... ................................... ................................

14
months
to 36
months.

After 36
months.

Per cent. Per cent. Per cent.
12
12
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.........

5
3

5
6

4

2

Total reserve..........................................................................................

12

12

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 irom 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.............................................................. ......................

60 days
to 14
months.

After 36
months.

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

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

10

9
3

10

6

Total reserve .........................................................................................

20

18

9
6

4
18

Date.—MFrom and after the date set by the Secretary of the Treasury for the incor­
poration of the Federal reserve hank.”
Again.—“ For 60 days from the date set by the Secretary for the organization of the
reserve bark.”




62

CHANGEIS IN T H E
BANKS

IN

BAN K IN G

AND

CU RREN CY

S Y ST E M .

C E N T R A L RESERVE C IT IE S .

60 days.

60 days
to 14
months.

After 14
mouths.

Total rwnT> 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

10

0

3

5
4

Total reserve.......................................................................................

20

18

18

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 this
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 tne city banks in self-defense have
deemed themselves warranted in suspending specie payments. It is
contended, however, that these difficulties and irregularities of tfye
existing system are mere blemishes upon the surface of an otherwise
desirable state of affairs, and that there is good and suflicient economic
reason for maintaining the present system of redeposited reserves at
least in part . This claim may be reduced to a series of proposition^,
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 accommoda­
tion to be granted them by the size of the balances.
3 . Tho 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 aro
widely ui^ged.
Regarding the first point— the question of exchange fund*— it will
be noted that the proposed bill has mot tho 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




CHANGES

IN

TH E

BANKING

AND

CURRENCY

S Y S T E M ..

63

banks from maintaining any amount of such balances with city banks
as they desire. Clearly if the balances with the city banks are ex­
change 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 oountry 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 accom­
modation except in proportion to the amount of balance held by the
would-be borrower is purely a matter of business practice. If a con­
dition should be created under the proposed biu such that banks
could not piaintain 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 nad altered and the large balances of for­
mer 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 argu­
ment 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 com­
munity out represents tho 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 rystem 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 amJys*s 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, (r) 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 12k per cent of
their deposits in lawful money and may hold 1 2 $ 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

CHANGES IN THE BARKING

AMD

OUBBENCY SYSTEM.

8. 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 x x their relation to others.
x
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; (6) 5 per
cent of the deposits of present countir banks to be carried in cash
in their own vaults; (c) 2 per cent of tne 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 “ balances1 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 tne 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..............................................................................
$141,127,835
To be held as balances............................................. .............................. 141,127,836
T ota l............................................................ ..............................

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 ana 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........................................... .............................$268,473,589
Minimum release of cash....................................................................... . 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............................................................... .............................$250, 383, 926
Held in balances........................................................................ 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 ajid a




CHANGES IK TH B B A N D H O AND OTJUB1NOT 8TBTMM.

65

like am ount in b a la n ces'(m a xim u m ), w hich w ou ld b e fo r the reeerre
cities as a g rou p :
To be held in cash..................................................................................$175,128,701
To be held in balances.......................................................................... 175,128,701
Total..............................................................................................

350,257,402

C om paring these figures with the present requirem ents, as already
given , it is seen th a t the new plan m igh t m ean either a
Maximum release of caah......................................................................... $75,255,225
Or a maximum contraction of caah..................................................... . . 99, 873,476
9. A t the same date m entioned a b ov e the ban kin g reserve in
co u n try banks was held as follow s:
Held in caah.. . .......................................................................................$289, 392,177
Held in balance#.................... .............................................................. 310, 689,129
Total............................................................................................

600,081,306

'U nder the new plan the cash required w ould be 5 per cent o f their
net deposits su bject to reserve requirem ents and 7 per cent in
balances (2 o f this at the b an k ’s discretion). This w oula m ean:
To be held in caah................. ................................................................$180, 533, 642
To be held in balance®.. >................................................. ..................... 252,747,100
Total...........

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

433,280,742

On the same principles as before this would m ean a m axim um re­
lease or con traction as follow s:
Maximum release................. .................................................................. $108,858,535
Maximum contraction............................. ......... .................................... 143, 888, 566
10. Thus it appears that there would be a possible m axim um con ­
traction as follow s:
Reserve city banka................................................................................. $99, 973, 476
Country banka.. ....... ............ .............. .............. .................................. 143,888,565
Total............................................................................................
Deduct central reserve city release.......................................................

243,862,041
127, 345, 754

Net contraction............................................................................

116, 514, 287

I t is also evident that the result m ight work out as follow s:
Released by central reserve city banka.................................................. $268, 473, 589
Released by reserve city banka.................................... ........................
75, 255, 225
Released by country banka.......................................................... .......... 108, 858, 535
Total......................................................................................... .

452,587,349

11. W h ich o f these results w ould p rob ab ly be reach ed? A ssum e
th at the first (con traction ) was the net result ow ing to banks fulfilling
their reserve requirem ents b y depositing cash in every instance.
T h e G overnm ent balances w hich are now to be poured into trade
channels through the new reserve banks will run irom $200,000,000
to $250,000,000. B earing in m ind the fa c t that the capital o f the
new banks has to be raised in cash, it will be seen that allow ing fo r
$100,000>000 of this capital the m on etary situation w ould b e left
abou t the sam e as it is to-d a y except that the new reserve banks
w ould be in p osition to add their loaning pow er to that o f the older




66

OHAHOB8 nr t h b bajtkijto a m o u b b s k o t bybtim .

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 releasea 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 releasea. 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 thereauirea
5 per cent.
If the reserve banks should do this, it would be found
that the required 5 per cent referred to would bo about $356,000,000
while the amount which tho 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,
being as follows:
Central reserve city banks....................................................................... $141,127,835
Reserve city banks....................................................................... 1........ 175,128,701
Country banks......................................................................................... 180,533,642
Total..............................................................................................

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 redemp­
tion 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.
IM M E D IA T E

SH IFT IN G OF F U N D S.

This review of the reserve requirements of the proposed bill is, how­
ever, 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 neces­
sarily ue 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 for shifting reserve require­
ments 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 ejected in a very much shorter time than
this, if it were necessary to bring it about more quickly, but the com­
mittee has deemed it best to allow tho 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.




OHJJffGM

nr

THE BANKING AND CTTBREHCY SYSTEM.

67

There is, however, another phase of the Question of transfer which
has not yet been dealt with. A review 01 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 oanks, 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 $2 1 0 ,0 0 0 ,0 0 0 . This might be supplied cither
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 nor­
mally about $250,000,000 in cash, and about an equal amount in
balances with central reserve cities. The reduction of reserve re­
quirements from 25 to 18 per cent would release seven twenty-fifths
out of this amount, or 3$ 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 por 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
woula the reserve city banks supply tlus 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 corre­
spondents, 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 them­
selves find it necessary to shift 3 per cent of their outstanding de­
posits 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 ,0 0 0 ,0 0 0 ,0 p0 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 trans­
ferred in casn without damaging their position. Another $70,000,000




68

0H AH 0S8 n r t h b b a n k i n g a n d CUBBBNOY 8Y8TKM.

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 co/nputation, 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 sup­
pose that this margin of casn could be drawn upon at the very outset
in 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 cor­
responding reduction of reservo requirements against them
For
example, if tho assumption that country banks draw upon reserve city
banks for the full amount of their transfers to tho new Federal reserver
banks be correct, tho effect would be to eliminate about $ 10 0 ,000,000
of deposits formerly held by reserve city banks against which reserves
had to bo carried but which having been paid off are no longer sub­
ject to reserve requirements. This would Ibe a release under the new
reserve provisions of $2 0 ,000,000 of reserve money in the reserve
cities. The reserve thus released might be either in cash o*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 tho result would bo a release of reserve against
deposits to a corresponding extent, thereby enabling banks to reduce
their necessary casli holdings by one-fifth oi 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 tho situa­
tion it is a fair conclusion that the draft upon tho banks during the
first 60 days’ life of the new undertaking would be much less, sif 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 of 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 oi June 4, last, the amount needed to bo trans­
ferred would be 2 per cent of about $6,900,000,000, or about $138,0 00 ,0 0 0 . If the banks had not accumulated cash during the year
or retained the surplus cash set free at the outset, this require­
ment 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 de­
velop. 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.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

69

That in the meantime the habit of resorting to the reserve banks for
rediscounts would have grown up can not bo 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 througlf ordinary commercial processes involv­
ing no inconvenience or sacrifice whatever. If the extreme supposi­
tion that the banks did not enlarge their deposits during the year,
and that the cash originally held against them remained stationary,
should be accented, the fact would remain that the reserve banks
would during tliat period have received some $2 0 0 ,000,000 from tho
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 o f 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 constric­
tion will cause relaxation and that the danger of the situation from
the banking standpoint will not be in the limitation o f loans but
rather in the inflating o f them— a process which, however, will remain
w under the control of the reserve banks to be organized, by reason
^ell
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 efTort has been made to put the situation
in a light that would present the transition to the new system as
unduly easv. 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 fact, 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 com­
mittee snail designate places for the organization of reserve banks,
and that (h) within 00 days after the date when the organization of a
bank has been announced, there shall be a shift of a certain percent in
the reserves required. This would be a total of 150 days after the pas­
sage 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 dist rict 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 dis­
tricts it would not be necessary for more than three-fifths of the banks
to have signified an intention to enter the system. The banks arc




70

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

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 tlie act.
If this should be the case tlie 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 tho
drftft on reserve funds will not fall suddenly as has been assumed in
the computations made above, but will be diffused over a very con­
siderable period. This would give ample opportunity for the acquir­
ing of reserve money through any one of the channels through which
it is ordinarily obtained— importation, production of gold, the gather­
ing in of cash in circulation, or as a substitute the gradual extension
of rediscounts by Federal reserve hanks which count for reserve pur­
poses 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 con­
sequent; upon a rush of banks into the new system Immediate!v'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 011 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 exist­
ing law which require that the 5 per cent fund deposited with tho
Treasurer of the Tinted States by national banking associations for
the purpose of note redemption shall be counted as part of the lawful
reserve. There is 110 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 redempt'en* of
their notes 011 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 011 deposit with the Treasury
for the current redemption of national-bank notes will be of less and
less importance, so tnat such burden as is thrown upon the banks
by the provisions of section 21 will disappear as the oanks at their
own option convert their bonds. Tho section is therefore a further
working out of the ideas carried by section 2 0 , which are in sub­
stance 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 THE BANKING AND CURRENCY SYSTEM.

71

SECTION 22.

Section 22 establishes a reserve of 33$ 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 be­
lieves, however, that in a country accustomed to fixed reserve require­
ments the prescription of a minimum reserve may have a beneficial
effect, and it therefore has determined upon 33 J 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 con­
siderably more than the amount required. It will be remembered
that in an earlier section (sec. 1 2 ) the Federal reserve board was
given power to suspend reserve requirements for 30 days if it saw
fit. And in the present section, with that in mind, it is provided that
if, upon notice ot 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, in the belief that the latter are not
now sufficiently effective and that oxisting authorities have not the
power to carry through such examinations either with the thorough­
ness 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 bo
-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 be­
stowed upon the Federal reservo 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 bo similar to those
now conducted by clearing-house associations.
Paragraph 3 of the section authorizes the Federal reservo 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, wity havo the power of hold­
ing bank funds and of conducting all of the functions they now per­
form. 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 desirablo that specially clos,e over­
sight should be maintained with regard to this class of banks.
It has been complained that under this section national banks in
reserve cities would bo under examination nearly all the time. No
charge of thb sort can be sustained. The Federal reserve board’s
examinations of banks in reserve cities, which are to be made four




72

CHANGE® IN

THE

BAN K IN G

AND

CURREN CY

SYSTEM .

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 banlc 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 associa­
tions to-day. The specifications with reference to the items to be
shown in tne 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 annoy­
ing or crippling the banks to which it is applied.
s e c t io n

24.

In this section it is sought to correct a bad practice, all too preva­
lent, of paying fees to bank examiners in order that they may make
a favoraole report upon the condition of a bank; and further to end
the illegitimate practice whereby officers of national banks have here­
tofore profited at the expense of borrowers by charging a commission
or brokerage for the obtaining of loans. The extent of these prac­
tices 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 stock­
holders 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
baiuc failure, but tnat tKey should not be liable it 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 knowlsd^e 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 lands 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




CHANGES IN THB BANKINO AND CURRENCY 8YSTEM.

73

are limited to a period of twelve months, and are permitted only in the
case of country banks. This provision has not ueen 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 01 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 oner 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 pro­
tection 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.
s e c t io n

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 mstances 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
coAtrol. 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 lon g been a dem and for an extension o f the powers of
national banks whicli w ould perm it them to facilitate foreign trade
and d o business abroad. The plan upon which the com m ittee has
determ ined after m uch consideration and com parison o f various
com peting propositions calls for perm ission to national banks having




74

0HAH0B8 n r THB BANKING AND CUBBBNOY 8Y8TBM,,

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 permis­
sion 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 natu­
rally specifies that a power of further regulation from the adminis­
trative 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.
s e c t io n

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.
s e c t io n

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 m specific language.




A p p e n d ix A*

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

ASSETS.

Cash:
In Treasury offices —
Gold coin............................ $26,227,243.44
Gold certificates.................
81.276.790.00
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
Nat ional-bank notes..........
48,810,150.97
N ote . — This includes
$44,468,406.97 which the
Treasury has redeemed and
tor which it will receive
payment from national
banka.

LIABILITIES.
Current liabilities:
in Treasury offices—
Disbursing officers' bal­
ances................................ $09,432,075.81
Outstanding warrants.......
3,754,564.40
Outstanding
Tresurcr's
9,440,773.90
checks..............................
Post Office Department
balances...........................
10,135,920.79
Postal savings balances—
1,504,100.63
Judicial officers' balances,
•tc........................... .
8,304,014.*
National-bank notes: Re­
demption fund >..............
20,741,483.00
National-bank 5 per cent
fund.................................
26,871,679.38
Assets of failed national
banks..............................
5,441,625.28
Coupons and interest checks
1,499,769.47
Miscellaneous (exchanges,
etc.)..................................
5.075,981.14
Total.................... . . . . 162,291.988.56
Subtract:
Checks
not
17,944,501.58
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
C u r r e n t lia­
bilities.......... 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 unavail­
able—
Silver bullion................ - .
Subsidiary silver c o in ......
Fractional currency..........
Minor coin....................

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

1,829,953.69
1,654,548.97

In national-bank depositaries—
Judicial officers' balances,
etc....................................
Outstanding warrants. . . . .

144,347,486.96
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
2,106,704.00

Total liabilities against cash...

155,428,420.50

Net balance In general fund............

130,962,552.96

Total liabilities and net
balance......................... 286,380,973.48

• 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
oath the circulating notes which come into its possession subject to redemption.

75
203<U> O —

------ 6




76

OHAKOBS IK THB BAXKDfQ AJSTD CTJBMWOY SYSTEM.

Th$ currency truit fuhdt, tSe general fund, and tk* gold rutrve fund.
AKSTi.

LIABILITIES.

Currency trust funds:
Ooldooln................................ $890,041,539.00
Oold bullion........................... 303,778,040.00

Outstanding certificates:
Gold cerlifloatee outstanding. 81,092,830,109.00
Silver oertiflcatcj outstand-

Total nold........................... 1,003,830,100.00
Silver dollars.......................... 485.008,000.00
Silver dollars of 1800................
3,045,000.00
Total currency trust funda__ 1,580,473,100.00
General fund:
Total oash assets, as a bovt.. 380,380,973.46

(M l reserve fund:
Gold coin................................
Gold bullion
.
.

100, 000. 000.00

S 000 000 00
O

Treasury notes outstanding .

3,045,000.00

Total outstanding certificate* 1,580,473,109.00
General fund liabilities and
balance:
Total liabilities, as above....
155,438,430.50
Balance in
te n e ra l
ra n d , as
above....... $130,953,553.95
Gold reserve» ... 150,000,000.00
Total

net

bal-

Grand total cash assets in
Treasury..........................3,010,854,142.45

2,010,854,143.41

* Reserved against 8346,081,010 of United States notes and 12/4 *,000 of Treasury notes of 1800.
>

Cash receipts and payments, Aug. 5 , 1913.
GENERAL 7UND.
RECEIPTS.
Currant receipts:
Customs...................................... $1,331,010.83
Internal revenue—
Ordinary..............................
879,309.31
Corporation tax....................
3,384.53
Miscellaneous..............................
82,083.90

PAYMENT*.
Currency payments:
By Treasury and Subtreasuries.. $2,003,228.31
By national banks.......... ............ 3,827,700.54

Total........................................ 3,286,950.47
Agency receipts:
NationaEbank redemptions, post­
masters’ reoeipts, etc............... 5,500,450.05

Total........................................ 0,520,934.85
Agency payments:
National-bank redemptions, post­
masters’ payments, etc............ 3,259,302.77

Total current and agency re­
ceipts.................................... 7,793,407.13
Publio-debt reoeipts:
Lawful money deposited to re­
tire national-bank notes (act
July 14,1800)...........................
104,050.00

Total current and agency pay­
ments.................................... 9,780,337.03
Publio-debt payments:
Lawful money paid for nationalbank notes retired (act July 14,
1890).........................................
125,350.00
United States bonds, certificates,

Proceeds of postal savings bonds.......................
Panama Canal—
Proceeds of bonds.......................................
Total reoeipts for the day........
Excess of payments for the day........

Panama Canal payments:
Disbursements for the canal (in­
cluded above in current pay­
ments).............................................................

2,007, d o . 50

7,898,057.13

Total payments for the day_
_ 9,905,487.03
Exoess of reoeipts for the day...................................

9,905,487.03

9,905,487.03

N on .—Both receipts and payments represent transactions which have reached the Treasury this day.
Distant points are, necessarily, a number of days behind.
RECAPITU
LATION GENERAL FUND.
,
Total cash assets in the general
fund, previous day..................... 8288,388,403.95
Receipts this day...........................
7,898,057.13
Payments this day........................

390,280,401.07
9,905,487.02

Total cash assets in the general
fond at end of this day............... 280,380,973.45




TRAN
SACTION IN NATIONAL-BANK N
S
OTES.
Notes reoeived for redemption this
day.............................................
Month to date:
This fiscal year........................
Last fiscal year........................
Year to date:
This fiscal year........................
Last fiscal year........................

$1,241,900.80
8,550,875.70
9,830,000.00
09.801,000.30
09,503,127.50

77

CHANGES *N THE BANKING AND CURBENCY SYSTEM.

Bonds held in trust for national banka, Aug. 5, 191S.
Bonds hold for national banks.

Kind of bonds.

To secure dep »sits of
public moneys.

Rate of Total amount
outstanding.

To secure
circulation.
Value at
par.

Total.

Value at
rate ap­
proved by
depart­
ment.

$.3,404,200
3,040,100
17,580,700
11,034,200
1.274.000
527.000
5.927.000
1.801.000
933.000

$3,464,200
3,640,100
17,580,700
11,034,200
1.274.000
527.000
5.927.000
1.801.000
933.000

GOVERNMENT.

U. 8. loan of 1925..at par..
U .S. loan of l‘J0K-19l8.do..
U. S. Panama of liHii.. .d o ..
I’ .S.cons > of 1930........do..
1
U.S. Panama of 1930.. .d o ..
U.S.Panama of 1938.. .do..
Philippine loans.......... do..
Porto Uico loans......... do.„
District of Columbia, do..
Territory of Hawaii, 3$ per
II. cent bonds at 90 per "ccnt
of par: all other Hawaiian
bonds at market value,
not exceeding par.............

I

$33,357,500
22.023 200

10, 000, (X )
X
5,225,000
0,970,050

$3G, 821,700
25, O
f,3,300
17,580,700
01ft, 225,750
54,128,3(0
29,472, (>
40
5.927.000
1.801.000
933,000

6,515,000

1,943,000

1,943.000

1,895,900

8,543.000
6, 735,000

898,000

898,000
10,000

588,571
6,750

64, 403, 800

58,9ti5,523

$118, 489,900
tv 94 . 4M
t, .">
50.000.000
(40,250,150
54, (’>31,980

so, n t), oot)
o

3.05

(‘)

004,591.550
52,854, .3 0
(5
28,945,040

MISCELLANEOUS.

Philippine Railway Co----Manila Railroad Co.............

At 90 per cent of market
value, not exceeding 90
per cent par.
I V . State, county, and city at
75 per cent * of market
value, not exceeding par

<
‘)

10,000

14. 831. 000
800, 230, 050

9,693,103
741,772, 250

1Various.
Total................................
* For the District of Columbia temporary tax deposits, certain other classes ol securities are also accept­
able at this rule and State bonds are acceptable at 85 per ccnt 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 l>e the order of withdrawal: Group IV. Group III, Group II, and Group I.
Bonds within a group may be interchanged by banks ir 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 11, providod the 2’s aa withdrawn shall be used as security for additional circulation.




78

CHANGES IN THE BANKING AND CUBBENCY SYSTEM.

Current receipts contrasted with pay warrants drawn {exclusive of postal service payable
from postal revenues)—Aug. 5, 1913.
Month to date.

Year to date.

This fiscal year. Last fiscal year. This fiscal year. Last fiscal year.
Current receipts:
Customs............................................
Internal revenue—
Ordinary....................................
Corporation tax.........................
Miscellaneous....................................
Total cash receipts.................
Pay warrants drawn:
Legislative establishment...............
Executive Office..............................
State Department.................. .........
Treasury DepartmentExcluding public buildings___
Public buildings*......................
War Department—
Military......................................
C i v i l i a n .......... , T
.........
Department of Justice.....................
Poet Office Department—
Not including postal service—
Postal deficiencies.....................
Navy Department—Naval..............
Civilian...........
Interior Department—E x c 1 n ding “ Pensions ”
and “ In­
dians” ___
Pensions....
Indians.......
Department of Agriculture..............
Department of Commerce...............
Department of Labor......................
Independent offices and coramis-

*3,845,507.68

*3,859,556.50

<31,652,252.22

$31,906,058.77

3, G , 300.62
IG
44,124.16
895,970.32

3,635,497.81
86,112.50
677,412.55

29,337,154.75
1,897,423.04
5,746,092.80

28,368,034.10
1,440,105.21
5,090,714.87

8,401,998.78

8,258,579. 45

68,633,522.90

67,704.012.05

102,027.3.5
4(18.97
24,123.44

130,904.06
9,000.00
35,617.48

1,343,143.83
46,180. 66
588,885.90

1.214.503.10
08,355.00
382,498.58

01,422. 60
221,245.01

100,753.09
55,431.12

4,316,767.05
1,921,198.23

3,832,832.60
1,700,813.68

1,907,407.11

1,014,557.46

340,063.75
29,616.04

426,436.85
31,588.99

16,776,280.11
230,088.02
4,975,390.48
1,380,509.44

12,100,639.90
184,814.53
4,026,133.75
506.761.37

132,406.49

25,347.94

326,780.40

1,988.566. 71
14.900.00

1,798, 159.50
7, 233.80

14,311,720.37
87,208.33

165.422.37
401,947.60
12,688,142.26
75,837.12

120,432.03
3,225,894.38
530,760.23
1,997.07
48,625. 62

380,588.49
3,005, 264.59
197,125.88
21,506.00
3, 745.10 /
\

4,834,369.19
17,674,638.28
1,537,434. 72
2,860.966.54
937,162.08
349,816.37 }

4,877,134.34
15,774,255.46
1,020,043.64
1,972,362.63
1,061,585.01

}

District of Columbia........................
Interest on the public debt.............

09,017. 12
61.639.01
111,194. 75

583.33
577,333.33
77,705.67

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

339,331.10
2.807.444.10
3,406.007.40

Total pay warrants drawn_
_
Less* unexpended balances

8,998,407.68

7,907,882.74

80,788,974.79

€8, 795,956.70

405,595.70

444,805.60

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 (doficit)___

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 ranama Canal bonds

334,650.00

50,060 00

1.791.690.00
1.116.880.00

1,502,060.00
854.860.00

Total public debt receipts___

334.650.00

50, 060. 00

2,908,570.00

2,356,020.00

Public debt payments:
National-bank notes retired............
United States bonds, certificates,
and notes paid..............................

383,900.00

375,950.00

3,143,012.50

3,256,098.00

705, 502 40

60.618.71
0* 873, 495. 24

5,280.00

29,765.00

Total retirements...................
Panama Canal payments:
Pay warrants for construction, e tc..

383,900. 00

375, 950.00

3,148,292.50

3,285.800.00

1,049,846.50

28,073.06

4,263,207.65

4,186,587.45

Total public debt and ranama
Canal pay warrants......................

1,433,746.50

404,023.06

7,411,500.15

7,471,390.45

Excess of public debt receipt#........
Excess of public debt and ranama
Canal pay warrants......................

1,099,096.50

353,963.06

4,502,930.15

5,114,47a 45

14,370,425.30

5,053,851.74

Net excess of all receipts........................
Net excess of ail pay warrants...............

441,539.34
1,289,900.70

*Sites, construction, equipment, operation, end maintenance.




CHANGES IN THE BANKING AND CUBBENCY 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 so ld ..................... ..........................................................................

183,891,031.64

Total bonds authorised by existing laws for Panama Canal..................................
Total bonds issued to this d a t e ............................................................................

375,200,980.00
134,631,980.00

Balance of bonds authorized but not yet issued...............................................

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, 191$.
June 4.1913—
7,473 banks

10,966,788,617.68

11,185,599,266.47

11,081,974,333.46

11,036,919,757.04

1.046.012.580.00
701,021,452.71
242.735.174.37
713,823,118.00
27,701.00
1,068,683,209.81
539,959,859.28
529.299.679.38
39,545,913.62
1,299,534.51
5.891.670.007.00
47,259,053.42

1,045,092,580.00
701,999,833.63
968,007,265.44
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
647,774,013.99
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

1,052,265,581.63
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
39,886,867.14
17,687,643.16
6,316,019.43

1,056,919,792.00
720,606,792.54
268,140,962.57
722,125,024.00
22,416.00
1,017,460,873.04
£>*^64,904.42
£M40,184.47
45,885,609.76
1,529,196.67
5,953,461,551.12
43,118,218.06
18,661,875.47
6,606,821.08

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...........................................
Poetal-aevinn deposits..........................................

Peposits of united States disbursing officers........




11,968,274.96

SYSTEM,

10,963.400.760.35

Total.

OUBBENOY

16,143,028,132.94
19,006,152.02
735.226.870.00
47.061.690.00
43,607,929.68
6,318,000.00
6,876,636.89
1,060,687,666.66
248,888,963.96
31,332,948.16
439,021,200.04
194,990,066.54
762,176,994.73
37,092,245.76
267,660,492.67
51.538.808.00
3,680,482.68
724,074,627.77
189.908.013.00
35.394.885.00
9,636,971.86

AD
N

96,125,029,165.96 16,178,096,379.33
20.077.156.00
22,307,066.94
730,424,030.00
730.754.970.00
47.598.470.00
47.406.310.00
34,742,462.12
37,624,380.29
7,898,870.00
6,136,37a 00
7,014,837.88
6,722,651.96
1,061,481,767.28
1,043,943,884.13
248,670,244.17
246,629,609.78
31,934,222.65
32,070,676.151
451,758,116.35
473.496.114.13
194,311,338.05
209,294,468,18
808,364,504.79
850,478,400.06
32,680,725.17
36,722,041.76
249,893,991.16
288.820,252.73
47.761.533.00
49.747.626.00
3,896,212.41
3,782,668.19
712,906,399.96
749.731.848.13
175,377,336 00
183.685.383.00
36,000,010.39
34,988,720.82
9,109,576.42
9,394,808.69

BANKING

16,058,982,029.40
26.493.061.24
728.482.810.00
46.166.400.00
33.029.494.25
7,737,060.00
7,069,551.81
1,096,942,064.36
345,796,890.28
29,078,950.21
477,181,5X2.05
218,289,353.55
786,190,805.24
34,100,567.74
278,672.040.53
46.118.234.00
3,300,300.97
662,320,721.71
176.778.016.00
35,486.273.80
7,583,460.54

,

TH
B

16,040, 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
1.039, 966,552.37
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. 02*. 032.99
6,,908,419.67

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...............................................
Dae from national banks (not reserve agents).............
Due from State banks and bankers.............................
Due from approved 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......
Doe from Treasurer United States.

I
K

Nov. 26,1912—
7,420 banks.

CHANGES

Feb. 4.1913—
7,425 banks.

Apr. 4.1913—
7,440 banks.

Sept. 4,1912—
7,397 banks.

Bonds borrowed...........................................................................................................
Notes and bills rediscounted...................................................................................... !
Bills payable........................................ ........................................................................ |
Reser ved for taxes........................................................................................................i
Liabilities other than those above stated.................................................... ......... j

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

43,215,466.68
14,080,960.86
68,825,794.93
7,030,644.10
2,022,652.90

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

TH
E
BANKING
AND
(JUBBBNOY
SYSTEM .




38,774,688.78
10,776,272.59
61,105,295.55
7,447,975.40
1,716,397.83

O A OS I
H N S
N

Total................................................................................ .............................

37,913,129.27
15,716,092.06
66, 658,690.96
0,674,012.38
3,133,271.60

99

Q B A K Q i8

Uf T&M B A JfU V Q 4JTO 0U 8M H 0T

K IT IM .

Changes in theprincipal items of rssouress and liabilities ofnational banks as shown tyAs
returns on June 4, 1913, as compared with the returns on Apr. 4, 1913, and June 14,

Since Apr. 4,1918.

Since June 14,1910.

Items.

Increase.

Dec

Increase.

Decrease.

Loads and discounts...............................
935,0(9)8,246.39 9189,123,701.09
United States bonds..........................
93,706,190.00
12,584,390.00
Due from national banks, State banks
and bankers, and reserve agents..........
$27,903,419.00
58,245,697.88
32,688,060.36
11,108,227.82
Legal tenders.......................................... 14,530,077.00
1,467,806.00
r*n>ui stook...................................
4,054,210.47
23.349.117.00
Surplus and other profits...................... . 13,086,712.07
37,920,240.46
Circulation.............................................. 3,148,34a 00
13.434.431.00
Due to national and State banks and
57,611,846.42
bankers........................................
71,793,967.75
Individual deposits...............................
15,325,493.92
128,000,377.76
United States Government deposits___
3,522,162.56
974,232.31
Postal saving deposits..........................
Bills payable ana rediscounts.............. 16,374,236.73
14,300,470.73
Total resources......................................
45,0M, 576.42
175,155,879.89
» Postal savings deposits eliminated from United States deposits.
Total number banks reporting June 14, 1912, 7,372; June 4, 1913, 7,473; increase, 101.




T h o m as P . K a n e ,

Acting Comptroller.

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close of business on Wednesday, June 4 ,
1913.

States, Territories, and reserve cities.

i
i

Pennsylvania...........

Eastern States..




2,571,000

2,968,758. 74

60,200

284,158.30

99,461,835.00

37,983,560

247,939.26

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

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

61,100

182,967.41

96,754, 120.27
8.685, 690.44
4.685. 162.52
177,054, 381.66
66,934, 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
6,543, 619.49

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

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

1,485,410
451.500
442.000

479,857.43
180,557.50
118,000.00
43,465.98
112,293.75
71,000.00
140,155.00
94,300.94
108,573.33
19.777.50
66.152.50

52,110
182,500
25,010
9,000

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

11

292.538. 351.19
23,858, 319.68
17,439, 699.96
886,966, 803.90
154,899, 174.55
369,195, 46190
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

1.653
133
116
73
48
116

6

36

200

781
32
23
26
89
16

1

2

52
87
33
26
5

2, 100,000

6,904,100

1,000

4.909.250

238.000

11.153.000
800,000
6,048,750
8,505,050
3,085,300
2.571.250
3.270.000

585.500
105.000
464.000
302.500
144.000
34,000
403.000

21,600

996,120
239,180
168,750

1,000

66,000

100

25,760

10,000

175,000
49.000
34.000
89,000

1,997.30
630,491.35
131.031.82
817.550.82
350,718.17
4S1.846.62
23,370.13
57,767.96
156,138. 56

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

$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

8YBTBM

Virginia...............
West Virginia___
North Carolina...
South Carolina...
Georgia.................
Savannah___
Florida.................
Alabama..............
Mississippi...........
Louisiana.............
New Orleans.

62.424,100

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

507,378.942.38

429
3

79

783.000

$70,726.59
43,703.77
34.380.00
100,296. 58
11.625.00
6,950.00
14,476.36

CUBRENCY

Philadelphia___
Pittsburgh.........
Delaware...................
Maryland..................
Baltimore...........
District of Columbia.
Washington.......

395,373.79

453

17

20

$13,000
25,600

AD
N

New York.................
Albany...............
Brook! r n ...........
New York City..
Ntw Jersey...............

291.000
259.000

$215,855.05
288.688.44
117,663.75
988.554.31
654.600.25
155.477.50
547.913.44

BANKING

New England States.

$308,000
343.000
207.900
379.100

I50.67S.67
56.523. 26
72.049.18
90.908.01
34.800.25
8,025.36
81,729.06

13
6

Securities,
judgments,
claims, etc.

$6,033,250
5.056.500
4.512.500
20.009.000
8.557,000
4.722.500
13,533,350

137,232.949.20
19.186,295.08
18,456,571.80
134.038.075.52
200,240,665.93
29.765,080.46
68,459,304.30

56
49

United States1
United States Other bonds United States Premium on
bonds to
to secure
bonds on
bonds to se­
United States
secure circu­ cure deposits. United States
hand.
bonds.
lation.
deposits.

TH
E

Rhode Island......
Connecticut.......

Overdrafts.

I
K

Maine...................
New Hampshire.
Vermont.........
Massachusetts —
Boston. . . —

Loans and dis­
counts.

CHANGES

Resources.
; Num­
ber of
i banks.

00
0*

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4 ,
1913—Continu ed.

States, Territories, and reserve cities.

Tennessee...........

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

481
5

8
2

•
7
5

40
186

8

Other bonds United States Premium on
to secure
bonds on United States
secure circuUnited States
bonds.
hand.
t ion
cure deposits.
deposits.
lation.

^ t T 3U itedto sen
bonds 8tst“
$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

$263,845.47
169,640.00

100,000

30,000.00
125,000.00
56,000.00

2,000

110,000

323,000
40,000
217.500
766,600
1,152,000
929.500

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

10,410
221,670
134,100

$166,910.19
694.80
10.500.00
3,403.75
9,200.98
833.06
11.500.00
18,972.37
39,487.50
102,014.91
164,672.59

$119,270

100,000.00

1,000

9,740

10,000

Securities,
judgments,
claims, etc.
$3,907,631.58
896,527.90
373,598.13
122,624.43
1,127,264.96
191,000.00
20,791.90
848,782.85
2,973,251.70
4,187,692.48
3,380,796.94

138,096,270 j

9,780,510

2,943,404.28

1,121,810

1,342,036.11

45,618,992.41

TnHi»n * .......................

240
5
448

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

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

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

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
2,078,9ia07
2,908,812.#

Indianapolis..
Illinois...................
Chicago...........
Michigan...............
Detroit............
W isconsin...........
Milwaukee......
Minnesota.............
Minneapolis...
St. Paul..........
Iowa......................
Cedar Rapids..
Des Moines___
Dubuque........
Sioux City......
Missouri.................
! City...




8
7

8

9
96

3
124
5
261

6

4
325
3
4

3

5

111
11

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

66.314.742.21

4.606.000

202.000

294.500
311.000
1.125.000
333.000
41.000
165.000
50.000
137.000

133.000
834.000

.

22 000.00
196,783.36
551.330.00

52,500
234,160
.......220

500
182,710

‘ ‘ si,*579*66
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

S'

6,092,806.00

183,386,621.86

OTTBBEKOY

806,351,387.09

357~

Southern States.

AO
JT

10
,5 5

Ohio......................
Cincinnati.......
Cleveland........
Columbus.......

BAITKTSTG

Louisville___

Overdrafts.

nr TH
E

Texas..................
Dallas...........
Fort W orth..
Galveston
Houston........
San Antonio..
Waco............
Arkansas............
Kentucky...........

Loans and dis­
counts.

0HAKGE8

Resources.
Num­
ber of
banks.

00

11,002,129.34
l(Xi, 384,851.17

St. Joseph.
St. Louis..

87,902.35
5,276,099.98

1,717,140

1,251,466.70

216,954,77L87

83,035.12
220,864.75
207,598.51
87,522.89
266,000.00
42.325.00
436,756. 86
151.500.00

120
75,400
56,920

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

6

58.000.00
595,S58.35
57,542.40
618.043.00
461,525.15
82.000.00
47.030.00
121,458.30
5,000.00
60,000.00

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
1,453,151.21

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

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. K
7
372.322.50
72.814.05
55,950.35
2,996.53

2,584,850
1.589.000

365.000
1, 200,000
208.500

625, 325.20
302, 000.00
42, .moo
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
3 , 336.05
6
188, (io . 8
26

1,500
4,600

5,880.00
28f565.58
12,600.61

53,7«0
600,000
153,480
213,600
185,000
10,000

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, 09.43

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, 706.40
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 j

1,256,960 1 594,920.38

62,877,649.70

1,781,081.24

31,474.84

306,250 I

2

3
3
57
30
117

6

3
40
314
5

6

5

2

78
5
235

8
0

54
17

6
11

13

7,473

6,143,028,132.94

2.800.000

500,000
3,520,260
2,900,000
17,066,800
5,070, (X )
X
21,950,000
2, 772,500
923,250

2, 4 0 0
0 ,0 0
1,579, (X )
X
941, :>io
62,500

19,006,152.02 j 735,226,870

200.000

205.500
795.000
460,200
357.000
841.000
308.000
102.000

290.000
57, (XX)
261.000
250,000
5,900,200
235,400 I
47,061,690

20, 000.00

111. 000.00 l

4,861,580.10 (

1,000

1,500
20,000

104,520
1,000
25,780
25,000
4.000
131,500
1.000
24,640

25,'666'i

io.ooo'j

2^.561.00 i
43,597,929. 58 I

593.55 I
6,338,000

161,353.59

SYSTEM,

13,262,442. 46

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

OT7BBENOY

14,516,820

3,971,770
3,283,300
8,657,760
930,500
2,517,500
680,000
8, K99f 740
399.000
325.000
325.000
3,306,450
1,537,550
5,001,010
3.500.000
450.000
1.679.000
8,404,310
675.000
625.000

AD
N

196,012,130

184,932.55
230,610.29
681,158.85
68,216.51
102,079.67
68,862.32
447.409.41
2.543.68
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

1,74^026, 577.9

BANKING




84,234.68

5,864,192.16

144
103
228
4
7
3
205

Hawaii................................
Total United States.

1,000

TH
E

Pacific States............

53,500.00
189,085.00

I
N

Western States.
Washington..........
Seattle.............
Spokane.......... .
Tacoma............
Oregon...................
Portland.........
California...............
Los Angeles
San Francisco..
Idaho......................
Utah.......................
Salt Lake City.
Nevada...................
Arizona...................
Alaska *...................

119.000
596.000

OHANOES

Kansas City___
Topeka.............
Wichita............
Montana..................
Wyoming................
Colorado..................
Denver..............
Pueblo..............
New Mexico............
Oklahoma...............
Muskogee..........
Oklahoma Oitv.

970,000 I
17,049,790

31,449,390.17
27,246,642.21
55.524.637.04
6,116,458.37
32,289,290.60
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

Middle Western States..................... i 2,063
North Dakota.......
South Dakota.......
Nebraska...............
Liflcoln...........
Omaha............
South Omaha.

25,241.77
45,586.05

6,876,636.89 | 1,050,587,655.55

1 One report for Apr. 4,1913.

00

Oi

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4,
19IS—Continued.

States, Territories, and reserve cities.

Bankinghouse furni­
ture anu fix­
tures.

1

I
Due from ap­
proved 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
100,5147.77
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

$185,370.79
366,833.04
12,767,267.98
262,701.12
515,398. 2$

610,531.65

21,7.11,830.84

10-, 071,543.06

84,434,523.72

2, $88,099.14

14,097,571.13

7,398,430.83
578,000.00
627,053.68
30,357,838.13
8,852,608.34
22,132.457.15
6,6SS,u.*v>.17
15,420,718.92
538.11*1.03
1,811,976.53
2,780,350.*8
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

5,412,459.37
10,560,225.28
343,991.11
58,647,282.69
5,110, S O 53
C.
5,385,591.10
35,213,599.55
i i , 039,189. (5
9
162,227.30
503,678.00
7,387,745.66
9,951.77
2,816,936.01

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
3,9(H 253.07
),
74,505.55
301,478.26
1,5*9,310.91

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

1,136,435.41

24,35*,143.00
58,321,033.11
42,4 M416.(*6
;> ,
23, W . 110.42
l,02i >,40*. 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
5,98K, 222.65
1,207.46V 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

100,4m, 910.81

10,473,332.34

142,593,678.06 j
i

61,867,649.15

219,291,497.82

14,328,214.18

183,559,465.49

4,142,185.68
3,491,887.97
1,825,046.78
951,449.30
3,313,967.12
34,673.02
2,070,087.72
1,980,012.71
893,565.91
985,523.24
2,430,604.25

334,450.83
392,909.09
234,101.12
131,550.43
287,123.23

5,188,110.21 <
;
2,625,513.17 1
3,421,773.39
1,355,119.07
2,430, 007.14
233,579.69
4,009,777.03
2,36K, 755.70
456,052.02
857,566.62
1,255,665.06

1,738,597.73
704,080.41
1,435,344.70
719, S71.31
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
7,208,062.54
2,544,024.33
1,652,787.28
5,034,482.72
169,2%. 82
5,101,664.43
4,569,868.69
2,209,763.16
1,826,487.53
3,429,254.66

Virginia..........................................................
West Virginia.................................................
North Carolina...............................................
South Carolina...............................................
Georgia...........................................................

Louisiana............................................. .........
New Orleans...........................................




133 i
116 1
73 :
48 '
116 !
2i
52 1
87 |
33 j
26 j
5:

7,614.32

188, *25.25
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
2,184,356.00

SYSTEM.

19,223,005.13

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

CUBBENOY

453

AD
N

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

BANKING

$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

Due from
State and pri­
vate banks
and bankers.

TH
E

69
56
49
163
17
20
79

Due from,
other national
banks.

I
N

Maine..............................................................
New Hampshire....................................
Vermont.........................................................
Massachusetts................................................
Boston.....................................................
Rhode Island.................................................
Connecticut....................................................

Other real
estate and
m o n ie s
owned.

CHANGES

R esources—Continued.
Num­
ber of
banks.

00

0»

97,101,133.08

6,408,482.71

11,351,899.42

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
2,2191,729.97
2,718, 845.61
4,665,,042.58
4,207,,219.31
58,354 ,766.19
1,246! 258.24
i,
5,070
826, 946.23
2,904,,344.16
3,903, 575.60
6.924,,823.53
1.924,,189.22
3,522, 976.01
707 681.06
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
81,7.16.72
163.165.66
67,883.20
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
231.476.47
697.268.66
62,017.18
15,042.90
37,378.97
88,456.04
262,712.84
899,092.10
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, e5 .5
61
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

1.632,313.64
732,809.86 j
235,014.01 1
1,418.133.00
410.180. 72 I
2.366.173.25
459.310.30
29.089.39
13.013.35
1,411.423.67
89.500.00
13,351.49 |
2,190.006.48
400,133.66
146.000.00
15,155.81 ;
28.051.87
11,907.75 !
152.485.56 ........................... i
1,070,779.15
333,154.69 !

1,481,447.10
1.360,422.94
1,377. SH 82
I.
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

249
5
448
9
96
3
124
5
261

6

4
325
3
4
3
5
111

11

Middle Western States.

;

!
1
I
!

144 j

103
228
4
7
3
205
2
3
3
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

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

j
,
!
1
,

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

SYSTEM .

24,198,935.44

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

CURRENCY

53,152,310.16

7,542, 836.22
3,295. 366.52
1,273, 956.84
950, 553.93
3,372, 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, 61.69
271, 933.33
.1,437 417.84
1,398. 940.79
185, 116.00
5,565, 128.16

AND

5,841,708.40

4
7

Ohio......................
Cincinnati......
Cleveland.......
Columbus.......
Indiana.................
Indianapolis..
Illinois..................
Chicago..........
Michigan...............
Detroit...........
Wisconsin.............
Milwaukee___
Minnesota.............
Minneaoolis...
St. Paul..........
Iowa......................
Cedar Rapids.
Des Moines—
Dubuque.......
Sioux City___
Missouri................
Kansas C ity...
St. Josenh......
St. Louis........

BANKING

40,217,428.84

107

8

THE

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

I
N

1,623,515.03
398,043.39
240,066.16
34,120.54
219,428.51
147.130.11
20,829.89
142.113.12
329,818, 78
88,315.25
743,776.65

CHANGES

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

7
5
49
136

Southern States.




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

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

481
5

Dallas.............
Fort Worth..
Galveston___
Houston
San Antonio.
Waco.............
Arkansas...........
Kentucky.............
Louisville....
Tennessee.............

North Dakota.......
South Dakota.. . . .
Nebraska...............
Lincoln...........
Omaha.............
South Omaha.
Kansas....................
Kansas City...
Topoka............
Wichita........... .
Montana................

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

7,386,390.85
3,077,7,50.38
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

6,462,045.37
876,505.89
1,052,372.58
244,6*8.50
2,514,235.47
358,671.10
82,077.54
611,498.34
2,340,548.29
315,807.80
3,239,374.26

1,505

Texas............ .

00

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4,
1913—Continued.

States, Territories, and reserve cities.

Other real
estate and
mortgages
owned.

Due from
other national
banks.

Due from
State and pri­
vate 1>anks
and bankers.

Due from ap­
proved reserve
agents.

j
i
Checks and
other cash
items.

Exchanges for
clearinghouse.

S205.2S2.65
57s. 155. S3
1.655.524.58
68.732.46
253.997.96
588.141.02
35.250.86
186.731.08

SI. 877.514.95
8.4S7.S13.S9
4.933.629.06
1.015.559.02
2.356.X93.79
12,277.466.64
544.044.78
1,228.710.28

S46.777.32
145.764.39
171.776.99
3K.838.29
107.902.87
295.K19.60
11,337.60
114,905.61

S28.627.18
116.000.43
1.218,263.12
51,116.62
95.586.65
105.285.12
86.728.02
85,488.10

32,997.045.00

0.964.2S0.88

83,081.051.58

3,042.773.72

4,857,842.65

2

1.242.145.06
232.001.00
1,212.648.68
256,000.00
1,941.614.61
333.968.97
6,276.703.85
745.863.46
4.685.944.19
1.024.485.21
424.252.10
407.824.04
131.592.46
486.260.84
13.000.00

439.901.25
169.297.44
204.829.61
171.857.39
294.106.58
26.904.57
090.486.04
95,722.07
891.943.66
330.921.14
112.322.48
19.07ft. 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
5.315.616.90
9,760.472.38
657.872.63
270.355.83
1.451 279.07
183. <43.26
5SS.421.79
8. 862.90

682.657.62
2,091.370.28
1,005.551.34
17*. 791.68
529.646.63
9*9.746.67
1.806.132.31
2.649.7K5.74
18.725.416.88
50S.S76.23
277.974.77
736.497.53
54.5M7.92
3*6.533.16
14.7*4.02

5,958.983.40
4,595.029.89
2,066.643.87
909.944.47
5,263.195.94
2.850.657.19
18,(121,544.76
5.223.311.13
14.043.172.73
2.97*. 1*9.09
Mi5.tii»s.34
1.201.749.11
1.221.4<>. 30
2.44»M»i7.S0
1<»9.219.00

135.028.87
190.877.74
25,793.76
7,052.02
153.855.33
161.300.16
494.H73.81
426.252.62
276.708.63
127.699.44
10.709.62
70, *75.90
13.041.17
121.277.50
8,334. M
i

100,784.61
794,424.93
267,731.72
136,847.00
40,274.05
1,187,730 86
777,323.15
1,82S. 743.58
2,052.992.26
81.002.97
78,482.91
346.410.77
7,980.73
59,441.97

515 !

19.414.303.57

3.651,53i. 50

29.141.719.47

30.63S.272.7S j

67.9<N.sti2.ti2 1

2,163.6*1.43

8.660,171.00

Pacific States..................................... 1
Hawaii........................................................ j

6

5
2

78
5
235
8

9
54
17
6
11

13

4

Total United States..........................^ 7,473 j
j




•I 04? no 1
V
|
248.88K.U53.V5 |

k

45A m 1
I

31,332.94$. 10 1

3.31ft.45 |
j

127.552.10

14v571.32

439.021.200.04 j| im,«*p.<*ki. 54 | 762.17li.iW4.73 j
|

1 One report for Apr. 4,1913.

34.164.6*
37,092.245.76 | 257,560.492.57

SYSTEM,

4,122.740.04

64

OUBBENOY

16,853.367.31

Washington................................................
Seattle..................................................
Spokane................................................
Tacoma.................................................
Oregon........................................................
Portland...............................................
California....................................................
Los Angeles..........................................
San Francisco......................................
Idaho..........................................................
Utah...........................................................
Salt Lake City......................................
Kerada.......................................................
Arizona.......................................................
Alaska^......................................................

AD
N

6

1.290

3
40
314
5

BACKING

S581.306.87
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

Western States................................. .

6

TH
E

095.632.53
585.400.33
293.849.62
107.804.42
185.430.97
523.967.81
58.659.64
78,184.80

S492.904.84
1,232.256.58
303.132.79
54.756.98
668.931.45
2,893.192.27
78.200.00
165.815.53

30
117

I
N

Wyoming....................................................
Colorado......................................................
Denver..................................................
Pueblo..................................................
New Mexico................................................
Oklahoma...................................................
Muskogee..............................................
Oklahoma City.....................................

1

Bankinghouse furni­
ture and fix­
tures.

CHANGES

Resources—Continued.
Num­
ber of
banks.

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday. June 4,
19 IS— Continued.

States, Territories, and reserve cities.

Eastern Statos.........




Due from
United States
Treasurer.

$2,707.203.14
1,203,1*4. >
.2
936,69V 29
6,889.509.86
26,634,781). 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.

20
79

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

453 |

5,304,766

313,007.48

43,950,868.69

12,028,332 ]

3,040,9$O. 00

1,268,357.50

894,507,784.55

429
3

2,302.464
237.
124.007
2,340.064
1,078.283
4,108.722
970.810
1,678.301
5*.439
166,263
455,495

19,356. 594.96
2,555. 290.16
2,914, 784.75
242, <66. 036.02
9,606. 742.35
25.493, 4<»8.19
31,496. 161.60
18.553. 115.55
406. 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. < 0
105 000.00
51 850.00
2,477, 065.00
894 353.50
2.719. 6*7.50
59 3 0 0
3 .0
8 1 547.50
3.
O
«3. 512. (J
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
610,410.00
522.000.00
12.800.00
6, («2.50
45.000.00

82,565

184,328.06
7,137.53
25,741.67
142,200.12
131.049.24
300.360.47
105.546.41
ft). 179.39
11.310.43
26,:K5.18
39.9*0.46
198.51
9,230.49

527,724 668.00
60,375. 351.97
33.382. 28.68
1,692.944. (•44.90
294.354. 970.66
705.1*8, 200.84
429.074. 560. 75
299.434. 506.10
14.332. 203.46
66,852. 868.17
110. 882. 457.45
2.044, 864.77
56,579, 568.93

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

676,614.95
436, :>85.00
317.895.00
237.692.50
530.711.00
40.000.00
2M, 145.00
393,942. .50
144,613. S
O
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

157,904,73(K54
88,037,709.41
64,254,616.85
43.025.674.60
94,810,601.47
5,435,730.19
63,606,887.80
60,615,687.99
24.591.219.60
27,942,892.88
46,897,582.65

56 :
49 I
163 .
it ;

6

30

200

71
H
32
23
26
89
16

1
11

......r 1 5
.6 3
~ 133
116
73
48
116

2

52

8'7

33
26
5

$401,467
300.291

12 2
1 .* 3

1,200

606,460
670,'*85
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 ,

$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

SYSTEM.

Virginia..............
West Virginia___
North Carolina...
South Carolina...
Georgia................
Savannah___
Florida................
Alabama..............
Mississippi..........
Louisiana............
New Orleans.

Five per cent
redemption
fund.

CURRENCY

Maryland..................
Baltimore............
District of Columbia.
Washington........

Legal-tender
notes.

AD
N

New York.................
Albany................
Brooklyn............
New York C ity ..
New Jersey................
Pennsylvania............
Philadelphia.......
Pittsburgh..........
Delaware...................

Specie.

BANKING

New England States.

Fractional paper j
currency, nickels,!
and cents.
1

I
N TH
E

Maine..................
New Hampshire.
Vermont.............
Massachusetts—
Boston..........
Rhode Island___
Connecticut........

U'rof !
banks. i Bills of other
national
banks.

CHANGES

Resources—Continued.

1Nm
u-

00

C
D

Abstract of reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4,
1913— Continued.

States, Territories, and reserve cities.

6,497,292.75

501,481.18

1,329,739,072.44

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. 125.0C
119, 750.00
93o, 145.40
290, 107.00
1,292, 975.00
727, 450.00
416, 135.00
107 650.00
440, 698.50
205. 850. 00
440. 923.00
99, 750. 00
41, 2.50.00
737, ’27.71
26, 250.00
65, 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. (X
)

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. W
5,547,736.93
17,603,980.84
51,442,743.49
117,844,076.29

8

5
448
9
96
3
124
5
261

6

4
325

a

4
3
5

111

11

401.490

254.635
793.996
38.043
94,020
27.479

68.035
256.C.'6
538.475

,4W, 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
5,000.00
107. 50
58,500.00

SYSTEM,

14,077,266

11,855, 381. 70
6,045, 256.80
7,533, 008.95
2,315, 052.05
tO
8,015, O . 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
4.450, 274. 40
5,831, 883.38
5,862, 567.95
3,995, 373.10
6,382, 245.20
629. 8S8.30
1,491, 798. 40
304 046.05
1, 112. 821.90
1,673. 079.04
7,233, 941.95

CURRENCY




48,925,079.80 |

120,918.77
11,806.66
17,500.75
13,148.26
85,130.50
14,519.36
138,937. 76
05.637.54
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

3.255.00

AD
N

Wisconsin............
Milwaukee...
Minnesota...........
Minneapolis. .
St. Paul........
Iowa....................
Cedar Rapids
Des Moines...
Dubuque___
Sioux C ity...
Missouri..............
Kansas City..

702,165.77

2 9 .3 9
,7 1 0

7, 660.06
9.300.00

BANKING

Detroit...........

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
10,950,282.36
34,083,536.92
78.034.615.63
50,304,134.20
109,563,865.24

9,416,673

249

Aggregate.

$27,249.50
16,002.50

1,505 !

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

Due from
United States
Treasurer.

$1,107,767.50
129.200.00
109.100.00
20.250.00
22.", 000.00
80.750.00
62.900.00
146.445.50
506.117.50
247.750.00
508.850.00

$143,0S9.49 !
{>,298.68 !
19,906.45
1,998.08
40,378.63
14,027.82
6,815.56
21,012.33
29,660.24
10,227.84
49,194.67

301,725

Five per cent
redemption
fund.

11,878,146
3*2,658
658,780
115,920
783,555
318,795
130,640
289,394
591,007
794,477
1,740,062

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

7

Legal-tender
notes.

$8,167,572.69
1.892.234.00
l,2h0,69s.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

4S1
5
8
2
6
7
5
49
136
8 j
107

8

Specie.

TH
E

Southern States......................................

Ohio....................
Cincinnati....
Cleveland___
Columbus___
Indiana...............
Indianapolis.
Illinois.................
Chicago.........
Michigan.............

Fractional paper
currency, nickels,
and cents.

I
N

1
Texas................................................................... ;
Dallas...........................................................
Fort Worth.................................................
Galveston.....................................................
Houston.......................................................
San Antonio................................................
Waco............................................................
Arkansas.............................................................
Ken tuckv ...........................................................
Louisville....................................................
Tennessee............................................................

Bills of other
national
banks.

O

CHANGES

R ©sources—Continued.
Num­
ber of
banks.

CO

56.153
707.591

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

2.063
Middle Western States....................... ( 2.063

15.197.858

934.543.57

178,272.813.15

72,984.445

9.395.355.41

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

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
67,663
89,929
537,174
78,802
168,378

25,660.06
24,917.96
32,762. S3
4,869.24
7,101.84
2,3*8.17
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
5,746,5fi6.05
9*5.487. 40
1,029,974.65
3,350,215.85
551,343.55
882,5*7.00

371,247
345,655
500,178
282,388
1,089,280
300,223
803,354
50,510
73,980
65,580
362,759
88,861
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, h 50
?>.
30,650.00
435,4%. S9
19,9.50.00
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

1.2V)

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

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. S6
3.872.77
ass. 45

2.168,610.55
4, m . 463.35
2.405.014.25
1,195,K 75
06.
2.758, r>.'4.78
4.751. U21.U5
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

41.782.309.47
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

Pacific States............

515

3,618.693

241,811.96

53,376.362.65

1,625.586

3.293.391.00

Hawaii.............................

4

Alaska*....................

Total United States.




275

535.14

538.11-111.05

30

51,538,808

3,580,482.68

724,074,627.77

189,908,013

One report for Apr. 4 1913.

1,339.47
10,652.50

5,000.00

807.615.377.76

9,636,971.86

11,036.919.757.04

15.012.50
35,394,885.00 jI

1.370.557.63

17.418.47

3.731.617.46

SYSTEM .

Salt Lake City.
Nevada..................
Arizona..................

3,450.00
55,914.98

CURRENCY

Utah.......................

22,000.00
3,240.25
5.00
9,100.00
61,000.00

AND

Portland...........

California...............
Los Anuelos....
San Francisco..
Idaho.....................

765.99

BANKING

Spokane..........
Tacoma...........
Oregon...................

2i,502.50

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
03,128,389.43
11,857,580.00
22,204,109.76
S7.934,265.82
7,744,293.95
12,803,289.70

THE

Swittle...............

12,511.08
1,775.90
2,550.00

I
N

Western States..
Washington...........

2,764.929.11 j 3.002.100. .880.88
OHANGKS

20366 0 -5 8 -

North Dakota..........
South Dakota..........
Nebraska.................
Lincoln..............
( >maha...............
South Omaha...
Kansas.....................
Kansas City......
Topeka...*........
Wichita.............
Montana..................
Wyoming.................
Colorado...................
Denver..............
Pueblo...............
New Mexico.............
Oklahoma................
Muskopoe..........
Oklahoma Citv.

5.000. O |
u
117.000.00 1

19.564.341.60
201.128.059.30

4
7

St. Joseph.
St. Louis...

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4,
19IS—Continued.

States, Territories, and re­
serve cities.

Capital stock
paid in.

Due to other
national banks.

Due to State
and private
banks and
bankers.

$3,756,000.00
3.369.400.00
2,077,101.95
18.014.225.00
19,8H1,000.00
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
4,561,868.06
93,628.10
329,811.93

$1,224,598.11
2/006,806.09
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
1,606,222.41
7,527,474.12
432,861.71
754,886.80

53,026,829.48

Dae to ap­
Due to trust
companies and proved reserve
agents.
savings banks.

Dividends
unpaid.

$10,907.49
10,641.82
3,812.33
32,170.66
6,897.06
4,091.03
20,058.10

101,686,700.00

63,602,626.95

38,313,676.31

61,165,695.00

38.231,536.77

5,425,664.43

11,022,79ft. 50

88,478* 63

Pennsylvania.........................
Philadelphia....................
Pittsburgh.......................
Delaware................................
Maryland...............................
Baltimore........................
District of Columbia.............
Washington....................

48.742.600.00
2,100,000.00
2,262,000.00
119,700,000.00
22,292,000.00
67.624.040.00
22,066,000.00
29,300,000.00
1,723,9/5.00
6.192.000.00
11.790.710.00
252,000.00
6.350.000.00

35,114,560.00
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, W ). 00
X
3.834.301 78
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
1,367,537.06
2,280,431.71
175,411.53
617.429.25

37,384,430.00
2.070.497.50
1.023.050.00
48.013.312.50
17. (W1,197..'50
56,599.586. 50
11.823.682.50
17.102.087.50
1,306,655. 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
3,078,428.89
183,053.79
103,117,052.40
1.351,042.33
1,317,101.44
15,609.826.72
8,844,125.67
23,817.08
83,273.13
4,091,103.05
1,329.57
314,432.07

3,582,718.64
10,894,040.99
2,622,408.62
8,509,764.68
127,103.01
5,595,567.52
205,246,651.64
10,139,910.97 *‘ 3*440,'623*27'
943,014.20
3,065,686.88
13.814,442.42
50,265,626.24
2,765.568.61
30.123,004.08
66,676.77
332.048. 88
93,070.55
120,346. 75
1,617,334.16
8,571,323.05
22,542.93
2,457,621.18 .........52,*947*94*

328,303.70
1,533.50
656.00
121,151.72
31,909.00
142,273.88
26,019.26
17,726.33
827.88
11,693.63
9,539.20
8,208.00
2,037.00

Eastern States.............

339,374,325.00

347,620,334.92

107,472,204.24

211,340,711.50

498,739,760.96

142,694.123.34

335,340,735.79

29,125,908.19

701,879.09

1,201,069.97
396,125.76
159,470.93
361,266.91
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
17,208.66
6,228.00
76.00
3,138.50
3.560.00
2.532.00
16,805.74
2,511 10

Virginia..................................
West Virginia.......................
North Carolina......................
South Carolina......................
Georgia...................................
Savannah........................
Florida...................................
A labam a...............................
Mississippi.............................
Louisiana...............................
New Orleans...................




17.668.500.00
10.168.132.00
8,610,000.00
6.365.000.00
14.318.600.00
900,000.00
7.475.800.00
9.964.600.00
3.685.000.00
3.020.000.00
5.200.000.00

11,696,995.93
6.237.600.00
2.880.926.00
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
2,009,690.72
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
2,779,597.06

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

SYSTEM.

New England States...
New York..............................
Albany............................
Brooklyn.........................
New York City...............

CUBBENCY

*7,740,000.00
5,286,000.00
4.985.000.00
29.842.500.00
28,200,000.00
6.320.000.00
19.314.200.00

AD
K

Maine.....................................
New Hampshire....................
Vermont................................
Massachusetts........................
Boston.............................
Rhode Island.........................
Connecticut...........................

BAVKIKO

National-bank
notes out­
standing.

TH
E

Undivided
profits, loss
expenses.

I
K

Surplus fund.

to

CHANGES

Liabilities.

to

Texas............. ............
Dallas...................
Fort Worth..........
Gah&astoo..........
H ouston......... .
San A n to n io ....
W aco.... . . . . . . . . . .

17,449,794.05
3.500.000.00
1.760.000.00
360.000.00
1.725.000.00
1.312.500.00
400.000.00
2.108.090.00
6,064,412.05
2.725.000.00
6,474,647.82

8,172,091.33
677,743.70
909,653.58
120,636.34
842,495.37
277,937.92
200,445.07
847,647.60
1,393,121.15
1,154,259.65
2,277,990.94

22,855,507.50
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
1,376,026.16
790.403.69
803.400.70
402,542.40
5,549,170.77
3.946.401.81

4,703,197.23
1,600,970.41
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
5,703,149.66

1,200,125.74

926,750.86
678,597.65
77,550.58
687,464.99
442,646.26
1,332,276.80
830,075.72

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

11,988.37
3,564.00
258.00
410.00
473.60
28.490.00
106.00
8,568.88
11,779.*2
11,265.32
16.672.00
170,014.28

441,379.44

Kentucky............. .
Louisville..............
Tvmeeeee....................

13,680,000.00
3.400.000.00
3.175.000.00
600,000.00
6.300.000.00
2.350.000.00
1.750.000.00
6.065.000.00
12,270,900.00
5.496.000.00
13,015,000.00

Southern states.

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

Ohio....................... .
Cincinnati.............
Cleveland.............
Columbus___.. . . .

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
8.060.000.00
1, 100, 000.00
30.200.000.00

18,816,625.91
6.450.000.00
4.860.000.00
1. 668. 000.00
9,677,700.18
3, 000, 000.00
18,124,335.06
36,300,000.00
6.627.900.00
1.750.000.00
4.752.250.00
3.300.000.00
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
3.401.804.66
768,085.57
Z, 602,541.88
7,369,425.25
2.642.291.66
1.428.212.56
2.656.362.57
1,530,620.06
2.296.665.42
1,435,346.72
1,100,156.17
3,468,072.91
63,531.11
343.545.71
260,642.92
99,656.66
966,906.35
2,669,104.46
138,664.68
1,415,641.71

29.452.120.00
7,463,095. Oi
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
1.087.695.00
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
2,4^6,700.48
157,409,434.27
525,885.39
6,033,930.06
416,612.00
5,849,980.73
3,910,231.50
14,190,034.90
8,824,127.39
3.313.903.04
8,151,514.97
4.064.868.92
413,433.08
3,890,936.32
363,011.52
30,708,093.13
3,347,666.21
66,339,310.03

3,327,149.55
8,178,815.98
8,832,317.73
2,109,795.54
4,362,070.09
4,925,272.03

4.668.613.61
6,363,758.03
15,273,305.09
1,132,590.66
3.311.641.62
1,940,444.97
1,635,011.11
16,682,395.27
1.349.263.63
4,657,571.80
390,445.07
808,701.01
94,970.77
2,486,921.53
1,351,223.31
8,276,682.79
2,702,914.78
2,869,384.94
408,387.09
1,001,644.36
66,182.13
4,343,663.06
490,616.39
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

Artatniai..... ................

Indianapolis........... .
Illinois..................
Chicago.................

lfVhiyan...................

Detroit.......................
Wisconsin........................
Milwaukee.................
Minnesota........................
Minneapolis...............
St. Paul........... ........
Iowa................................
Cedar Rapids.............
Des Moines................
Dubuque................
Sioux City.................
U sou ri...........................
Kansas City..............
St. Joseph.................
St. Louis..............
Middle Western States.
North Dakota..................
Booth Dakota..................
Nebraska.........................
Lincoln......................
Omaha......................
South Omaha............
Kansas City.
Topeka........
Wj
rfchlta.......




282,411,035.00

146,656,447.22

64,049,689.62

193,223,502.50

6, 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
6.135.000.00

2.076.665.33
1,325,960.07
4.498.643.00
330.000.00
2,850,000.00
606.000.00
4.890.183.33
300.000.00
190.000.00
666.000.00
3.098.700.00

810,703.16
•41,835.85
1,631,233.24
309,386.06
915,382.73
192,667.12
2,601,494.14
77,988.78
46,930.17
91,669.83
1,316,806.40

3.962.715.00
3.366.010.00
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
3.186.620.00

9,092,814.69

74,071,142.88
2,327,631.80
6,236,350.79
3.415.403.36
7,901,808.45
4,743,388.15
14,067,637.34
6.631.793.36
5,063,466.76
3,437,164.87
3,467,497.14
638,966.03
4,100,397.18
3,747,469.86
33,683,794.47
6,978,886.13
27,831,808.96

162,291.56

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

144,637.45
259.27

101,439.49

44,723.66
11.760.00
4.486.00
2,173.35
7.766.06
10.643.00
22,974.87
6.309.50
7.168.06
1,174.04*
63,509.36T
167.60
16,773.76
4.606.50
1.433.00
15,703.41
60.00
1.240.00
162.00

387,520.19

36,179.50
1,912.60
138.00

133,567.76

344,369,167.46 234,031,817.72

84,860,266.86

2,783,756.77

374,559.68

2,713,968.41
3,604,36a 36
8,667,731.68
1,908,490.66
7,817,106.06
3,391,439.02
6,192,809.96
2,043>915.77
411,924.56
2,673,078.48
1,346,847.44

106,673.03
113,797.68
259,631.53
137,963.11
188,365.18
133,716.34
188,997.60
147,406.67
6,289.69
66,683.69
192,603.06

1,992.44
1,986.86

6.697.00
17,592.00
6.796.00
43.00
1.326.00

13,369.89

17,515.33
1,014.00

"i'aftio

7 00
11,002.14

1,087,192.63
836,892.66
663,243.72
1.287.742.20
11,367,249.39
2,466,866.41
1,300,503.34
1,210,722.96
658,003.98
1.661.276.21
1,441,779.50

£
CO

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4,
1913—Continued.

States, Territories, and re­
serve cities.

Capital stock
paid in.

Surplus fund.

Undivided
profits, less
expenses.

National-bank
notes out­
standing.

Due to other
national banks.

Due to State
and private
banks and
bankers.

Due to trust | Due to ap­
companies and j proved reserve
agents.
savings banks.

$538,418. IS
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

$926.00
2,121.43
95,032.23

4,835.23
Jl, 246.06

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

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

2,050,704.20
1.370.000.00
771,465.77
850.000.00
2.230.329.96
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
418,790.63
120.209.32
877,771.98
615,059.13
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. C
O
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
8,093,431.88
t , 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
467,206.30
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
144,01&35
1,000,593.73
525,102.51
310,466.36

11,278.15

003.33
1,215.00
451.00

3,188.88

64.755.00
702.25
10,228.33
2,098.55
9,391.50
300.00
330.00
15.625.00
746.00
236.00

Pacific States...............

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

610,000.00

259,082.08

63,877.16

306,247.50

1,900.45

163,219.37

30,367.47

United States..............

1,056.919.792.00

720,006,792.54

268,140,962.57

722,125,024.00

1,017,460,873.04

528,264,904.42

528,940,184.47




4, 1913.

342,086.94
3,309.03
1,145.33
4,209.07
1,218.29
1,215.49

Hawaii...................................

‘ One report for Apr.

378,809.02

747,120.80

106,741.96

3.00

810.00

45,885,009.70 | 1,529,196.57

SYSTEM .

33,708,304.71

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
* 100,000.00

CXTBBENCT

72,261.900.00

AND

Western States............
Washington...........................
Seattle.............................
Spokane..........................
Tacoma...........................
Oregon...................................
Portland..........................
California...............................
Los Angeies.....................
San Francisco.........
Idaho.....................................
Utah......................................
Salt Lake City................
Nevada..................................
Arizona...........•....................
Alaska1..................................

BANKING

$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

THE

$1,710,000.00
6.740.000.00
3.600.000.00
600.000.00
2.215.000.00
12,08*.200.00
900.000.00
1.300.000.00

I
N

Wyoming...............................
Colorado.................................
Denver............................
Pueblo.............................
New Mexico...........................
Oklahoma.............................
Muskogee.........................
Oklahoma City...............

Dividends
unpaid.

CHANGES

Liabilities.

C
D

Abstract o f reports o f the national banking associations of the United States, showing their condition at the close o f business on Wednesday, June 4.
19IS—Continued.
Liabilities—
Continued.

States, Territories, and re­
serve cities.

Individual de­
posits.

United States
deposits.

Postal savings
deposits.

Deposits of
United States
disbursing
officers.

Bonds borrowed. Notes and bflls BiDs payable.
redisoounted.

Reserved far
taxes.

Other

Maine................... ............. ..

New Hampshire....................
Vermont.................................
Massachusetts.......................
Boston....... ............ .
Rhode Island.........................
Connecticut- ............ ..........

$40,967,316.00
90,141,718.13
18,433,067.03
136,000,108.06
103,139,390.48
98,798,038.86
67,759,671.84

$154,614.10
260,550.33
58,907.70
250,795.08
750,822.12
275,961.90
237,038.18

$75,889.31
186.115.16
96.922.98
501,300.61
419.663.17
73,399.60
272,906.57

$106,578.02
7,940.76
162,723.45
511.61
177,712.70
96,501.09
8,404.80

$86, 000.00
6, 000.00
9,000.00
60,000.00
3,047,000.00

$30,047.01
141,518.44
14.500.00
108,455.41
13.500.00

$086,500.00
$9$,on . 81
288,000.00
1,108,800.00
100, 000.00
345.000.00
60.000.00

New England States...

509,462,325.44

1,968,609.41

1,645,195.70

490,369.42

8,915,000.00

$17,090.86

3,023,083.81

702,386.44

1 0 ,8 0 .0

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

360,642,422.94
17,296,578.93
19,626,388.41
704,994,318.24
194,960,116.57
479,401,739.43
192,903,890.59
130,618,008.68
8,255,006.78
40,703,2*9.44
43,704,232.56
1,603,541.18
27,784,451.20

906,071.74
281,462.15
258,532.37
2,506,145.26
513,197.40
578,618.42
1,003,429.38
713,505.60
81,350.83
112,770.34
1,191,898.61
71,000.00
9,683,303.97

814,822.70
12,924.99
270,129.90
786.109.14
491,194.17
857,995.96
115.100.15
83,189.40
3,612.53
10,872.44
82,863.02

97,4)3.66

1,150,000.00

$36,920.00

3,606,554.46

72,644.47
30, 657.97
104,178.65
47,089.96
170,714.50
93,308.40
90,927.98

118,106.36
5,000.0

8,433,750.00
93.000.00
10,613.01
75.000.00
996.000.00

65.000.00
898,350.04
193,447.4$
187,354.41
1,803,460.71

$98,104.33
11.450.00
36,068.54
1,758,603.98
36,916.10
46.106.0
34,304.80
187,733.38

8,853.51

940.000.00

18,768.75
77.000.00

71,032.96

195,069.93

9,455,795.00

386,000.00

36,915.11

Eastern States.............

2,221,985,884.95

10,828,295.06

3,587,140.36

1,033,834.59

14,060,087.01

3,163,609.33

13,903,554.46

3,558,067.53

641,156.44

1,342,222.25
88,317,172.61
323,370.60
56,337,416.69 i
32,495,822.74 |
474,663.42
229,542.14
19,978,246.22 !
522,222.77
44,654,693.63
1,598,824.98
138,993.54
376,326.59
36,692,315.87
38,655,704.83
225,688.01
50,090.52
14,025,319.27
6, 000.00
14,832,407.07
370,720.48
21,930,855.06

104,502.44
58,188.20
13,619.89
9,549.25
30,578.97
4,941.07
92,296.46
42,859.33
80,522.32
18,141.26
40,963.77

806,579.35
41,600.50
93,100.80
10.900.98
936,330.39
12,580.12
45,784.28
34,760.88
71.017.99

1,885,000.00
163.000.00
966.000.00

1,641,703.00
$3,800.00
1,179,516.75
1,106,853.31
1,608,904.36

3,136,513.17
301,654.76
8,761,30.33
3.707.000.00
5.897.000.60
298.050.00
889.500.00
1,863,400.00
403,263.81
765,000.00
1*701.901.60

136,078.03
11,680.13

150,3140

38,501 38
13,503.34
33,514.56
81,006.06
80,000.00

401.56
7,607.08
7,883.04

Virginia..................................
West Virginia........................
North Carolina......................
800th Carolina......................
Georgia...................................
Savannah.. ••.................
Florida...................................
Alabama................................
Mississippi.............................
Louisiana...............................
New Orleans...................




B2.85i.96

56,600.66
66, 000.00

984,500.00 .......148,'458.04'
36.800.00
570,700.58
159.600.00
60,365.73
41,000.00
950,476.81
1,131,400.00

$as0.0r
13,100.00
5,413.07
146,887.0
475,000.90
16,131.4$
40,143.81

335.000.00
4.108.500.00
1.315.500.00
630.000.00
100. 000.00
143.000.00
445.000.00 ..........3,073*36
38,703.16
8, 010, 000.00

$0,106.0
81.00
30.000.00
44.803.0
3,147.0
3 7 .00 .0
38.126.0

io ,a i6 b

300,461.87
6 1 ,00 .0
4,600.0
3,510.07
648.10
468.00

........ M&OT
37,430.15
31,597.00
750.00
1,880.0

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4,
19IS— Con tin ued.

States, Territories, and re­
serve cities.

Individual de­
posits.

United States | Postal savings
deposits.
{
deposits.

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___

211,234,297.40
38.359.928.39
46.034.766.02
21,569,385.41
123,635,112.02
2.r
»,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
40,27s, 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




1,407,231.8
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

$33,651.11

$550,255.36

$3,243,500.00

$41,960.83

21,499.91

200, 000.00
365,000.00

288,*174.76

10,000.00

342,483.33

2,007,400.00

8,549,348.39

29,461,979.42

711,138.51

117,313.02

1,215,060.00

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

1,963,864.62

6,038,651.11

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

*18,*727.48

4,603.15

1,400.00

122 000.00

395,000.00

866.12

128,671.59
475,342.68

471,868.66

98,163.80

244,011.85
224,477.93

995,700.00
327,000.00
25,000.00

.

2,558.3$

500.000.00
75,000.00
130.000.00
775,165.00
976,367.65

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

87,754.20
89,843.66
203,580.84

*ioo,'606.60
64,000.00

305,392.40

*i32,804.80

1,584,700.66

493,500.07

350,000.00

*6i,*294*37

130.000.00
800.000.00
348,000.00

,

1,345,000.00

2,445.65
7,570.58
68,174.68

$88,891.0*
36,822.69

’ 260, 660.66

10,760.87
183.30
3,150.72

17,522.77

*’6 3 6 6
,* 6 '6
26,368.62
*206,'499.'47
23,815.07
27,‘5ii*28
99, io7.57
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

SYSTBM.

7,475,924.51

$409,247.03
28,148.96

Other
liabilities.

CURRENCY

715,053,294.27

104,380.03
91,992.98
132,098.02
182,455.09

Reserved for

AD
N

Southern State

2, 000.00

$156,478.98
105,409.73
32,372.36
13,026.63
43,375.29
49,477.79

Bills payable.

BANKING

76,259.93
150,000.00
14,479.12
39,114.61
44,296. 86
652,863.89
1,112,9X7.47
618,324.75

$556,499.26
149,258.37

Notes and bills
rediscounted

TH
B

$121,992,525.16
20,606,291.43
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

Bonds borrowed.

I
N

Texas......................
Dallas............... .
Fort Wort h . . . . ,
Galveston..........
Houston.............
San Antonio___
Waco................
Arkansas..................
Kentucky............... .
Louisville..........
Tennessee............... .

Deposits of
United States
disbursing
officers.

Q .ITG
ELA BS

Liabilities—Continued.

St. Joseph..........
8t. Louis..........
Middle Western States

104,880.56
639,008. 71

30,799.57
84,504.98

28,570.29

2,756,290.00

1,609,998,200.66 j 13,216,144.92

6,451,675.20

1,519,920.68

19,077,067.90

6,825,604.61 I
62,195,253.78

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
3,316,358.30

Pacific States.............

453,882,373.01

4,900,282.23

Hawaii.................... ............

1,876,445.06

261,877.73

United States.............

5,953,461,551.12

43,118,218.05




1 One report for Apr. 4,1913.

87,500.00

113,854.98

233,872.16
85,000.00

2, 000.00

4,500.00
37.000.00

267,500.00
63.000.00
95.000.00

112,015.92

148,000.00
867,060.85
25,000.00

234, 353. i4
35,079.80
227.09
1,207.25
286,199.14
1,967.21
6,468.92
367,512.82

'26,006.66
7,000.00
61,380.41

20.000.00

150,000.00

4,141.65
27.98
2,220.55
1,718.17
593.85
57.11
42,571.28
87.05

1,086,625.83

353,880.41

527,672.45

2,936,257.00

529,624.55

102,700.26

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

20,000.00

148,578.83

21,129.01
14,832.8*
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

118,096.52
146.58

17,229.85
565.18
200.00
19,092.95
354,419.03

37,800.00

5,074.45

129,000.00

317,979.15
77,000.00

127,464. 76

2,257,500.00

14,000.00
7,000.00

49,571.20

235,000.00
65,000.00

200,000.00

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

56,210.00

1,196.06
4,109.42
575.89
3,310.20
183, 644.69

157,786.98
18,661,875.47

6,606,821.08

7,030,644.10 1 2,045,067.99

* Includes 821,947 State bank notes outstanding.

SYSTEM .

261.072.97
1,040,490.02
143.679.98
156.739.12
87,271.66
7T
>5,710.94
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

202,509. i5

CURRENCY

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

Washington.........................
Seattle...........................
Spokane.........................
Tacoma.........................
Oregon................................. .
Portland.........................
California.............................
Los Angeles...................
San Francisco...............
Idaho.....................................
Utah......................................
Salt Lake City........... .
Nevada................................ .
Ariiona................................
Alaska1................................

2,254,344.0

30,828.62
15,404.00
5,050.00

1, 000.00
19,000.00

AND

4,447,004.19

442,396.42

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

BANKING

441,203,027.73

46,819.72

2,054,821.64

325,500.00
229,000.00
597,323.99

THE

202, 000.00

Western States..........

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

6,575,892.40

87,792.45

I
N

30,795.72
122,803.76
98,483.59
18,863.37
149,337.52
15,000.27
213,236.18
111,863.10
20,629.43
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

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
85,148, 490.96
12,946, 684.41
38,953, 187.61
37,111, 306.78
6,994, 207.91
15,271, 583.45
55,597, 272.15
4,716, 498.20
7,110, 223.46

1,114,639.74

CHANGES

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

North Dakota......................
South Dakota.................
Nebraska..............................
Lincoln.................. .
Omaha..........................
South Omaha................
Kansas.................................
Kansas C it y ................
Topeka...........................
Wichita.........................
Montana...............................
Wyoming.............................
Colorado..............................
Denver......................
Pueblo...........................
New Mexico.........................
Oklahoma............................
Muskogee.......................
Oklahoma City.............

2.46
159,609.37

Abstract o f reports o f the national banking associations o f the United States, showing their condition at the close o f business on Wednesday, June 4,
1913—Continued.

States, Territories, and reserve cities.

Time certificates
of deposit.
$471,507.98
82,783.86
600,931.38
331,759.92

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

Total.

$46,267,316.06
20,141,718,12
18,433,087.08
135,000,103.06
193,139,390.48
28,728,038.86
67,752,671.84

2,894,266.39

2,929,139.55

509,462, $23.44

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
17,298,578.9*
19,626,388.41
704,994,318.27
194,960,116.64
479,401,739.43
192,993,860.59
130,618,006.68
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

8, 715,284.29

31,071,862.56

2,221,985,884.95

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
1,044,50?. 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
24,798.05
26,576.38
25,611.83
101,694.13
1.795.58
61,244.10
43,921.32
9,439.37
28,664.78
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
1.598.824.96
36,692,315.87
38,655,704.83
14,025,319.27
14,832,407.07
21,930,855.0»

Virginia..............
West Virginia___
North Carolina...
South Carolina...
Georgia................
Savannah___
Florida................
Alabama............. .
Mississippi..........
Louisiana............
New Orleans.




SYSTEM,

1,641,448.14

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

CURRENCY

16,059,761.43

307,625,148.38
17,151,208.36
18,929,641.83
611,288.720.67
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

New England States.

AD
N

485,937,709.93

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

BANKING

$2,237,765.77
1,747,789.37
8a?, 148.88
3,4G9,708.23
2.589.973.53
3,575,209.12
1.546.166.53

Certified checks.

TH
E

$43,376,590.32
18,043,903.23
16,846,033.86
120,463,685.71
186,847,606.24
24,922,304.49
65,437,586.08

Demand certify
cates of deposit.

I
N

M
aine............

New Hampshire.
Vermont..............
Massachusetts...
Boston..........
Rhode Island___
Connecticut.........

Individual depos­
its subject to
check.

CHANGES

Classification of deposits.

Tftxas....................................
Danas................................
Fort Worth......................
Galveston.......... ..
Houston..........................
San Antonio...................
W aco............... .................
Arkansas..........................
Kentucky..................... .
Louisville..................
Tennessee........ ......................

109,859, 259.90
19,603, 375.78
11,426, 557.22
3,798, 236.66
21,446, 315.74
9,680, 465.00
5,357, 692. 43
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
11,331.96
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
827,635.15
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, 067.29
23,961, 568.71
10,343, 009.53
5,576, 231.70
18,517, 333.92
43,348, 401.42
21,172, 364.93
63,878, 623.83

Southern States...........

602,250,137.22

38,975,310.51

68,056,131.01

1,459,617.81

4,312,097.72

715,053,294.27

Ohio..........................................
Cincinnati........................
Cleveland..........................
Columbus..................
Indiana...................................
Indianapolis.................
Illinois......................................
Chicago.............................
Michigan................ .................
Detroit..............................
Wisconsin................................
Milwaukee........................
Minnesota................................
Minneapolis......................
St. Paul........................
Io\wa..........................
Cedar Rapids...................
Des Moines.......................
Dubuque..........................
Sioux City........................
Missouri................... ...............
Kansas City.....................
St. Joseph.........................
St. Louis...........................

148,461, 311.51
36,805, 376.63
45,011, 086.55
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, 22.57
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
6,654.57
84, 326.10
3, 538.70
6,092.94

250, 670.25
392, 267.89
277, 978.17
2 , 137.65
6
197, 439.18
822, 336.52
611, 735.01
4,447, 459.95
43, 995.65
273, 306.99
99, 634.72
369, 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.
40,214,636.
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.

Middle Western States

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

North Dakota.........................
South Dakota.........................
Nebraska............... .................
Lincoln.............................
Omaha..............................
South Omaha..................
Kansas.....................................
Kansas City.....................
Topeka.............................
Wichita.............................
Montana............................

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

44,880.97
42,221.59
52,459.17
19,447.94
192,398.57
3,771.59
87,770.13
2,301.86
10,050.63
8,161.98
39,063.81

208,948.90
149.292.15
162,245.39
103.644.34
696.888.03
1,007.628.34
166,257.94
44.123.38
15.388.47
46,338.74
174,710. !•

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
8,145,144.28
3,308.644.58
4,513,249.92
85,148,490.96




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

O

M
►
*
©
H

W
►
w
Q
►
%
d
o
d
8

H
S
O
H
j

0
0

H
*
on

O

CO

States, Territories, and reserve cities.

Individual depos­
its subject to
check.

Demand certifi­
cates of deposit.

Washington..............
Seattle................
Spokane..............
Tacoma..............
Oregon......................
Portland.............
California..................
Los Angeles........
San Francisco___
Idaho........................
Utah.........................
Salt Lake C ity...
Nevada................
Arizona.....................
Alaska......................

054,990.07
174,253.51
427,241.55
90,952.49
179,508.94
571,833.01
00,040.79
100,348.37

012,946,004.41
30,953,107.01
37,111,300.78
0,994,207.91
15,271,5C. 45
56,597,272.15
4,710,498.20
7,110,2“ “

28,302,911.85

119,264,355.00

780,717.19

4,348,041.17

441,200,027.73

24,906,859.28
25,986,052.14
14,897,363.31
6,909,508.49
23,436,986.24
23,652,322.48
100,943,500.09
40,396.544.77
81,400,257.21
13,789,116.00
6,360,285.87
9,631,763.09
4,280,059.28
8,607,650.18
786,328.86

1.222.610.30
390,610.19
1,936,155.47
84,075.02
1,792,966.93
1,254,762.45
7,809.714.54
2.517.800.30
2,280,410.77
1,709,809.28
00,031.11
35,814.27
809,103.28
209,851.03
20,250.90

4,120,696.48
4,001,921.81
48,752.19
518,805.72
4,090,585.17
435,402.07
10,905,544.33
1,796,393.30
3,321,609.13
2,994,602.37
1,722,035.61
1,653,272.68
874,602.06
812,964.68
58,643.85

45,508.50
247.850.80
48.931.07
70.203.07
21,269.31
210.587.81
209,044.37
457,075.51
878,084.18
26,711.95
15,570.27
10,83a 45
027.30
14,540.40
241.50

58,095.04
414,304.42
115,233.70
20,939.94
100,262.00
403,700.19
2,402,148.04
1,268,181.74
855,500.22
207,873.34
105,315.48
145,000.91
47,573.15
71,000.28
9,019.03

10,363,777.72
31,700,739.42
17,040,436.34
7,009,533.44
21,448,009.06
25,902,891.00
122,449,952.57
40,436,001.02
00,730,533.51
18,720,112.94
7,323,044.34
11,482,740.10
0,012,029.13
9,710,018.03
076,09a 30
453,882,373.01

Pacific States..

384,984,597.89

22,194,040.50

38,015,893.45

2,335,089.99

0,351,551.18

Hawaii.....................

1,736,879.10

81,020.10

53,125.22

4,700.28

54.30

1,870,445.00

United States..

4,866,181,398.63

418,661,677.79

525,506,864.50

02,285,775.14

5,953,461,551.12




80,823,835.00

STSXBM.

166,448.78

19,951.37
18,090.51
90,337.01
2,135.47
0,251.03
114,409.43
71,983.74
0,970.39

OUBRENCY

288,446,401.92

$4,930,833.04
9,235,081.99
9,194,057.20
1,045,004.11
4,707,982.04
0,289.885.91
1,192,750.81
385,770.07

AD
N

Western States.

Total.

BANKING

197,880.24
4,113.260.16
377,351.82
1,145,095.69
184,545.02
2,061,258.78

Cashier's checks
outstanding.

TH
E

97,847,029.09
25,412,501.44
27,014,319.20
4,103,020.15
10,133,296.42
45,959,825.02
3,385,716.86
6,450,079.85

Certified checks.

I
K

Denver
Pueblo................
New Mexico.............
Oklahoma................
Muskogee...........
Oklahoma City..

Time certificates
of deposit.

CHANGES

Classification of deposits.

10
0

tslract of reports o f the national banking associations o f the United States, showing their condition at the clou o f business on Wednesday, June 4,
1913— Continued.
^

Specie and circulation o f national banks on June 4 , 19IS.
8pecie.

Gold coin.

Gold Treas­ Clearing­
ury certifi­
Gold
house
cates to
Treasury
certificates
certificates. order (act (sec. 5192,
of Mar. 14,
R. S.).
1900).

146,175,180

24,215,000

800.941.00
571.845.00
171,68Q.OO
,758,310.00
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
940.037.50
045.274.50
045.785.00
196.485.00
940.532.50
056.942.50
608.752.50
95,0S0.00
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
1,218,7*0
339,380
342,550
661,010
85.000
323,600
3,319,500
589,500

45.000
60.000




6

32
23
16
11

2
6

5

8

2

6
7

6
8
8
7

8

5
3
5

6

4
3
4
3
5

11

4

7,170,000

64,895,000!
5,415,000
320,000
6,865,000
2,920,000

460.000
100.000

500,000

560,000
1,050,000

740,000

60,000

1,160.000
300.000
120.000

1,090,000

110,000

500,000

1,130,000

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 f 14,549,000 j
220,599 18,716,187
4,475,944
381,325.00 16,60S, 465. U
O
107,255.90 17,342,171.90 17,049,790
109,877
1,053

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

314. R22.530.52 I $1.355.090 1 2,222,265.00

67 208 317

6,991
4,296
3,651
162,860
260,369
38,354
9,063
24,350
28,685
109,944
136,340
40,670
212,887
194,801
100,726
71,331
74,024
65,375
115,586

745,000 j

Received
from
comp­
troller.

120,298
70,840
52,207
226,S03
103,175
25,558
61,240
7,452
28,521
118,358
46,647

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,.m 05
27.996.90
177,509.95
27.504.90

26,634,789.70
2,555,290.16
2,914,784.75
31,496,161.60
18,553,115.56
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. U
5
2.315.052.05
3.450.033.05
3.104.755.00
4.480.274.40
5.862.567.95
3,995,373.10
620,888.30
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
5,702,500
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
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

79,132,825.00
8,410,702.
2,070,497.
1,023,050.
11,823,682.
17,102,087.
8,149,085.
5,567,040.
800,000.
3.247.595.
2.563.200.
2,268,145.
405.000.
4.483.000.
2,046,892.
1.500.000.
4,952,500.
7,463,095.
’ 5,619,000.
2.487.200.
5,801,237.
2,102,400.
4.081.595.
1,987,695.
800.000.
515.450.
1,32*,697.
596,700.
864,497.
4.397.595.
957,095.

SYSTEM.

9,967,121.24

17
3

Total.

A D CtTRBENCT
N

52

Fractional
silver coin.

BANKING

Central reserve cities.
Boston.........................
Albany........................
Brooklyn.....................
Philadelphia...............
Pittsburgh...................
Baltimore....................
Washington.................
8avannah....................
New Orleans...............
Dallas..........................
Fort Worth.................
Galveston....................
Houston......................
San Antonio................
W aco...........................
Louisville....................
Cincinnati....................
Cleveland....................
Columbus....................
Indianapolis................
Detroit........................
Milwaukee...................
Minneapolis................
St. Paul.......................
Cedar Rapids..............
Des Moines..................
Dubuque.....................
Sioux City...................
Kansas City, Mo.........
St. Joseph...................

Silver
Treasury
certificates.

I TE
N H

$4,332,011.24 $114,855,720 $22,050,000 $55,450,000
4.023.595.00
20,731,880 : 1,715,000
9,445,000
1.611.515.00
10,587,580 i
450,000

New York City...........
Chicago........................
8t. Louis......................

Silver
dollars.

CHANGES

Cities, States, and Ter­ Num­
ber of
ritories.
banks.

Circulating notes.

12
0

Specie and circulation o f national banks on June 4, 191$—Continued.
Specie.

Lincoln......................
Omaha.......................
South Omaha............
Kansas City, Kans...
Topeka......................
Wichita.....................
Denver......................
P u eblo.....................
Muskogee...................
Oklahoma City.........
Seattle.......................
Spokane.....................
Tacoma......................
Portland..................
Los Angeles...............
Ban Francisco...........
Salt Lake City..........

$278,236.00
1.011.435.00
332.650.00
141.282.50
125.865.00
131.500.00
3.365.055.00
452.460.00
106.585.00
199.597.50
2.915.410.00
879.137.50
757.867.50
2.728.040.00
4.733.365.00
9,677,542.50
1,164,499.75

Gold Treas­ Clearing­
ury certifi­
house
cates to
order (act certificates
(sec. 5192,
of Mar. 14.
E. S.).
1900).

Silver
dollars.

Silver
Treasury
certificates.

Fractional
silver coin.

Total

Received
from
comp­
troller.

$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

$930,500
2,517,500
680,000
399.000
300.000
325.000
3.500.000
480.000
675.000
625.000
1.589.000
2.800.000
500.000
2.900.000
5.070.000
21,950,000
2 400 ono

On hand.

Outstanding.

I
N

Gold coin.

Gold
Treasury
certificates.

CHANGES

Cities, States, and Ter­ Num­
ber of
ritories
banks.

Circulating notes.

200,000
120,000

180,000

1, 011,000

324.000
717.000

1,000,000
838.000

$42,405.80
107,018.60
19,282.10
9,427.85
28.509.85
21.933.85
47,586.05
17,440.40
36.179.55
53,892.50
175,661.35
156,736.75
30,054.25
121,849.05
228,733.15
352,532.12
62.068.55

$19,850.00
2.50
16,250.00
4,802.50
19.605.00
3,500.00
2.50
10.750.00
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

315

52,505,104.65

68,350.020

15.576.000

23.406; 000

3; 706,942

33,136,398

5,302,237.33 202,072,701.98 184,599,740

2,697,772.50 161,901,967.50

All reserve cities.. .

367

62,562,225.89

214,525,000

39,791,000

88,301,000

4,085,995 106,344,715

7,285,096.61 516,895,232.50 245,954,830

4,920,037.50 |241,034,792.50

56
49
163
30

79

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

971.660
255,700
298,790
1,718,890
605.660
880,220

436

6,404,299.10

4,730,920

20,000

429

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

6,z /i ,030
3,733,570
8,677,550
106,570

925.000
60,000
360.000

Maine..................
New Hampshire.
Vermont..............
Massachusetts___
Rhode Island....
Connecticut.........
New England States
New Y o r k ....
New Jersey___
Pennsylvania.
D elaw are.....

300
781
36




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

2,707,203.14
1,203,184.82
936,698.29
6,889,509.86
1,498,255.47
4,081,227.41

6,016,650
5.056.500
4.512.500
20,009,000
4,717,000
13,533,350

115.892.50
89.572.50
62.562.50
365.967.50
91.797.50
364,215.00

5.900.757.50
4.966.927.50
4.449.937.50
19,643,032.50
4.625.202.50
13,169,135.00

3,000

266,674

4,496,761

1,394,424.89

17,316,078.99

53,845,000

1,090,007.50

52,754,992.50

695,000

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

995,107.38
594,317.92
1,314,352.37
45,993.75

19,3 V), 594.96
9,606,742.35
25,493,408.19
496,074.75

37,971,060
18,043,070
57,618,040
1,415,250

586,630.00
401,872.50
1,018,453.50
18,595.00

37,384,430.00
17.641.197.50
56.599.586.50
1,396.655.00

20,000

"is,'ooo’

4,678,535
3,332,025
4,564,442
216,299

SYSTEM .

Other reserve cities.

CtTBKENCT

$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

AND

2,260,000

$S02,000

$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

BANKING

94,

192,
2,219,
470,
274,
388,
470,
205,
46,
107,
174,
672,
413,

$10,000
100,000

THE

$162,
1,657,
46,
161,

Maryland.....................
District of Columbia.. .
Eastern States.

486,426.94 j
900.00 1

746,970 j
55,550

1,526 | 17,628,424.77 i 19,591,240 I 1,375,000

4
9

136

io;

1,400, 936.95
1,343, 031.39
4 < 730.35
3 *,
220, 952.50
517, 790.93
597, 453.33
6*5, Ml. 21
155, 587.35
2*7, 613.15
2,397, 048.23
409, 387.00
799, 721.85
1,067, 004.50

1,626,600
1,020.030
409,0H
0
157.020
634,350
617,2*.#)
1,096,730
376, *40
347,620
3,040,440
*337,420 ;
81S.6.V) '
1,432,190

Southern States.......j 1,457 | 10,272,098.74 I 11,914,260
4,469, 350.27
3,194, 143.50
4,592, 1)0.36
2,393, 066.34
1,980, 427.25
3,035, 899.80
2,597, 026.07
783, 279.30

3 , 7S6,100

1,971 j 23,045,372.89

448

96
124
261
325
111

Western States.

628, 059.70

450,000
40.000

650,000

54,000 j 2,942,149 j 5,869,288 j 3,177,493.53

4,336, 892.86
3,254, 23.37
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, 62.25

14,838,250
9,013,400
6,904,100
4.969.250
11.153.000
6,035,000
8,480,050
3,085,300
2.571.250
23,046,410
2,984,510
11,699,350
10.783.000

34,879,289.27 J
115,562,870

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

1,140,407 50 114,422,462.50

2,70V510
4,179,520
1,715,800
1,2X9,620
1,274,280
1,948,000
364,260

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

547,974.43
350.656.57
675,454.40
218,237.51
226,129.60
300.635.58
310,769.13
120,001.74

17,266,090

3,345,000

206,000

2,895,144

7,127,022

2,749,858.96

80,000

128,858
105,670
197,208
303,387
91,205
44,790
139,041
53,619
348,860

188,851
185,052
250,442
422,688
126,649
55,721
208,102
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

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

455,000

1,412,647

1,907,919

1,384,549.69

22,382,604.60

44,656,610

475,695.00

44,180,915.00

170,000

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

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

144,313.55
149,127.12
603,834.26
100, 062.10
28,849.85
26,622.90

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

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
2.740.010.00
014,542.50
1.557.540.00

785, 264.10
1,486, 472.80
1,715, 035.75
1,603, 351.40
473, 793.80
1,435, 879.75
427, 062.50
893, 659.11

1,238

9,449,178.91

7,773,400

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




**20*660'

2,105,203.50 117,591,956.50

330,131.91
170,130.98
135,550.01
200.475.45
377,465.77
205,024.51
237.073.69
64, *S3.55
129.4fW.3o
846.242.46
120,395.40
130.230.70
230,420.75

206,000

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

11

90.000
50.000

56,850,501.33 jll9,697,160

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

635.000
80,000
885.000
50.000
770.000
340, m
525.000
60.000

144
103
228
205
57
30
117
40
314

Washington.
Oregon........ .
California....
Idaho............
Utah.............
Nevada.........

40,000

13,211,841 j 3,073,7*1.56

40.000
275,000
60.000

20,000

149,500

15,983

3,654

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

29,796,180
19,594,920
27,081,140
8,609,750
9,124,970
8,988,260
15,308,200
5,844,310

56,634,487.85 124,347,730

1,570,000

344.060.00
188.917.50
262.017.50
108.665.00
93,720.00
74.337.50
111.017.50
60.762.50

29,452,120.00
19.406.002.50
26.819.122.50
8.501.085.00
9.031.250.00
8.913.922.50
15.197.182.50
5.783.547.50

1,243,497.50 123,104.232.50

SYSTEM.

North Dakota.
South Dakota..
Nebraska.........
Kansas.............
Montana..........
Wyoming.........
Colorado..........
New Mexico....
Oklahoma........

193,915
119,912
130,131
79,370
283,523
220,106
305,145
70,933
116,640
890,347
112,561
139,265
330,301

73,302.50 ! 4,326,437.50
6,350.00 j
243,650.00

A D CURRENCY
N

Middle States.

357
249

1,260,274

14,000

1,822,971.08 | 4,399,740
74,710.00
250,000

BANKING

Ohio............................
Indiana......................
Illinois.......................
Michigan....................
Wisconsin..................
Minnesota..................
Iowa...........................
Missouri.....................

710,000

122,600.14
1,350.00

I TE
N H

133
116
73
48
116
52
87
33
26
481

412,180 i
8,360 1

CHANGES

Virginia.......................
West Virginia..............
North Carolina............
South Carolina............
Georgia........................
Florida........................
Alabama......................
Mississippi...................
Louisiana....................
Texas...........................
Arkansas.....................
Kentucky....................
Tennessee....................

24,794
490

80,000

o

co

Specie and circulation o f national bank* on June 4,1913—Continued.

h*

________ _______________________________________________________________2
Specie.

Gold coin.

Gold Treas­ Clearing­
ury certifi­
Gold
house
cates to
Treasury
certificates. order (act certificates
(sec. 5192,
of Mar. 14,
R. S.).
1900).

Arizona.......................
Alaska*.......................

13
2

*415,232.00
228,469.54

$181,160
53,900

Pacific States..........

474

13,916,397.20

2,. ..,940

I M a n d possessions
(Hawaii)..................

4

494,661.00

260

Total States, etc...... 7,106

81,200,432.61

63,288,110

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

277,813,310

8ilver
Treasury
certificates.

Fractional
silver coin.

Total

Received
from
comp­
troller.

On hand.

Outstanding.

159,242
4,520
8170,000

$169,500

$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

$932,107.60
61,900.00

823,603

382,175

1,103,688.98

18,577,394.18

29,322,370

592,945.00

28,729,426.00

104

19,027.05

538,949.05

306,260

2.50

306,247.50

34,297
6,015,000

1,142,500 9,634,878

32,995,110 12,903,364.66 207,179,395.27 487,737,990

6,647,758.50 481,090,231.60

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
1 One report for Apr. 4 ,191&

A D CUBBENCY
N
SYSTEM.




Silver
dollars.

CHANGES I T E BANKING
N H

Cities, States, and Ter­ Num­
ber of
ritories.
banks.

Circulating notes.

Deposits and reserve o f national banks on June 4, 1913.
Reserve required, and the amount and per cent held.
Held.
Cities, States, and
Territories.

Net deposits sub­
ject to reserve re­
quirements.

Required.

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

$2,477,065.00
727,450.00
768,319.50

90,806,059
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
139,611

427.900.00
105.000.00
51.850.00
596.350.00
831.547.50
412.450.00
284.500.00
40,000.00
163.500.00
129.200.00
109.100.00
20.250.00
225.000.00
80.750.00
62.900.00
247.750.00
373.025.00
285.125.00
119.750.00
290.107.00
107.650.00
205.850.00
99.750.00
41.250.00
26.250.00
65.447.50




25.450.00

$29,278,230.89
4,859,744.15
2,891,819.50
34,673,367.08
23,680,110.42
7,574,586.59
3.365.553.11
169,296.82
8,070,443.61
2,464,311.25
1,818,105.93
584,896.76
8,592,870.36
1,341,184.53
585,077.80
3,568,341.00
7,337,066.21
8.436.183.12
2.748.037.57
3,844,395.24
6.810.499.58
6,346,031.06
6,329,513.27
4,974,393.17
1,245,604.96
1,972,668.52

439,609.44

26.97
24.32
23.66

$294,995,013.02
88,295,948.60
26,310,462.40

409,601,424.02

3,972,834.50

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

$294,995,013.02
88,295,948.60
26,310,462.40

26.12

409,601,424.02

26.12

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
6.996.003.26
4.868.403.25
3,872,684.18
1.625.235.31
7.095.236.61
3,368,022.48
1,631,224.68
7,131,111.00
15,750,643.01
18,410,567.07
6.015.053.62
9,104,110.29
11.985.106.68
12,217,180.46
13,670,108.22
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
7,871,266.83
$,750,444.61
1,531,224.68
7,869,119. $2
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

30.25
27.87
27.55
27.74
23.98
22.57
22.70
20.54
25.20
22.50
27.14
35.28
24.87
33.93
26.46
26.64
26.86
27.35
25.45
34.14
28.83
24.64
22.27
24.96
20.67
25.41
27.93

26.97
24.32
23.66

105

314,822,530.52

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
6,407,377.56
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

Per
cent.

SYSTEM.

392,021,764.18

235,937j 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
11,0.52, 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

Amount.

CUBRENCY

1,568,087,056.73

Per
cen t

AD
N

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........ ........... .
M ilw a u k e e ............
Minneapolis..................
St. Paul.........................
Cedar Rapids...............
Des Moines...................
D u b u q u e ..................

Total amount.

BANKING

$273,474,038.55 $242,056,036.02
90,755,109.99
55,424,322.60
27,792,615.64
17,342,171.90

Available with
reserve agents,
not exceeding
60 per cent of
net reserve
required.

TH
E

New York City. ......... $1,093,896,154.20
363,020,4m 98
Chicago. . . . . . . . . . . . . . .
111,170,462.55
St. Louis.......................

Redemption
funa.

I
N

Specie.

Legal
tenders.

CHANGES

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

16
0

Deposits and reserve o f national banks on June 4, 1913—Continued.
Reserve required, and the amount and per cent held.

Cities, States, and
Territories.

Net deposits sub­
ject to reserve re­
quirements.

Required.
Specie.

Legal
tenders.

Redemption
fund.

Available with
reserve agents,
not exceeding
60 per cent of
net reserve
required.

Total amount.

$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
10,682,766.94
2,088,809.77
1,211,110.66
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
5,746,666.06
985,487.40
661,343.65
882,687.00
4.463.463.35
2,405; 014.25
1,195,806.75
4,751,021.05
6,253,137.16
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
61j400
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
98.500.00

$1,602,763.43
10,084,442.42
1,643,950.80
572,693.81
4.828.111.02
1,133,375.72
665,833.19
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

$3,102,510.33
19,341,093.37
3,197,249.20
1,456,916.61
10,016,141.12
2,088,404.83
1,199,826.54
912,750.12
1,553,355.82
12,177,835.11
2,097,788.42
1,214,638.33
3,124,138.51
8,978,892.09
4,673,058.13
3,149,763.22
7,780,853.24
12,222,978.28
29,296,422.36
3,086,364.41

Other reserve cities..

1,945,874,457.03

486,468,614.26

202,072,701.98

40,221,479

8,089,744.50

232,799,679.68

All reserve cities___

3,513,961,513.76

878,490,378.44

516,895,232.50

131,027,538

12,062,579.00

Maine..........................
New Hampshire.........
Vermont......................
Massachusetts.............
Rhode Island..............
Connecticut.................

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
3,340,316.60
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

533,821
494,699
397,258
3,814,364
506,956
1,600,282

293.212.50
241.175.00
2(jg 375.00

New England States.

328,846,117.43

49,326,917.61

17,316,078.99

7,237,380




23.87
23.71
23.98
21.88

25.60
32.73
24.33
20.93
23.31
38.50
35.11
35.07
36.95
25.50

$3,228,970.47
21,723,773.02
3,815,454.31
1,456,916.61
10,489,142.56
3,004,557.10
.1,199,826.64
967,982.68
1,697,143.06
12,177,835.11
2,097,788.42
1,314,638.33
3.382.202.28
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

25.36
28.50
25.11
25.07
30.22
26.18
2 74
4=
27.37
26.02
33.36
24.60
23.25

483,183,605.16

24.83

515,600,808.37

26.50

232,799,679.68

892,785,029.18

25.41

925,202,232.39

228.125.00
663.692.50

4.044.951.29
1.859.484.29
1, GO;, 617.14
12,077,856.32
2,555, G55.95
5,885,737.54

7,569,187.03
3,798,543.11
3,14o,S48.43
23,760,230.18
4,788,992.42
12,130,939.45

16.14
17.06
io. 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

1
]

18.53
26.43
20.94
21.17
19.27
25.65

2,613,080.00

28,028,302.53

55,194,841.53

16.78

72,076,671.53 1

21.92

978,'m o o

24.74
27.37
26.02
22.36
24.60
23.25

24.84
26.63
28.61
21.88
26.81
32.69
24.32

28.56

26.33
l
!
1

SYSTEM.

$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
7,854j 204, 67
29.906.806.26
54,679,499.16
119,056,019.87
13,276,773.65

Par
cent.

Amount.

A D CURRENCY
N

Sioux City...................
Kansas City, Mo.........
St. Joseph...................
Lincoln........................
Omaha........................
South Omaha.......... i.
Kansas City, Kans___
Topeka........................
Wichita.......................
Denver........................
Pueblo.........................
Muskogee....................
Oklahoma City...........
Seattle........................
Spokane......................
Tacoma.......................
Portland......................
Los Angeles................
San Francisco.............
Salt Lake City............

Per
cent.

CHANGES I T E BANKING
N H

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

Held.

- m*os
o

19,356,594.96
9,606,742.35
25,493,408.19
496,074.75
1,822,971.06
74,710.00

6,479,357
4,299,547
8,607,441
172,844
707,996
12,640

1,822,408.00
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

Eastern States.........

1,098,338,552.67

164,750,782.90

56,850,501.33

20,279,825

5,719,967.10

95,418,489.44

Virginia.......................
West Virginia.............
North Carolina............
South Carolina............
Geortria........................
Florida........................
Mississippi...................
Louisiana....................
Texas...........................
Arkansas.....................
Kentucky....................
Tennessee....................

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

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

16.18
16.04
16.40
17.16
15.44
17.95

71,636,066.95
39,158,785.85
95,141,560.80
1,752,839.11
7,095,563.79
256,056.09

178,268,782.87

16.23

215,040,881.59

19.58

14,826,606.37
9,329,366.77
4,928,461.69
8,051,690.73
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

19.35
19.33
20.01
20.59
17.40
24.83

89,746,224.55

34,879,289.27

10,526,386

5,418,842.75

50,341,550.92

101,166,068.94

16.91

128,728,878.52

21.52

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, WO. 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

4,361,617
2,248,950
3,445,501
1,847,991
1,165,149
995,488
1,690,602
614,446

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

HUtt"
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

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
a3.200.00
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
14.042.161.4*
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

Western States........

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

93,706,203.78

27.24

Washington.................
Oregon.........................
California....................
Idaho..........................

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
6,507,267.73
22,052,495.83
3,383,858.38

16L67
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




SYSTEM.

Middle States..........
North Dakota.............
South Dakota.............
Nebraska.....................
Kansas........................
Montana......................
Wyoming....................
Colorado......................
New Mexico................
Oklahoma...................

CUBBENCY

598,308,163.68

AD
N

Southern States.......
Ohio.............................
Indiana........................
Illinois.........................
Michigan......................
Wisconsin...................
Minnesota...................
Iowa.............................
Missouri......................

BANKING

55,529,041.41
30,386,189.06
71,320,760.31
1,276,965.45
6,083,116.21
154,710.46

I
N TE
H

370,193,609.43
202,574,593.74
475,471,735.41
8,513,102.98
40,554,108.05
1,031,403.06

CHANGES

New Y ork...................
New Jersey.................
Pennsylvania..............
Delaware.....................
Maryland....................
District of Columbia..

Deposits and reserve q f national banks on June 4,1913—Continued.
Reserve required, and the amount and per cent held.

Cities, States, and
Territories.

Net deposits sub­
ject to reserve re­
quirements.

Required.
Specie.

Redemption
funa.

t iX .

Available with
reserve agents,
not exceeding
50 per cent of
net reserve
required.

Per
cent.

Total amount.

Amount.

Per
cent.

Utah...........................
Nevada......................
Arizona......................
Alaska^......................

17,899,595.96
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

$514,13435
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
645,521 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

$1,570,45119
1,930.182.70
3,326,165.75
494,205.89

19.88
29.30
3194
57.96

Pacific States..........

230,570,770.38

34,585,615.56

18,677,39118

730,821

1,454,441.00

19,878,70169

40,641,360.87

17.63

57,781,010.41

25.06

1,941,602.46

291,240.37

15,012.50

148f571.32

702,562.87

36.18

Island p ossession s
(Hawaii)..............

Total United States.

638,949.05

90

3,610,672,858.65 ) 541,600,928.79 207,179,395.27

58,880,475

23,332,306.00 310,689,129.92

724,074,627.77

189,908,013

35,394,885.00 543,488,809.60

7,124,634,373.41 1,420,091,307.23

36.18
21.78

1,711,654,620.50

2108

1,492,866,335.37 | 20.96
1

•One report lor Apr. < 1913.

SYSTEM.




702,562.87

600,061,306.19 | 16.62 | 786,352,288.11

A D CUBBENCY
N

Total States, etc.........

CHANGES I T E BANKING
N H

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

Held.

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

109

Abstract of the reports o f condition of national banks in the United States on June 4,1913,
arranged by classes.
Central reserve
city banks (52).

Other reserve
city banks (315).

Ceuntry banks
(6,806).

Total (7,173).

RESOURCES.
Loans and discounts.................. $1,315,735,176.67 $1,640,317,608.33 $3,186,975,347.94
Overdrafts..................................
356,717.17 j
3,183,861.62
15,465,573.23
United States bonds to secure
circulation...............................
81,355,090.00 ' 164,633,240.00
489.238.540.00
United Stales bonds to secure
United States deposits...........
3.670.000.00
18.547.500.00
24.844.190.00
Other bonds to secure United
States deposits........................
3,066,402.44
23,408,628.10
17,122,899.04
United States bonds on hand...
1.000.120.00
1,734,800.06
3,603,080.00
Premiums on United States
787,774.53
4,098,850.81
bonds................................... .
1,990,011.55
Bonds, securities, etc.................
210,810,479.10
235,190,549.44
604.586.627.01
Banking house, furniture and
fixtures...................................
37,931,243.04
145,206,704.51
65,751,006.40
Other real estate owned............
1,543,592.52
7,769 305.11
22,020,050.53
Due from national banks (not
reserve agents)........................
144,611,713.50
100,065,031.68
194,344,454.86
Due from State banks and
53,034,760.41
bankers, trust companies, etc.
50,308,317.15
91,646,988.98
Due from approved reserve
agents........... ..........................
496,960,111.84
265,216,882.89
Checks and other cash items__
6,815,197.36
11,902,552.93
18,374,495.47
73.360,235. 77
Exchanges for clearing house...
168,229,831.61
15,970,425.19
Bills of other national banks...
4,339,135.00
14.793.766.00
32.405.907.00
Fractional currcncy, nickels,
262.100. 16
869,677.72
2,448,704.80
and cents.................................
314,822( .> 0.52
r
Specie....................... ..............
202,072,701.98
207,179,395.27
Legal-tender notes....................
40.221.479.00
58.880.475.00
90,806,069.00
23.332.306.00
Five per cent redemption fund.
8,089,744.50
3,972,834.60
Due from Treasurer of United
States other than 5 per cent
3,311,012.00
fund....... ............................
1,574,266.40
4,751,693. 46
Total... . . ...... ................. 2,445,176',007. 73

$6,143,028,132.94
19,006,152.02
735.226.870.00
47.061.600.00
43,507,020.58
6,338,000.00
6,876,636.80
1,060,587,655.55
248,888,053.05
31,332,048.16
430,021,200,04
104,000,066.54
762,176,004.73
37,002,245,76
257,560,402.57
51.538.806.00
3,580,482.68
724,074,627.77
189,008,013.00
35.304.886.00
0,636, OH. 86

3,062,070,278.12

5,529,673,471.19

11,036,010,757.04

264,217,710.00
187,736,975.77

610,052,082.00
368,624,816.77

1,066,010,702.00
720,606,702.54

LIABILITIES.
Capital stock paid in........... .
Surplus fund...........................
Undivided profits, less ex­
penses and taxes....................
National-bank notes outstand*
„ tag--........ ......................
State-bank notes outstanding..
Due to national banks (not re­
serve 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 dis­
bursing officers........................
Bonds borrowed.....................
Notes and bills rediscounted.. ..
Bills payable........................
Reserved for taxes.....................
Liabilities other than those
above stated.......... .............
T o t a l . . . . . . . . . ........




182.650.000.00
164.245.000.00
56,121,856.33

63,689,642.06

148,329,464.19

268,140,062.57

79.132.825.00
16,516.00

161,901,967.50
468.00

481,090,231.50
5,431.00

722,126,024.00
22,416.00

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
528,264,004.42

224,695,080.64
251,028.97
975,581,299.58
4,529,269.11
1,102,635.28

227,697,703.81
31,431,888.90
191,478.77
1,435,930,189.14
19,291,072. 78
6,379,859.18

76,547,400.02
14,453,720.86
1,086,687.83
3,541,950,062.40
19,297,876.16
11,179,381.01

528,040,184.47
45,885,600.76
1,520,106.57
5,953,461,551.12
43,118,218.05
18,661,876.47

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

3,101,533.04
10,656,064.33
11,117,518.11
50,215,843.32
2,286,412.65

6,606,821.08
43,215,465.58
14,080,080.36
58,825,704.02
7,030,644.10

123.000.00

66,492.17

1,833,160.82

2,022,662.09

2,445,176,007.73

3,062,070,278.12

5,529,673,471.19

11,036,919,757.04

110

CHANGES IN THE BANKING AND CUBRENCY SYSTEM.

Number o f national banks showing savings deposits and amount of savings deposits as
shoum by call of June 4, 19IS.
Number
Total
number showing Amount of sav­
of banks. savings ings deposits.
deposits.

States.

Maine........................................................................................................
New Harnpflhirn........................
Vermont...................................................................................................
Massachusetts..................................................... ..................... .
Rhode Island................................................................................. .........
Connecticut............ - ..........................................................
Nf>w England StatA*.............................

____. ____

09
56
49
184)
20
79

43
15
31
35
5
14

$24,120, 447.31
1.925.537.06
9,011,843.60
15,910,306.46
5,220,718.71
3,497,610.78

453

143

59,686,464.52

New York.................................................................................................
New Jersey...............................................................................................
P e n n sy lv a n ia ........................
....................... ...................................................
Delaware..................................................................................................
Maryland.................................................................................................
District of Columbia................................................................................

474
200
836
26
105
12

240
152
624
15
80
4

84,851,995.17
60,029,284.94
201,406,779.21
2,055,525.60
22,090,404.98
1,398,971.49

Eastern States................................................................................

1,653

1,115

371,832,961.39

Virginia....................................................................................................
West Virginia..........................................................................................
North Carolina........................................................................................
South Carolina.........................................................................................
Georgia.....................................................................................................
Florida............................................... ......................................................
Alabama..................................................................................................
Mississippi...............................................................................................
T ouisiana.................................................................................................

133
116
73

90
70
42
39
48
42
41
11
15
62
15
27
41

•
IS

Arkansas........................ .........................................................................
Kentucky................................................................................................
Tennessee................................................................................................

118
52
87
33
31
514
49
144
107

Southern States......................................................................... ...

1, 505

28,653,611.43
9,756,259.37
5,637,634.71
8.844,239.58
8,729,484.06
11,141,955.83
7,860,936.63
1,252,132.90
1,978,255.16
8,728,699.08
981,235.96
4,156’ 304. 70
9,144,145.65
---------------------543
106,864,895.06

3S0
167~
42, (i56,146. 38
254
71
9,617,374.55
457
240
$44,713,556.04
SK
99
45,215,105. 75
129
110
35,418,313.93
154
271
18,877,599.59
340
132
10,403,195.75
Missouri...................................................................................................
3,428,705.39

Indiana..................................................................................................
Illinois.................................................................................................... .
Michigan .............................................................................................. .
W isconsin................................................................................................
Minnesota................................................................................................

Middle States...............................................................................

2,063

992

210,329,997.38

144
103
242
213
57
30
126
40
325

47
50
47
54
21
12
39
8
57

I’, 149, 111. 28
1,457,928.30
3,891,978.05
1,905,777.18
1,924,229.75
557,548.42
8,008,174.28
207,661.67
1,373,050.27

Western Statos..............................................................................

1,280

335

20,475,459.20

Washington.............................................................................................

Utah. ...................................................................................................
Nevad ...................................................................................................
Arizona....................................................................................................
Alaska......................................................................................................

77
83
252
54
23
11
13
2

59
35
106
30
17

1

17,159,427.25
3,716,939.06
23,051,411.53
1,395,799.92
3,460,969.16
614,240.56
44,762.47
81,674.33

Pacific States.................................................................................

515

254

49,525,224.28

4

3

354,964.73

7,473

3,385

829,070,166.56

North Dakota.........................................................................................
South Dakota......... ........................................................... ........... ........
Nebraska......................................................................................... ...... .
Kansas.....................................................................................................
Montana......................................................................................... ...... .
Wyoming........................................................................................ .......
Colorado..........................................................................................
.
New Mexico.............................................................................................
Oklahoma .............................................................................................

California................................................................................................

Island possessions (Hawaii).......................................................
United States................................................................................




4

2

133

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

HI

APPENDIX C.

The bill as reported to the House is as follows:
A BILL To provide for the establishment «f 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 ilFederal reserve act.”
F E D E R A L R E S E R V E D ISTR ICTS.

S e c . 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 com­
munity 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 De known as
Federal reserve districts and shall be designated by number accord­
ing 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 baiiks 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 Chi­
cago,” 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 deter­
mining the reserve cities to be designated and organizing the reserve
districts hereinbefore provided.
Every national bank located wathin 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




112

o h a jt o k b

nr

the

b a n k in g a n d ctjbben cy s y s t e m .

obligations of the Federal reserve bank, under such terms and in
accordance with such regulations as the board of directors of «
mid
Federal reserve bank may prescribe: Provided, That no Federal
reserve bank shall commence business with a paid-up and unim­
paired capital less in amount than $5,000,000. The organization
committee shaU have power to appoint such assistants and incur
such expenses in carrying out the provisions of this act as it
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 bo 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 BESEBVE 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,
tne 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 shar6s 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 certifi­
cate is made to enable such banks to avail themselves of the advan­
tages of this act. The said organization certificate shall be acknowl­
edged 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
oi the CuiTency, who shall file, record, and carefully preserve the
same in his office. Upon the filing of such certificate with the Comp­
troller 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, Revised Statutes, save in so far as the same shall be limited
by tne provisions of this act. The Federal reserve bank so incorpo­
rated snail have succession for a period of twenty years from its or­
ganization, unless sooner dissolved by act of Congress.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

113

Every Federal reserve bank shall be conducted under the over­
sight 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 mem­
bers, holding office for three years, and divided into three classes,
designated as classes A, B, ana 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 maimer:
It shall be the duty of the chairman of the board o f directors of the
Federal reserve bank of the district in which each such bank is situ­
ated to classify the member banks of the said district into three gen­
eral groups or divisions. Each such group shall contain as nearly as
may be one-tliird 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 num­
ber 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 olector 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 by 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 cer­
tify 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 estab­
lished bv him. Each elector shall at once select and certify to the
said chairman from among tho three persons submitted to him his
choice for Federal reserve director, class A, and the name receiving
the greatest number of such votes shall bo 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 can­
didate receives more votes than either of the others.
Directors of class B shall be chosen by the electors of the respec­
tive 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




114

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

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 industrial
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 nxed 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 neces­
sary 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 con­
ferred upon the chairman of the board of directors of each Federal
reserve bank pending the complete organization of such bank.
A t 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 01 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 such
directors, such appointees to hold office for the unexpired terms of
their predecessors.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.
IN C R E A SE

115

A N D D E C R E A S E OP C A P IT A L .

S e c . 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 c entum of said subscription to be paid in cash in the manner here­
inbefore 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 tw enty
)er centum of the capital stock of said subscribing bank, paying thereor its par value in accordance wr
ith 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 hold­
ings in the capital of said Federal reserve bank, and in case a member
bank goes into voluntary liquidation*it shall surrender all of its hold­
ings 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 tho
Federal reserve board, a sum equal to its cash paid subscriptions on
the shares surrendered.
S e c . (). 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 reduc­
tion of capital stock and the amount repaid to such bank.

1

DIVISION OF EARNINGS.
S e c . 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
S t a t e s and forty per centum to the member banks m the ratio of their
average balances with the Federal reserve bank for the preceding




116

CHANGES IN THE BANKING AND CUBRENCY SYSTEM,

year. Whenever and so long as the surplus fund of a Federal reserve
Dank 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 Dank ; 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 proviaed 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.
S e c . 8. That any national banking association heretofore organized
may upon application at any time within one year after the passage
o f this act, and with the approval of the Comptroller of the Currency,
b e granted, as herein provided, all the lights, and be subject to all
the liabilities, of national banking associat ions organized subsequent
to th e passage of this act: Provided, That such application on the part
o f such associations shall be authorized by the consent in writing of
stockholders owning not less than a majority of the capital stock of
th e association. Any national banking association now organized
which shall not, withm one year after the passage of this act, become
a national banking association under the provisions hereinbefore
stated, o r which shall fail to comply with any of the provisions of
this act applicable thereto, shall be dissolved; but sucn 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.
S e c . 9. That any bank or banking association incorporated by spe­
cial 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 unim­
paired 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 nob less tnan fifty-one per cen­
tum 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. Tho directors thereof may continue to he the
directors of tho association so organized until others
elected or
appointed in accordance with the provisions of the law. When the
comptroller has given to such bank or banking association a certifi­
cate that the provisions of this act have been complied with, such bank
or banking association, and all its stockholders, officers, and employ­
ees, 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.




CHANGES IN THE*-BANKING AND CURRENCY SYSTEM.

117

STATE B A N K S AS M EM BERS.

S e c. 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 Federal
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 sucn applying bank to
become a stockholder in the Federal reserve bank of the district in
which such applying bank is located. Whenever the Federal re­
serve board snail permit such an applying bank to become a stock­
holder in the Federal reserve bank of the district in which the apply­
ing 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 b.y the State banks and banking associations and
trust companies hereinbefore referred to for stock ownership in Fed­
eral reserve banks. Such by-laws shall require applying banks not
organized under Federal lawr to comply with tho 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
ossesses a paid-up unimpaired capital sufficient to entitle it to
ecome a national banking association in the place where it is situ­
ated, 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 pro­
visions 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 associa­
tion 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.

P

federal

reserve

board.

S e c . 1 1 . 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 tho
Currency, who shall be members ex officio, and four members chosen
by the President of the United States, by and with the advice and




118

CHANGES IN THE BANKING AND CURRENCY BYSTEM.

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 allow­
ance 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 tne four persons thus appointed, one shall be aesignated by the President as manager ana 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 Fed­
eral 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 hold in
Washington, District of Columbia, as soon as may be after the pas­
sage of this act, at a date to be fixed by the reserve bank organiza­
tion 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 irfetitution; and before entering upon his duties as a member
of the Federal reserve board he shall certify under oath to the Sec­
retary 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 bv 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 whoso 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 S tatutesor
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 CUKBENCY 8YBTBM.

119

■hall be called the Comptroller of the Currency, and ahull perform his
duties under the general direction of the Secretary of the Treasury,
acting as the chairman of the Federal reserve board:” Provided,
however, That nothing herein contained
be construed to affect
any power now Tested by law in the Comptroller of the Currency or
the Secretary of the Treasury.
Sbo. 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, and 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 resetre 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 lees than one nor greater than three
per centum above the higher of the rates prevailing in the districts
immediately affected.
(0) To suspend for a period not exceeding thirty days (and to
rntwir such suspension for periods not to exceed fifteen davs) 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 require­
ments 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 clsssified as reserve and central
reserve cities under existing law in which national banking associa­
tion are subject to the reserve requirements set forth in section
twenty of this act; or to reclassify existing reserve and oentral
reserve cities and to designate the banks therein situated as oountry
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
thebooks and balance sheets of Federal reserve banks.
(h) To suspend, for cause relating to violation of any of the pro­
visions of this act, the operations of any Federal reserve bank and
appoint a reoefter therefor.
(1) To perform the duties, functions, or services specified or implied
In this act.




ISO

m u xam nr

t h b b u c k in g a k d o u b b b k c y sy stb m .

rSD U U L ADVISOBT OOUHOIL.

Sbc. 13. '"hew it 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 ahall
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
membere 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 boara; (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 s&ia banks, and the gen­
eral 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 com­
mercial transactions; that is, notes and bills of exchange issued or
drawn for agricultural, industrial, or commercial purposes, or the
proceeds of wnich 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 snail anything herein con­
tained be construed to prohibit sucn 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 tnan 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 excluaive of its outstanding Federal reserve notes by an amount to be




CHANGE8 IK THE BANKING AND CUBBENCY SYSTEM.

121

fixed b y the Federal reserve b o a r d : b u t n ot m ore than fifty per centum
o f the to ta l p ap er so d iscou n ted fo r a ny m em ber ban k shall h ave a
m a tu rity o f m ore th an n in ety days.
U p on the indorsem ent o f any m em ber bank any Federal reserve
ban k m a y d iscou n t acceptances o f such banks w hich are based on
the exp ortation or im portation o f good s and w hich m ature in n o t
m ore tnan six m onths and bear the signature o f at least one m em ber
bank in addition to th at o f the acceptor. The am ount so discounted
shall’ at no tim e exceed one-half tne capital stock o f the bank for
w h ich the rediscounts are m ade.
T h e aggregate o f such notes and bills bearing the signature or
indorsem ent o f any one person, com pan y, firm, or corporation
rediscounted fo r any one bank shall at no time exceed ten per centum
o f the unim paired capital and surplus o f said ban k ; but this res trietio n . shall n ot a p p ly to the discoun t o f bills o f exchange drawn in
g o o d faith against actually existing values.
A n y n ational ban k m ay, at its discretion, accep t drafts or bills o f
exch an ge draw n u pon it h avin g n ot m ore than six m on th s’ sight to
run ana grow ing ou t o f transactions involvin g the im portation or
e xp orta tion o f g o o d s ; b u t no ban k shall a ccep t such bills to an
am ou n t equal at a n y tim e in the aggregate to m ore than one-half the
fa ce value o f its paid-u p and unim paired capital.
OPEN-MABKET OPERATIONS.

S e o . 15. T h a t a ny Federal reserve bank m ay, under rules and
regulations prescribed b y the Federal reserve board, purchase and
sell in the op en m arket, either from or to dom estic or foreign banks,
firm s, corporation s, or individuals, prim e bankers’ bills, and bills o f
exch an ge o f the km ds and m aturities b y this act m ade eligible for
rediscount, and ca b le transfers.
E v e iy F ederal reserve b an k shall have pow er (a) to deal in gold coin
and b ullion b o th at h om e and abroad, to make loans thereon, and to
co n tra ct fo r loans o f gold coin or bullion, giving therefor, w hen neces­
sary, acceptable security, including the hyp oth eca tion o f U nited
States b on d s; (b ) to invest in U nited States bonds, and bonds issued
b y an y State, cou n ty , district, or m u n icipality; (c) to purchase from
m em ber banks and to sell, w ith or w ithout its indorsem ent, bills o f
exch an ge arising ou t o f com m ercial transactions, as hereinbefore
defined, payable in foreign countries; b u t such bills o f exchange m ust
h ave n o t exceedin g n inety days to run and m ust bear the signature o f
tw o o r m ore responsible parties, o f which the last shall be that o f a
m em ber b a n k ; (d) to establish each week, or as m uch oftener as
required, su b ject to review and determ ination o f the Federal reserve
b oard, a rate o f discou nt to be charged b y such bank fo r each class
o f paper, w hich shall be fixed w ith a view o f accom m odatin g the co m ­
m erce o f the cou n try ; and (e) w ith the consent o f the Federal reserve
board, to open ana m aintain banking accounts in foreign countries
and establish agencies in such countries wheresoever it m a y deem
best fo r the purpose o f purchasing, selling, and collecting foreign bills
o f exchange, and to b u y and sell w ith or w ithout its indorsem ent,
th rough such correspondents or agencies, prim e foreign bills o f e x ­
change arising ou t o f com m ercial transactions w hich have n o t exceed ­
ing ninety days to run and w hich bear the signature o f tw o t>r m ore

responsible parties.



122

CHANGES IK THE BANKING AND CtflUftlTOY SYSTEM.

oomNvnrr nrosm .
S e o . 16. T h a t all m on eys n ow held in the general fu n d o f th e
T reasu ry shall, u p o n the d irection o f th e Secretary o f th e T reasu ry,
w ith in tw elve m on th s after the passage o f this a ct, b e d ep osited in
F ed eral reserve banks, w h ich ban ks shall a ct as fiscal agents o f th e
U n ited S ta tes; and. thereafter the revenues o f the G o v e rn m e n t shall
b e regu larly deposited in su ch ban ks, and disbursem ents shall b e
m a d e i>y ch eck s draw n against su ch deposits. .
T h e S ecreta ry o f the T reasu ry shall, s u b je ct to the a p p ro v a l o f th e
F ed era l reserve b oa rd , from tune to tim e, a p p o rtio n the fu n d s o f
th e G ov ern m en t a m on g the said F ederal reserve ban ks, d istrib u tin g
th em , as fa r as p ra ctica ble, eq u ita b ly betw een d ifferen t section s, and
m a y , a t their jo in t discretion, ch arge interest th ereon a n d fix ; fro m
m on th to m on th , a rate w h ich shall b e regularly p a id b y the ban k s
h old in g su ch d ep osits: Provided, T h a t n o F ed era l reserve b a n k shall
p a y in te re s t u p on a n y deposits e x ce p t those o f the U n ited S tates.
N o F ederal reserve b a n k shall receive o r cred it d ep osits e x c e p t
fro m the G ov ern m en t o f the U n ited States, its ow n m em b er ban k s,
and. to the e x te n t perm itted b y this act, fro m oth er F ed era l reserve
ban ks. A ll d om estic transactions o f the F ederal reserve ban k s in­
v o lv in g a red iscou n t op eration o r the creation o f d ep osit a ccou n ts
shall b e con fin ed to the G ov ern m en t and the d epositin g and F e d e ra l
reserve banks, w ith the ex cep tion o f the purchase o r s u e o f Govern^
m en t o r State securities o r o f g o ld coin o r bullion .
NOTE ISSUES.

S e c . 17. T h a t Federal reserve n otes, to be issued a t the discretion
the F ederal reserve b oa rd fo r the p urpose o f m a kin g a dvan ces to
F ed era l reserve banks as hereinafter set fo rth and fo r n o o th e r pur­
p ose, are h ereby authorized. T h e said n otes shall be ob ligation s e l
the U n ited States and shall be receivable fo r all taxes, cu stom s, and
oth er p u b lic dues. T h e y shall be redeem ed in g o ld or lawful money
on dem an d a t the T reasu ry D ep a rtm en t o f the U n ited States, in the
c it y o f W ash in g ton , D istrict o r C olu m bia, or a t a n y Federal reserve
bank.
A n y F ederal reserve b an k m a y, u p on v o te o f its d irectors, m ake
app lica tion to the loca l F ederal reserve agent fo r such a m ou n t o f the
T reasu ry notes hereinbefore p rovid ed fo r as it m a y deem beet. Such
app lica tion shall be a ccom pa n ied w ith a tender to the loca l F ederal
reserve agent o f collateral secu rity to p ro te ct the notes fo r w h ich
a p p lica tion is m ade equal in am ou n t to the sum o f the n otes thus
applied fo r. T h e collateral secu rity thus offered ,shall b e n otes and
bills accep ted fo r rediscou nt under the p rovision s o f section fou rteen
o f this a ct, and the F ederal reserve agent shall each d a y n o tify the
F ed eral reserve b oa rd o f issues and w ithdraw als o f n otes to and b y
the F ederal reserve b an k to w hich he is accredited. T h e said F ederal
reserve b oa rd shall be authorized a t any tim e to call u p on a F ederal
reserve ban k fo r additional secu rity to p rotect the F ederal reserve
n otes issued to it.
W h en ev er an y Federal reserve b an k shall p a y o u t or disburse
F ederal reserve n otes issued to it as herein before p ro v id e d , it shall
segregate in its ow n va u lts and shall carry t o a special reserve a ccou n t
o n its b o ok s g o ld o r law fu l m on ey equ al in am ou n t to th irty-th ree and
on e-th ird p e r cen tu m o f th e reserve n otes so p aid o u t b y it, such

of




0HANGE8 m

THE BAM MI MB A M P CUBBENCY SYSTEM,

128

reserve to be used for the redemption of said reserve notes as pre­
sented; but any Federal reserve bank so using any part of such re­
serve to redeem notes shall immediately carry to said reserve account
an amount of gold or lawful money sufficient to make said reserve
equat to thirty-three and one-thira per centum of its outstanding
Treasury notes. Notes so paid out shall bear upon their faces a dis­
tinctive letter and serial number, which shall be assinged by the Fed­
eral reserve board to each Federal reserve bank. Whenever Federal
reserve notes issued through one Federal Reserve bank shall be re­
ceived 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
ana returned to the Treasury of the United States, or shall be pre­
sented to the said Treasury for redemption. No Federal reserve
bank shall pay out notes issued through another under penalty o f 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 !. !iuted States a sum in gold equal to five per centum of sucn
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 P ederal reserve
board* which rate shall not he less than one-half of one per pen turn 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
aU 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 reduc­
tion in the required reserve fund of lawful money 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




124

CHANGES IK THE BANKING AND CURRENCY SYSTEM.

reserve agent under regulations to be prescribed b y the Federal
reserve board.
I t shall b e the d u ty o f every Federal reserve ban k to receive on
deposit, at par and w ith ou t charge fo r exchange o r collection , checks
and drafts draw n u pon a ny o f its depositors or b y an y o f its depositors
u p o n a n y oth er depositor and checks and drafts draw n b y a ny deposi­
to r in a n y oth er Federal reserve bank upon fun ds, to the cred it o f
said d epositor in said reserve bank last m entioned, n oth in g herein
con tain ed to be construed as proh ibitin g m em ber banks from m aking
reasonable charges to co v e r actual expenses incurred in collectin g
and rem ittin g funds fo r their patrons. T h e Federal reserve b oard
shall m ake and prom ulgate from tim e to tim e regulations govern in g
the transfer o f funds at par am ong Federal reserve banks, and m a y
a t its discretion exercise the fun ction s o f a clearing house fo r sucn
Federal reserve banks, or m a y designate a Federal reserve ban k to
exercise such functions, and m a y also require each such ban k to
exercise the fun ction s o f a clearing house fo r its m em ber banks.
Sec. 18. T h a t so m uch o f the p rovision s o f section fifty -o n e hun­
dred and fifty-n in e o f the R e v ise d Statutes o f the U nited States, and
section fo u r o f the a ct o f June tw entieth, eighteen hundred and
seven ty-fou r, and section eight o f the a ct o f J u ly tw elfth, eighteen
h u ndred and eigh ty-tw o, ana o f any oth er provision s o f existin g stat­
utes, as require that before any national banking association shall
b e authorized to com m en ce banking business it shall transfer and
d eliver to the Treasurer o f the U nited States a stated am ou nt o f
U nited States registered b onds be, and the sam e is hereby* repealed.
REFUNDING BONDS.

S e c . 19. T h a t u p on application the Secretary o f the T reasu ry shall
exch an ge the tw o p er centum b ond s o f the U nited States te a rin g
th e circu la tion privilege deposited b y a ny nation al ban kin g associa­
tion w ith th e Treasurer o f the U nited States as secu rity fo r circulating
n otes fo r three p e r cen tu m bon d s o f the U nited States w ith ou t the
circu la tion privilege, p a y a b le after tw en ty years from date o f issue,
and exem p t from ^Federal, State, and m u nicipal ta x a tio n b o th as to
incom e and principal. N o national ban k shall, in a ny one* year,
present tw o p e r cen tu m b ond s fo r exch an ge in the m anner herein­
b efore p rov id ed to an am ount exceeding five p er cen tu m o f th e to ta l
am ount o i b on d s on deposit w ith the Treasurer b y said ban k fo r
circu lation purposes. S h ould any national bank fail in a n y on e year
t o so exch an ge its full q u ota o f tw o per centum b on d s un der the term s
o f this act, the S ecretary o f the T rea su ry m a y p erm it a n y oth er
n ation al ban k o r banks to exchange b onds in excess o f the n v e p er
cen tu m aforesaid in an am ount equal to the deficien cy caused b y the
failure o f a ny one or m ore banks to m ake exch an ge in a ny one year,
allotm ent to be m ade to a pplying banks in p rop o rtio n to their h oldings
o f bonds. A t the expiration o f tw en ty years fro m tthe passage o f this
a ct every h old er o f U nited States tw o p er centum bon d s then ou tstan d ­
ing shall receive p aym en t at par and accrued interest. A fte r tw e n ty
years from the date o f the passage o f this act n ation al-ban k notes still
rem aining outstanding shall b e recalled and redeem ed b y the n ational
ban kin g associations issuing the sam e w ithin a period and un der regu­
lations to be prescribed b y the Federal reserve board, and n otes still
rem aining in circulation at the end o f such period shall be secured b y
an equal am ou n t o f law ful m on ey to be deposited in the T reasu ry o f




0H AKG B8 IK TH B BANKING AKD OUBBBNGY 8Y8TBM .

125

the United States by the
associations originally issuing such
notes. Meanwhile every national bank may continue to apply for
and receive circulating notea 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 permittocTto 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 certifi­
cates, cashier's checks, or other obligation.
BANK KKSXBYKS.

Sbq. 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 beea-established in any
desumated district, eveir 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 defined by existing law, it shall hold and
maintain a reserve equal to twelve per centum of thS aggreg&Uamount
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 penod 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. Tike remainder of the
twelve per centum reserve hereinbefore required any. for a period of
thirty-six months from and after the date fixed Inf the Secretanr of
the Treasury, as hereinbefore provided, consist of Valances due from
national banks in reserve or 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 igmainder of the twelve per centum reserve required of each
oountrv 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.
Q If a reserve oity 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 tnree-eighteenths and permanently thereafter at least
nve-eighteenths of sucn 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 ana 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




126

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

con sist either in w h ole o r in p art o f reserve m on ey in th e ban k ’ s
ow n vau lts o r o f cred it balance w ith the F ederal reserve ban k o f its
district.
(c) I f a central reserve c ity bank as defined b y existin g law , it shall
h old and m aintain for a period o f s ix ty days from the d ate fixed b y the
Secretary o f th e T reasury as hereinbefore p rovid ed a reserve equ al to
tw e n ty p er cen tu m o f the aggregate am ou nt o f its deposits, n o t in­
clu din g savings deposits hereinafter p rovid ed for, and p erm an ently
thereafter eighteen p ercen tu m . A t least one-h alf o f such reserve shall
con sist o f m on ey w h ich n ational banks m a y tinder existin g law co u n t as
lega l reserve, h eld actu ally in the bank s ow n vaults. A fte r s ix ty
d ays fro m the d ate aforesaid, and thereafter fo r a p eriod o f on e year,
a t least three-eighteenths and perm anently thereafter a t least fiveeighteenths o f such reserve shall consist o f a cred it balance w ith the
F ed eral reserve b an k o f its district. T h e rem ainder o f the eighteen
p er cen tu m reserve required o f each central reserve c ity b a n k shall
con sist either in w hole o r in p art o f reserve m on ey actu ally h el4 in
its ow n vaults or o f cred it balance w ith the Federal reserve b an k o f
its d istrict.
S e c . 21. T h a t s o m u ch o f sections tw o and three o f th e a ct o f J u n e
tw entieth, eighteen hundred and seven ty-fou r, en titled “ A n a ct
fixin g the am ou n t o f U nited States notes, p rovid in g fo r a redistribu­
tion o f th e nation al b an k ourrency, and ifor oth er pu rp oses,” as pro­
vides th a t the fu n d d eposited b y a ny nation al ban kin g a ssociation
w ith the Treasurer o f the U nited States fo r the red em p tion o f its
n otes shall b e cou n ted as a p art o f its law ful reserve as p ro v id e d in
th e a ct aforesaid, be, and tne sam e is hereby, repealed. A n d fro m
and after the passage o f this a ct su ch fun d o f five per cen tu m shall in
n o case be cou n ted b y a n y nation al ban kin g association as a p art o f
its law ful reserve.
Sec. 22. T h a t every Federal reserve bank shall at all tim es h ave
on hand in its ow n vaults, in g old o r law fu l m on ey, a sum equal to
n o t less than th irty-th ree and on e-th ird per cen tu m o f its o v tsta n d in g d e m a n d lia bilities^
TK e Federal reserve b oa rd m a y n o tify a n y F ederal reserve ban k
w hose law ful reserve shall b e b elow the am ou nt required to b e k e p t
on hand to m ok e g o o d su ch reserve; and if such b an k shall fa il fo r
th irty days thereafter so to m ake g o o d its law fu l reserve, the F ederal
reserve b oa rd m a y a p p oin t a receiver to wind u p th e business o f
■aid bank.
BANK EXAMINATIONS.

Sec. 23.

T h a t the exam ination o f the affairs o f ev ery n a tion a l
banking association authorized b y existin g law shall take p la ce at
least tw ice in each calendar y ea r and as m u ch often er as tfee Federal
reserve b oard shall con sider necessary in order to furn ish a fu ll and
com p lete k now ledge o f its con d ition . T h e Secretary o f th e T reasu ry
m ay, how ever, a t a ny tim e d irect the h old in g o f a special exam in ation .
T h e person assigned to the m aking o f such exam ination o f the affairs
o f a n y nation al banking association shall h ave p ow er to call togeth er
a quoru m o f the directors o f such association , w h o shall,' u n der oa th ,
state to su ch exam iner the ch aracter and circu m stan ces o f su ch o f
its loans o r discou n ts as he m a y d esign ate; and from and after the
passage o f this a ct all bank exam iners shall receiv e fix e d salaries,
the am ount w hereof shall b e determ ined b y the Federal reserve
board and annually reported to Congress. B u t the exp en se o f th s




CHANGES IN THE BANKING AND CURRENCY SYSTBM.

12?

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 exammations are held to oe established by the
Federal reserve board. The Comptroller of the Currency shall so
arrange the duties of national-bank examiners that no two successive
exammations of any association shall bo made by the same examiner.
In addition to the examinations made and conducted by the Comp­
troller of the Currency, every Federal reserve bank may, with tne
approval of the Federal reserve board, arrange for special or period­
ical examination of the member banks within its district. Such exam­
ination shall be so conducted as to inform the Federal reserve bank
under whose auspices it is carried on of the condition of its mem­
ber 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 m 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 collattijffli
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.
S e c. 24 That no national bank shall hereafter make any loan or
grant any gratuity to any examiner of such bank. Any bank offend­
ing against this provision shall be doomed guilty of a misdemeanor
and shall be tinea not more than $5,000 ana a further sum equal to
the monev so loaned or gratuity given; and the officer or officers of a
bank making 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 disquali­
fied 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 bene­
ficiary, either directly or indirectly, of any fee (other than a legiti­
mate 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 note's, bills of exchange, acceptances,
bankers5 bills, cable transfers, or mortgages made by or on behalf of
a national-bank of ^hich 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 tne court
having jurisdiction.




128

CHANGE8 IK THE BANKING AND CURRENCY SYSTEM.

Except so far as already provided in existing laws this provision
shall not take effect until six months after the passage of this act.
Sec. 25. That from and after the passage of tnis act the stockhold­
ers of every national banking association shall be held individually
responsible for all contracts, debts, and engagements of such associa­
tion, 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 o f 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 re­
course wnich such shareholders might otherwise have against tnose
in whose names such shares are registered at the time of such failure.
Section fifty-one hundred and mty-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 reservo city may make loans secured by im­
proved ana 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 within 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 tho list of cities in which national banks shall not be per­
mitted 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 V y a majority
vote apportioned a specified percentage of their paid-in capital
and surplus to said savings department, and to that end have segre­
gated specified assets for the purposes of said department, or that
cash capital for tho 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 m no case be less than $25,000, or than a sum equal to twenty
per centum of the paid-up capital and surplus of the said national
Dank.

In making the application aforesaid any national banking associa­
tion 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 tho
applying bank, and thereafter the organization and business con­
ducted or possessed by said bank at the time of making said applica­
tion, 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 banlt operating upon the provisions of this
section shall be made such increaso 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 apiwrtionment 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 com­
mercial business.
The savings department of each such national bank shall be author­
ized to accumulate and loan the funds of its depositors, to receive de­
posits of current funds, to loan any funds in its possession upon per­
sonal or real estate security, and to collect the samo 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 de­
partments. The said regulations shall require every national bank
which shall conduct a savings department and a commercial depart­
ment 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




130

CHANGE8 IN THE BANKING AND CURRENCY SYSTEM.

shall be authorized to b u y ; and said lists need n o t be u n iform through­
o u t the U nited States, b u t shall be adapted to the con d ition s o f busi­
ness in different sections o f the cou n try.
I t shall be the d u ty o f evory national bank to m aintain, w ith respect
to all d eposit liabilities o f its savings departm ent, a reserve in m on ey
which m ay under existin g law be counted, as reserve, equal bo n o t less
than five per centum of its tota l d eposit Liabilities, and every national
bank authorized to m aintain a savings d epartm ent is h ereb y exem p ted
from the reserve requirem ents o f the national banking a ct and o f this
a ct in respect to the said d eposit liabilities o f its savings departm ent,
e x cep t as in this section provid ed. E v e ry regulation m ade in pursu­
ance o f this section shall be d u ly published, and also p osted in e v e ry
m em ber bank h avin g a savings departm ent.

Every officer, director, or employee of any national bank who shall
knowingly or willfully violate any of tho provisions of this section, o r
any of the regulations of the Federal reserve board, or of the Comp­
troller 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 $5,000 or by imprisonment n o t
exceeding two years.
FOREIGN BRANCHES.

Sec. 28. T h a t any n ational bankin g association possessing a cap ital
o f $1,000,000 or m oro m ay file application with the Federal reserve
b oa rd , upon such con d ition s and under such circum stances as m a y
be prescribed b y tho said board, fo r the p u rp o se o f socuring a u th ority
to establish branches in foroign countries fo r the furtherance o f the
foreign com m erce o f the U nited States and to act, if required to d o so,
as fiscal agents o f th o U nited States. Such application shall specify,
in addition to tho nam e and cap ital o f tho ban kin g association filing
it, tho foreign co u n try or countries or the dependencies o f the U nited
States wliero the ban kin g operations p rop osed are to be carried on
and the am ount o f ca p ita l set aside b y the said banking association
filing such app lication fo r tho con d u ct o f its foreign business at the
branches p rop osed b y it to b e established in foreign countries. T h e
F ederal reserve b oa rd shall h ave p ow er to app rove o r to reject such
a pp lication if, in its ju d gm en t, the am ount o f capital p rop osed to be
set aside fo r tho co n d u ct o f foreign business is inadequate o r if fo r
oth er reasons the granting o f such application is deem ed inexpedient.
E v e r y nation al ban kin g association w hich shall receive a uthority
to establish branches in foreign countries shall be required at all times
to furnish in form ation con cern ing the con d ition o f such branches to
the C om ptroller o f the C urrency upon dem and, and the Federal
reserve board m a y order special exam inations o f the said foreign
branches at such tim e or tim es as it m a y deem best. E v e r y such
nation al ban k in g association shall con d u ct the accounts o f each
foreign branch in d ep en d en tly o f the accounts o f oth er foreign branches
established b y it and o f its hom e office and shall at the end o f each
fiscal period transfer to its general ledger the profit o r loss accru in g
at eacn such branch as a separate item .
Sec. 29. T h at all provisions o f law inconsistent w ith o r superseded
b y any o f the provisions o f this a ct be, and the same are hereby,
repealed.
Sec. 30. That the right to amend, alter, or repeal this act iis hereby
expressly reserved.




A p p e n d ix D .

Reserve required under U. R. 7837, based on deposits reported June 4, tOtS.

Cities, States, and Territories.

Net deposits sub*
ject to reserve
requirements.

i
Balance in
Cash require­ j reserve banks
ment under ! under 11. R.
H. It. 7837.
7837.

Chicago...................
St. Louis.
.................................

11, 0d3,896,154.20
363,020,439.98
111,170,462.55

998,450,654.00
32,671.840.00
10,005.341.00

Central reserve t i t ..... .............

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
14.9hl.247.51
4.760.174.05
29.642,962.90
1i , 052.470.24
5.788,341.06
29,537.728.00
00.188, 629. 74
68, 629.965. 00
23,639,013. 72
31,915,5X9.99
46,914,596. 64
51,591,048. 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,(199.11
39 128 378.20
9,189,605.77
4,932,871.80
3,389,13S. 20
0,092,109. 82
42,731,013.75
*,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

78,404,352.00

21,234.370. 00
3,536,810.00
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

J)es Moines .......
..............................
Dubuque.
..
.
Sioux <'ity.
___
Kansas rlt\ , M<*...
.........
St. Joseph.
Lincoln ..
.................................
Omaha ..
.....
...............
South Omaha ...............
...............
Kansas ('it v. Kans...........
Topeka.
.........
.............
W ichita,
.....................................
Denver.
...
...............
Pueblo. .
...
..............
Muskogee..
..................
Oklahoma r it y
.............................
Seattle.......
Spokane . „............................................
Tacoma . . .
...........

$54,694,807.00 $43,755,845.00
18,151,022.00 14,520,819.00
5,558,523 00
4,446,818.00

141,127,835.00

Boston.
...............
Albany....
.......
Brooklyn .
Philadelphia...
Pittsburgh..
Baltimore,.
Washinuton
Savannah
New Orleans.
Dallas
.......
Fort \ orth .
\
.............
(ilaiveston
........ ...................
Houston. . .
....... ......................
San Antonio............................................
Waco . . . . ..... ..........................
Louisville
.................... ................
Cincinnati.........................................
Cleveland ,
..
---ColunilHi..................
.........
Indianapolis............
..............
Detroit.....................................................
Milwaukee........................
Minneapolis.......................................... ..
St. Paul . . ................. ...................
..............
Oilar Hap ids ...............

1,443, 884.00
325.683.00
1, lti9,740.U0
7,341 026.00
1,200,109.00
599,048. 00
3,521,555.00
827,065.00
443,959.00
305,024.00
f>02,295. 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. O
f)
10,715,044.00
1,194 912.00

Los Ane«‘ lo«»,.
.......
San Francisco................
Salt Lake Citv ...................

...
....

Other reserve 'itic s ...................

Maine........................................................
New Hampshire........................................

Vermont.......

...........

Massachusetts..................

.....

.......

Khode Island............................................
Connecticut
.............
New Knt'lanti States.................




1.945,874,457.03

316,256,536.00

46,898. 653. 28
22,268,769 99
19,218,246.04
110,721,736. 97
29,917,010.63
01*, 821,700. 52

514,688. 00
802,157.00
180,934.00
t»49,856.00
4,078,347 00
666,759. 00
332, 8(M 00
.
1,956,419. 00
459 480. 00
246. 043.00
169,457 00
334. (508. 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
5,952,8111.00
663,838. 00

77,834,979.00

175,698,075.00 140,558,460.00
937,972.00
445,377.00
384,364.00
2,814.4:15.00
598,340.00
1,396.434.00

2,344,932 00
1,113,438.00
960,913.00
7,036,0.87. 00
I, 495, 851. 00
3,491,085.00
16,442, 306 00

16,44?. 306 00

-

411,750.00
641,726.00
144,748.00
519,885.00
3,262,678.00
533,407.00
266,243.00
1,565,1*5.00
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

2,344,932.00
1,113 438.00
960.913.00
7,036,087 00
1,495,851. 00
3,491,085.00

328.846,117.43

62,723,482.00

11,796,872.00
9,437,497.00
1,571,918.00
1.964,897. tt)
953,453.00
1,191,816.00
13,988,617.00 11,190,894.00
7,844,657.00
9.805.821. 00
2,489,859.00
3,112.324.00
1,428.401.00
1,142,722.00
74,309.00
92.886 00
1,008,703.00
1. '260,878.00
865,181.00
1,081.476. 00
749,062 00 | 599,249.00
238.008.00 i
190.406.00
1,482.148. IM ! 1,185,719.00
I
552,624. 00
442,099.00
289.417 00
231,534.00
1,476,887.00
1,181,510.00
3,009,431.00
2,407,545.00
3.431,498. 00
2,745,199.00
945,560.00
1.181,950. 00
1.595.779.00
1,276,623.00
1,876,583.00
2.345.729. 00
2,063,066.00
2.579.582.00
2,454,580.00
3,068.225.00
1,634,927.00
2,043.4*57.00

175,128,702.00

3, 513,961.513. 76

Optional
under H. R.
7837 (per
cent cash or
balanots).

i rs
\r

-!

6,576, V” , 00
-

-

131

..

-= 3

132

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

Reserve required under H. R. 7837, based on deposits reported June 4, 1913
Balance in
reserve banks
under II. It.

Contd.
Optional

Net deposits sub­
ject to reserve
requirements.

Cash require­
ment under

New Y ork...........................
New Jersey..........................
Pennsylvania......................
Delaware.............................
Maryland.............................
District of Columbia...........

1370,193,609. 43
202,574,593.74
47% 471,735.41
8,513,102.98
40,554,108.05
1,031,403.06

$18,500, (i81 00
10.128.729.00
23.773.587.00
425,655.00
2,027,705.00
51,570.00

$18,509,681. 00
10.128.729.00
23.773.587.00
425,655.00
2,027,705.00
51,570.00

$7,403,872.00
4.051.492.00
9.509.434.00
170.262.00
811.082.00
20,628.00

Eastern States..........

1,098,338,552.67

54,916,927.00

54,916,927.00

21,966,770.00

Virginia...............................
West Virginia.....................
North Carolina....................
South Carolina....................
Georgia................................
Florida.................................
Alabama..............................
Mississippi...........................
ILouisiana............................
Texas...................................
Arkansas..............................
Kentucky............................
Tennessee............................

93,719,750. 42
56,160,448.92
32,9<i5,737. 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
19,072,104.12
43,465,014.17
64,719,553.41

4,685, 987.00
2,808, 023. 00
1,648, 2X8. 00
2,127, 355. 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

Cities, States, and Territories.

H. R. 7837.

4,685, 987.00
2,808, 023 00
1,648, > 8 0
8 .0
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

7837.

1, 010, 060. on

under H. R.
7X37 (per
cent cash or
balances).

Southern States........

598,308,163.68

29,915,408.00

29,915,408.00

11,966,164.00

Ohio.....................................
Indiana................................
Illinois.................................
Michigan..............................
Wisconsin............................
Minnesota............................
Iowa.....................................
Missouri...............................

211,714, 557.24
127,799, 890.35
217,140, 608.31
92,318, 092. 81
05,050, 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

Middle States............

1,008,725,460.20

50,436,273.00

50,436,273.00

20,174,508.00

North Dakota.....................
South Dakota^.....................
Nebraska.............................
Kansas.................................
Montana..............................
Wyoming.............................
Colorado...............................
New Mexico.........................
Oklahoma............................

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, 368.40

1,707, 804.00
1,626, 227.00
2, S74, 239.00
3,149, .507.00
1,728, 459.00
656, 795.00
1,086, 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
1,72X, 459. (X
)
656, 795.00
1,936, 52X. 00
754, 132.00
2,763, 418.00

683.122.00
650.490.00
1.149.695.00
1.259.803.00
691,3X3.00
262.717.00
774.613.00
301.652.00
1.105.369.00

Western States..........

343,942,182.83

17,197,109.00

17,197,109.00

6,878,844.00

Washington.........................
Oregon.................................
Calilomia.............................
Idaho....................................
Utah.....................................
Nevada................................
Arizona................................
Alaska..................................

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
1,466,3X4.00
6,365,23X. 00
942.113.00
394.979.00
329,3X6.00
476.033.00
42,634.00

604, m o o
586.554.00
2,546,096.00
376.846.00
157.990.00
131.754.00
190.414.00
17,054.00

Pacific States.............

230,570,770.38

11,528,538.00

11,528, .538.00

4,611,416.00

Island possessions ( Hawaii)

1,941,602.46

07,080.00

97,080.00

38,832.00

Total States...............
Total United States..

3.610.672.858.00
7.124.634.372.00

180.533.642.00
496.790.179.00




180.533.642.00 72,213,457.00
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 II. R. 7837 they found the majority
membors of the committeo 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.
Sueh changes, while comparatively few in number, in our opinion
are fundamental and vital. Tho 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 Fed­
eral reserve banks on pain of forfeiture of their charters. We be­
lieve 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, tne mercantile, manufacturing, and agri­
cultural interests of the country, which control the banks, can be
depended upon to appreciate its advantages, and the banks will nat­
urally and voluntarily join in trying to make it a success. At least
time enough should l>e allowed for a gradual and natural develop­
ment to fully demonstrate that the new system is a success before
force should be applied, by way of quasi penal or forfeiture pro­
visions, 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 a
Quantity of the reserves as the bill proposes to compel would cause
tne borrowing public great hardship, and the vast business inter­
ests 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 tne Federal reserve banks
“ shall be obligations of the United S tates/’ 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

134

CHANGES IN THE BANKING AND CURRENCY SYSTEM.

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 histoiy of all such experiment®
amply proves.
FEDERAL RE8ERVE BOARD.

The powers of the Federal reserve board are, in our judgm ent too
great. This board should be given supervision, but not actual man­
agement of the banking business of the country. We also believe that
while an effort has been made to make the board somewhat non­
partisan, 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 pmitical 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. H a y e s .
F r a n k E. G u e r n s e y .




J am es F. B u r k e .
F r a n k P. W o o d s .
E dm u n d P l a t t .

M r. tiiNbBEEGH su bm itted the fo llo w in g

MINORITY VIEWS.
T h e G la s s B i l l , H . R . 7837.
T h e Glass hill, as drafted, is m erely a new form fo r the adm in­
istration o f a false old system . I t leaves the w orst o f all features
in th e present financial schem e u n ch anged; that is, the burden o f
excessive interest. I t provid es u pon its face for a financial strin­
gen cy and possible p a n ic in its inception as a result o f the forced
sh iftin g o f cash ana resultant transfer, and therefore a disturbance
o f credit. A fter the sh ift w ou ld be m ade and the adjustm ent was
finally com pleted, w ith the excep tion o f a p rovision for the issue
o f asset currency, it w ou ld be an im provem en t over the present
m eth od o f finances. T h e disadvantage that w ould arise b y shifting
o f cash balances and early disturbance o f credits m ay be rem edied
b y sim ple am endm ents.
T h e m ost disappointing thing abou t the bill is that it p rovid es
n o relief from existing econ om ic evils. T h a t relief is due to begin
w ith an im proved m oney system . T h e Glass bill proposes to incor­
porate, canonize, and san ctify a private m on op oly of the m on ey
and credit of the N ation — to rem ove all the p eople's m on ey from
the U nited States Treasury and place it in the vaults o f the banks
to b e used b y them fo r private gain. It violates every principle
o f popu lar, d em ocratic, representative G overn m en t and every
declaration o f the D em ocra tic P a rty and platform pledges from
T h om as Jefferson d ow n to the beginning of this Congress.
T h ose o f the com m ittee w ho fa v or the bill have w orked diligently
with earnestness and a bility to m od ify the details in dealing with
finances, bu t h ave done nothing to correct the grossly false basis
on whicn finance is n ow o p e ra te d ; that is, the fa ct that financing in
the present w a y is a burden instead o f an assistance to trade and co m ­
m erce. Severe as m y criticism o f the bill m a y seem , still I believe
that w ith som e few am endm ents the system tb at the Glass bill
w ould p u t into operation w ould be less severe on the p eople than
ou r present system . I do n ot o b je c t to it because o f u n favorable
com parison w ith that now p racticed , b u t base m y o b jection s on the
ground that now , while w e are at it, we should instead pass a good
In su bm itting a m in ority report I have tw o purposes in v iew :
(a) T o offer suggestions for am endm ents in the Glass bill that w ould
m ake it sim ple, m ore responsive, and less expensive to op era te:
Q ) to offer a new bill to form the basis for an A m erican financial
>
p o licy to place p u b lic and private enterprise, industry, and exchanges
upon a sound econ om ic oasis and d estroy the pow er o f private
operators to m on op olize the m edium s o f exchange.
Those w ho are responsible fo r the draft o f the Glass bill u n dou b tedly
hope through its en actm en t to rem ove from finance the frequent




m

136

OfiANQttS tir THE BANKING AKD CUBttElfCY SYSTEM.

stringencies and occasion al panics th at d ev elop . T h e p lan th ey
offer, on ce it b eca m e op era tiv e and adjusted to , w ou ld p ro b a b ly
rem ove som e o f the d an ger elem ents th at in the past h av e driven
the co u n try in to frequ en t m on ey stringencies and occasion al p an ics;
b u t as an effective rem edy it is inadequate. T h e v e r y basis o f d ie
system th at is sou gh t to b e p atch ed is lalse.
T h e Glass bill w ou ld m a k e a ch an ge in th e adm in istration o f th e
present system , b u t n o ch a n ge in th e m on ey basis. T h e design o f th e
b ill is to lessen th e im m oderate and v iolen t flu ctuation s th a t result
from th e present m eth od o f financing. F o r th at reason a M em ber
w h o does n o t con sider th e bill sa tisfa ctory m a y v o te fo r it nevertheless.
W e sh ould firet d o aU w e ca n to secu re the en actm en t o f a g o o d bill.
This is n o t a g o o d -bill, b u t w ith a few am endm ents it m a y b e b e tte r
th an n o bill.
B usiness is n ow operated under a h ig h ly tech n ica l cred it system
b ased o n a sm all am ount o f law fu l m on ey. T w e n ty -fiv e and p ossib ly
m ore dollars o f cred it exchanges, o n the average, fo r each d ollar o f
a ctu a l cash p aid, b u t cred it as a rule is d irectly related to th e lo ca tio n
o f actu al m on ey. I t is th rou gh th e banks tn a t m ost o f th e cred it
extensions occu r. T h e cash is m reserve fo r th e final balances. C om ­
p a ra tiv ely little o f the cash in the banks m oves a t all. I t lies in th e
Vaults year after year w ith ou t g oin g o u t on a n y m ission o f business.
T h is bill proposes to sh ift a v e ry con siderable p art o f the b an k cash.
I t w ou ld require several m onth s at th e v e ry least to a dju st credits to
th e sh ift. T h e volu m e o f cred it w ou ld b e distu rbed to a v e r y m u ch
greater exten t than the sh ift o f cash. Business w ou ld b e distu rbed
b y th e change unless p rovision w ere m ade to keep cred it from bein g
interfered w ith.
T h e general p u b lic gets n o direct con n ectio n w ith th e Glass b ill fo r
purposes o f securing either cred it o r cash. T h e p u b lic w ill still b e
forced to g o to the banks. Therefore if the bill is to b eco m e op erative,
th e banks w ill h ave to com e under it. T h e nation al banks w ou ld
o n ly be com pelled to d o so, b u t if th ey alone d o, it w ill h ard ly b e
satisfa ctory, because th ey d o o n ly a bou t one-third o f th e banlring
business.
SOME ACTUAL CONDITIONS TO BE MET.
O n A p ril 4, 1913, the deposits held b y n ational banks required
th em to h old a reserve o f $891,794,905. T h e y w ere <15,691,784
sh ort— b elow th e reserve requirem ents. I f th e y nad been com p elled
to su bscribe fo r Federal reserve ban k s to ck under th ose con d ition s,
w hat w ou ld h ave h a p p e n e d ! T heir capital s to ck was a p p rox i­
m a tely $1,050,000,000, w hich w ould h ave required th em to p a y
$105,000,000 for s to ck w ithin 60 d ays. T his sum w ou ld b e transferred
to an entirely new field o f financial d evelop m en t. In ad d ition to
th at, un der tn e law th ey w ou ld h av e been required to m ake g o o d the
$15,691,784 shortage in reserve w ithin 30 d a y s ; an old p rovision
w h ich is carried in to this bill. T h e State banka were p ra ctica lly in
th e sam e con d ition , and if th ey, to o , cam e in, as the bill con tem plates,
the dem and fo r rea d y m on ey w ou ld h av e exceeded $200,000,000 fo r
Federal reserve ban k s to ck alone, and a m u ch greater sh ift o f de­
posits w ould b e required. A ll things considered, it is n o t im p roba ble
that a shift o f near h a lf a billion dollars w ou ld h av e to b e m ade.




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

187

A MONEY STRINGENCY AND POSSIBLE 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 suffi­
ciently. 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 tne 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..................................
Whftland National Bank. Indiana................................
People's National Bank, Kollesburg, W. Va.................
First National Bank, Hudson, Ohio........................
First National Bank, Almena, Kans.......................
Irving National Bank, Irving Park, III-----------Athol National Bank, Athol, Mass....................... .......
Commanche National Bank, Commanche, T ex...........
First National Bank, Perry, A rk......... ......................
First National Bank. Wellington, C olo........................
Heard National Bank, Jacksonville, Fla......................
First National Bank, Alex, Okla..................................
Gaffney National Bank, South Carolina.....................
First National Bank, Vacaville, Cal............................
Union National Bank, Brunswick, Me.........................
Orange National Bank, Chester, P a .. . . . . . . ...............
Farmers dc Mechanics’ National Bank, Jefferson, Iowa
First National Bank, Baldwinsville, N. Y ...................

125,000
50,000
25,000
25.000
50.000
50,000
100,000
100,000
100,000
25,000
25,000
1,000,000
25,000
150,000
50,000
50,000
100,000
40,000
100,000

Assess­
ment.
12,500
5,000
2,500
2,500
5,000
5,000
10,000
10,000
10,000*
2,500
2,500
100,000
2,500
15,000
5,000
5,000
10,000
4,000
10,000

Money in
bank.
12,514
3,981
1,287
1,636
3,05?
2,866
7,798
6,582
6,637
1,688
1,203
80,826
1,503
9,726
3,601
4,288
9,112
1,877
8,225

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




188

CHANGES IN THE BANKING AND 0T7BBBNCY 8YSTE»L

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 banlcs 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 out­
standing; but, admitting that, and that these come in rapidly, as
many more are put out in the regular course of business. The com*
merce 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 D an k. Its stock­
holders 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 tne tanks to get in
shape to meet their obligations. Naturally they would demand pay­
ment of the borrowers. A stringency would result, and possibly a
panic. In such an emergency the borrowing people would suffer,
D ecause they are absolutely tied to the banks, and the Glass bill
would make no change in that respect. If everybody would remain
perfectly calm and make no demand for impossible things, the shift
could be made under the stress without an actual 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 currency. But the organization would have to be complete
before that could be loaned. Much loss might occur in the mean­
time.
It is claimed by this bill to give considerable control and manage­
ment of the banfes 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 com­
pelled to go to those who use money simply for the purpose of charg­
ing a profit out of handling it. That is, the banks and money loaners
make a profit out of those who use money. The latter have no other
purpose whatever. This bill makes the bankers the 1 go-between1
1
’
between the Government and those who use money only as &means
to deal in the material and social exchanges that are essential to
civilization, the only true purpose of money., This bill provides for




CH A N G E S IN T H E B A N K IN G AND C U R R E N C Y SY ST E M .

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 Govern­
ment in its sovereign capacity nor the people, or their representa­
tives, 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-callea Federal reserve
banks, which by tne 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.
Tnose who wish to use money for the purpose of its service to^a
freedom of trade by the people among themselves find no Govern­
ment-supported source of supply except the exclusive monopoly
granted to the banks. These banks 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
m m not sufficient to the business world. Bankers are cautious




140

CH AN G E S IN T H E B A N K IN G AN D C U R R E N C Y SY S T E M .

business m en and will resolve all
fore call in loans until th ey are
provisions o f the bill. T h e bill
so far as hum an foresight can
clauses to m eet any oversight.

d oubts in fa v o r o f safety and there­
prepared to m eet the m ost difficult
should be m ade right to start with
m ake it and still have the saving

FEDERAL RESERVE BANK STOCK ASSESSMENT.

In stead o f m aking a call for 5 per cen t instanter and 5 per cen t
w ithin 60 days, it should be m ade m several sm aller calls distributed
ov er a p eriod o f a year. There is, how ever, no need o f so m uch cen ­
tral izea ca p ita l as w ould occu r in these banks. T h e secu rity o f
the d epositors in a bank depends on the g o o d m anagem ent m ore
than on the am ount o f its capital stock . T h e funds in the co n tro l
o f a g o o d m anagem ent in a bank are usually several tim es greater
than its cap ital. A 5 per cen t assessment on the ca p ital and surplus
fo r the establishm ent o f the Federal reserve banks w ou ld serve the
co u n try b etter than a larger assessment upon the ca p ital alone.
I believe th a t 3 per cen t on the com bin ed capital and surplus w ou ld
be still b etter, because that w ould leave m ore m on ey fo r use in the
p ro x im ity o f its origin, where it belongs.
ASSESS COMBINED CAPITAL AND SURPLUS.

A ssessm ents should be m ade both on the capital and surplus. T h e
surplus o f a bank is as m u ch a part o f its capital as the capital itself is.
It w ould be an injustice to the smaller banks unless the assessment is
m ade on b oth capital and surplus. T h e 37 national banks, in N ew
Y o rk C ity, for exam ple, haa Septem ber 4, 1912, a capital o f
$120,200,000 and a surplus o f $128,255,000, while taking, fo r instance,
the first 37 banks listed in M innesota, w hich is a fair average fo r cou n ­
try banks generally, their aggregate capital on the sam e date was
$1,425,000 and their surplus $458,615. N ow , 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 p a y for the one or the other in a proper p rop ortion
T h e bill should De am ended to have the assessment m ade on the capital
and surplus both .
BANK RESERVES.

T h e reserve requirem ents should be reduced im m ediately to 20 per
cent for all reserve banks. T h a t w ould help the banks to m eet the
dem ands of the cou n try banks for a return oi their funds. A s the bill
Ls, the reserve banks w ould sim ultaneously be com pelled to press co l­
lections— first, in order to m eet the dem ands from the co u n try banks
fo r their reserves; second, to subscribe fo r stock in Federal reserve
banks; and, third, to transfer a part o f their ow n reserves to the lat­
ter. T he period o f adjustm ent should be m ore graduated and the
reserve requirem ents reduced. Since the banks h ave absolute con trol
o f the distribution o f m on ey to borrow ers, th ey should n ot be pre­
vented from loaning at tim es and in places w hen and where th e m on ey
is needed. Th e form ative period oi adjustm en t to th e requirem ents
o f this bill would prevent tnat unless am endm ents are mide.




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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
Dill 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
’oin in order to have capital enough for 12 reserve banks. Tho
arger banks are controlled by stockholders who support tho Wall
Street system. Anyone who nas investigated the influence of that
system knows that its influence in a case of this kind would bo all
powerful. The New York district under that condition might com­
plete 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 t8 help thetgeneral public out of the difficulty that would
arise from such 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.

I

INCREASE AND DECREASE OF CAPITAL STOCK.

Sections 5 and (> provide that when banks reduce their capital, or
dissolve, or become insolvent, the Federal reserve bunk shall pay
therefor a sum equal to their cash paid subscriptions on shares sur­
rendered. 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 apart of tho responsibility to carry
the Federal reserve banks through financial storms, but actually there­
by 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




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CH AN G E S IN T H E B A N K IN G AND CU R R E N C Y S Y ST E M .

board from time to time provides. No solvent bank should be per­
mitted 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
rovidc that no bank should be excluded from becoming a member
ank 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.

C

FOREIGN AGENCIES.

The last paragraph of section 15 should be amended so as to pre­
vent 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 re­
serve 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 Gov­
ernment funds in the banks, except in consequence of appropriations
made by law. Funds that have not been appropriated mu*st remain
in the Treasury. Subdivision 7 of section 9, article 1, reads:
No money shftll 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. TT:ie 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 busi­
ness. If its doing so were confined to legitimate business, anil 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 2per 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.




CH A N G E S IN T H E BA N K IN G AND CURRENCY SY STEM .

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 com­
pelled 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 tho
Federal reserve board would approve, as very likely it would if tho
ublic interest required, but that is a protection available to the
anks 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 tney 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 tho note
issues if they wish but no one else can.

E

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




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CH A N G ES IN T H E B A N K IN G AND CU RRE N CY SY STE M .

porations and issue this currency on the security of notes., bills o f
exchange, acceptances, Government, State, and municipal bonds. In
other words, it is to be a form of asset currency supported by the G o v ­
ernment but given to special interests to be vestea 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 these private cor­
porations 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 themselvos, 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 tho charge to be made upon Government
deposits, this section 7 establishes a vicious principle. Upon the
note issue as well as tho Government deposits, the policy ojf making
a reasonable charge, can not bo reasonably questioned. That is
clearly within the Government right as well as a fair policy, but this
section goes further, and provides that after tho 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 tho 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
o f the people with each other is so important as the m on ey and
credit system. The authority for the money, as well as the su pport
of credit, depends for its stability on the Government. In. the ex­
tension of the advantages sought to be derived from the use o f
money and a practical use of credit the power of tho G overn m en t
is absolutely essential. Any proper considerations b y Congress o f
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 tho 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 pri­
vate 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 manufac­
turers’ , and others* notes, as well as the bonds of towns, villages,
cities, States, and even the Nation’s bonds, to the Government and
got currency, and at the same time refuse the producers themselves,
the makers of those notes and obligations, an equal privilege? The
absurdity of tho Government giving awav its own credit to corpora­
tions to exploit the people is incomprehensible. Tho bankers; are not
to blame. Congress is to blame for giving away the people’s rights
and bestowing them upon tho banks.




CH AN G E S IN T H E B A N K IN G AND CU RRE N CY SYSTEM .

145

It is true that Congress possesses the authority and has the power
to strip the banks o f 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 Govern­
ment 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 exclu­
sive privilege were not given to tne hanks, then they would become
the people’s natural agents, but with the exclusive monopoly they
become tho people’s masters.
The notes, bills of exchange, acceptances, bonds, etc., are the lim­
ited 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 tne 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 liave 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 nave 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 ana 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, bring­
ing it out from the Treasury of the people and into the banks, to be




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CH A N G B S IN T H E B A N K IN G AND CU R R E N C Y S Y ST E M .

loaned to tho people themselves at a price 10 be in the exclusive con­
trol 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 tho bill gives
no individual borrower any protection as against an unreasonable
charge of interest by tho 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 tne people, would absorb the equal of evpry 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 com­
pute the cost to the people. If he does, he must admit the truth of tho
statement. A somewhat similar process to that which this bill makes
possible for the pyramiding of loans from the use of currency author­
ized to be given to the banns 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 tliey get from the results of their daily boil. The
rest is absorbed to pay the toll that the Government practically pro­
vides for tho 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 indi­
viduals in these United States, each of whose fortunes are now large
enough so that 6 per cent annual interest compounded as is the cus­
tom, 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 aU levying a tax, burden, or whatever you wish to call it on us
every day of our lives.
It is a fact that any and all the legislation that has been advocated
by the political leaders will have mightv 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 bill is an example of that. Those
who provide us with bread and butter and with tne 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




CH AN G ES IN T H E B A N K IN G AND CU RREN CY SY STEM .

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 uso, 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 oft
till the last. His rural credit system can wait. The speculating
interests are to be first supplied with funds to speculate on the farm­
ers’ 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 he foolish to mortgage his farm for so short a period,
but section 17 of tlie bill discredits the farmer’s note bv refusing to
permit it to be used as security for United States currency, but allows
most other kuids of paper to be taken. There is nothing better than
a note secured by a tarm mortgage. Farm-mortgage notes should be
accepted the same as merchants’ notes and others when they have
the satne period to run before maturity. A large amount of farmmortgage notes arc 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 advo­
cate 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 lessor importance could be made to
the Glass bill, improving it, to which I shall not call attention in this
report, rather leaving (hem to be considered on the floor of the House.
In suggesting the amendments that I have, it is not with the inten­
tion 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 tilings 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 moot the necessities of the present times, even the
title would have to be stricken out, another substituted, all the
sections rewritten, and there would bo 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 pur­
pose. E arnest efforts have been and still are being made to accom-




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CH AN G E S IN T H E B A N K IN G AND C U RRE N CY SY ST E M .

lish
E

that result, b u t on accou n t o f peculiar partisan practices and
Use rules for the governm en t of Congress, for which mem and n ot
parties are at fault, Congress does n ot have presented to it in form to
v o te on measures suited to the p eop le’s m ost urgent needs. Secret
com m ittee m eetings and secret caucuses f rame hills, hind and gag the
attending m em bers, and b y a system of evadin g record votes on sep­
arate im portant provisions, prevent the passage of legislation that
w ould result in a substantial reduction of the cost o f living.
Unless som e sudden change takes place in the govern m en t of C on­
gress, that is n ot apparent at this time, n oth in g that is here being done
will reduce m aterially the cost of living to those who earn it b y their
d aily work. The reason w h y m ay be easily u nderstood b y anyone
w h o will carefully stu d y the conditions. Such a study* will reveal to
anyone the leading cause for the high cost o f living. \\ hen one under­
stands those, he will know that the two bills which b y the rules g o v ­
erning Congress are perm itted to be acted upon, will n ot accom plish
the result dem anded.
In the hopes that the people, as well as their representatives in
Congress, m ay give this m ost serious m atter atten tion early enough
to change the course o f things here to give them a better turn, 1 have
labored to point out a few things that m ust be dono if we w ould
give the neonle any material relief. I u rn n ot given sufficient tim e
to state all the facts that I wish to in this report. 1 have no greater
ca p a city than other Members, but I have put in the tim e to investi­
gate carefu lly the con dition s. I have gone ou t am on g the people
and seen the rich and p oor in actual operation in business ana w ork
and have studied them there as well as in their hom es. I have had
enough experience in various ways to enable me to understand quite
well w h y it is that a few people are now gettin g all the wealth that
results from the labor o f people generally, and what is m ore im port­
ant, I know that the pow er o f the few to outrageou sly e x to rt from
the people generally can be prevented. For the inform ation o f any
M em ber w ho has not had tim e to m ake the investigation for him self
and w ho wishes to stu d y the su bject further from m y view p oin t and
so inform s me, I will furnish a b ook which I havo ju st published on
B anking and C urrency and the M oney Trust, and also a speech which
I delivered in the H ouse A ugust 2, 1912.
THE LOWER COST OF LIVING AND ITS RELATION TO MONEY AND CREDIT
AND TO INTEREST, DIVIDENDS, RENTS, AND PROFITS.

W e m ust have food , clothes, and shelter, and require the instru­
ments with w hich to p ly our daily work. These are the prim e
necessities, and are m ade available on ly as the p ro d u ct of labor.
T h ey determ ine the initial cost in living. W h en the means o f the
individual units in our social order— that is, o f the people— arc safe­
guarded and kept unencum bered while they p rovid e their prim e
necessities, their securing benefits from the social order in excess
o f such prim e requirem ents will be assured as a consequence. A
few con crete illustrations will m ake that clear.
It must be kept in mind that the G overn m en t o f the U nited States
and o f the several States has established a p olicy su pported by
general practice, by statutes, and the decrees o f courts, that the
owners o f p rop erty are legally entitled to a rate o f interest or d ivi­




CHANGES IN THE BANKING AND QURRBNCY SYSTEM.

149

dends or profit return, that m and o f itself encum bers all people.
Th e people m ust have the use o f the p rop erty or the produ cts from
its uso and therefore are com pelled to pay the interest. The pow er
o f its enorm ous burden I show in the follow in g interest table co m ­
piled b y a form er Librarian o f Congress. This table shows the
S'ow th o f SI b y com p ou n d in g interest in the m anner o f the banks,
ne dollar loaned fo r 100 years w ould grow as follow s:
Interest at—
$340
Gper cent per annum would amount to....................
8 per cent per annum would amount to....................
2, 203
10 per cent per annum would amount to...................
13, 808
12 per cent per annum would amount to...................
84,075
18 per cent per annum would amount to...................
15,145,007
24 per cent per annum would amount to................... 2,551, 798,404
I shall cite a few individual cases from w hich M em bers o f C ongress
can easily determ ine that n ot on ly on paper and in th eory is the
G overn m en t su pporting a p o licy o f pauperizing the people, b u t it is
actually pauperizing them b y its support of this practice. U se the
table a bove, and from it the trem endous pow er ol interest and d ivi­
dends to oppress tho plain producers m ay be seen. The individual
fortunes are stacked up against the p eop le’s daily energy, so that
from the p rod u cts o f their toil tho interest, dividends, and rents m ust
be paid. It means that de -d capital is stacked up against hum an
life so as to m ake hum anity subservient to so-called “ vested rights,”
b y law privileged to take un extortion a te toll for the use o f sub­
stance wnieh has boon prod u ced b y the p e o p le ’s own toil. T h a t is the
incu m bran ce to whicn I referred as feeing directly and indirectly
responsible for the high cost o f living. No bill th a t'w o u ld properly
deal with this problem has boon perm itted b y the so-called “ lead era
in this Congress to get a fair hearing. On tho con trary the “ lead ers”
have appropriated the p u blic com m ittee room s and the H alls o f
Congress us well, corralled subservient Mem bers, locked the doors to
keep the oth er Mem bers and the p ublic out, and produ ced bills that
M em bers have been coerced to su pport under the guise o f harm ony in
a p arty.
T h e follow in g cases to w hich the table o f interest m a y be applied
is illum inating:
F rom the testim on y given b y G eorge F. B aker (president o f the
F irst N ation al B an k o f N ew Y o r k C ity) before the com m ittee
appoin ted to investigate the M oney Trust we learn that the opera­
tions o f a single bank produ ced in 50 years profits equal to $86,000,000,
or 172 tim es its original capital, i f that bank continues to d o busi­
ness and is allow ed to pile up profits in that geom etrical progression
it alone, on an original investm ent o f $500,000, in less than 100
years w ou ld have the pow er to extort from the people m ore than the
equal value o f all the existing p rop erty in the U nited States, and
that bank is bu t one o f the 30,000 banks operating on an u neco­
n om ic system .
T h e capital stock o f the national banks alone, in 1912, was
$1,046,012,580. T h e dividends p a id for the y e a r ending June 30,
1912, averaged 11.66 per cent, w hich was in addition to the accum u­
lation o f a large surplus. G oing at that rate, com pou n ded as the
banks do, they w ou ld h ave the equal o f the entire present valuation
o f the cou n try absorbed in less m a n 50 years and w ould have the




150

QHANGE8 IN THE BANKING AND CURRENCY SYSTEM.

surplus from yea r to year to d o anythin g th ey wish w ith. These
dividends are o v er and a bove all the expenses w hich include pa}"
fo r the clerks and h igh salaries fo r the officers con n ected w ith the
banks. T h a t is n ot all; the bank officials h ave unusual op p o rtu ­
nities, and m ost o f them d o speculate in various w ays, ana m the
aggregate th ey g e t greater profits fro m deals th at m ake no return
to the hanks than the actual d ivid en d s declared. W h a t I h ave
nam ed includes the n ational banks alone. T h ere are m ore than
tw ice as m a n y oth er banks, loan and trust com pan ies o f the different
kinds. These d o a bou t tw ice as m u ch business as the national
banks. T h a t is ju st one great interest, the ban k in g and financial.
T h ere are the railw ays, the steel and iron com pan ies, the oil co m ­
panies, the coa l com panies, the telegraph and telephone and num er­
ous oth er com panies, besides a thousand or m ore great individu al
fortunes, that con cen trate in to very lim ited con trol the p rin cip al p art
o f the a ctive capital in the cou n try. This is held on on e side b y the
so-called capitalists, p rotected b y the * vested rights d o ctrin e ,”
*
which m eans law, that enables them to e x to rt from the peoplle in w hat
are called dividends, interest, rents, and profits, an am ou nt that, as
show n b y the interest table given before, is a bsolu tely sure to keep
the cost o f livin g high and to k eep the p eop le w orkin g to su pp ort
th at system . B y that system any person w h o can g e t a few thousand
dollars can live in idleness or as a spen dth rift on the interest that
the w orkin g people o f this cou n try are force d to p ay.
M em bers o f Congress are intelligent. W h a t I h ave already stated
is sufficient to'sh ow any intelligent person that ou r present system is a
fraud on the people. N o intelligent, self-respectin g p eop le can lon g
tolerate a govern m ental system w hich b y its established and e x ­
pressed p o licy places an unnecessary burden on the citizenship. I
shall n ot m u ltip ly the exam ples show ing the injustices created b y the
p o licy o f G overnm en t. A w ord to the wise is sufficient. T o others
it w ould be hopeless to pile up exam ples.
WS REQUIRE TO LIBERATE THE PEOPLE FROM EXCESSIVE INTEREST.
U nder the Glass bill the am ount o f m on ey th at w ou ld b e exclu s­
iv e ly w ithin the con trol o f the banks w ithin a few m onths a fte f its
becom in g a law w ou ld be increased. T h e bankers’ pow ers to co lle ct
interest w ould b e con siderably augm ented. I t is o n that a ccou n t
that th e Glass b ill does n ot p rovid e a rem edy t o m eet th e p e o p le ’s
greatest necessity.
There is b u t on e w a y to m eet th e financial necessities o f th e people,
and that is to h ave tne G overn m en t su pp ort all the p eop le in w h a t­
ever useful industry th ey m a y be engaged. T h e G overn m en t m ust
w ithdraw from the Danks the exclu sive m o n o p o ly co n tro l o f financing
the p eople and give to every legitim ate and necessary enterprise
im partial governm ental support. I t is a bsolu tely necessary to an
independent p eople that the G overn m en t should stand rea d y to d o
that-. T h en the bankers, seeing th at th ey n o lon ger h a v e an e x ­
clusive m on op oly , w ould exercise th e office o f an a gen cy Listead o f
h olding the hand o f m astery. W ith that purpose m view , and to
p ave tne w a y fo r very early perm anent relief to the p eople, I offer
the follow in g am endm ents to the Glass b ill:




CH ANG ES IN T H E B A N K I N G AND CU RREN CY SY STEM .

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.

S e c t i o n 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 oi' said fiscal department shall consist of eight members.
This number shall include the Secretary of the Treasury, who shall be member ex
otlicio, 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 con­
sent 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 tor 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, l^he 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 perform­
ance 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.
U N ITE D ST A TE S C U R R E N C Y .

S e c . 2. That in aid of Congress in pursuance of the power conferred by the Constitu­
tion 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 ae vised
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 ail 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.
D I8 T R IU U T IO N OF U N ITE D ST A TE S C U R R E N C Y .

S e c . 3. That to carry o u t the appropriations made by Congress, the fiscal department

issue the United States currency authorized by this act to the various depart­
ments of Government for all public purposes that require or may require the expendi-

B h a ll




152

CHANGES IN THE tlANKtNG ANt) CUftSENCY SYSTEM.

tureof 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
banka, 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 checkB and drafts and other evidences of dues to the Gov­
ernment deposited by the Government shall not be distinguished from or have any
privileges or preference over other deposits of individuals, whether private or otherwise,
m the same Danks. 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 Governments general account, pay
checks drawn by tne Government agencies out of the general account, and the use of
the special deposits of United States currency in payment of such checks is hereby pro­
hibited until the general account shall have been exhausted, in which cane payment
may be made out of the special deposit.
C N E L T N O RXISTIN C R E C
A C L A IO P
a U R N Y.
Sic. 4. That from and after the passage of this act all United States notes, currency,
sold and silver certificates, and national-bank notes shall be fmll legal tender for all
debts and dues, public and private, in the United States, its Territories, and posses­
sions, 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 sucn other form of money as now provided by law; and as soon as practi­
cable after any United States notes, currency, gold and silver certificates, ana bank
notes -come into the possession of the Secretary of the Treasury for redemption the
same shall be canceled and destroyed: Provided, That when such redemption is of
national-bank notes the amount canceled shall operate in liquidation o f an equal
amount of United States bonds securing the same, except that any national bank
may* by giving the fiscal department sucn 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 recir*
culating any sucn notes, currency, or certificates are hereby repealed. That when
gold or silver becomes tne 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 ana in aid of interstate exchanges when the Government shall in 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 extin­
guished, and except as authorized by this act, the United States shall receive told
for coinage only, the purpose being solely to affix the governmental stamp of weight
and fineness to Buch coinB, but all coins so made after the passage of this act shall
have no legal-tender quality. A charge equal to the cost o f 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 cold bullion or coins not belonging to the United States and shall issue no
more gold or silver certificates.
Sbc. 5. That on and after three yean 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.
A T T E ST T S
ID O H
AE.
Sbc. 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, boioughs,




CHANGES IN THE BANKING AND CURRENCY SYSTEM.

158

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 po­
litical 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 ses­
sion and oftener when practical, an abstract of such applications and tne 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 tne fiscal department shall recom­
mend 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 snail 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 sucn 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 oy which it would be governed in the ex­
penditure, 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.
S e c . 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 tne 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 imme­
diate relief to all congested labor conditions within the territorial jurisdiction of the
United States and render available all surplus labor and insure against enforced idle­
ness 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 plana and
the outlines of a policy to Congress with recommendations.
AID TO THE AGRICULTURAL ANI^ HORTICULTURAL INTERE8T8.

S e c . 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, transpor­
tation, and distribution of agricultural and horticultural products, to tne 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 monop­
olizing the same and controlling and manipulating the prices of such products both to
the nmrliioers and cons iraers, and shall, if practical, propose such an extension and
enlargement of the postal savings system, and if jieea 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. Such interest shall be reduced to a
nominal interest barely sufficient to reimburse the Treasury as soon as the national
debt can be extinguished, and such plan shall be reported to Congress with recommendations.
GOVERNMENT LOANS TO WAGE EARNERS.

Sro. 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




154

C H A N G E S IN

T H E B A N K IN G AND C U R R E N C Y S Y S T E M .

earners at the lowest rate of interest consistent with the cost and integrity of the
service, which loans will enable Ihem 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 ( oiigress with recommendations.
▲ID TO M A N U F A C T U R IN G IN D U S T R IE S .

S e c . 11. That the fiscal department shall proceed with all reasonable expedition to
au 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 tx aid and assist such of those inan>
ufacturing 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 advaures to such manufacturing interests
as are able 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 Con­
gress with recommendations.
IN G E N E R A L .

S e c . 12. That it shall be the duty of the fiscal department to investigate into the
finaucial conditions of all legitimate industry, work, and enterprise oif 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 suc h of them as require aid. The
fiscal department shall report to Congress from lime to time thereon with recom­
mendations.
S e c . 13. That the fiscal department in its administration shall take notice of the
economic* fact that payment by the Government for a serv ice to the Government
involves a collec tion from the people of an equal amount plus the expense of collec­
tion, and that the issue of l: nitcd States c urrency in payment of Government expenses
creates a demand on the part of the people equal to the currency required to be re­
turned to the Government in canc ellation 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 commodi­
ties or s e r v i c es of equal value, whether the same is accomplished by direction or indi­
rection, and that whenever actual commodities or services are not immediately or
directly exchanged in a cancellation of the respecti ve obligations, then a credit repre­
sentative is nec essary, 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 ot a greater c harge than is consistent with the cost and integrity of an honest
and just system. Therefore in the supply of United States c urrency guaranteed by
the credit of the people as a medium of exchange, the volume to be plac ed in circula­
tion should conform to the needs of commerce, avoiding alike both redundanc y 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.
A U T H O R IZ IN G

N A TIO N A L B A N K S TO B O R R O W R E S E R V E S .

S e c . 14. That the nat ional-bank act is hereby amended so as to permit national banks
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 ana 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 U do so its securities shall be
>
approved and deposited with the fisc al department, in such amounts as the fiscal
department shall demand, and the bank or banks having complied with all the rules
and regulations of the fiscal department, 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 bauk shall specifically retain the United States




G H A N G E 8 IN T H E B A N K IN G AN D CU B B E N C Y 8 Y 8 T E M .

155

currency thus received in its vaults, and then may loan or pay to its depositor* or
pay its other obligations from its other rash 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 author­
ized. 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 tne following sec­
tion 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, authorised by this act to
be specifically retained by the fiscal department for said purpose: and to be specifi­
cally 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
surolus 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 com­
pany 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
ahall be refused the privileges and advantages in regard to such loatis 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 monoj>oly
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 reauire 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 regu­
lated 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
tne correct principle:
The issue of currency is fundamentally a Government function and the system
riiould have as basic principles soundness and elasticity. The control should be
20306 0 — 58------ 11




156

0H A N Q B8 IN TH B BANKING AND CUBBBNCY BY8TBM.

lodged with the Government and should be protected from the domination of manipu­
lation by Wall Street or any special interest.

GOLD STANDARD RESPONSIBLE FOR MANY OK THE SOCIAL EVILS.

I t w ill b e o b je cte d to m y bill th at it discredits the g o ld standard.
I t is difficult to rem ove a p reju d ice such as th at existin g in la v o r o f
th e gold standard.
O n M arch 14, 1910, after an a droit ca m p aign carried on b y the
special interests coverin g a considerable period, C ongress passed an
a ct w h ich called fo r the perm anent establishm ent o f the so-called
“ gold b a s is ” fo r all o f our m oney. Since then there h ave been new
inven tion s m ade fo r m ining gola w hich m ake the available am ou n t
m ore plen tiful, w ith the result that the “ gold b a s is ” is puzzlin g the
M on ey T rust. B u t there is a still further com p lica tio n and th a t is
that the people are b ecom in g fam iliar w ith the fa lla cy o f the “ g o ld
standard and th ey are becom in g dissatisfied in p ro p o rtio n to their
understanding of its bad effects.
T h e dollar is w orth less now than it was in 1900; th at is, it will b u y
less. T h at fact, particularly, does n ot satisfy the cre d ito r class. T h e y
h ave had enorm ous interest returns, but th e y h ave lost a p art o f th at
advantage because o f the depreciation o f the purch asin g p ow er o f the
dollar. T o a greater or less exten t all o f the people are dissatisfied
w ith it; m an y for selfish reasons; and th ey o n ly desire a rem ed y to
be adopted w hich will help th em alone, but there are few er o f these
than there are o f those w ho seek a reform w hich w ill b etter th e co n ­
ditions o f all.
W e have seen m a n y com m ents in the press la te ly in regard to a
plan devised b y P rof. Irvin g Fisher, o f Y alo U niversity. M i. Fisher
is no d ou b t an honest and earnest w orker w ho is tryin g to reform the
gold standard. H e has arrived at the inevitable con clu sion th at every
capable student m ust finally a dop t, and that is that the present go ld
standard is n ot the standard b y w hich we can secure honest m on ey .
P rof. Fisher has given a m ost th orough analysis o f the p ro d u ctio n
and su p p ly o f gold and show n quite exten sively the effect o f its present
use as a m on ey standard upon the prices o f com m odities. I h ave
given below a synopsis o f his plan as stated in the B oston N ew s B ureau
o f D ecem ber 28, 1912. It is as follow s:
Prof. Fisher is one of the most distinguished economists in this country, if not in
the wbrld. 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 com­
posite unit, thus standardizing the dollar. Such standardization would be effected
by 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 interrontrovertible. Every dollar is now intercontrovertible with 25.8 grains of gold bullion (nine-tenths fine), and is thcirefore worth
whatever this amount of bullion is worth.
The very principle of intercontrovertibility with gold bullion which we now em­
ploy could be usea 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 cer­
tificates 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 leeB 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 any­
body’s discretion, but according to an exact criterion. This exact criterion is found
in tii© now familiar “ index number,” which tells us whether the general level of
price w, 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.
P rof. Fisher has perform ed a great service to his cou n try and to the
world b y discrediting the gold standard so con vin cin gly. W hen a man
o f his p rom inence and ability has the courage to state his beliefs, the
m ore tim id o f those h olding like views, o f w hich there are m any, ought
to take an active part in supportin g the indictm ent o f the gold
standard.
W hile the professor has clearly indicted the gold standard and co n ­
clusively show n that it is a false one, I d o n ot asrce w ith the rem edy
that he proposes. Instead o f proposin g to abandon gold as a standard
and relegating it to its natural place am ong the articles o f com m erce,
he advocates its reform and w ould still retain is as a standard b y
m aking the w eight o f the dollar variable and determ ining its value
from tune to tim e accordin g to a com m odities index. Th e professor
is surely correct in his assum ption that com m odities have actual value
w orth considering in con n ection w ith tho establishm ent o f a true
exchange system based upon the actual value o f services and co m ­
m odities. It is to be regretted that P rof. Fisher has com plicated the
conclusions he arrives at b y contin u ing to consider the gold standard
entitled to any greater recognition than is accredited to com m odities
in general. A fter p rovin g its falsity he should have suggested the
abandon m ent o f the gold standard.
I f we were com pelled to change the weight o f the dollar m onthly,
quarterly, or even annually, as wo would have to d o with a com m od ity
dollar; if we tried to keep it of the same purchasing p ow er all o f the
time, lt ^ o u ld givQ us m ore trouble than we now have in changing the
tariff schedules; but while Prof. Fisher lias perform ed a w orld service
in being instrum ental in givin g general p u b licity to the falsity o f the
gold standard, that p u b licity is pushed by the influence o f selfish
interests, because they are pleased with the rem edy lie proposes. I f
he had not proposed to standardize the gold dollar, his p ro o f that it
is n ot an honest measure o f value w ould have received no p u b licity
greater than he him self and his friends and a few others cou ld give to
it. It would have been ridiculed if he had n ot proposed a rem edy
that suited the interests, for the m on ey sharks dem and som e m easure
that is favorable to them and not fair to the people. T h ey have
always sought to m ake the w orld believe the gold standard to be
sacred and, therefore, that the people were bound to su pport it, no
m atter how m uch it w ronged them. These selfish interests have sim ­
p ly seized on this proposed rem edy, which I believe Prof. Fisher to
h ave erroneously suggested w ithout his having given as much thought
to the rem edy as he had to the facts which con clu sively p rove gold to
be a false m oney standard.




158

C H A N 3 E S IN

T H E B A N K IN G AND C U R R E N C Y S Y ST E M .

I t m ay seem strange to som e p eople that this rem ed y suggested b y
P rof. Fisher should be advertised all over the w orld now , but there is
nothing strange a bou t it, for the all-pow erful M on ey T ru st interests
are quick to ob serve anyth ing that m ight be m ade use o f b y them , and
im m ediately upon its appearance th ey seized upon the idea o f stand­
ardizing the gold dollar and were instrum ental in h av in g the plan
advertised in order, if possible, to indu ce the p eople to accep t it as tt
rem edy.
I t m a y n ot be g en era lly realized b y the p eop le th at this is a critical
period in the establishm ent o f govern m en ta l policies, b u t the interests
arc especia lly alert to that fact. E v e ry th in g is bein g d on e to m ake
the p eop le a ccep t som e w orthless m akeshift, and in som e cases
a ctu a lly harm ful, so-called “ rem edies,” w hich, if a ccep ted , will
d ela y the a d op tion o f real substantial rem edies until an oth er genera­
tion shall enter p u b lic life. I t is because o f th at fa c t th at I fear the
(Hass bill m a y delay a true rem edy. Sim ultan eou sly, in all cou n tries
w here th ey have the gold stan d ard — and th at is in m o st cou n tries, and
in the oth ers equally unju st standards are u sed— articles w ere p u b ­
lished w hich were substan tially the sam e in su bstan ce as the fo llo w in g
w h ich was published in a W ash in gton p ap er on A p ril 12, 1013:
TO A S K IN T E R N A T IO N A L G O L D -D O L L A R A G R E E M E N T .

One of the feature? 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 t&kcn into
account.
N o t all o f the articles appearin g in tho press d ire ctly discuss the
gold standard, bu t m a n y o f them arc a d roitly w ritten in ord er to
im press the reader and prepare him to receive the in form ation th at
the gold d ollar is n ot n ow a g o o d standard, b u t fu rth er designed to
m ake the reader com e to a w rong con clu sion on the q u estion o f a
rem edy. W hen the first half o f an argum ent is true, unless the reader
is v ery careful it g oes far tow ard m akin g him b elieve th at the secon d
half is also true, and that is freq u en tly the case even w hen th e co n ­
clusions are w h olly erroneous, as lon g as the m aterial is a d ro itly
han dled. T h a t is w here the dan ger com es in the discussion o f the
gold standard from the sido o f tne special interests alone. In n u ­
m erable articles are n ow p ublished, in fa c t the plan is sy stem ­
a tica lly advertised fo r th at v ery purpose. B u t there are o th e r
articles w h ich are w ritten and published in g oo d faith , and in these
there is no in tention to d eceive. A n article was publish ed in C ol­
lier’s W eek ly , also on the d ate o f A p ril 12, 1913, w h ich I q u o te :
THE DISCOURAGEMENT OP 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 lat^est, 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




C H A N G E S IN T H E B A N K IN G AND CU RRE N CY SY STEM

159

a dthe like.
n

Then probably comes life insurance. The savings in banks are relatively
■m
flJl The increment in land values goes to mudh 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 die efforts of all. The larger amount of the securities outstanding repre­
sents a more or less fixed value. The eighteen billions of insurance in force is of ab­
solutely 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 locus 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
policies, relatively far less than the average amount of money which the policy­
holders 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 policy­
holders 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 Iossl 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 som ething
to think abou t. W e have indeed been bun coed long enough— so long
th at w e ou gh t to think abou t it seriously. It is up to Congress right
now .
I believe th at the rem edy is necessarily tw o fo ld : First, and co n ­
current w ith the establishm ent o f a new system , the old system should
be so am ended that som e o f its m ost serious adm inistrative defects
will be dim inished. It should then serve as a vehicle for carrying ou t
the equitable relations and obligations already existing as a result
o f the legitim ate business based upon it.
Second, an entirely new system should be instituted, w hich shall
be foun ded u pon the natural dem ands o f com m erce and trade and
d ivorced from personal fa v or or p rop erty preference. This new
system should be the basis for the establishm ent o f a perm anently
solid and equitable means o f exchange.
In order to com pletely accom plish the latter, we will have to cease
m onetizing gold. JBut that prohibition w ould not prevent, nor should
w e desire to prevent, the use o f gold as a means o f exchange. T h e
G overnm ent, on being paid the cost of stam ping, m a y properly stam p
the w eight and quality on an y com m od ity o f com m erce and let it
pass in exchange on a basis o f its ow n intrinsic value. A n yon e w ho
dem ands m ore than that privilege for the use o f a m etal or other
co m m od ity is intentionally unfair to the rest o f us, or ignorant. In
m ost cases it is because the persons accent seem ing facts w ith ou t
actu ally understanding the con dition s whicn surround them . If the
ow ner o f gold, silver, or other com m od ity desires to pay the G overn ­
m ent the expense of the operation, there need be no ob jection . T o
so stam p gold and m ake it legal tender is sim ply to decrease the
value o f our labor, and o f ou r p rop erty— if we have any, unless w e
also possess gold enough to offset, which m ost o f us d o not.
T h e owners of gold claim that it has an intrinsic value w hich
m akes it the m ost practicable com m od ity to use as m on ey. B ecause




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CHANGES IN THE BANKING AND CUBBENCY SYSTEM.

o f its sm all b u lk it is a con ven ien t co m m o d ity to ship and store.
B u t it can be used as a mean9 o f exchange w itn ou t m alting it legal
tender. T h e G overn m en t cou ld still stam p its w eight and fineness,
and then it cou ld be exch an ged in the same w a y th at it n ow is if it
really is intrinsically w orth w hat th ey say. I f it is n ot, then it should
b e exch an ged fo r on ly w h at it is w orth. W h en the ow ners o f g old ask
a n yth in g m ore, th ey, in effect, adm it th at it becom es m ore valuable
w ith th elegal-ten d er privilege than w ithout. T h e y w ou ld n ot dem and
it if that were n ot true. It can n ot be m ade legal tender e xcep t b y
govern m en tal act. A governm ental act is the act o f the p eople, ana
there is no reason w h y the people should stam p gold or any oth er
co m m o d ity that belongs to individuals w ith a special privilege.
This results in a ta x against themselves. L et gold De w eighed and
tested and given credit on ly for w hat it is. E xistin g coins will retain
their legal tender while in circulation, bu t when the G overn m en t
acquires any such, their legal-tender character should be rem oved , and
after th at bullion should be stam ped w ith its w eight and q u a lity and
should becom e an article o f com m erce standing on its ow n m erits.
I f the owners o f gold are correct in their statem en t that* gold cir­
culates on its intrinsic value, instead o f p a rtly on th at and p a rtly on
the additional value it acquires b y reason o f the dem and created b y the
legal-tender stam p, it is useless fo r them to ask th at it be m ade le g a l
tender, and if gold is n o t com m ercially w orth w hat it circulates fo r as
legal tender, then the owners are u n ju st in asking the p ublic to sup­
p ort the value added to gold b y the G overn m en t stam p. L e t them
take w hichever side o f the p rop osition th ey wdsli. In the one case
the legal-tender q u a lity w ould be useless. In the oth er it w ould be a
burden placed u pon the p u b lic and su pported fo r the benefit o f the
owners o f gold.
T o cease m onetizing gold or m etal is to d rop a practice lon g in­
dulged in fo r the benefit o f the m on ey loaners. Th e p eople have
b ecom e accustom ed to p ayin g them fo r the cred it su pported b y
them selves. I can n ot say th at it can be entirely stopp ed . There
are m a n y practices that injure the p eople generally, b u t axe never­
theless follow ed . I sim ply call atten tion to certain facts that can n o t
be successfully disputed. I know, and so does an y careful stu den t
kn ow , w hether he adm its it or n ot, that the fa ct that the G overn m en t
stam ps legal-tender privileges on gold creates an increased and arti­
ficial dem and fo r it, and consequen tly a m erchantable valu e th at is
v ery m uch in excess o f w hat it w ould be if the gold did o t h ave
im pressed u pon it this legal-tender privilege. I t n ow partakes o f the
character o f m on op oly. E v e ry additiom u cen t o f cred it given to it
a b ove intrinsic w orth as an article of com m erce, b y reason o f the
G overn m en t’s stam ping it legal tender, is first e x torted fro m the
p e o p le’s ow n credit, n ext accum ulated in the fo rm o f so-called
‘ ca p ita l,” and after that becom es the basis fo r charging them co m ­
poun d interest fo r generations— perpetu ally— if th ey shall n o t
em ancipate them selves b y an abandon m ent o f this false practice. A s
fa r as the principle is concerned, there is n o difference betw een the
G overn m en t stam ping gold as legal tender and givin g the ow ner the
advantage o f its increased value, and the same stam pin g process
being applied to plain paper.
Under the present practice all value in excess o f w hat gold is
actu ally w orth as an ordinary article o f com m erce is fiat credit added




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161

to it b y the people. I f the sam e stam p were affixed to paper, it
would all be fiat. It is sim p ly a question o f degree, and neither can
be extended to the individual as a free privilege w ithout rob b in g the
people of all that is added b y their credit.
T h e whole problem sim ply reduces itself to a question o f how long
will the people subm it to rem aining industrial slaves to the system .
T h e gold owners ridicule fiat greenbackers, y et th ey them selves are
fiatists. If th ey are not, w hy d o th ey o b je ct to gold circulating on
its ow n com m ercial merits ? W h y do th ey wish to coin it with any
oth er designation than its weight and fineness and w h y fo rce the
people to take it as legal tender ? T h ey are inconsistent in claim ing
a special privilege fo r gold. If gold is w orth all th ey claim fo r it, it
needs no extra function. If, on the other hand, it is n ot able to
retain its present relative value w ithout being legal tender, then that
is positive p roof that it should n ot be m ade legal tender. In the one
case it is unnecessary; in the oth er case it is unjust. T h e G overn ­
m ent will have to cease m onetizing gold or any oth er m etal as soon
as the people generally realize its present im position on them .
Y o u m ay say that som e losses would be suffered in a readjustm ent.
T h at will o f course be adm itted, but the losses would n ot begin to
equal those that are con tinually taking place now. Th e excessive
interest and expense o f m aintenance resulting from the use o f the
false system under which we operate is so great that, notw ithstanding
all o f the m od em inventions that have im m ensely increased the
people's p rod u ctive energy, most of us fail to secure the ordinary ad­
vantages that are due from this civilization to every honest, in­
dustrious person. The interest, dividend, and rent charges alone,
com pounded as th ey are now, are absolutely sure to keep the greatest
num ber of people in want and m any in misery.
I do not say dem onetize gold. I sim ply say cease to m onetize it.
Coin no m ore m etal witli the legal-tender character attached except
that required for small change. Our gold will circulate in foreign
m arkets on its weight and quality equally well w ithout the legaltender privilege as long as foreigners w ill use it for their legal tenner.
G old will d o tnat as an article o f com m erce, and foreign nations m ay
con vert it ia to their ow n legal tender if th ey like, but any nation that
use* gold as legal tender after a great nation like our ow n ceases to d o
so will be adding additional burdens to the present burdens o f its
people. W h atever gold we have in excess o f what we need for the
sciences and arts we can dispose o f for such articles o f com m erce as
we actually require, and it will be that m uch to our advantage as
against the present practice o f hoarding it. W e have m ore gold than
any other nation, and if we cease to m onetize it the other nations will
soon do the same. The com m on intelligence o f the people generally
has reached a point when* th ey ought to take the lead in forwarding
a plan which will p rove the use o f anv com m od ity as legal tender to be
a fallac y and result in the event ual discontinuance o f such a practice.
A m erica should lead in doing this.
Let us consider in con crete form the effect that the m on ey loaners*
dollars (which, b y the wray, are the dollars that w’e use) have on the
cost o f things and w hen t say cost I mean the expenditure in hum an
toil necessary to acquire the necessaries, conveniences, advantages,
and luxuries appropriate to human life. I shall n o t burden anyone




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CH A N G E S IN T H E B A N K IN G AND C U RRE N CY SY STE M .

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 loa n ed dollar is nob a meas­
ure fitted to the requirements of a people desiring equitable relations
with each other. It is simply a gambling dollar, and prices are regu­
lated by a manipulation of it instead of by the intrinsic value the com­
modities 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 specula­
tors and financiers, so called, are able to pillage on all the excnanges.
The system built up by these pillagers is an unnatural and unjust one.
It often happens that the aggregate value in m on ey o f a large
au an tity of a useful com m od ity will com m an d less in one year than
tiiat of a smaller qu an tity brought in another year. W h o, for
instance, will claim that 3,000,000,000 bushels o f w heat (supposing
that to be the w orld’s crop ) is w orth less in the aggregate for fo o d
and seed than 2,700,000,000 bushels, other things D o i n g equal,
except m oney, which seldom is? N o one claim s that 3,000,000,000
bushels o f wheat is actually w orth less than 2,700,000,000. It is
a fact, how ever, that the lesser q u a n tity will often sell for as m uch,
and som etim es m ore, than the larger q uan tity. A difference o f
10 cents a bushel will accom plish that result, if the 3,000,000,000
sold for 90 cents and the 2,700,000,000 sold for $1. Illu strative
o f that fact, let me quote the follow ing from the Saturday E ven in g
P ost o f March 15, 1913:
TH E VICIOU S CIR CLE .

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 sa'r
ed
on flour you lost on the pan to bake it in. Ana 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 offset by higher prices, to overcome which investors must demand still more interest.
Meanwhile labor, so to speak, chases its own tail, demanding higher wages, which
result in higher prices that consume the increased wages— which naturally induces a
demand for still iiigher 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 tho 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 loss for it.
A farmer having the equivalent of 300 bushels of wheat to soli in a
year when crops arc generally abundant expects to receive a little less
per bushel than lie would receive per bushel for 270 bushels in a year
when crops were not abundant, but he dot's 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




CH AN G ES IN T H E B A N K IN G AND CU RRE N CY SY STE M .

163

individual financial standpoint, to burn up a part o f his crop when it
was abundant. In fact, the cotton farmers o f the South started to d o
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 ow n
m on ey instead of into the m on ey-loan er’s m oney, no th ought o f so
destructive a nature would ever have occurred to the co tto n growers
or to any other producer of com m odities.
There should bo no legal tender other than that issued b y the G o v ­
ernm ent, and no individual ought to be able to obtain it w ith ou t
giving its equivalent in return. I f such were the case the problem o f
interest (as a disturbing factor) would cease, and a new era w ould
dawn upon the world. The present difficult problem s created b y our
arbitrary and ridiculous banking and currency system would then
give place to natural selection. I use the term 44natural se lection ”
m its scientific sense, because we can n ot run the G overnm ent in the
interest o f the people unless we follow the suprem e laws that will
u nquestionably govern in the end. W hen we do there will be no
ch oking up o f the system b y the arbitrary acts o f the financial kings,
fo r they are but a produ ct of the arbitrary and unnatural practices
that the people have fallen into the habit o f using as a means o f con ­
ducting their business, nor will the m ajority of men be payin g penal­
ties in the form of overw ork, w orry, and discouragem ent.
The bankers have a true system o f clearing exchanges. A s an
exam ple 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 schem e is a good one for taking care of the exchanges o f the
country, and it helps the cou n try as long as we have n ot a better one.
B y its use on ly $47.80 of actual cash was required in order to handle
each $1,000,000 (of checks on the banks) that passes through the clear­
ing houses. B ut 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
b y reason of it.
O f course these exchanges should g o on w herever th ey serve the
general welfare, and since we ourselves have n ot p rovided a better
m ethod w e are under obligations to the bankers for havin g honored
and m ade current and m erchantable our ow n credit. B u t sin ce
these exchanges relate to our business and are used directly b y m ost
o f us at som e time, and indirectly b y all o f us all o f the time, we should
establish a system that will give us the least costly service. T h e main
thing for us to d o is to elim inate m ost o f the interest charges and m ake
it practicable for the hum an fam ily to thrive b y industry b v having
industry available to all people* w ho wish to be and are industrious.
T hat does n ot mean that the banks should be superseded b y new e x ­
change agents, but it does mean that the banks should be required
to adjust to a new system -th at will cost the people less. I t means
also that there w ould be few er banks, because under any econ om ic
system of exchange there w ould be no m ore necessity "for several
banks in cities o f less than ten or tw en ty thousand people than there
w ould be a need for several post offices in tow ns o f that size.
Let us take up the discussion from still another view point in order
that no one shall possibly misunderstand. Money*as such is n ot a
/thing o f prim e necessity. It is m erely a convenience w hich e u a b ta




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CH A N G E S IN T H E B A N K IN G AND CU RRE N CY SY STE M .

us to m ake such exchanges as we m ay wish w ith ou t the cum bersom e
handling o f property.

The banks have taught us to use chccks 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 banker:* 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 SI ,500,000,000, two-thirds
of it or more is lying dead in their vaults as reserves and is never used.
W e are under obligations to the banks for teaching us this e con om y
in the use o f m on ey and credit. B ut, after all, as we observed before,
the credit is su pported and m aintained b y the resources o f the people
and the daily application o f their energy. The banks have sim ply
filled the office oi m aking it current and m erchantable. W e do not
ow e that tribute to the bankers, and, thanking them for the good that
th ey have done, but for which they have been overpaid, we are now
prepared as a people in our national ca p acity to pass the necessary
laws and to perform the governm ental fun ction laid dow n b y the
Constitution, “ T o coin m oney, regulate the value th e re o f” (and “ o f
foreign c o in ” when used in our cou n try) in behalf o f all the people
o f these U nited States. W e should profit b v the exam ple o f the
banks in co p y in g som ew hat after som e parts o f the system th ey have
used fo r m aking exchanges, but as a G overnm ent we ought to furnish
the advantage to all o f the people on equality and with the least
expense practicable. The G overnm ent can do what the banks are
d oin g and save to the people as m uch as the banks m ake in excessive
dividends, besides the still greater profits that are m ade on specula­
tion on the side.
The G overnm ent shall “ coin m oney and regulate the value there­
o f.” That is the con stitutional provision. The great spec ial inter­
ests have been sticklers for follow ing the C on stitu tion whenever it
has blocked the w ay to the people’s progress if that m ight in any w ay
interfere with the practice o f tne interests, but w henever the special
interests find it to their advantage to follow any practice profitable
to them , the fact that such practice m ay be in con traven tion to the
Constitution and the laws does n ot in the least embarrass or hinder
them , as long as the people do n ot invoke the law. W hen the people
d o. every possible dilatory ta ctic is resorted to b y the interests to
delay com pliance. The consequence has been that the C on stitution
has often been used as an instrum ent to prevent the people from
enforcing their rights.
“ Sound m o n e y ” will be the song that will be sung to y o u b y every
a dvocate o f the special interests. I have shown, and they have
already stated ana proved , that w hat th ey have in the past called
“ sound m o n e y ” is n ot “ sou n d .”
B y d oin g that th ey aid me. B y
that admission they disclose the fact, and it is a fact, that th ey have
defrauded all o f the people b y their so-called “ sound m o n e y .” Their
kind o f sound m on ey has enabled them to becom e w ealthy and inde­
pendent, b u t it has prevented the people generally from d oin g what




CH AN GES IN T H E B A N K IN G

a

ND CU RRENCY SYSTEM .

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 buy­
ing 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 thereby
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 pro­
portion to the service they may render to the people, and no one
should complain when absolute justice is to be done. As a conse­
quence 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 ques­
tion 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 will buy the exact equiv­
alent 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 tho 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 com­
mercial 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 indis­
putable 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




166

CH ANGES IN T H E B A N K IN G AND CU RREN CY SYSTEM .

from the people. Money is the means of exchange among all peo­
ple. 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 com)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
niles 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 qi 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 w
rhat 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
et 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. L i n d b e r g h .

1

N o t e .— At the last meeting o f the com m ittee m y ob jection s as to
the amount of reserves required were met b y am endm ents. There­
fore my objections as to the reserve requirements are rem oved.
C. A. L in d b e r g h .




O

Calendar No. 107.
63d t

SENATE.

1st

JRept. 133,

( Part 1.

B A N K IN G AND CU RREN CY.

November 22, 1913.—Ordered 16 be printed with the individual views of the
members of the committee.

Mr. Owen, from the Committee on Banking and Currency, submitted
the following

REPORT.
[To accompany H. R. 7837.]

The Committee on Banking and Currency, to which was referred
the bill (H . R. 7837) to provide for the establishment of Federal
reserve banks, for furnishing an elastic currency, affording means of
rediscounting commercial paper, and to establish a more effective suervision o f banking in the United States, and for other purposes,
aving considered the measure, report the same to the Senate with­
out recommendation.

E




Calendar No. 107.
63d C o n g re s s , j

1st Session.

SEN ATE.

I R e f t . 133,
P a rt 2.

\

|

BA N K IN G AN D CURREN CY.

November 22, 1913.—Ordered to be printed, with the individual views of mem*

bers of the committee.

Mr.

(for himself, Messrs. O 'G o r m a n , R e e d , P o m e r e n e , S h a f and H o l l i s ) , from the Committee on Banking and Currency,
submitted the following
O w en

roth ,

V IE W S .
[To accompany.H. R. 7837.]

The chairman (Mr. Owen), on behalf of himself and his colleagues,
Messrs. O ’Gorman, Reed, Pomerene, Shafroth, and Hollis, submit,
the following memorandum:
The Committee on Banking and Currency, to which was referred
the bill (H . R. 7837) to provide for the establishment o f Federal re­
serve banks, etc., received the bill on September 18, 1913, and the
members thereof, having been unable after two months to agree upon
a report, the committee having divided into two sections, were com­
pelled, finally, to agree to report the bill back to the Senate without
recommendation from the committee acting as a committee, but
submitting separately the respective views of the two sections of the
committee.
The views of the Democratic section of the committee are embraced
in the House bill, with certain interlined amendments submitted
herewith (Exhibit A ), and the following observations are made to
explain the origin and principles o f the measure, give a general out­
line o f the changes which have been proposed in the House bill, the
reasons therefor, etc.
AN OUTLINE OF THE INVESTIGATION MADE AFFECTING THE PRINCIPI^ES
AND CONSTRUCTION OF THE PENDING MEASURE.

So many persons have been under the impression that Congress
was inclined to act without sufficient consideration of the pending
measure and the principles involved in it, that attention is called to
the work which has been done preliminary to the drafting o f the pres­
ent bill.




3

4

B A N K IN G

AND C U R R E N C Y .

It has been long understood that the American banking system
was seriously defective in having no adequate safeguard against
financial panic, against financial stringencies, and violent fluctua­
tions o f interest rates, so that immediately after the panic of 1907
a temporary measure providing against panic was passed by Con­
gress in the Vreeland-Aldrich Act, approved May 30, 1908. This
Bill established the National Monetary Commission. The act gave
authority and instruction to the commission as follows:
It shall be the duty of this commissi m to inquire into and rei>ort to Con­
gress, 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 ses­
sion or recess of Congress ;it such times and places m s they may deem desirable;
to send for persons and papers; to administer oaths, to summon and compel
the attendance of witnesses. * * * 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 com­
mitted to their charge as they shall deem necessary.

Under this instruction the National Monetary Commission con­
ducted the most extensive and far-reaching investigation of the
banking systems of the entire world, and published a series of re­
ports including over 30 volumes and a vast compilation of literature
involving over 2,500 volumes, and finally resulting in the recom­
mendation of a central bank, privately controlled, which was sub­
mitted to the Senate of the United States under the title of U bill
A
to incorporate the National Reserve Association of the United
States, and for other purposes.” (Vol. I, p. 43.) This bill was intro­
duced during the preceding Congress and was not considered. It
was, however, reintroduced in the present Congress (63d Cong., 1st
sess, S. 7) on April 13, 1913, and has been commonly referred to as
“ the Aldrich bill.”
This bill provided substantially that the national reserve associa­
tion should be established for 50 years with an authorized capital
equal to 20 per cent o f the capital of all banks eligible for member­
ship with one-half paid in. It was provided that the Secretary o f
the Treasury, the Secretary of Agriculture, the Secretary o f Com­
merce and Labor, and the Comptroller o f the Currency, snould be a
committee to organize the national reserve association. It was to
have a capital of $200,000,000 and 15 branches in 15 districts o f the
United States. Each branch was to be controlled by a board o f di­
rectors chosen by the member banks, with power to make by-laws,
etc., and the central national reserve association was to have 39 direc­
tors elected by the directors of the 15 branches, and 7 additional ex
officio members o f the board of directors, to wit, a governor o f the
national reserve association, 2 deputy directors, the Secretary o f the
Treasury, the Secretary o f Agriculture, the Secretary o f Commerce
and Labor, and the Comptroller o f the Currency, so that the Gov­
ernment had 4 representatives out of 46 members o f the board of
directors of the national reserve association. An executive com­
mittee of 9 members was provided with 1 representative o f the
Government, the Comptroller o f the Currency, ex officio a member.
Each branch bank was to have a manager and a deputy manager,
appointed by the governor of the association.




B A N K IN G AN D C U R R E N C Y .

5

The earnings o f the association were to be 4 per cent annual divi­
dend, cumulative, a 20 per cent surplus provided, and a division of
the remainder between the United States and the shareholders.
The Veserve association was made the principal fiscal agent o f the
United States. Provision was made for rediscounting notes and
bills o f exchange drawn for agricultural, industrial, and commercial
purposes, having a maturity of not more than 28 days. The reserve
association was given various powers to deal in gold coin or bullion,
to purchase from subscribing banks bills of exchange, open foreign
banking accounts, transfer deposit balances from one bank to
another, etc.
It was required to keep 50 per cent reserve against demand liabili­
ties, including deposit and circulating notes, with a tax upon any
reserve deficiency.
It was authorized to purchase for a limited time the 2 per cent
bonds of national banks, assume the redemption of the notes of such
banks, and issue its own notes in lieu of such national-bank notes.
It was authorized to have a cover for such note issues, either of 50 per
cent of cold or other money of the United States, or bills of exchange
arising out of commercial transactions, as defined by the act. These
notes could be issued up to nine hundred millions without a gold
cover under a special tax of l.\ per cent, and any notes in excess of
$1,200,0(X),000 not covered by gold or lawful money could be taxed
at 5 per cent, provided that the outstanding national-bank notes
should be computed as a part of such issue. Its circulating notes
,wcre to be redeemed in lawful money and maintained at a parity.
The circulating notes of this association were to be received at
par in payment of all taxes, excises, and other dues to the United
States, and of alTsalaries and other debts and demands due by the
United States, except obligations specifically payable in gold, and for
all debts due from or by one bank or trust company to another, and
for all obligations due to any bank or trust company.
The 2 per cent bonds purchased were to l>e exchanged for 3 per
cent bonds payable in 50 years, and the association was to hold
such bonds during its corporate existence, with the right, at the option
of the Secretary of the Treasury, to sell fifty millions of such bonds
annually after five years. It provided for the establishment of
branches of banks to do a foreign banking business.
The Government of the United States was required absolutely to
deposit all of its general funds with the national reserve association
and i t s branches, a f t e r Ib e organization of the association, and there­
after a l l receipts of the Government except its trust funds.
Tips hill was made a matter of general debate throughout the
United States, was vigorously pressed by the friends of the meas­
ure. and discussed in all of the large cities of the Nation. It was
indorsed by the American Hanking Association, but. after abundant
discussion, was condemned by the Democratic national convention at
Baltimore on July 3, 1912, in the following language:
W e oppose (lie so-called A ld rich hill or the establishment o f a central h a n k :
and w e believe the people o f the co untry will he largely freed from panic mid
subsequent unemploym ent and business depression by such a syste m atic re­
vision o f ou r bankin g la w s as will render temjMirary relief in localities w here
such re lief is needed with protection from con trol or dom in atio n by w hat is
kn own as the Money Trust.
2 ( ) 36 (*> 0 — 58 ---------- 12




6

BANKING AND CURRENCY.

T h e obviou s reason fo r p u blic d isa p p rova l o f this b ill was that the
com p a ra tiv e independence o f the variou s districts o f the cou n try was
ign ored , the con centration o f b an k in g p ow er was very extrem e, and
fin ally it placed the n ational cred it system in the con trol o f private
persons, w ithout any adequate supervision o r con trol b y the G o v ­
ernm ent o f the U nited States, and p rop osed to a llow these banks to
issue the curren cy o f the cou n try as private corp oration s.
THE PUJO INVESTIGATION.

U n d e r H ouse resolutions 439 and 504. S ix ty -S e co n d C ongress, second
session, the so-called 44M oney T ru st in v e stig a tio n ” was con du cted b y
th e H ouse o f Representatives, b eg in n in g M a y 16, 1912. T hese hear­
in gs were published in 29 parts, con sistin g o f thousands o f pages,
a n d w ith a m ost illu m in a tin g report sh ow in g the existence, sub­
s ta n tia lly, o f a vast concen tration o f p ow er in the hands o f a few
m en over the cred it system o f the U nited States.
THE GLASS INVESTIGATION.

These investigations were further continued by a subcommittee o f
the Committee on Hanking and Currency o f the House o f Represen­
tatives, beginning on Tuesday, January 7, 1918, and directed by Hon.
Carter Glass, chairman, according to the leading bankers and
finencial experts o f the country extended hearings, comprising a
volume o f 745 pages of printed testimony.
In addition to these extensive examinations by the National Mone­
tary Commission, the Pujo investigation, and the Glass investiga­
tion various representatives o f the American Banking Association
were in frequent consultation with Chairman Glass o f the House
Committee on Banking and Currency, with the chairman o f the
Senate Committee on Banking and Currency, with the Secretary o f
the Treasury, and others who were concerned in the primary framing
o f the pending measure, so that the plea of some o f the interests
opposing the bill that the matter had not l>een properly investigated
had no just foundation o f fact. But in addition to these investiga­
tions and discussions the bill, when finally introduced in the House
o f Representatives, was discussed for many weeks in the Committee
on Banking and Currency o f the House, in the Democratic con­
ference. and for .many days in the House o f Representatives, finally
passing September 17, 1913.
THE SENATE INVESTIGATION.

Anticipating the action o f the House o f Representatives upon this
bill, the Committee on Banking and Currency o f the United States
Senate l>egan hearings on the bili September 2, 1913, holding their
sessions from 10 o'clock in the morning until 5 and 6 in the even­
ing and listening to various representatives o f the American Bank­
ing Association, o f credit associations, o f business men, and o f
financial experts. These hearings when concluded and presented^ to
the Senate in Senate Document Xo. 232. Sixtv-third Congress, first
session, on Xovemlwr 0, 1913, in three volumes, with index, make




BANKING AND CURRENCY.

7

3,259 pages. It is therefore obvious that great pains have been taken
by the authorities o f the United States and by the committees in
(Congress to proceed with the greatest caution and upon the fullest
information in the adjustment o f this very important measure.
When the hearings before the Senate Committee on Banking and
Currency were concluded, the members o f the committee discussed
the bill for over two weeks, finally agreeing to submit their separate
views in the form o f the House bill, H. R. 7837, with certain amend­
ments thereto, representing the respective views o f the two sections
o f the committee.
Both sections o f the committee, however, agreed on the great
fundamentals o f the bill—that is :
First. On the necessity for greater concentration o f tlie banking re­
serves o f the country.
Second. The volume o f such reserves.
T h ird . T h e volum e o f the capital o f the proposed banks.

Fourth. The mobilization o f such reserves.
Fifth. The promotion o f an open discount market
J Sixth. The provision for elastic currency; the issuance o f Federal
reserve notes.
Seventh.. That the Federal reserve notes should be the obligations
o f the United States.
Eighth. That the system should be the regional Federal reserve
bank system instead o f a central bank; and
Ninth. The control o f the system itself by the Government.
The two sections o f the committee disagree upon the number
o f the Federal reserve banks, the method o f subscribing for the stock
o f such banks, the method o f electing the directors o f such banks, the
method o f administering the regional reserve banks, and these d if­
ferences arise, in the main, because o f two schools o f thought, one part
o f the committee believing in a central batik administered by a central
board and the other part o f the committee proposing Jo establish a
number o f comparatively independent district banks administered
by boards o f directors chosen from and representing the several
districts, but under the strict supervisory control of the Government.
The interests or the public are thus protected by Government super
vision, and the vast and intricate technical detail o f bank adminis­
tration being placed in the hands o f the bankers whose funds and
whose business is involved.
T IIK PURPOSES o r T IIE B A N K IN G AN1> CI KHKNCY B IL L.

The chief purposes o f the banking and currency bill is to give
stability to the commerce and industry o f the United States, prevent
financial panics or financial stringencies; make available effective
commercial credit for individuals engaged in manufacturing, in com­
merce. in finance, and in business to the extent o f their just deserts;
put an end to the pyramiding o f the bank reserves o f the country
and the use o f such reserves for gambling purposes on the stock ex­
change.




8

B A N K IN G AND C U R R E N C Y .

In ord er to accom plish these results there are certain great fu n d a ­
m entals recognized by all experts as essential and necessary, to w it:
First. T h e p rop er concentration o f the bank reserves o f the cou n try
under the con trol o f the banks themselves, safegu arded by g o v e rn ­
m ental supervision.
Second. A suitable bankin g capital as a m argin o f safety.
T h ird . P la cin g the larger part o f the G overnm ent fu n d s w ith such
banks, where they m ay be used in the service o f the national com ­
merce.
Fou rth . A u th orizin g the issuance o f elastic currency against liquid
com m ercial bills under proper safeguards.
F ifth . E stablish in g an open market fo r liquid com m ercial bills, b y
p ro v id in g through the reserve banks a constant and u n fa ilin g m arket
fo r such bills at a steady rate o f interest.
Sixth . F in a lly , protectin g the gold reserve o f the U nited States
b y the same m ethods adopted in E urope, to w it, raisin g the rate o f
interest th rou gh the Federal reserve banks and authorizin g such
banks to acquire foreign bills when g old shipm ents are anticipated
and takin g other precautionary measures.
T H E M E C H A N IS M OF T H E FEDERAL RESERVE B A N K SY ST E M .

These im portant national ends are proposed to be obtained by
the m echanism o f eight Federal reserve Danks organized w ith a
capital equal to 0 per cent o f the capital and surplus o f the N ational
and State banks in the several districts.
T h e eight districts are proposed to be laid off by an organization
com m ittee, w ho shall organize a Federal reserve bank w ith head­
quarters in a central city o f each district, each bank to establish as
m any branches in its district as may be fou n d expedient.
I t is proposed that each Federal reserve bank shall have nine
directors, six elected by the banks and three chosen by the F ederal
reserve board.
T h e onUr<iLJ$ystein is proposed to be under the supervisory co n ­
trol o f the F ed eral reserve board, consisting o f the Secretary o f the
Treasu ry and six other members o f such ooard appoin ted b y the
President and confirm ed by the Senate.
T h e Federal reserve board is given very broad pow ers o l.s u p e r ­
vision and'TsTassisted"by a Federal advisory council, consisting o f
one representative from each o f the Federal reserve banks.
T h e details o f the organization and the p rin cip les o f the bill w ill
be hereinafter m ore fu lly set forth .
FEDERAL RESERVE DISTRICTS.

T h e Federal reserve districts are proposed to be organ ized by the
Secretary o f the Treasury and not less than tw o members o f the
Federal reserve board (sec. 2 ) , w ho shall sum m on expert aid and
take testim ony and lay out such Federal reserve districts, eight in
num ber, a ccord in g to the convenience and custom ary course o f busi­
ness, design atin g the city in which the d istrict Federal reserve bank
shall be located (p . 2 ).
W h en the districts shall have been laid out and the city deter­
m ined in w hich such Federal reserve, banks shall be located, five




BANKING AND CURRENCY.

9

o f the subscribing banks in such district are authorized to take out
a charter in the same manner and with similar powers as a national
bank (pp. 11 to 14), except that the business o f the Federal reserve
bank is confined to member banks and other Federal reserve banks
and to the United States except its open market operations, which
may be with any responsible concern.
These banks are given, as a part o f the charter rights, the right
to issue Federal reserve bank notes against United States bonds in
the same manner as a national bank, the purpose being to' permit
said banks to absorb as much o f the 2 per cent bonds as the national
banks may care to dispose of.
STOCK SUBSCRIPTION.

The amount o f possible stock is placed at a sum equal to 6 per
cent o f the capital and surplus of national banks and State banks
and trust companies, exclusive o f savings banks, a possible total of
about $150,000,000, one-half o f which will be required to be paid
in during a period of six months after the organization of said
banks and one-half subject to call, with a double liability resting
upon the subscribers against the amount subscribed.
The reasons for requiring the banks to subscribe to this stock with
a double liability are—
First. To protect the large deposits of general funds which the
United States will probably place with such banks.
Second. T o protect the United States against the extension of
credit through the Federal reserve notes, the obligations of the United
States, loaned to the Federal reserve banks against commercial bills.
Third. To safeguard the system itself, to protect the large volume
of reserves placed with such banks, and give to such banks the confi­
dence o f the world.
Fourth. To justify the Government in putting on the banks the
prime responsibility o f administering these banks and safeguarding
their own reserves and their owT capital stock, and making them
n
responsible to the country for safeguarding the welfare of the na­
tional banking system, protecting the national gold supply under the
safeguard of governmental supervision.
Every national bank located in a given district is required within
60 days after the passage o f the act to signify its acceptance of the
terms o f the act, and every State bank eligible for membership is
permitted to signify its assent in like manner.
Anv national bank within such district failing to signify its assent
may be discontinued as a reserve agent upon 30 days’ notice by the
organization committee or the Federal reserve board. And should
any national bank within one year after the passage of the act fail
to become a member bank o f the system, it is required to cease to act
as a national bank.
In the contingency that the capital stock is not fully subscribed
by the banks o i a given district, provision is made (p. 7) to offer
such stock to public subscription, and on the contingency that such
stock is not subscribed by the public the balance o f the necessary
capital may be allotted to the United States and sold by the Govern­
ment at proper times and places.




BANKING AND CURRENCY.

10

A ll stock held by the public or by the Government will be voted by
the directors o f the Federal reserve bank o f class C, representing the
Government.
CONTROL OF THE FEDERAL RESERVE BANKS.

Each Federal reserve bank will be controlled by a board o f nine
directors—three o f class A, elected by the banks; three o f class B —
business men— elected by the banks; and three o f class C, appointed
by the Federal reserve board to represent the United States.
One director o f class C will be a Federal reserve agent and chair­
man of the board, and one a deputy Federal reserve agent and dep­
uty chairman, representing expressly the interests o f the United
States at such bank and issuing Federal reserve notes to the reserve
bank, holding the security therefor, and receiving such notes for
safe-keeping when returned by the bank.
PROBABLE RESOURCES OF FEDERAL RESERVE* BANKS.

The capital stock o f 25,195 banks in the United States, including
savings banks, amounts to $2,010,000,000; surplus, $1,585,000,000. Six
per cent o f this sum would be something over $200,000,000, and the
total liability would make over $400,000,000. Assuming that one-half
o f these concerns enter the system, it would give a capital of
$100,000,000, witli over $50,000,000 paid in.
The total reserves which would be paid into the Federal reserve
banks by 7,120 national banks, outside o f reserve or central reserve
cities, would be $166,000,000 (Exhibit B, p. 1) ; from 315 reserve
city banks, $110,000,000; and from 52 central reserve city banks,*
$96,000,000, which, including an estimated deposit o f $150,000,000
from the Government, would make an amount equal to $672,00,000.
I f the State banks and trust companies come m, omitting the sav­
ings banks, it would add $279,000,000 o f reserves and $21,000,000 o f
capital stock (Exhibit B, p. 6 ), making a total o f $972,000,000.
These funds would not include any optional deposits that might be
voluntarily placed with the Federal reserve bank by member banks.
DIVISION OF EARNINGS.

It is proposed in the pending bill to give the stockholders $ per
cent dividends, lay up a surplus o f 20 per cent, and give the United
States the additional earnings. The policy of limiting the dividends
to 6 per cent is based upon the theory that these great public utility
banks are not intended to be merely money-making banks, but that
they are guardians o f the public welfare, primarily safeguarding the
member banks, protecting their reserves, safeguarding their credit,
protecting them from panic or financial stringency, and being always
prepared to furnish them with accommodation at a reasonable rate of
interest. But these Federal reserve banks will also be charged with
the duty o f protecting the national gold reserve, protecting the
national commerce, and in this way give stability to the manufactur­
in g , industrial, commercial, and transportation enterprises o f the
United States. For this reason these banks ought to have no other




B A N K IN G AND C U R R E N C Y .

11

motive than the public welfare, and the moving policy of the banks
^ o u ld noTBe to earn as mucK~<lividends as the commerce of the coun­
try could endure, but to protect our national commerce and our
national-banking system at a fair profit.
STATE B A N K S AXI> TR U ST C O M PA N IE S.

The bill (pp. 5 and 27) invites the State banks to become members
where the capital stock, sound condition, subscription, and com­
pliance with the rules of the system justifies. The State banks and
trust companies, however, will be subjected to the same rules govern­
ing the national banks in regard to the limitation o f liability which
may be incurred by any one person to such banks, the prohibition o f
maxing purchase o f or loans upon the stock of such banks, or with­
drawal or impairment of capital, the payment o f unearned dividends,
the making o f reports to the comptroller, and the right o f examina­
tion o f such banks, as if they were national banks, with the right,
however, to accept the State examinations in lieu o f the comptroller’s
examination where such examinations are satisfactorily made.
B A N K E X A M IN A T IO N S .

Under the proposed svstem the bank examinations are made much
more carefully, the bank examiners put on salaries (p. 60). Loans,
gratuities, or commissions are forbidden to either bank examiners
or to officers or directors of member banks.
B A N K RESERVES.

Very important changes are made in the matter of bank reserves
(p. 59) by requiring the withdrawal o f the legal reserves from other
national banks after a period of three years, making the change that
the country banks are required to keep 12 per cent o f their demand
liabilities and 5 per cent of their time deposits as reserves—twotwelfths in the Federal reserve bank for 14 months, and thereafter
five-twelfths— leaving seven-twelfths after three years to be optionally
kept either in the bank's own vaults or in the Federal reserve bank
(p. 62). The reserve city banks are required to keep 18 per cent of
their demand liabilities and 5 per cent o f time deposits: threeeighteenths o f such reserve for the first 14 months being kept in the
Federal reserve bank, and thereafter six-eighteenths of said reserve,
leaving twelve-eighteenths of such reserve to be kept after three
years either in the bank's own vaults or in the Federal reserve bank,
at its option (p. 63).
The central reserve city banks are required to maintain a reserve
equal to 18 per cent o f their demand liabilities and 5 per cent of their
time deposits; for 14 months three-eighteenths of such reserves and
thereafter six-eighteenths of such reserves with the Federal reserve
bank, leaving twelve-eighteenths optional to be kept in the bank’s
own vaults or with the Federal reserve bank.
The State banks are permitted to keep their surplus legal reserves
for three years with other State banks if the State law requires.




12

B A N K IN G AND C U R R E N C Y .

It is proposed that the reserves of the Federal reserve banks shall
be not less than 35 per cent o f gold or lawful money against their de­
mand liabilities or Federal reserve notes in circulation (pp. 48 and
65.)
Some o f the banks have objected that they would lose 2 per cent
interest on so much of the deposits as they keep with the Federal re
serve bank, and they seem to think they would not be sufficiently com­
pensated by the obvious benefits o f the Federal reserve banking
system.
The answer to such objections is that the compensations in a
financial
will far more than outweigh the loss o f the 2 per cent
interest, while the stability o f the business o f the bank, and tne peace
o f mind it will give to the bankers in having freedom from constant
anxiety, would more than compensate them, even if the financial ad­
vantages did not do so. The financial advantages are obvious—
First. The capital stock put into the system will be merely a trans­
fer o f funds obtained by taking a certain, portion o f the present de
posits (however invested) into the form of this capital stock, earning
G per cent net, free from tax, making the earning on such stock be­
tween 7 and 8 per cent, which is a higher return than any bank can
possibly average upon its deposits.
Second. The reserves placed with the Federal reserve banks would
not bear interest under the present bill (although this may possibly
be found expedient at some future time when the system is estab­
lished), but an average bank with a hundred thousand dollars
($100,000) capital and $550,000 average individual deposits, if it car­
ried 5 per cent of its deposits as reserves with the Federal reserve
bank, would carry only $27,500 with the Federal reserve bank, which
it might use, if it saw fit, as a checking account for exchange purposes
if it kept the account up to the required standard.
The earning power on $27,500 at 2 per cent would only be $550,
and since the bank could borrow back an equal sum, at probably 4
per cent and lend it at G or 8 per cent, it could earn as much or more
out o f such rediscount as the interest at 2 per cent amounts to.
But it has a far larger earning power, because, under the old sys­
tem, where every bank had to protect itself by keeping a high in­
dividual reserve, the country banks have carried on an average o f
over 21 per cent, and under this system they would have available the
difference between 12 per cent legal reserves and 21 per cent actual re­
serves, which, on the deposits of an average bank of $550,000, would
amount to $49,000, and which they could lend at G per cent instead of
2 per cent, as at present, giving such bank an additional earning
power of $1,980 above its present earning power, if it saw fit to use
these surplus reserves which they now carry, because of the fear o f
panic and financial stringency.
A very important consideration, however, would result from this
impro\ed system in giving an increased public confidence in the banks
and which would attract a considerable amount of money which is
not now deposited in banks at all and would thus enlarge the deposits
o f the bank and enlarge substantially their money-earning power.
Another important financial advantage to the bank would be that
the larger use o f their reserves would also result in an enlargement
o f deposits, entirely justified and on- a safe basis, which would give
them increased earning power. It is extremely short-sighted for a




13

BANKING AND CURRENCY.

bank to imagine that its financial earnings would be in any wise
harmed by the proposals o f this measure. A very great psycholog­
ical advantage is in giving peace o f mind to the entire banking world,
so long as business is conducted upon an honest, sensible basis.
PROBABLE READJUSTMENT OF CASH UNDER REQUIREMENT OF THE FEDERAL
RESERVE ACT.

If all national banks enter the system and subscribe at the rate of
6 percent of their capital ($1,056,345,786) and surplus ($725,333,629),
or $106,900,764.90, paying one-sixth in cash, one-sixtK in three
months, and one-sixth in six months, the Federal reserve banks will
have in six months a paid-up capital of $53,450,382, to which should
be added about $150,000,000 of Government funds, which will be
deposited with the Federal reserve, banks, making a total of $203,450,382 cash, of which two-thirds could be used for discounting.
The relative proportion of subscription to the Federal reserve bank
is as follows: Country banks, 55 per cent; reserve city banks, 26
per cent; and central reserve cities, 19 per cent.
Assuming that the banks will immediately avail themselves of the
discounting privilege to the extent of one-third of this fund in the
Federal reserve banks, the country‘ banks will be entitled to 55 per
cent of (one-third of $203,450,382) $67,816,794 = $37,299,236; the
reserve city banks 26 per cent, or $17,632,366; and the central reserve
cities 19 per cent, or $12,SS5,190.
Should the banks avail themselves of this privilege to the extent
of one-half of this fund, the country banks will be entitled to 55 per
cent of (one-half of $203,450,382) $101,725,191 =$55,948,855; the
reserve city banks 26 per cent, or $26,448,549, and the central reserve
city banks 19 per cent, or $19,327,787.
In the event the banks should avail themselves of the discount
rivilege to the extent of two-thirds of the fund in the Federal reserve
anks, the country banks would be entitled.to 55 per cent of (twothirds of $203,450,382) $ 135,033,588 -$74,598,472; the reserve city
banks 26 per cent, or $35,264,732, and the central reseivc city banks
19 per cent, or $25,770,380.
r he reserve requirement and the probable .readjustment of cash
l
in the several classes, respectively, under the Federal reserve act are
as follows:

K

7,120 banks not in a reserve or central reserve city.
UKSKKVKS.

12 per cent of demand liabilities (*3,1*6,329,730.27)................................................................. ^ZS'iSS’ SE’ K
5 per eent of time deposits ($459,377,757.19).............................................................................
22,968,887,80
Total.............................................

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

Optional, in own
vault, in Federal

^
('ash in the Itanks’ Cash in the Federal
reserve bank.
own vault.

oank.

|

j ^

I
first 14 months_
_
Hetween 14 and
months...............
After 36 months__

4/12—$133,109,485

V12-» 106,3*0,855
5/12-166,386,<855




reserve
city bank.

6/12—1199,664,228

2/12- «66,554,742

4/12- 133,109,485

399,328,455.49

7/12—9232,941,597

3/12- 99,832,114

14

BANKING AND CUBRENCY.
PROBABLE R E A D JU S T M E N T OF C A S H . C O U N T R Y B A N K S .
(First 14 months.)

Cash oil hand (Aug. 9, 1913) specie and legal tender..............................................*250,702,980
Cash available by discount of commercial paper i one-third i*as.s»....................... 37,299,236
Cash required for stock subscription to Federal reserve banks............................................
C'ash reserve required in own vault ( four-t welft hs •
...............................................................
Cash reserve required in Federal reserve banks itwo-twelfths)...........................................
Cash surplus..............................................................................................................................

$29,397,710
133,109,485
66,554,742
1 58,940,279

2**, 002,216

288,002,216

One-third bads.— Between 14 and 36 months, amount reserve re­
quired in the Federal reserve banks is increased three-twelfths, or
$99,832,114, making a deficit of $40,891,835, and after 36 months,
three-twelfths additional, or $99,832,114. must be kept either in
Federal reserve banks or in banks* own vaults, making the total
deficit after 36 months $140,723,949.
One-half basis — Should the banks discount to the extent of onehalf of the available fund in the Federal reserve banks (i. e., capital
stock and United States funds) this deficit will be reduced by the
difference between $37,299,236 (one-third basis) and $55,948,855 (onehalf basis), or $18,649,619, leaving a deficit of $122,074,330.
Two-thirds basis.— If the banks discount to the extent of twothirds of the fund in the Federal reserve banks, the deficit will be
reduced by the difference between $37,299,236 (one-third basis) and
$74,598,472 (two-thirds basis) or $37,299,236, leaving a deficit of
$103,424,713.
315 reserve city banks.
RKSKRVKS.
18 per cent of demand liabilities ($1,821,413,780.14)...................................................................$327,854,480.43
5 per cant of tinto deposit s (WO,233,520.52).................................................................................
3,011,676.03
Total....................................................................................................................................

330,866,156.46

| Optional, in own
Cash in the banks' Cash in the Federal
own vaults.
reserve l*aiiK.

First 14 months............. 6/18-$110,288,719
Betw^n 14 and 30
months....................... 6/18- 110,288,719
After 36 months...............................................

DanK*

r 1 reserve bank, re! serve city bank, or
j in central reserve
I
city bank.

3/18-$55,144,359 ................................. | 9/18-$165,433,078
I
6/18-110,28*.71< .................................! 6/18- 110,288,719
»
6/18-110,28K 719 12,18-$220,577,438 .................................

PKOHAIILK RKADJCSTMKNT OF CAS1I.
(First 14 momt,*.)
Cash on hand (Aug. 9,1913) specie and lecal tender..............................................$240,947,005
Cash available by discount of commercial paper (one-third basis)......................
17,632,366
( ‘ash required for -stock subscription to * ederal reserve banks............................................
< ash reserve required in own vault (six-eighteent hs •
...........................................................
< ish reserve required in Federal reserve bajiks (three-eighteenths.*...................................
< ash surplus...............................................................................................................................

$13, 897,099
1 io, 288,719
55,144,359
79,249,194

258,579,371

258,579,371

One-third basis.— Between 14 and 36 months, amount of reserve
required in Federal reserve banks is increased three-eighteenths, or
$55,144,359, leaving still a surplus of $24,104,835, and after 36 months
» The above table does uot include cash from possible rediscounts of reserve put in Federal reserve banks.




BANKING AND CURRENCY.

15

an additional six-eighteenths, or $110,288,719, must be kept either
in banks’ own vaults or in Federal reserve banks, causing a deficit of
$86,183,884.
One-half basis.— Should the banks discount to the extent of onehalf of the available fund in the Federal reserve banks, this deficit
will be reduced by the difference between $17,632,366 (one-third
basis) and $26,448,549, or $8,816,183, leaving a deficit of $77,367,701.
Two-thirds basis.— If the banks discount to the extent of two-thirds
of the funds in the Federal reserve banks, the deficit will be reduced
by the difference between $17,632,366 (one-third basis) and $35,264,732, or $17,632,366, leaving a deficit of $59,735,355.
52 central reserve city banks.
RESERVES.
$289,004,394.65
687,765.53

18 per cent of demand liabilities ($1,605,579,970.29)
5 per cent of time deposits ($13,755,310.58)___
Total...............................................................
I

289,692,160.18

I

!

Optional, in own

. i

1Cash in the banks* ICash in the Federal
j
own vaults.
i reserve bank.

6/18-196,564,053
First 14 months............
Between 14 and 36
months....................... 6/18— 96,564,053
After 36 months............j................................. '

8= $48,282,027

h in t
DanK*

serve city bank, or
central reserve
city bank.

9/18= $144,846,080

o/i**= w>,d04,ud3 ■
»
6/18= 96,564,053 112/18* 193,128,107

PROBABLE READJUSTMENT OF CASH.
(First 14 months.)
Cash on hand (Aug. 9, 1913) specie and legal tender.............................................
Cash available by discount of commercial paper (one-third basis)......................
Cash required for stock subscription in Federal reserve banks.....................
('ash reserve required in own vaults (six-e&hteenths)..................................
Cash reserve required in Federal reserve banks (three-eighteenths).............
Cash reserve required in own vault or Federal reserve banks (nine-eight­
eenths).............................................................. ...............................................
Cash surplus.......................................................................................................

1407,519,3S9
12,885,190
110,155,572
90,54>4,053
-IS,282,026
144,840,080
120,556,848
420,404,579

420,404,579

Although the percent ages of cash reserve required in the banks’ own
vaults and in the Federal reserve banks change after 14 months and
after 36 months, inasmuch as at all times the full reserve requirement
must be either in tho banks’ own vaults or in the Federal reserve
banks, the surplus cash remains the same.
One-half basis.— Should the banks discount to the extent of one-half
of the available fund in the Federal reserve banks, this surplus would
be increased by the difference between $12,885,190. (one-tnird basis)
and $19,327,787 (one-half basis), or $6,442,597, making a surplus of
$126,999,445.
Two-thirds basis.— If the banks discount to the extent of twothirds of the funds in the Federal reseive banks, the surplus will be
increased by the difference between $12,885,190 (one-third basis)
and $25,770,380 (two-thirds basis), or $12,885,190, making a surplus
of $133,442,038.




16

BANKING AND CUBBENCY.

In addition to the paid-up capital of the Federal reserve banks
($53,450,382) and the deposit o f Government funds ($150,000,000)
the Federal reserve banks will have available for discount purposes
the funds held by them as reserves of the member banks to within
33J per cent, viz:
Reserves deposited—Available for loans to member banks.
FIRST 14 MONTHS.
Amount of reserve deposited with Federal reserve banks first 14 months:
Country banks (two-twelfths of reserve requirement).................................. ........................... 166,554,742
Reserve city banks (three-eighteenths of reserve requirement)................... ........................... 55,144,359
Central reserve city Danks (three-eighteenths of required reserve)......................................... 48,282,027
Total................................... .................................................................................................... 169,981,12g

If one-third of this fund is used for rediscounting purposes, the
additional cash would amount to $56,660,376; if one-nall is used,
$84,940,564; and if two-thirds, $113,320,752.
BETW EEN 14 AND 36 MONTHS.
Amount of reserves deposited with Federal reserve banks 14 to 36 months:
Country banks (five-twelfths of reserve requirement)............................................................ $166,386,855
Reserve city banks (six-eighteenths of reserve requirement)................................................ 110,288,719
'Central reserve city banks (six-eighteenths of reserve requirement).....................................
96, 564,053
Total.........................................................................................................................................

373,239,627

Additional available cash as follows: One-third basis, $124,413,209;
one-half basis, $186,619,814; and two-thirds basis, $248,826,418.
AFTE R 36 MONTHS.
Country banks (live-cwelfths of reserve requirement)................. ..................................................$166,386,855
Reserve city banks (six-eighteenths of reserve requirement)........................................................ 110,288,719
Central reserve city banks (six-eighteenths of reserve requirement)............................................
96,504,053
373,239,627

Additional available cash hs follows: One-third basis, $124,413,209;
one-half basis, $186,619,814; and two-thirds^basis, $248,826,418.
SUMMARY.

Condition of all national banks with respect'to cash after probable redistribution under
Federal reserve act.
FIRST 14 MONTHS.
jThls table does nbt include cash obtained from rediscounting reserve money in Federal reserve banks.]

National bank system.

When one-third of Fed­
eral reserve bank funds
are discounted.
Surplus.

Deficit.

When one-half of Fed­
eral reserve bank funds
are discounted.
Surplus.

Deficit,

When two-thirds of Fed­
eral reserve bank funds
are discounted.
j Surplus.

Deficit.

country banc*................ $58,940,279
Reserve city banks.......... 79,249,194
Central reserve city banks 120,556,848

*77,589,898
88.065,377
126,999,445

S96.239.515
96,881,560 i
133.442,038

tturp a s................. 2$8,746,321
Additional cash available
if reserves (9160,081,128)
of member banks are
50,660,376
used for rediscount—

292,654,720

. 326,563,113 '

84.040.564

• 113,320,753 I

Total sui plus......... 316.406,697




j

377,595,284 ...................430.883,865 J
.

!
i

BAJTXXNa AND OUBSBNOY.

17

Condition of all national banks with respect to cash qfter probable re istrib tio under
d u n
Federal reserse act— on u .
C tin ed
BETW EEN 14 AND 30 MONTHS.

National bank system.

When one-third of Fed­
eral rejerre bank funds
are discounted.
Surplus.

When one-half of Fed­
eral reserve bank funds
are discounted.

Deficit.

Country banks_________
Reserve city banks.......... $24,104,835
Central reserve city banks 120,556,848
Surplus, including all
banks .. ,. ..........

144,661,883

Deficit.

$40,891,885

144,661,683

Surplus.

Surplus.

$3,568,599

$41,737,901
133,442,088

103,770,048

137,678,247
159,920,463

i n , 586,640

159,990,463

175,179,239

137,678,247

186,619,814

248,896,418

j 324,298,061

175,179,939

= = = = =

171,586,640

420,413,058

All banks: Additional
cash available if re­
serves ($373,239,627) of
member banks are used
for rediscount................ 124,413,209 i
228,183,257

Deficit.

$22,242,216

$32,921,018
126,999,445

103,770,048

Total surplus.........

When two-thirds of Fed­
eral reserve bank hinds
are discounted.

A F TE R 36 MONTHS.
$103,424,711
Country banks.................
$122,074,330
$140,723,949
Reserve
banks______ i_______
86,183,884
77,367,701
59,735,345
Central reserve citv hanks 1120.
$133,442,038
$126,999,445
Deficit of all banks, to
29,718,018
72,442,586
balance..............
. . 106,350,985
226,107,833
Deficit, to balance, ex­
cluding cash from re­
serve discounts..............
Additional cash available i
If reserves ($373,239,627) i
of member banks are !
used for rediscount i 1124.413.000
Total surplus....................
124,413,209
Total deficit or surplus
for system where cash
is obtained from re­
discounting r e s e r v e s
as well as capital and
United States deposits . *18,062,224

226,907,833

199,442,031

163,160,056

199,442,081

163,160,066

i

72,442,586

106,350,985

29,718,018

!
18,062,224
124,413,209

|186,619,814
j
; 186,619,814

114,177,228
186,619,814

248,896,418

|219,108,400

248,826,418 j 248,826,418

|
i

i
•114,177,228 .................... <219,108,400 j....................

i

1

1 The total reserve deposits are $373,239,627; one-third equals $124,413,209; one-half equals $186,619,814;
two-thirds equal $248,826,418.
* $18,062,224 surplus is on theory of discounting one-third of capital, United States funds, and reserv es.
• $114,177,228 surplus is on theory of discounting one-half of capital, United States funds, and reserves.
4 $219,108,400 surplus is on theory of discounting two-thirds of capital, United States funds, and reserves.

All the capital could be loaned out, but only two-thirds of United
States funds and of reserves.
These figures above relate only to the national banks. The State
banks and trust companies must be provided with reserve money in
sufficient quantity to enable them to enter the system without con­
tracting loans.




18

BANKING AND CUBBBNOY.

Memorandum prepared by Robert L. Oven, thawing amount of reterve money available
by ttatment of Aug. 9 ,191S.
Demand liabili­
ties.

Time deposits.

Cash on hand, j

7,488 $6,563,335,480.70
14,011 2,444,100,836.73
1,615 2,600,505,985.19

$533,364,588.29
*636,910,746.06
• 970,855,018.71

* $899,169,374.00
» 246,247,125.00
« 285,384,815.00

Number.

i
National banks.....................
Stats banks...........................
Trust oompanies..................

Aug. 9,1913
June 4,1913
Do.

* National banks have^also. not included in thesefigures, $42,637,771 national-bank notes and 93,650,042.38
minor ooins; total, 146,287,813.38. which can not be counted as reserves under present laws.
* Represent savings deposits, time deposits not given.
* Includes 835,521,522 national-bank notes arid minor ooins.
« Includes $26,732,028 national-bank notes and minor coins.
Total reserve money, 246+ 285- 5 3 1 -6 2 - 459 millions
i,Tn, at
8tate banks............. $2,444, at 12%-1292
...............
.
636, at 5 % - 31
Total, $323
Trust companies... 2,600,at 1 8 % - 468
970, at 5 % - 48
------- Total, 516
Total requirements........................................... 839
Aotual reserve cash..................................................... 459

Own vaults..................................................... $216
In Federal reserve banks.............................. 107
Own vaults..................... ...............................
In Federal reserve banks..............................

344
172

r»l6

Gross deficit....................................................... 378
Credit oash from rediscounts one-half $279, on de­
posit Federal reserve banks ($172+107)............. 139
Total net deficit................................................ 239

The capital stock of State banks and trust companies excluding
savings banks equals $459,000,000 with a surplus fund of $271,000,000,
making a total of $730,000,000, which upon a 6 per cent basis would
’ve an addition to the capital stock of the Federal reserve banks, if
e State banks and trust companies entered it, of $43,000,000, which,
if one-half were paid in cash, would add to the initial capital stock
in cash $21,000,000 above the capital stock heretofore considered, and
would therefore add a further deficit of $21,000,000 to the total net
deficit of $239,000,000, making a total deficit of $260,000,000, as far
as the State banks and trust companies are concerned.
It is insisted, however, that this contingency is not likely to arise,
as many of the small State banks will not enter the system, and if
it did arise, it could be taken care of—
First, by discounting of the funds of the Federal reserve banks.
Second, by an additional deposit of United jBtates funds above the
$150,000,000 heretofore estimated.
Third, or finally, by the issuance of Federal reserve notes, which
should be counted as reserves for member banks if the Federal re­
serve board find it necessary.
Moreover, it might further be provided for by making the nationalbank notes available for reserve money, since they are based on Gov­
ernment bonds and are already used by State banks under the present
State laws as reserves. This contingency has been provided for by a
proposed amendment giving the Federal reserve board (p. 38, line
15) the right to authorize the use as reserves of member banks Fed­
eral reserve notes or bank notes based on United States bonds.

S




BANKING AND CTJBBHNOY.

19

FEDERAL RESERVE BOARD— ITS POWEH8.

The Federal reserve board, consisting of the Secretary of the
Treasury and six members appointed by the President of the United
States and confirmed by the Senate for terms of six years (p. 31),
are given the following powers:
POW
ERS OF THE FEDERAL RESERVE BO .
ARD
To readjust districts created by the organization committee and create new
ones.
To regulate the establishment of branches o f Federal reserve banks within
Federal reserve district in which bank is located.
To designate three (class C) o f the nine members of the board of directors o f
each Federal reserve bank, one of these to be chairman o f the board with the
title o f “ Federal reserve agent,” and one “ deputy 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 or officer o f a Federal reserve bank for cause stated.
To remove chairman o f Federal reserve bank without notice.
To establish by-laws governing applications from State banks and trust
companies.
“ Of the six persons * * * appointed (by the President), one shall be
designated governor and one vice governor o f the Federal reserve board.**
The governor, subject to supervision of the Secretary of the Treasury and
board, shall be the acting managing officer o f the Federal reserve board.
To levy a semiannual assessment upon the Federal reserve banks for esti­
mated 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 or member 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 pf any other Federal reserve bank.
To suspend for a period not exceeding 30 days (and to renew such suspen­
sion for j>eriods 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 o f officials of Federal reserve banks.
To require the writing off o f doubtful or worthless assets upon the books
and balance sheets o f Federal reserve banks.
To susi>end 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 o f
bankers' bills, etci
To review and determine the minimum rate o f discount for member banka
established by Federal reserve banks and fix weekly the discount rate reserve
banks may discount for each other.
To authorize establishment o f correspondents and agencies of Federal re­
serve banks in foreign countries.
To authorize the issue o f Federal reserve Treasury notes.




BANKING AND CUBXM G Y.

(2 0

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 banks to maintain deposits in Treasury o f United
States in gold o f 5 per cent o f notes issued.
To grant in whole or in part or to reject entirely the application from Federal
reserve banks for notes.
To establish rate o f interest on notes issued.
To prescribe regulations for substitution o f collateral.
To make and promulgate regulations governing the transfer o f funds among
Federal reserve banks.
To act, if desired, ns clearing house for Federal reserve banks.
To require, in its discretion, Federal reserve banks to act as clearing houses
for shareholding banks.
To require extra examinations o f national banks when deemed necessary.
To determine and report annually to Congress fixed salaries o f all bank ex­
aminers.
To assess upon banks in proportion to assets or resources the expenses of ex­
aminations.
To fix
date for such assessment.
To arrauge for special or periodical examinations of member banks for ac­
count o f Federal reserve banks.
To receive from Federal reserve banks information concerning the condition
e f any national bank in its district.
To order examinations o f national banks in reserve cities as often as neces­
sary.
To add to the list o f cities in which national banks shall not be i>ermitted to
loan on real estate as described.
To receive applications from national banks haviug $1,000,000 or more capital
for the establishment o f branches in foreign countries, to reject or accept «ucli
applications, and to prescribe conditions under which such branches may be
opened.
To require examinations o f foreign branches as it may deem best.
(Pp. 31-38, 40, 45.)

a

FEDERAL ADVISORY COUNCIL.

In ord er to keep the Federal reserve board in intim ate touch with
the ban k in g business o f the cou n try, the Federal a dvisory council Is
established, con sistin g o f one representative fro m each Federal re­
serve bank w ith p ow er to con fer d irectly w ith the Federal reserve
'board, make p rop er representations and recom m endations, call fo r
in form ation , etc. (p . 39). M any o f the b ig banks quite u rgently in ­
sisted that the bankers should have representation upon the Federal
reserve board. T h is was denied fo r the obvious reason that the fu n c­
tion o f the Federal reserve board in supervising the b an k in g system
is a governm ental fun ction in w hich private persons o r p rivate in ­
terests have no right to representation except th rou gh the G ov ern ­
m ent itself. T h e precedents o f all civilized governm ents is against
.such a contention. It was believed that the F ederal reserve board
itself, consistin g entirely o f officers o f the G overnm ent, m igh t be
m ade m ere efficient i f it had the advice freely available o f the F e d ­
eral advisory council. M oreover, the operations o f the Federal re­
serve b oard w ould in this way be subject to greater p u b licity and
enable the banks o f the country to have a greater measure o f "confi­
dence in all o f the operations of the Federal' reserve board.
It was furth er believed that the banks o f the country, w hich are in ­
vited o r required to contribute a very large sum to the Federal reserve
banks, w ou ld be m ore content by h av in g an easy and convenient
means p rovid ed by law o f frequent conferences w ith the F ederal




BANKING AND CUBBENCY.

21

reserve board and the opportunity to advise the board with regard
to the financial, commercial, and industrial needs of the country.
CONCENTRATION OF RESERVES.

The reserves o f the banks of the United States are now scattered
without any system among over 25,000 individual banks. The
present law permits the national banks in the country to keep ninefifteenths o f their reserves in the banks of reserve cities and permits
banks o f the reserve cities to keep one-half of their reserves in the
central reserve cities, and permits the banks in the central reserve
cities to keep only one-fourth of these reserves of the reserves of the
reserves in cash. The effect o f this system—the necessary effect o f this
system— is to concentrate in the hands of a few banks in the central
reserve cities (who have diligently sought the reserves of other banks)
to such an extent that the Nation's bank reserves are pyramided in a
dangerous fashion in the hands of a few banks in the three central re­
serve cities and chiefly in certain banks in New York City. These
central reserve city banks have been accustomed to pay 2 per cent on
the deposit o f these bank reserves placed with them, and having no
place to which they themselves might go for rediscount they have
fallen into the habit o f placing very large sums out o f these reserves,
amounting to hundreds of millions, upon call on the New York Stock
Exchange, for the simple reason that under the law of the stock ex­
change they can sell the stock collateral immediately on any day when
money is actually needed. It may be ruinous to the borrower—it
may wipe-out his margin— it may cause him a disastrous loss; it may
upset the interest rates o f the country, excite alarm, and result in
finaj. panic; but it does furnish the money when needed.
We are advised bv representative bankers in New York that the
great banks there would be glad to improve the system by the estab­
lishment o f Federal reserve banks strong enough to furnish money
quickly on demand against good commercial bills, and thus enable
the New York banks to withdraw their funds from the stock ex­
change (which has become the most gigantic gambling establishment
in the world) and place such funds in the service o f legitimate
industry and commerce. This will be one o f the great benefits o f the
pending measure—that is, that it will withdraw from gambling
enterprises on the stock exchange the bank reserves of the country
and enable such reserves to be used for the commerce of the Nation.
Attention is respectfully called to the fact that while in 1890 the
shares sold on the New York Stock Exchange amounted to only a
little over $3,000,000,000, in 1905 it was $21,000,000,000, in 1906 it
was $23,000,000,000, in 1907—the year o f the panic—the amount fell
to $14,000,000,000, increasing in 1908 to $15,000,000,000, and in 1909
to $19,000,000,000. (National Monetary Commission Reports, vol.
21, p. 9.)
MAKING 8TABLE THE INTEREST RATES.

The extremely injurious character o f this gambling on the stock
market with the reserves o f the country is shown by Table 29, Na­
tional Monetary Commission Reports (vol. 21, p. 136),'where during
20366 0 — 58-------l'A




22

BANKING AND CURRENCY.

the year 1907 the range o f interest for money was from 2 to 45 per
cent in January, from 3 to 25 per cent for March, from 5 to 125 per
cent in October, from 3 to 75 per cent in November, and from 2 to 25
per cent in December, with currency bringing a premium from 1 to
4 per cent during November and December. The blighting effect of
these violent fluctuations o f the interest rates is demonstrated by
the rate charged for 90-day time loans, which during November and
December, 1907, were running as high as 12 to 16 per cent, with no
business done in time loans of a longer period during the entire
month o f November and no business being done at times on prime
commercial bills during the same months, (Ibid.)
These violent fluctuations are the more astounding when compared
with the extremely stable rates of interest which have long prevailed
in Europe, as shown by the rates of discount for 50 years in England,
France, Germany, Holland, and Belgium, where the rate has been
steadily around 3 to 4 per cent. (See Senate hearings before Banking
and Currency Committee, pp. 538-542, an abstract o f which is sub­
mitted.)
Moreover, in Europe manufacturers, merchants, and business men
could a l w a y s get money, while in the United States they have been
absolutely ruined bv thousands because o f the denial" o f merited
credit. This act will put an end to this deadly peril to American
business.
T a b le

III. — Rat* ~nf discount, 1844-1909— The number of days at each rate arranged

from the lowest rate to the highest.

Bank 0
England.!

Bank o'
Franco.*

Imperial Bank
01 Germany.

Bank of the
Netherlands.4
1

•lato.
Num­
ber of
days.

2 per cent..................
24 per cent.............. ..
2$ per cent................
3 percent..................
3£ per ccnt................
4 per cent..................
44 percent................ 1
l
6 per ccnt..................1
6| percent................
6 per cent..................
64 per cent.......... •
7 per r§ it ..................
74 per 0 *nt
8 per cent
•
9 per cent
J1
10 per cent
•
Total...............

Num­
ber of
day*
percent
ol total
(total 1,000).

3,409
28
3,590
5,859
1,921
3,772
608
2,195
263
975
91
<3
>3

143
1
151
246
8
(1
15*
26
92
11
41

2ftH
95
141

11
4
(i

23,857




4

26

1,000

National Bank
of Belgium.*

!

j
Num­
Num- l
Num­
Num­
ber of
ber of
ber of
ber of
Num­
day; i Num­
Num- 1 days
Num­
days
days
ber of iper cent ber 0; per cent ber 01 per cent ber of percent
days. 10 tota ! day;. ot total day3. of total days. of total
1Itotal—
(total—,
(total—
(total1,000). :
1,000).
1,000).
1,000).
j
2,735
2,579
7,828
2,060
4,579
353
2,061
120
1.170
8
286
21
41
16
23,857

1,328 1

56

5,058 !
i29 i 8,013 ;
27
3,737 |
2,167
511
68
811
172
1,823
30
375
260
41
150
3
11
135
5
1

212
336
157
91
34
76
16
U
6
5

115

....... 1

108 '
329 ; 3,073
86
644
192 12,192
1,626
15
|
4,094
;
86
!
707
5
49
970
:
_______
72
269
12
1
110
2
37
63

j
1
:

1,000

23,857

1,000

23,857

3,169
9,412
2,965
3,416
698
944
378
540
27

1,000

21,549
1

* I*owest
» Lowest
* Lowest
*Lowest
* Lowest

rate 2 per cent; nighest rate 10 per cent.
rate 2 per cent; highest rate 9 per cent.
rate 3 per cent; highest rate 9 per cent.
rate 2 per cent; highest rate 7 per cent.
rate 2) per cent; highest rate 6 per cent.

147
437
138
159
32
44
18
25

1,000

23

BANKING AND CURRENCY.
T a b le

I V .— Rate o f discount, 1844-1909— The number o f days at each rate, arranged from
the highest number o f days to the lowest.

Bank of England.

1 Bank of France.

Imperial Hank of
Germany.

Bank of the Neth­
erlands.

Bank of Belgium.
|

£3

o il

£
6
3

a

5,859
3,772
3,559
3,409
2,195
1,921
975
633
608
268
263
141
95
91
28

a

G

3
4

2*

2
5

3)

6
7
4i
8
54
10
9
61
A

23,857 i........

I
r

Si

a
{£

<

246
158
151
143
92
80
41
26
26
11
11
t
>
4
4
1

c
g
c

7,828
4,579
2,735
12,579
2,061
2,060
1,170
1 353
286
120
41
21
16
8

1,000 23,857

S.

* 8 1J
X^«

2

e
a
3
4
2

2*
5

3}

6
4*
7
5*
s
"4
9
64

2

o
r

>.
a
c.
329 12,192
192 4,091
115 3,073
108 1,626
86
970
86
707
49
644
15
269
12
110
5
72
2
63
1
37

2
a
4
5
3
6

H

3*
7
6}
9
8

1

m

m
/

r.
r
>.

C
3
o
511 8,013
172 5,058
129 3,737
68 2,167
41 1,823
30 1,328
27
811
11
375
5 1 260
3 '
150
2
135
1

.
■o S S

o da
f
t o toi
f
1,000).

c
o
>

■S Sg

S 3 -S

1

ug |

4 '
>
e
3
C :A
£
3
3

1

4
5 ;
2

r

6
6J

* !§

I

I

1
336 9,412
3
212 3,416
4
157 3,169
91 2,965
3
944 I 5
76
698 ! H
56
1
34
540
6
16 I 378 1 54
27
7
11
6
5
1

!& !

£

437
150
147
138
44
32
25
18

............
1

1,000 23,857

1.000 23,857

1,000 21,549

1,000

It w ill thus be seen that these great banks holding tho national reserves have been
able to furnish com m erce w ith a very low rate of discount tor nearly all the tim e and
on ly occasionally have been com pelfed to raise the rate to a high point.
These low rates illustrate the enormous value of these great banks to European com ­
m erce and the urgent necessity for action by the United States along similar lines.

The stabilizing o f the rate of interest in the United States will be
one o f the very important functions of the proposed Federal reserve
system. The right o f the Federal reserve board to fix the rate o f
interest which may be charged member banks by the Federal reserve
banks and which the Federal reserve banks may charge each other
would have a steadying effect upon the interest rate throughout the
United States, and will enable the banks of the country to extend
accommodation at a comparatively stable rate of interest upon a
lower basis than heretofore, because the element o f hazard o f panic
and o f financial stringency will be removed by the proposed system.
MOBILIZATION OF RESERVE8.

In addition to concentrating in the Federal reserve banks a sub­
stantial part o f the reserves o f the National and State banks and
trust companies o f the country and placing in such banks a re­
spectable capital by stock subscriptions and a considerable volume
o f Government funds— approximately a total o f about $700,000,000—
it is proposed to make them perfectly mobile. In order to have
these funds meet the purpose for which they were intended they
must be kept in a liquid condition and made instantly mobile by
keeping the investments o f such banks either in actual gold and law­
ful money or in short-time commercial bills drawn against actual
commercial transactions which are readily converted into money on
short notice. (Sec. 14, p. 40, and sec. 15, p. 44.)




24

BANKING AND CURRENCY,

ollowed the experience o f the
The European systems con0
0___ .he public utility banks to cash
and liquid bills o f very short maturities, the average length o f time
o f the bills o f the Bank o f France not exceeding 28 days and the
Reichsbank o f Germany having no paper of longer maturity than
90 days, and a large part o f its paper very short time paper. The
Bank o f England handles quite a large volume of paper, running
7 to 14 days. These public utility banks carefully avoid putting the
funds in their custody in the form of investments which are not
instantly convertible into money. This consideration is o f the high­
est importance, because the Federal reserve banks holding the re­
serves o f the reserves must be in a position to extend instant accom­
modation to any member bank requiring cash.
With a view to enlarging the volume of liquid paper based on
actual shipments o f goods, the reserve bank is authorized to discount
acceptances and the member banks are authorized to accept bills o f
exchange against actual shipments o f goods.
ELASTIC CURRENCY--- FEDERAL RESERVE NOTES.

In order to render still more mobile and liquid the reserves held by
the Federal reserve banks, elastic currency has been provided (sec. 17,
p. 47) in the form of Federal reserve notes issued as obligations o f
the United States, redeemable in gold at the Treasury, or in gold or
lawful money at the reserve banks, and receivable for all taxes and
public dues, except customs. The exception of customs was intended
to enable the Federal Government to command a supply o f gold
through the customhouses, if it should prove to be necessary, by com­
pelling the customs to be paid in gold by foreign shippers.
These Federal reserve notes, while tne obligations of the United
States, and made redeemable in gold or lawful money at the Federal
reserve banks and in gold only at the Treasury o f the United States,
are carefully surrounded by very numerous safeguards to make
assurance doubly sure that they shall not at any time in reality tax
the credit o f the United States itself. The securities behind these
notes are:
First. Commercial bills drawn against actual commercial trans­
actions which have goods and merchandise behind the notes.
Second. Such notes have the credit o f the maker o f the commercial
bill deemed good by the member banks.
Third. The indorsement by the member bank o f such commercial
bills.
Fourth. The double liability o f the stockholders o f the member
bank so indorsing.
Fifth. Thirty-three and a third per cent o f gold reserve in the Fed­
eral reserve bank.
Sixth. A first lien on all the assets o f the Federal reserve bank.
Seventh. The stock o f the indorsing member bank in the Federal
reserve bank.
Eighth. The reserve balance o f the indorsing member bank in the
Federal reserve bank.
Ninth. A double liability o f the member banks o f the Federal
reserve bank.




BANKING AND CURRENCY.

25

Tenth. The double liability of the stockholders of the member
banks of the Federal reserve bank.
Eleventh. The surplus of the Federal reserve bank.
Twelfth. The earning power of such reserve bank, and finally
the United States. There has never been issued a note with such
safepards surrounding it by any banking system of the world.
The commercial bills alone would never fail, because of their
liquid character and short maturity. No apprehension whatever need
be felt with regard to these notes ever taxing the Federal Treasury.
Since each bank is required to keep a gold reserve with the Treas­
ury of the United States against such note issues, it is necessary to
keep a record o f the outstanding circulation emitted through each
Federal reserve bank, and for tnis reason a descriptive number is
placed upon the notes emitted through any Federal reserve bank
so as to keep the record o f notes outstanding issued through such
banks. The effect o f issuing Federal reserve notes against com­
mercial bills is to make intensely mobile the assets o f the Federal
reserve bank and enable such bank at all times to respond instantly
to the needs o f national commerce. The emission o f these notes iV
controlled by the Federal reserve board, which is authorized to
control the volume o f these notes and the terms upon which they
shall be advanced to the Federal reserve bank and the conditions of
retirement.
The Federal reserve board is authorized to tax the issue o f the
notes and also to fix the rate o f interest on the discounts of the
Federal reserve banks, and in this way keep a double check on the
issuance of the Federal reserve notes.
While the Federal reserve notes are extremely well secured, it is
made easy for member banks needing currency for seasonal demands
or for any extraordinary emergency to obtain Federal reserve notes
from the Federal reserve banks. Tne Federal reserve bank has only
to deposit liquid commercial bills o f a qualified class with the Federal
reserve agent and obtain from him such Federal reserve notes, keep­
ing. however, a minimum deposit of 33 per cent of gold against such
Federal reserve notes as may be put in actual circulation. It is be­
lieved that in actual practice the gold reserves against such notes in
circulation will be very large, much larger than the minimum re­
quirement, especially if our proposed amendment is placed in the
House bill, permitting the reserves against deposits .and against the
notes to be kept as a common fund. It is obvious that if a minimum
requirement o f 33 per cent against deposits and 33 per cent against
notes in circulation is held as a common fund, anyone observing the
statement merely from the standpoint of a depositor, if the deposits
and the notes in circulation happened to be equal, would perceive
that the reserves against deposits would appear as 66 per cent, and
anyone looking at the reserves against the notes from that point of
view would observe a reserve equal to 66 per cent of the notes in
circulation.
It also is obvious that when there is a surplus reserve against the
deposits far above 33 per cent there is no reason why the bank should
not have the credit o f this surplus appearing also in its favor as a
reserve against notes in circulation, and it was upon the best advice
obtainable that an amendment was proposed to section 17 permitting




26

BAXKIHG AND CUBBBNOY.

these reserves to be carried as a common fund, but in no contingency
less than a 33 per cent gold reserve against the notes, as required
in the House bill.
The retirement of these Federal reserve notes would, of course,
be accomplished whenever the commercial bills were withdrawn by
the member bank or by the Federal reserve bank from the hands of
the Federal reserve a^ent, the Federal reserve agent in such con­
tingency either receiving the notes back or a like volume of lawful
money.
OFEN-MARKET OPERATIONS.

One of the most important features of this bill is the establishment
of what is called an open market for bills of exchange and bankers’
acceptances such as has long prevailed in Europe, but which has not
existed to any great extent in the United States. In Europe the
various banks and private bankers carry on a very large scale com­
mercial bills of exchange and acceptances based on actual commer­
cial ^transactions of short maturities and which are regarded as selfliquidating. Such bills have behind thepi actual merchandise for
which a purchaser has been found, and these bills are held in their
portfolios as almost the exact equivalent of cash, for the reason that
the security of such bills is regarded as substantially perfect, their
uniform and certain payment constant, and therefore there is an
u open market ” for such bills maintained by the great public banks,
sucn as the Bank of France, the Reichsbank, the Bank of Belgium,
the Bank of Netherlands, the Bank of England, etc., at a very low
rate of interest.
It is now proposed that a constant market at a fairly uniform rate
o f interest be established in this country by establishing the Federal
reserve bank with a large capital and large reserves and with the
«xpress power to discount for member banks commercial bills and
acceptances of the qualified liquid class, and also to buy and sell in
the open market such bills and bankers’ acceptances as have been
found merchantable and liquid by the experience of European bank­
ing systems. It is anticipated that the effect of this method will
be to encourage banking houses to buy commercial bills of the quali­
fied class, ana in this way that we may greatly enlarge the market
for the bills of manufacturers, merchants, and business men who
are handling the actual commerce of the country. (Secs. 14 and 15,
j>p. 40-44.)
GOVERNM ENT DEPOSITS W ITH FEDERAL RESERVE BA N K S.

It has been deemed of the highest importance to maintain the in­
dependent Treasury of the United States and not compel the Secre­
tary of the Treasury to deposit every dollar of the public funds in
the Federal reserve banks, Dut to provide that he may do so. The
argument in favor of maintaining the independence of the Federal
Treasury is overwhelmingly in favor of an independent Treasury
and need not be recounted here.
The Government of the United States can advantageously to the
banks and to itself place with the Federal reserve banks $150,000,000,




BANKING AND CURRENCY.

27

or even a larger sum, but the process of collecting the revenue through
revenue collectors scattered throughout the Nation, making local
deposits, and the right of the Treasury Department to make dis­
bursements in every part of the country through its numerous dis­
bursing officers, makes it highly necessary to maintain the independ­
ence o f the Treasury. We have, therefore, thought it proper to change
the provision of section 16 in such a way as to accomplish this
object (p. 46).
REFUNDING BOND8.

The House measure (sec. 19, p. 56) provided for retiring 5 per
cent o f the outstanding 2 per cent bonds held for national-bank
circulation by the exchange o f 3 per cent bonds without circulation
privilege for such 2 per cent bonds, justly assumes that the Govern­
ment will be compensated by the interest earned upon a like amount
o f Federal reserve notes.
We have preferred to absorb such of these bonds as would be
offered on the market by permitting the Federal reserve banks to
buy such 2 per cent bonds and issue Federal reserve bank notes
against them just as the national banks do (p. 14), and have further
permitted such Federal reserve banks, in section 19, to assume the
redemption of not exceeding $36,000,000 of national-bank notes issued
against such bonds and to take over such bonds and issue Federal
reserve notes against such bonds, leaving the bonds with the Treas­
urer of the United States in trust in the form of 3 per cent bonds or
3 per cent annual notes, in this way assuring to the Government the
earning power upon the circulation taking the place of the retired
national.-Dank circulation (p. 58).
CLEARING CHECKS AND DRAFTS.

The House bill proposed to clear checks and drafts at par, but we
propose an amendment providing that checks and drafts sent to the
Federal reserve banks by member banks may be cleared, allowing the
Federal reserve board to fix the charge which may be imposed for the
service o f clearing or collection rendered either by the Federal re­
serve bank or by the member banks, and with a provision that the act
should not be construed to prohibit member banks from making
reasonable charges for checks and drafts debited to their account,
or for collecting and remitting drafts, or for exchange sold to its
patrons. In this way the reserve banks are not put in competition
with the country banks, but can serve them and their customers at a
fair price. This amendment should remove the very serious objection
o f many o f the country banks to the House provision, which they
thought would interfere with their right to charge for exchange in
making remittances (p. 55).
SAVINGS-BANK SECTION.

Your committee has struck out entirely the savings-bank section
No. 27, for the reason that the national banks now, through the system
o f time deposits, carry on a savings-bank business very economically




28

BANKING AND CUBBENCY.

and at the same time use the funds in promoting the local enterprises.
It was the practical judgment of all the small banks of the country
that this section should not remain in the bill.
CHANGES IN THE NATIONAL-BANK ACT.

Several changes of importance in the national-bank act have been
made, to which attention should be called:
First. Section 21 (p. 65) provides that the 5 per cent fund placed
with the Secretary of the Treasury for the redemption o f nationalbank notes shall no longer be construed to be a part o f the bank’s
reserves. This is justified because the reserves of the national banks
have been made decidedly lower than they have been in the past.
Second. The law requiring bonds o f national banks to be deposited
before any national bank association shall be authorized to commence
the banking business, as provided in section 5150 o f the Revised Stat­
utes, etc., is repealed by section 18 (p. 56). The obvious purpose o f
♦his section is to ultimately do away with the bond-secured circula­
tion, which is inelastic and unscientific. The way to establish an im­
proved system is thus made open.
Third. The bank examinations are more thoroughly provided for in
section 23 (p. 66).
Fourth. The loans, gratuities, and commissions to bank officers or
bank examiners are penalized by section 24 (p. 69).
Fifth. The stockholders’ liabilities of national banks and o f mem­
ber banks is modified to establish the double liability and to prevent
its evasion. (Sec. 25, p. 71.)
Sixth. Loans on farm lands are permitted to the extent of 25 per
cent o f the capital and surplus of a national bank and for a period of
five years. This would make available possibly $400,000,000, but in
actual practice it would not be likely to exceed a hundred million dol­
lars under the terms of the bill, for the reason that the city banks do
not make such loans, and where the banks have the authority they will
probably not exercise it with any uniformity.
f >i I
Seventh. The change of the reserves in the rtfifional banking law
is a very important change, heretofore described, and which will be
found set forth in section 20 (p. 59).
The House provision was changed so as to make the language more
compact and to simplify it.
Eighth. Foreign branches were also provided for national banks
having a capital and surplus of a million dollars or more, with the
approval o f the Federal reserve board. (Sec. 28, p. 77.)
This is a very important amendment and one of far-reaching im­
portance to the foreign commerce of the United States, the purpose
of which is so obvious as to need no explanation.
Many other amendments are needed in the national-bank act which
this bill does not undertake to deal with, for the reason that it was
of great importance that this bill should not be embarrassed by the
consideration of questions which were not necessarily germane to
the bill itself in establishing the Federal reserve system.
The National Monetary Commission did a very large amount of
work looking toward the codification of the national-bank act, and




BANKING AND CURRENCY.

29

this work has so far progressed that it may be easily submitted to the
Senate during the next regular session, in such a form as to enable
the matter to be disposed of and to make any other amendments
which are necessary to the national-bank act, without embarrassing
the present measure by considerations which are not necessarily a
part o f the Federal reserve system.
The proposed changes recommended by the undersigned are best
set forth by submitting a print of the House bill with the parts struck
out being placed in brackets and the amendments proposed being in­
serted in italics. (See Exhibit .A.) The other exhibits are necessary
to justify the amendments recommended.
Very respectfully submitted.
R o b e r t L. O w e n , Chairman.
J a m e s A. O ’G o r m a n .
J a m e s A. R e e d .




A tlee P o m e r e n e .
J o h n F. S h a f r o t i i .
H e n r y F. H o i /l i s .

APPENDIX (WITH EXHIBITS).




EXH IBIT A.

31

H . B . 7887.

IOmit (lie part inclosed in brackets and insert the part printed in italic.]
AN ACT To provide for the establishment of Federal reserve bunks, to furuisli
an elastic currency, to afford means o f rediscounting commercial paper, to
establish a more effective supervision o f banking in the United States, and
for other purposes.

Be it enacted by the Senate ami House of Representatives of the
United States of America in Congress assembled, That the short
title o f this act shall be the “ Federal reserve act.”

Wherever the word “ bank” is used in this act, the word shall
be held to include State bank, banking association, and trust com­
pany, except where national banks or Federal reserve banks are
specifically referred to.
FEDERAL RESERVE DISTR ICTS.

S ec . 2. [T hat within ninety days after the passage o f this act, or
as] As soon [thereafter] as practicable, the Secretary o f the Treas­
ury, [the Secretary o f Agriculture, and the Comptroller o f the Cur­
rency,] and not less than two members of the Federal reserve board,
acting as “ The reserve bank organization committee,'’ shall desig­
nate [from among the reserve and central reserve cities now author­
ized by law a number o f such] eight cities to be known as Federal
reserve cities, and shall divide the continental United States, inclvding Alaska^ into districts, each district to contain one, and only one,
o f such Federal reserve cities. The determination of said organiza­

tion committee shall not be subject to review except by the Federal
reserve board when organized: Provided, That the districts shall
be apportioned with due regard to the convenience and customary
course of business Eof the community] and shall not necessarily
[coincide with the area o f such] be coterminous with any 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 [here­
inafter 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 dis­
tricts and [sh a ll] may l>e designated by number [according to the
pleasure o f the organization committee, and no Federal reserve dis­
trict shall be abolished, nor the location of a Federal re**erve bank
changed, except upon the application of three-fourths of the mem­
ber banks o f such district]. A majority of the organization <om-

mit tee shall constitute a tfuorum -with authority to art.
.
[T h e organization committee shall, in accordance with regula­
tions to be established by itself, proceed to organize in each o f the
reserve cities designated as hereinl>efore specified a Federal reserve
83



34

BANKING AND CURRENCY.

bank. Each such Federal reserve bank shall include in its title the
name o f the city in which it is situated, as 4 Federal Reserve Bank
4
o f Chicago,” and so forth. The total number o f reserve cities desig­
nated by the organization committee shall be not less than twelve,
and the organization committee shall be authorized to employ coun­
sel 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 o f determin­
ing 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 o f tne Federal reserve bank
o f that district a sum equal to twenty per centum o f the capital stock
o f such national bank fully paid in and unimpaired, one-fourth o f
such subscription to be paid in cash and one-fourth within sixty days
after said subscription is made. The remainder o f the subscription
or any part thereof shall become a liability o f the member bank,
subject to call and payment thereof whenever necessary to meet the
obligations o f the Federal reserve bank under such terms and in
accordance with such regulations as the board o f directors o f said
Federal reserve bank may prescribe: Provided , That n o j

Said 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 investigation as may be deemed
necessary by the said committee in determining the reserve districts
and in determining the cities within such districts where such Federal
reserve banks shall be severally located. The said committee shall
supervise the organization, in each of the cities designated, of a Fed­
eral reserve bank, which shall include in its title the name of the city
in which it is situated, as “ Federal Iieseme Bank of Chicago,” and
so forth .
Under regulations to be prescribed by the organization committee,
every national banking association is hereby required and every
eligible bank is hereby authorized to signify in writing, within sixty
days after /the passage of this act, its acceptance of the terms and
provisions hereof. When such Federal reserve bank shall have been
organized^ every national banking association within that district
shall be required and every eligible bank may be permitted to sub­
scribe to the capital stock thereof in a sum equal to six per centum of
the paid-up capital stock and surplus of such bank, one-sixth of such
subscription to be payable on call of the organization committee or of
the Federal reserve board, one-sixth within three months and onesixth within six months thereafter. and the remainder of the sub­
scription, or any part thereof, shall be subject to call when deemed
necessary by the Federal reserve board, said payments to be in gold
or gold certificates.
The shareholders of every Federal reserve bank shall be held
individually responsible, equally and ratably, and not one for another,
for all contracts, debts, and engagements of such bank to the extent
of the amount of their subscriptions to such stock at the par value
thereof in addition to the amount subscribed, whether such subscrip­
tions have been paid up in whole or in part, under the provisions of
this act.




BANKING AND CURRENCY.

35

Any national bank 'failing to signify its acceptance of the tei'ms of
this act within the sixty days aforesaid sfudl cease to act as a reserve
agent, upon thirty days' notice, to be given within the discretion of
the said organization committee or of the Federal reserve board.
Should any national banking association now organized fail>
within one year after the passage of this act, to become a member
bank under the provisions hereinbefore stated, or fail to comply with
any of the provisions of this act applicable thereto, all of the rights,
privileges, and franchises of such association granted to it under the
national-bank act, or under the provisions of this act, shall be thereby
forfeited. Any noncompliance with or violation of this act shall,
however, he determined and adjudged by a proper circuit> district,
or Territorial court of the United States in a suit brought for that
purpose by the Comptroller of the Currency in his own name before
the association shall he declared dissolved, and in cases of such viola­
tion, other than the failure to become a member bank under the pro­
visions of this act, every director who participated in or assented to
the same shall be held liable in his personal or individual capacity
for all damages which said bank, its shareholders, or any other
person, shall have sustained in consequence of such violation.
Such dissolution shall not take away or impair any remedy against
such corporation, its stockholders or officers, for any liability or penalty v'hirh shall have been previously incurred.
Should the subscriptions by banks to the stock of said Federal re­
serve banks or any one or more of them be, in the judgment of the
organization committee, insuffirient to provide the amount of capital
required therefor, then and in that event the said organization com­
mittee may, under conditions and regulations to he prescribed by it,
offer to public subscription at par such an amount of stock in said
federal reserve banks, or any one or more of them, as said committee
shall determine, subject to tne same conditions as to payment in and
stock liability as provided for member banks.
No individual, copartnership, or corporation other than a member
bank of its district shall be permitted to subscribe for or to hold at
any time more than Si0,000 par value of stock in any Federal reserve
bank. Such stock shall be renown as public stock and may be trans­
ferred on the books of the Federal reserve hank by the chairman of
the hoard of directors of such bank.
Should the total subscriptions by banks and the public to the stock
of said, Federal reserve banks, or any one or more of them, be\ in the
judgment of the organization committee, insufficient to provide the
amount of capital required therefor, then and in that event the said
organization committee shall allot to the United States such an
amount of said stock as said committee shall determine. Said
United States stock shall be paid for at par out of any money in
the Treasury not otherwise appropriated, and shqlt be held, by the
Secretary of the Treasury a/nd disposed of for the benefit of -the
United States in such manner, at such times, and at such price, not
less than par, as the Secretary of the Treasury shall determine.
Stock not held by 'member hanks shall not be entitled to voting
power in the hands of its holders, hut the voting power thereon shall
he vested in and be exercised solely by the class (' directors of the
Federal reserve bank in which said stock may be held, and who shall




36

BANKING AND CURRENCY.

be designated as “ voting trustees.” The voting power on said pub­
lic stock shall be limited to one vote for each $15,000 par value thereof,
fractional amounts not to be considered. The voting trustees shall
•exercise the same powers as member banks in voting for class A and
class B directors.
The Federal reserve board is hereby empowerd to adopt and pro­
mulgate rules and regulations governing the transfers o f said stock
and the exercise of the voting power thereon.
Xo Federal reserve bank shall commence business with a [paid-up
and unimpaired] subscribed capital less in amount than [$5,000,000]
$3fi00JD00. The organization of reserve districts and Federal reserve
cities shall not be construed as changing the present status of reserve
cities and central reserve cities %except in so far as this act changes
the amount of reserves that may be carried with approved reserve
agents located therein. The organization committee shall have power
to appoint such assistants and incur such expenses in carrying out
the provisions o f this act as it shall deem necessary, and such ex­
penses shall be payable bv the Treasurer o f the United States upon
voucher approved by the Secretary o f the Treasury, and the sum o f
$100,000. or so much thereof as may be necessary, is hereby appropri­
ated, out o f any moneys in the Treasury not otherwise appropriated,
for the payment o f such expenses.
jSTOt’K ISSUES1

nitAX CH

O V F iC E S .

S ec. tt. [That the capital stock of each Federal reserve bank shall
be divided into shares o f $100 each. The outstanding capital stock
shall be increased from time to time as member banks increase their
capital Stock or as additional banks l>ecome members, and may be
decreased as meml>er banks reduce their capital stock or cease to be
members.] Each Federal reserve bank [m a y ] shall establish branch
offices [under regulations o f the Federal reserve board at points
within the Federal reserve district in which it is located: Provided,
That the total number o f such branches shall not exceed one for each
$500,000 o f the capital stock o f said Federal reserve bank] within

the Federal reserve district in v'hich it is located and also in th > dis­
<
trict of any. Federal reserve bank which may have been *usvended,
such branches to be established ami conducted at places and under
regulations approved by the Federal reserve board.
FEDERAL RESERVE BAN KS.

[ S ec. 4. T h e national banks in each Federal reserve district u n itin g
to form the Federal reserve bank therein, h ereinbefore p rovid ed fo r ,
shall under their seals, m ake an organ ization certificate, w h ich shall
specifically state the name o f such F ederal reserve bank so organ ized,
tne territorial extent o f the d istrict ov er w hich a
the operation s o f said
Federal reserve bank are to be carried on , the city and State in w h ich
said bank is to be located, the am ount o f capital stock and the num ­
ber o f shares into w hich the same is d ivid ed , the names and places
o f d o in g business o f each o f the makers o f said certificate and the
num ber o f shares held b y each o f them , and the fa ct that the ce r­
tificate is m ade to enable such banks to avail them selves o f the ad­
vantages o f this act. T h e said organization certificates shall be




BANKING AND OUBBENOY.

37

acknowledged before a judge o f some court o f record or notary
public; ana shall be, together with the acknowledgment thereof, au­
thenticated by the seal o f such court, or notary, transmitted to the
Comptroller o f the Currency, who shall file, record, and carefully pre­
serve the same in his office. Upon the filing o f such certificate with
the Comptroller o f the Currency as aforesaid, the said Federal
reserve bank so formed shall become a body corporate, and ub such,
and in the name designated in such organization certificate, shall have
power to perform all those acts and to enjoy all those privileges and
to exercise all those powers described in section fifty-one hundred and
thirty-six, Revised Statutes, save in so far us the same shall be
limited by the provisions o f this act. The Federal reserve bank so
incorporated shall have succession for a period o f twenty years from
its organization, unless sooner dissolved by act o f Congress. J

Sec. j> When the organization committee shall have established
.
Federal reserve districts as provided in section two of this act, a
certificate shall be fled with the Comptroller of the Currency show­
ing the geographical limits of such districts and the Federal reserve
city designated in each of such districts. The Comptroller of the
Currency shall thereupon cause to be forwarded to each national
bank located in each district, and to such other banks declared to be
eligible by the organization committee which may apply therefor, an
application blank in form to be approved by the organization com­
mittee, which blank shall contain a resolution to be adopted by the
board of directors of each bank executing such application, authoriz­
ing a subscription to the capital stock of the Federal reserve bank
organizing in that district in accordance with the provisions of this
act.
When the minimum amount of capital stock prescribed by this act
for the organization of any Federal reserve bank shall haw been sub­
scribed and allotted the organization committee shall designate any
five banks of those whose applications have been received, to execute
a certificate of organization, and thereupon the banks so designated
6 hall, under their seals, make an organization certificate which shall
specifically state the name of such Federal reserve banlc so organized,
the territorial extent of the district over which the operations of
such Federal reserve bank are to be canned 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 name and
place of doing business of each bank executing such certificate, and
of all banks which have subscribed to the capital stock of such Fed­
eral reserve bank and the number of shares subscribed by each, and
the fact that the certificate is made to enable those banks executing
same, and all banks which have subscribed or may thereafter sub­
scribe to the capital stock of such Federal reserve bank, 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, to­
gether with the acknowledgment thereof, authenticated b y the seal
of such court or notary, transmitted to the Comptroller of the Cur­
rency, who snail 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
o

:>,s..— i4




38

BANKING AND CUBBENCY.

heroine a body corporate and m such, and in the name designated in
such organization <<rtifirate, Khali have power—
First. To adopt and use a corporate seal.
Second. To hart xurecssion for a period of twenty years from its
organisation unless it is sooner dissolved by an act of Congress, or
unless its franchise heroines forfeited hy some violation of lav\
Third. t o make contracts.
J Fourth. To sac and he sued, complain ami defend\ in any court of
* la tv and equity as fully as natural person*.
Fifth. To appoint hy its hoard of director*, elected as hereinafter
provided\ such officer* as are not otherwise provided for in this
act, to define their duties%
require bonds of them and fix the penalty
thereof% dismiss surh officers or any of them as tnay be appointed
to
hy them at pleasure, and to appoint others to fill their places.
Sh'th. To prescribe by its board of directors by-laws not incon­
sistent with lau\ regulating the manner ip which its general business
may be conducted, and the privileges granted to it by law may be
exercised and enjoyed.
Seventh. To exercise by its board of directors% duly authorized
or
officers or agents. all powers specifically granted hy the provisions of
this act and such incidental powers as shall be necessary to carry on
the business of hanking within the limitations prescribed by this act.
Eighth. Upon deposit with the Treasurer of the United States
of any bonds of the United, States in the manner provided by existing
law relating to national banks, to receive from the Comptroller of
the Currency circulating notes in blank, registered and countersigned,
as provided by Jaw. equal in amount to the par value of the bonds so
deposited* suck notes to be issued under the same conditions and
provisions of late which relate to the issue of circulating notes of
national bank* secured by bonds of the United, States bearing the
circulating privilege.
But no Federal reserve bank shall transact any business except
such as is incidental and necessarily preliminary to its organisation
until it has been authorised by the (Jomptroller of the Currency to
commence business under the provisions of this act.
Every Federal reserve bank shall be conducted under the [over­
sigh t! supervision and control o f a board of directors [ . whose powers
shall l>e the same as those conferred upon the boards o f directors
o f national banking associations under existing law, not inconsistent
with the provisions o f this actj.

The board of directors shall perform the duties usually appertain­
ing to the office of directors of banking associations and all such
duties as are prescribed by law.
Said hoard shall administer the affairs of said bank fairly and
impartially and without discrimination in favor of or against any
member hank or hanks and shall. subject to the provisions of law and
the orders of the Federal reserve board, extend to each member bank
swh advancements and accommodations as may he safely and rea­
sonably made with due rcgar£ for the claims and demands of other
member hanks.
Such board o f directors shall l>e [constituted and electedj selected
as hereinafter specified and shall consist o f nine members, holding
office for three years, and divided into three classes, designated as
classes A, B, ana C




BANKING AND CUBBENCT.

39

Class A shall consist o f three members, who shall be chosen by and
be representative o f the stock-holding banks.
Class B shall consist o f three members, who shall be representative
o f the general public interests o f the reserve district.
Class C shall consist o f three members, who shall be designated by
the Federal reserve board.
No director of class R or of class C shall be an officer, director,

stockholder of a member bank.
Directors o f class A and class R shall be chosen in the following
manner:
[ I t shall be the duty o f th e! The chairman o f the board o f direc­
tors o f the Federal reserve bank o f the district in which [each such]
the bank is situated [ t o ] shall classify the member banks o f the
[s a id ] district into three general groups or divisions. Each [su ch ]
group shall contain as nearly as may be one-third o f the aggregate
number o f [s a id ] the memlier banks*of the [s a id ] district and shall
consist, as nearly as luav be, of banks o f similar capitalization. The
[s a id ] groups shall be designated by number [a t the pleasure o f ] by
the chairman [ o f the board o f directors o f the Federal reserve bankj.
At a regularly called [directors’] meeting of the board of directors
o f each member bank iti the |Fe3 eral reserve] district [aforesaid,
the board o f directors of such member bank] it shall elect by ballot
one o f its own meml>ers as a district reserve elector and shall •certify
his name to the chairman o f the board o f directors o f the Federal
reserve bank o f the district. The [s a id ] chairman shall establish
lists o f the district reserve electors[, class A .] thus named by banks
in each o f the aforesaid three groups and shall transmit one list to
each [sue
elector in each group. [E very elector shall, within
fifteen days o f the receipt o f 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 lus own, as rep­
resenting his choice for Federal reserve director, class A. The name
receiving the greatest number o f votes, not less than a majority, shall
be designated by said chairman as Federal reserve director for the
group to which he Indongs. In ease no candidate shall receive a ma­
jority o f all votes east in any group, the chairman aforesaid shall
establish an eligible list, consisting o f the three names receiving the
greatest number o f votes on the first ballot, and shall transmit said
list to the electors in each o f the groups o f banks established bv him.
Each elector shall at once select and certify to the said chairman
from among the three persons submitted to him his choice for Fed­
eral reserve director, class A. and the name receiving the greatest
number o f such votes shall l>e declared by the chairman as Federal
reserve director, class A. In case o f a tie vote the balloting shall
continue in the manner hereinliefore prescribed until one candidate
receives more votes than either o f the others.
Directors o f elas> B shall Ih chosen by the electors o f the respective
*
groups at the same time and in the same manner prescribed for di­
rectors o f class A. except that they must I k? selected from a list o f
names furnished, one by each meml>er bank, and such names shall in
110 ease be those o f officers or directors o f any bank or banking asso­
ciation.]
Eeery elector shall, within fifteen days after the receipt of the said
list, certify to the chairman hi* first, second, and other choices upon




40

BANKING AND CURRENCY.

the list, anon ft preferential ballot, on a form furnished by the chair­
man of the board of directors of the Federal reserve bank of the dis­
trict. Each rh etor shall make a cross opposite the name o f the first,
second, and other choices for a director of class A and for a director
o f class Rm shall not rote more than one choice for any one candi­
but
date.
Any candidate ha ring a majority o f all votes cast in the column of
first choice shall be declared elected. I f no candidate have a majority
of all the votes in the first column,, then there shall be added together
the votes cast by the electors for such candidates in the second column
to t/te votes cast for the several candidates in the first column. I f any
candidate then have a majority of the electors voting, by adding together the first and second choices, he shall be declared elected. I f no
candidate have a majority o f electors voting when the first and second
choices shall have been added, then the votes cast in the third column
for other choices shall be added together in like manner, and the can­
didate then having the highest number of votes shall be declared
elected. -In immediate report of election shall he declared.
[T h ey shall not accept office as such during the term o f their
service as directors o f the Federal reserve banks. T h ey] Directors of
elass R shall be fairly representative o f the commercial, agricultural,
or industrial interests o f their respective districts. [T h e Federal
reserve board shall have power at its discretion to remove any director
o f class B in any Federal reserve bank, if it should appear at any time
that such director does not fairly represent the commercial, agricul­
tural, or industrial interests o f his district.]
Three directors belonging to class C shall be [chosen] appointed
directly by the Federal reserve board, and shall [ b e ] Aa w been for
at least two years residents o f the district for which tlicv are
[selected] appointed, one o f whom shall be designated by said board
as chairman o f the board o f directors o f the Federal reserve bank
o f the district to which he is appointed and shall be designated by
%tid board as “ Federal reserve agent.” He shall be a person o f
tested banking experience; and in addition to his duties as chair­
man o f the board o f directors o f the Federal reserve bank of the
district to which he is appointed, he shall be required to maintain
under regulations to be established bv the Federal reserve board a
local office o f said board, which shall be situated on the premises o f
the Federal reserve bank o f the district, Tie shall make regular
reports to the Federal reserve board, and shall act as its official repre­
sentative for the performance o f 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. One of the directors of class C shall he

appointed by the Federal reserve hoard as deputy chairman and
deputy Federal reserve agent to exercise the powers of the chair­
man of the hoard and Federal reserve agent in case of the absence
or disability of his principal.
Directors o f Federal reserve banks shall receive, in addition to any
compensation otherwise provided, a reasonable allowance for neces­
sary expenses in attending meetings o f their respective boards, which
amount shall be paid by the respective Federal reserve banks. Any
compensation that may oe provided by boards o f directors o f Federal
reserve banks for members o f such boards shall be subject to review




BANKING AND CURRENCY.

41

and subsequent readjustment at any time by the Federal reserve
board.
The reserve hank organization committee may, in organizing Fed­
eral reserve banks for the first time, call such meetings o f bank
directors in the several districts as mav be necessary to carry out
the purposes o f this act. and may exercise the functions herein con­
ferred upon the chairman o f the board o f directors o f each Federal
reserve bank pending the complete organization o f such bank.
At the first meeting o f the full board of directors o f each Federal
reserve bank after organization it shall be the duty o f the directors
of classes A and B and C, respectively, to designate one o f the mem*
l>ers o f each class whose term o f office shall expire in one year from
the first o f January nearest to date of such meeting, one whose term
o f office shal1 expire at the end o f two years from said date, and one
whose term ot office shall expire at the end o f three years from said
date. Thereafter every director o f a Federal reserve bank chosen
as hereinbefore provided shall hold office for a term o f three years
[ ; but the chairman o f the board o f directors of each Federal
reserve bank designated bv the Federal reserve board, as hereinbefore
described, shall be removable at tjie pleasure o f the said board, with­
out notice, and his successor shall hold office during the unexpired
term o f the director in whose* place he was appointed.] Vacancies
that may occiir in the several classes o f directors of Federal reserve
banks mav be filled in the manner provided for the original selection
o f such directors, such appointees to hold office for the unexpired
terms of their predecessors.
ST O CK ItfSL 'K S; IN VRKASK

\M > DKCRKASK OF C A P IT A L .

S e c . 5. [T h at shares] The capital stock of each Federal reserve
bank shall be divided into shit res of $l()0 each. The outstanding
capital stock shall be increased from time to time as member banks
increase their capital stock and surplus or as additional banks become
members* and may be decreased as member banks reduce their capital
stock or surplus or cease to be members. Shares of the capital stock
o f Federal reserve banks owned by member banks shall not be trans­
ferable, nor be [hypothecated] hypothecate . In case a member
bank [increased] increase its capital stock or surplus, it shall there­

upon subscribe for an additional amount of capital stock o f the
Federal reserve bank of its district equal to [tw en ty] sir per centum
o f the [bank's ow n] said increase [ o f capital,] one-half of said sub­
scription to be paid |m cash] in tne manner hereinbefore provided
for original subscription, and one-half [to become a liability of the
member bank according to the terms of the original subscription]
subject to call of the Federal reserve board. A bank applying for
stock in a Federal reserve bank at any time after the [form ation of
the latter] organization thereof must subscribe for an amount of the
capital stock of [s a id ] the Federal reserve bank equal to [tw en ty]
six per centum o f the paid-up capital stock and surplus of said [sub­
scribing] applicant bank, paying therefor its par value Tin accord­
ance with the terms prescribed by section two o f this act] plus one-

half of one per cent a month from the period of the last dividend.
When the capital stock of any Federal reserve bank [Im s] »hal1 have
been increased either on account o f tin* increase of capital stock o f




42

BANKING AND CURRENCY.

member banks or on account o f the increase in the number o f mem­
ber banks, the board o f directors shall [make and execute] cause to
be executed a certificate to the Comptroller of the Currency showing
[s a id ] the increase in capital stock , the amount paixi in, and bv
whom paid. In case a member bank reduces its capital stock it shall
surrender a proportionate amount o f its holdings in the capital o f
said Federal reserve bank, and in case a member bank goes into vol­
untary liquidation it shall surrender all of its holdings o f the capital
stock o f said Federal reserve bank and be released from its stock sub­
scription not previously called. In either case the shares surren­
dered shall be canceled and such member bank shall receive in pay­
ment therefor, under regulations to be prescribed by the Federal re­
serve board, a sum equal to its cash paid subscriptions on the shares
surrendered and one-half of one per rent a month from the period of
the last dividends not to exceed the book value thereof, less any lia­
bility of such member bank to the Federal reserve bank.
S e c . 6. [T h at 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 o f its cash-paid subscriptions all debts due by such insolvent
bank to said Federal reserve bank, shall be paid to the receiver o f the
insolvent bank] I f any member bank shall be declared insol rent and a
receiver appointed the re for , the stock held by it in said Federal reserve
bank shall be canceled* and all cash-paid subscriptions on said stock,

with one-half of one per centum per?nonth from the period of last divi­
dend\ not to exceed the book value thereof * shall be first applied to
all debts of the insolvent member bank to the Fcderal reserve bank%
and
the balance. if any, shall be paid to the receiver of the insolvent bank.
Whenever the capital stock o f a Federal reserve bank is reduced,
either 011 'account of a reduction in capital stock o f any member bank
or o f the liquidation or insolvency o f [any such member] such bank,
the board o f directors shall [make and execute] cause to be executed,
a certificate to the Comptroller o f the Currency showing such reduc­
tion o f capital stock and the amount repaid to such bank.
D IV ISIO N OF E A K N IN < ;S .

Sk< . 7. [That after the payment o f ] After all necessary expenses
[and taxes] o f a Federal reserve bank have been paid or provided
for* the meinl>er banks shall be entitledto receive an annual dividend
o f [fiv e ] six per centum 011 the paid-in capital stock, which dividend
shall be cumulative. [O ne-half of the net earnings, after the afore­
said dividend claims have been fully met, shall be paid into a surplus
fund until such fund shall amount to twenty per (entiun o f the
paid-in capital stock of such bank, and of the remaining one-half
sixty per centum shall l>e paid to the Tinted States and forty per
centum to the member banks in the ratio of their average balances
with the Federal reserve bank for the preceding 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 have received the dividends at the rate o f five per
centum per annum hereinbefore provided for. sixty per centum o f
all excess earnings shall be paid to the Tinted States and forty per




BANKING AND CUBBENCY.

43

centum to the member banks in proportion to their annual average
balances with such Federal reserve bank; a ll] After the aforesaid
dividend claims have been fully met, all the net earnings shall be
paid to the United States as a franchise tax, excepting, however, that

one-half of such earnings shall be first applied to the creation and
maintenance of a surplus fund equal to twenty per centum of the
capital stock of said bank. All net earnings derived by the United
States from Federal reserve banks shall [constitute a sinking fund
to be held fo r ] be applied to the reduction o f the outstanding bonded
indebtedness o f the United States[, said reduction to be accom­
plished] 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] any surplus remaining,
after the payment o f all debts and dividend requirements as here­
inbefore provided for, shall be paid to and become the property o f
the United States and shall be similarly apvlied.
Every Federal reserve bank incorporated under the terms o f this
act [a n d ], the capital stock therein [held by member banks], and the
ineomA> denied therefrom shall be exempt from Federal, State, and
local taxation, except in respect to taxes upon real estate.
S e c . 8. [T hat any national banking association heretofore organ­
ized may upon application at any time within one year after the
passage o f 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, o f national banking associations organ­
ized subsequent to the passage of this act: Provided , That such appli­
cation on the part o f such associations shall be authorized by the
consent in writing o f stockholders owning not less than a majority
o f the capital stock o f the association. Any national banking asso­
ciation now organized which shall not, within one year after the
passage o f this act. become a national banking association under the
provisions hereinbefore stated, or which shall fail to complv with
any o f the provisions o f this act applicable thereto, shall l>e dis­
solved: 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.]
S e c . 0. [That any] Any bank [o r banking association] incorpo­
rated by special law of arty State or of the United States, or organ­
ized under the general laws of anv State or of the United States, and
having an unimpaired capital sufficient to entitle it to become a na­
tional banking association under the provisions o f existing laws, may,
by [the consent in w riting] rote o f the shareholders owning not less
than fifty-one per centum of the capital stock o f such bank or bank­
ing association, [a n d ] with the approval o f the Comptroller o f the
Currency [become a ] and acting through a committee* organize a

national banking axxoclaiion9-with any name approved by the said
comptroller, and transfer its business to such national banking asso­
ciation [under its former name or by any: name approved by the
comptroller] ; Prodded . however, That said arts are not in contra­
vention of the State or local law. The directors thereof may con­
tinue to be the directors o f 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




44

BANKING AND OUBMKOY.

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 nave the same powers and privileges, and shall
be subject to the same duties, liabilities, and regulations, in all re­
spects, as shall have been prescribed by this act [or| and by the na­
tional banking act for associations originally organized as national
banking asssociations.
STATE BA N K S AS MEMBERS.

S ec. 10. -{That from and after the passage o f this act any] Any
bank [o r banking association or trust com pany] incorporated by
special law o f any State, or organized under the general laws o f any
State or of the ITnited States, may make application to the reserve
bank organization committee, pending organization, and thereafter to
the Federal reserve board [hereinafter created] for the right to sub­
scribe to the stock o f the Federal reserve bank organized or to be
organized within the Federal reserve district where the applicant is
located. The organization committee or the Federal reserve board,
under such rules and regulations as it may prescribe, subject to the
rovisions o f this section, [sh a ll] may permit [su ch ] the applying
ank to become a stockholder in the Federal reserve bank o f the dis­
trict in which [su ch ] the applying bank is located. Whenever the
organization committee or the Federal reserve board shall permit
[su ch ] the applying bank to become a stockholder in the Federal
reserve bank o f 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.
[ I t shall be the duty o f the] The organization committee or the
Federal reserve board [ t o ]
establish by-laws for the general gov­
ernment o f its conduct in acting upon applications made by the State
hanks and banking associations and trust companies [hereinbefore re­
ferred 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 and capital requirements and to submit
to the [inspection] examination and [regulation provided for in
this and other laws relating to national banks] regulations pre­

E

scribed by the organization committee or by the Federal reserve
board. Xo [su ch ] applying bank shall be admitted to membership
in a Federal reserve bank unless it possesses a paid-up unimpaired
capital sufficient to entitle it to become a national banking asso­
ciation in the place where it is situated, under the provisions o f the
national banking act [ , and conforms to the provisions herein pre­
scribed for national banking associations of similar capitalization
and to the regulations of the Federal reserve board].

Any bank becoming a member of a Federal reserve bank under the
provisions of this section shall, in addition to the regulations and
restrictions hereinbefore provided, be required to conform to the
provisions of law imposed on the national banks and to such rules and
regulations as the Federal reserve board may, in pursuance thereof,
prescribe respecting the limitation of liability which may be incurred
by any person, firm-, or corporation to such banks, the prohibition
against making purchase of or loans on stock of such banks, and the




BANKING AND CURRENCY.

45

withdrawal or impairment of capital, or the payment of unearned
dividends.
Such banks, and the officers, agents, am/ employees thereof, shall
also be subject to the provisions of and to the penalties prescribed by
sections fifty-one hundred and ninety-eight* fifty-two hundred and
eight, fifty-two hundred, fifty-two hundred and one,
fifty-two
hundred and eight and fifty-two hundred and nine of the Revised
Statutes. The member banks shall also be required to make reports
of the conditions and of the payments of dividends to the comp­
troller, as provided in sections fifty-two hundred and eleven and fiftytwo hundred ami twelve of the Revised Statutes, and shall be subject
to the penalties prescribed by section fifty-two hundred and thirteen
for the failure to make such report.
I f at any time it shall appear to the Federal reserve board that a
hanking association or trust company organized under the laws o f
any State or o f the United States and having become a member bank
has failed to comply with the provisions of this section or the regu­
lations o f the Federal reserve board, it shall be within the power of
the said board, .after hearing, to require such banking association
^ trust company to surrender its stoc k in the Federal reserve bank;
[in w hich it holds stoc
upon [receiving from ] such surrender the
Federal reserve bank shall pay the cash-paid subscriptions to the said
stock [in current- fu n d s] trith interest at the rate of one-half of one

per centum per month
computed from the last dividend, if
earned, not to exceed f*he book value thereof, less any liability to said
Federal reserve bank, c.vcept the subscription liability not previously
(ailed, which shall he canceled* 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
o f membership, and shall within thirty days of such notice cancel
and retire its stock and make payment therefor in the manner herein
provided. The Federal reserve board, may restore membership upon
due proof of compliance frith the conditions imposed by this section.
FEDERAL RESERVE HOARD.

S et.

11. [ T hat there shall l>e created a ] .1 Federal reserve b oa rd [J

is hereby created which shall consist of seven members, including the
Secretary o f the Treasury, [the Secretary of Agriculture, and the
Comptroller of the Currency,] who shall l>e [members] a member
ex officio, and [f o u r ] si.r members appointed by the President of the
United States, bv and with the advice and consent of the Senate.
In selecting the [fo u r ] si.r appointive meml>ers 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] the financial, commercial* and
geographical divisions of the country. The [fo u r ] si.r members of
the Federal reserve board appointed 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 o f the Currency, as ex officuwnember o f said Federal reserve board, shall, in addition to the salary now




46

BANKING AND CUBBENCY.

paid him as comptroller, receive the sum o f $5,000 annually for his
services as a member o f said boa rd ], O f the [f o u r ] six members
thus appointed by the President [n ot more than two shall be of the
same political party, and] at least [one o f whom] two shall be [a
person] person* experienced in banking or finance. One shall be
designated bv the President to serve for [t w o ] one, one for [f o u r ]
two, one for [s ix ] three. [a m i] one for [eight years] four, one for
fire, and one for sir years, respectively, and thereafter each member
so appointed shall serve for a term o f [e ig h t] six years unless sooner
removed for cause by the President. O f the [f o u r ] six persons thus
appointed, one shall be designated by the President as [m anager]
governor and one as vice [m anager] governor of the Federal reserve
board. The [m anager] governor o f the Federal reserve board, sub­
ject to the supervision o f the [Secretary of the Treasury and] Fed­
eral reserve board, shall be the active executive officer of the Federal
reserve board. In ease of vacancies,, temporary appointments on the

Federal reserve hoard may he made hy the President when the
Senate is not in session, to he immediately submitted to the Senate
when it convenes. The Secretary of the Treasury may assign offices
in the Department of the Treasury for the use of the Federal reserve
board. TLaeh member of the Federal reserve hoard shall within
fifteen days after notice of appointment make and subscribe to the
o(ith of office.
The Federal reserve board shall have power to levy semiannually
upon the Federal reserve banks, in proportion to their capital stock
and surplus. $n assessment sufficient to pay its estimated expenses
and salaries of its members and employees for the half year succeed­
ing the levying o f such assessment, together with any deficit carried
forward from the preceding half year.
The first meeting o f the Federal reserve board shall Im held in
»
Washington, District o f Columbia, as soon as may be after the
passage o f this act, at a date to be fixed by the reserve bank organi­
zation committee. The Secretary o f the Treasury shall be ex officio
chairman o f the Federal reserve board. No member o f the Federal
reserve lx>ard shall be an officer or director o f any bank, [ o r ] bank­
ing institution, trust company, or Federal reserve bank nor hold
stock in any bank, [ o r ] banking institution, or trust company,
and before entering upon his duties as a member o f the Federal
reserve board lie shall certify under oath to the Secretary o f the
Treasury that he has complied with this requirement. Whenever a
vacanov shall occur, other than bv expiration o f term, among the
[ f o u r ] six members o f the Federal reserve board appointed by th«j
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 appointed he shall hold office for the unexpired
term o f the member whose place he is selected to fill.

Nothing in this act contained sh/ill he construed as taking away
any powers heretofore vested by law in the Secretary of the Treasury
which relate to the supervision, management, and control of the
Treasury Department and bureaus under such department\ and, wher­
ever any power rested hy this act in the Federal reserve hoard or the
Federal reserve agent appears to conflict with the powers of the Sec­
retary/ of the Treasury, such powers shall be exercised subject to the
supervision and control of the Secretary.




BANKING AND CURRENCY.

47

The Federal reserve board shall annually make a full report of
its [fiscal] operations to the Speaker of the House of Representa­
tives, 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 o f the Treasury a bureau charged, except
as in this act otherwise provided, with the execution o f all laws
passed bv Congress relating to the issue and regulation of currency
issued by or through banking associations, the chief officer of which
bureau shall be called the Comptroller o f 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 b oa rd :”
Provided, hou'cver, 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]j There shall be in the

Department of the Treasury a bureau charged with the execution of
all laws passed by Congress relating to the issue and regulation of
national currency secured by United States bonds and\ under the
general supervision of the Federal reserve board, of all Federal
reserve notes, the chief officer of which bureau shall be called the
Comptroller of the Currency and shall perform his duties under
the general directions of the Secretary of the Treasury ”
S e c . 12. [T hat the] 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 of each member 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 condi­
tion 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 [su ch ] the Federal reserve banks, single and
combined, and shall furnish full information regarding the character
o f the [la w fu l] money held as reserve and the amount, nature, and
maturities of the paper and other investments owned or held by
Federal reserve banks.
(b) To permit or require[. in time of emergency,] Federal reserve
banks to rediscount the discounted [p rim e] paper of other Federal
reserve banks[, at least five members of the Federal reserve board
being present when such action is taken and all present consenting to
the requirement. The exercise o f 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 o f the rates prevailing in the districts
immediately affected] at rates of interest to fixed each week by the
Federal reserve board.
(c) To suspend for a period not exceeding thirty days, [ ( ] and
from time to time to renew such suspension for periods not [to exceed]
exceeding fifteen d a y s [)]. any [and every] reserve requirement
specified in this act: Prodded , That it shail establish a graduated
tax upon the amounts bv 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 Federal reserve banks and
to member banks, required to keep the same reserves^ but said board




48

BANKING AND CURRKNCY.

shall not suspend the reserve requirements with reference to Federal
reserve notes].
(d ) [ T o supervise and regulate the issue and retirement o f Federal
reserve notes and to prescribe the form and tenor o f such notes.]

To supervise and regulate thi'ough the bureau under the charge of
the Comptroller of the Currency the issue and retirement of Federal
voter re notes, and to prescribe rules and regulations under which such
notes may be delivered by the comptroller of the Federal reserve
agents applying therefor.
(e) To add to the-number o f cities classified as reserve and central
reserve cities under existing law in which national banking asso­
ciations are subject to the reserve requirements set forth in section
twenty o f this act; or to reclassify existing reserve and central re­
serve cities [and to designate the banks therein situated as country
banks at its discretion] or to terminate tluir designation as such.
(f ) [T o suspend tne officials o f Federal reserve banks and, for
cause stated in writing with opportunity o f hearing, require the
removal o f said officials for incompetency, dereliction of duty, fraud,
or deceit, such removal to be subject to approval bv the President o f
the United States] To suspend or remove any officer or director of

any Federal reserve bank* the cause of such removal to be forthwith
communicated in writing by the Federal reserve boat'd to the removed
officer or director and to said bank.
(g ) To require the writing off o f doubtful or worthless assets
upon the books and balance sneets o f Federal reserve banks.
(h) To suspend, for cause relating to violation of any o f thjtpro­
visions o f this act, the operations o f any Federal reserve bank and
[appoint a receiver therefor] take possession, thereof and administer

the same during the period of suspension.
(i) To require bonds of Federal reserve agents, perform the duties,
functions, or services specified or implied in this act, and to make all
rules and regulations necessary to enable said board effectively to
pcrfo-rm the same.
(j) To exercise general supervision over said Federal resa w banks.
(k) To authorize the use, as reserves of member banks* Federal
reserve notes, or bank notes based on United States bonds* to the
extent that said board may find necessary.
(I) To grant by special permit to national banks applying there­
for the right to act as trustee, c#eeutor%or to exercise general trust
powers under such rides and regulations as the said board may
prescribe.
F ED ER AL ADVISOR Y

COVNC1L.

S ec.
There is hereby created a Federal advisory council, which
shall consist o f as many members as there are Federal reserve dis­
tricts. Each Federal reserve bank by its board o f directors shall an­
nually select from its own Federal reserve district one member o f said
council, who shall receive [n o compensation for his services, but may
be reimbursed for actual necessary expenses] such compensation and

allowances as may be fixed by his board of directors subject to the
approval of the Federal reserve board. The meetings o f said advisory
council shall l>e held at Washington, District o f Columbia, at least
four times each year, and oftener if called by the Federal reserve




BANKING AND CURRENCY.

49

board. T h e cou n cil m ay select^ its ow n officers and a d op t its ow n
m ethods o f procedure, and a m a jority o f its members shall constitute
a quorum fo r the transaction o f business. V acancies in the cou n cil
shall be filled b y the respective reserve banks, and m em bers selected
to fill vacancies shall serve f o r the unexpired term.
T h e Federal a d visory council shall have pow er, by itself or through
Us officers* (1 ) to [m e e t a n d ] co n fe r directly w ith the F ederal reserve
board on general business con d ition s; (2 ) to m ake oral o r written
representations con cern in g m atters w ithin the ju risd iction o f said'
b o a r d ; (3 ) to call f o r [ c o m p le t e ] inform ation and to m ake recom ­
m endations in regard to d iscou nt rates, rediscount business, note
issues, reserve con d ition s in the various districts, the* purchase and
sale o f g o ld o r securities b y reserve banks, o|>en-market operations b y
said banks, and the general affairs o f the reserve b an k in g system.
POWERS OF FEDERAL RESERVE BANKS.
S ec . 14. [T h a t a n y ] Any F ederal reserve bank m ay receive fro m
any of its m em ber [ b a n k ] banks* and from the United States, d epos­
its o f current fu n d s in la w fu l m oney, national-bank notes, F ed eral
reserve notes, o r checks and d ra fts upon solvent banks o f the Federal
reserve system, payable upon presen tation ; or, solely f o r exchange
purposes, m ay receive from other Federal reserve banks deposits o f
current fun ds in law fu l m oney, national-bank notes, o r checks and
d ra fts upon solvent member or other Federal reserve banks, payable
u pon presentation.
U p on the indorsem ent o f any of its m em ber [ b a n k ] hanks, any
Federal reserve bank m ay discount notes, draft** and b ills o f ex­
change arisin g out o f actual com m ercial transactions; that is, notes,
drafts, and bills o f exchange issued o r draw n f o r agricultural, indus­
tria l, o r com m ercial purposes, o r the proceeds o f which have been
used, o r [ m a y ] arc to be used, f o r such purposes, the Federal reserve
board to have the righ t to determ ine o r define the character o f the
p a p er thus eligib le f o r discount, w ithin the m eaning o f this act [ ;
n o th in g h erein ]. Nothing in this act contained shall be construed to
p roh ib it such notes, drafts, and bills o f exchange, secured b y staple
agricultural p roducts, o r oth er good s, wares, o r m erchandise from
bein g eligible f o r such d iscou n t; but such definition shall not include
notes, drafts, o r b ills covering merely investments or issued o r draw n
f o r the purpose o f ca rry in g o r tra d in g in stocks, bonds, o r other
investm ent securities, except bonds and nates of the Government of
the I nitcd States. N otes, drafts, and b ills adm itted to discount
under the terms o f this paragrap h must have a m aturity at the tim
<e
o f d i s c o u n t o f not m ore than ninety days.
[ U p o n the indorsem ent o f any m em ber bank any Federal reserve
bank m ay d iscou n t the paper o f the classes hereinbefore described
h a v in g a*m aturity o f m ore than ninety and not m ore than one hun­
dred and tw en ty days, when its ow n cash reserve exceeds th irty-three
and one-third per centum o f its total ou tstan din g dem and liabilities
exclu sive o f its ou tstan d in g F ederal reserve notes b y an am ount to
be fixed by the Federal reserve b o a r d : but not m ore than fifty per
centum o f the total p aper so discounted fo r any m em ber bank shall
have a m aturity o f m ore than ninety days.




50

BANKING AND 'CURRENCY.

U pon the indorsem ent o f anv member bank a n y ] Any F ed eral
reserve bank m ay discount acceptances o f [ s u c h ] member banks
w hich are based on the exp ortation or im portation or domestic ship­
ments o f good s and w hich [m a tu re i n ] have a maturity at time of dis­
count of not m ore than [ s i x ] three m onths, and bear the signature o f
at least one m em ber bank in addition to that o f the acceptor. T h e
am ount of acceptances so discounted shall at no tim e exceed on e -h a lf
the capital stock and surplus o f the bank fo r w hich the rediscounts
are made.
T h e aggregate o f such notes and bills bearin g the signature o r in ­
dorsem ent o f .any one person, com pan y, firm , or co rp ora tion red is­
counted f o r any one bank shall at no tim e exceed ten per centum o f
the unim paired capital and surplus o f said b a n k ; but this restriction
shall not a p p ly to the discount o f bills o f exchange d raw n in g o o d
fa ith against actually existin g values.
A n y national bank m ay [ . at its d iscretion ,] accept d ra fts or b ills
o f exchange draw n upon it [h a v in g n ot m ore than six m onths sight
to r u n ] and g row in g out o f transactions in v o lv in g the im p ortation ,
[ o r ] exp ortation , or domestic shipment o f go o d s having not more
than six months sight to m n; but no bank shall accept such b ills to
an am ount equal at any tim e in the aggregate to m ore than o n e -h a lf
[t h e face value o f ] its p aid -u p [a n d u n im p a ire d ] ca p ital stock and

surplus.
[S e c tio n fifty -tw o hundred and tw o o f the R evised Statutes o f the
U n ited States is hereby amended so as to read as fo llo w s : N o asso­
ciation shall at any tim e be indebted, or in any w ay liable, to an
am ount exceedin g the amount o f its capital stock at such tim e a c­
tually p aid in and rem ainin g undim inished b y losses o r otherw ise,
except on account o f dem ands o f the nature f o llo w in g :
First. N otes o f circulation.
S econd. M oneys deposited w ith o r collected b y the association.
T h ird . B ills o f exchange or d ra fts draw n against m oney actually
on deposit to the credit o f the association, o r due thereto.
F ou rth . L iabilities to the stockholders o f the association f o r d iv i­
dends and reserve profits.
F ifth . L iabilities incurred under the p rovision s o f sections tw o ,
five, and fourteen o f the Federal reserve a c t.]

The Federal reserve board may authorize the reserve bank of the
district to discount the direct obligations of member banks, secured
by the pledge and deposit of satisfactory securities; but in no case
shall the amount so loaned by a Federal reserve bank exceed threefourths of the actual value of the securities so pledged.
The rediscount by any Federal reserve bank of any bills receivable
and of domestic and foreign bills of exchange and acceptances shall
be subject to such restrictions* limitations, and regulations as may be
imposed by the Federal reserve board.
OPEN-MARKET <
»PERATIONS.
Sec. 15. [T h a t a n y ] Any Federal reserve bank m ay. under rules
and regulations prescribed by the Federal reserve b oard, purchase
and sell in the open m arket, at home or abroad, either fro m o r to
dom estic or foreign banks, firms, corp oration s, or individu als,
[ P r im e ] cable transfers an'1 bankers' [ b i l l s ] acceptances and b ills




BANKING AND CURRENCY,

51

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] or
abroad, to make loans thereon, exchange Federal reserve notes for
Ifold, (fold coin* or gold certificates, and to contract for loans of gold
coin or bullion, giving therefor, when necessary, acceptable security,
including the hypothecation of United States bonds or other securi­

ties which Federal reserve banks are authorized to hold;
(b) to [invest in] buy and sell, at home or abroad, bonds and notes
of the United States [bonds], and [bonds issue*) by any State,
county, district, or municipality] bills, notes* revenue bonds, ana
warrants with a maturity from date of purchase of not exceeding six
months, issued in anticipation of the collection of taxes or in antici­
pation of the receipt of assured revenues by any State, county, dis­
trict, or municipality of the United States, such purchases to he made
in accordance with rules and regulations prescribed by the Federal
reserve board;
(e) 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] from
time to time, subject to review and determination of the Federal
reserve board, [a rate] rates of discount to be charged by [such]
the Federal reserve bank for each class of paper, which shall be
fixed with a view of accommodating [th e] commerce [o f the coun­
try] and^business ; [and]
(e) to establish .accounts with other Federal riser re banks for
exchange purposes and, with the consent of the Federal reserve board,
to open and maintain banking accounts in foreign countries, appoint
correspondents, and establish agencies in such countries wheresoever
it may deem l>est for the purpose* of purchasing, selling, and collecting [foreign] bills of exchange, and to buy and sell with or without
its indorsement, through such correspondents or agencies, [prime foreign] bill of exchange arising out of actual commercial transac­
tions which have not [exceeding] more than ninety days to run and
which bear the signature of two or more responsible parties.
OOVKRNMKNT DEPOSITS

S k<. 10. [That all] The moneys [now ] held in the general fund
*
of the Treasury, except the five per centum fund for the redemption
of outstanding national-bank notes and the funds provided in this
act for the redemption of Federal reserve mtes [snail] may, upon
the direction of the .Secretary of the Treasury, [witnin twelve months
after the passage of this act,] be deposited in Federal reserve banks,
which banks [shall,] when require^ by the Secretary of th< Treasury,
shall act as fiscal agents of the United States: and [thereafter] the
revenues of the Government or any part thereof [sh all] may l>e
[regularly] deposited in such banks, and disbursement [shall] may
be made bv checks drawn against such deposits.




52

BANKING AND CURRENCY.

No public funds of the Philippine Islands, or of the postal savings,
or any Government funds, shall be deposited in the continental
United States in any bank not belonging to the system established by
this act: Provided, however, That nothing in this act shall be con­
strued to deny the right of the Secretary of the Treasury to use
member banks as depositaries.
[T h e Secretary of the Treasury shall, subject to the approval o f
the Federal reserve board, from time to time, apportion the funds
o f the Government among the said Federal reserve banks, distribut­
ing 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 o f the United
States.
No Federal reserve bank shall receive or credit deposits except
from the Government o f the United States, its own member banks,
and. to the extent permitted bv this act, from other Federal reserve
banks. All domestic transactions o f the Federal reserve banks in­
volving loans* made by such banks, rediscount operations or the cre­
ation o f deposit accounts shall be confined to the Government and
the depositing and Federal reserve banks, with the exception o f the
purchase or sale of Government or State securities or o f gold coin
or bull ion. J
NOTE

ISSU E S.

S e c . 17. Federal reserve notes, to be issued at the discretion of the
Federal reserve board for the purpose o f making advances to Fed­
eral reserve banks through the Federal reserve agents as hereinafter
set forth and for no other purpose, are hereby authorized. The said
notes shall be obligations o f the United States and shall be receivable
for all taxes [ , customs,] and other public dues, except customs. They
shall be redeemed in gold [o r lawful money] on demand at the
Treasury Department o f the United States, in the city o f Wash­
ington, District o f Columbia, or in gold or lawful money at any
Federal reserve bank.
Any Federal reserve bank may [ , upon vote o f its directors,] make
application to the local Federal reserve agent for such amount o f the
Federal reserve notes hereinbefore provided for as it may [deem
best] require. Such application shall be accompanied with a tender
to the local Federal reserve agent o f collateral in amount equal to
the sum o f the Federal reserve notes thus applied for and issued
pursuant to such application. The collateral security thus offered
shall be notes and bills accepted for rediscount under the provisions
o f section 14 o f this act, and the Federal reserve agent shall each
day notify the Federal reserve board o f all issues and withdrawals
o f Federal reserve 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 secur­
ity to protect the Federal reserve notes issued to it.
[W henever any Federal reserve bank shall pay out or disburse Fed­
eral reserve notes issued to it as hereinbefore provided, it shall segre­
gate in its own vaults and shall carry to a special reserve account on




BANKING AND CURRENCY.

53

its books gold or lawful money equal in amount to thirty-three and
one-third per centum of the rfeserve notes so paid out by it, such re­
serve 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 Federal
reserve notes.J

Every Federal reserve bank shall maintain reserves in gold or law­
ful money of not less than thirty-jive per centum against its deposits
and its Federal reserve notes in actual circulation, but the amount of
gold in the Federal reserve bank, together with the amount deposited
by it with the Treasury, shall be at least equal to thirty-three and onethird per centum of the Federal reserve notes issued to said bank and
in actual circulation and not offset by aold or lawful money depos­
ited with the Federal reserve agent. Notes so yaid out shall near
upon their faces a distinctive letter and serial number, which shall be
assigned by the Federal reserve board to each Federal reserve bank.
Whenever Federal reserve notes issued through one Federal Toserve
bank shall l>e received by another Federal reserve bank they shall be
[immediatelyJ ipromptly returned for credit oi' redemption to the
Federal reserve Dank through which they were originally issued [,o r
shall be charged off aga list Government deposits and returned to the
Treasury of the United States, or shall he presented to the said
Treasury for redemptionJ. 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 out of
the redemption fund, and, if fit for circulation, returned to the Fed­
eral reserve banks through wnich they were originally issued. Fed­
eral reserve notes received by the Treasury, otherwise than for re­
demption, [shallJ may be exchanged for [lawful money] gold 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, or they may be returned to such
bank for the credit of the United States. Federal reserve notes unfit

for circulation shall he retui'ned by the Federal reserve agents to the
Comptroller of the Currency for cancellation and destruction.

The Federal reserve board snail [have power, in its discretion, to]
require each Federal reserve [banxs] bank to maintain on deposit
in the Treasury of the United States a sum in gold [equal to five
per centum o f] mfficient in the judgment of the Secretary of the
Treasury for the redemption of [such amount o f] the Federal re­
serve notes [as may be] issued to [them under the provisions of this
act] such bank but in no event less than five per centum; but such
[five per centum] deposit of gold shall be counted and included as
part of the thirty-three and one-third per centum reserve hereinbe­
fore required. The [said] board shall [also] have the right, acting
through the Federal reserve agent, 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 re­
serve board shall, through its local Federal reserve agent [deposit]
supply Federal reserve notes [w ith] to the [banks] bank so apply­
20306 0 — 58------ 15




64

BANKING AND CURRENCY.

ing, 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 estab­
lished by the Federal reserve board, [w hich rate shall not be less
than one-half o f 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 o f such bank.
Any Federal reserve bank may at any time reduce its liability for
outstanding Federal reserve notes by [the deposit o f ] depositing,
with its Federal reserve agent, Federal reserve notes, [whether issued
to such bank or to some other reserve bank, or lawful money of the
United States,] gold certificates, or gold [bullion, with any Federal
reserve agent, or with the Treasurer o f the United States, and such
reduction shall be accompanied by a corresponding reduction in the
required reserve fund of lawful money set apart for the redemption
o f said notes and by the release of a corresponding amount o f the
collateral security deposited with the local Federal reserve agent].

The Federal reserve agent shall hold such gold certificates and
gold available for exchange for the outstanding Federal reserve notes
when offered by the reserve bank of which he is a director. Upon
the request of the Secretary of the Treasury the Federal reserve
board shall require the Federal reserve agent to transmit said gold
to the Treasury of th£ United States for the redemption of such
notes.
Any Federal reserve bank may at its discretion withdraw collateral
deposited with the local Federal reserve agent for the protection of
its Federal reserve notes deposited with it and shall at the same time
substitute therefor other like collateral of equal [va lu e] amount
approved by the Federal reserve agent under regulations to be pre­
scribed by the Federal reserve board.

In order to furnish suitable notes for circulation as Federal re­
serve notes, the Comptroller of the Currency shall, under the direc­
tion of the Secretary of the Treasury, cause plates and dies to be
engraved in the best manner t• guard, against counterfeits and fraud­
ulent alterations, and shall have printed therefrom and numbered
such quantities of such notes in blank of the denominations of $1. $2,
$6, $10, $20, $50, $100, as may be required to supply the Federal re­
serve banks. Such notes shall be in form and tenor as directed by
the Secretaty of the Treasury under the provisions of this act and
shall bear the distinctive numbers of the several Federal reserve
banks through which they are issued.
When such notes have been prepared, they shall be d posited in the
<
Treasury, or in the subtreasury or mint of the United States nearest
the place of business of each Federal reserve bank, a/nd shall be held
for the use of such bank subject to the order of the Comptroller of
the Currency for their delivery, as provided by this a r t .
The plates and dies to be procured by the Comptroller of the Cur­
rency for the printing of such circulating notes shall remain under
his control and direction, and the expenses necessarily incurred in
executing the laws relating to the procuring of such notes, and all
other expenses incidental to their issue and, retirement, shall be paid
by the Federal reserve banks, and the Federal reserve board shall
include in its estimate of expenses levied against the Federal reserve
banks a sufficient amount to cover the expenses herein provided for.




BANKING AND CURRENCY.

55

The examination of plates, dies, bed pieces, and so forth , anrf
regulations relating to such examination of plates, die*, and so
forth , 0/ national-bank notes provided for in section fifty-one hun­
dred arid seventy-four, Revised Statutes, is hereby extended to in­
clude Federal reserve notes herein provided for .
Any appropriation heretofore made out of the general funds of
the Treasury for engraving plates and dies, the purchase of dis­
tinctive paper, or to cover any other expense in connection with
the printing of national-bank notes or notes provided for by the
act o f May thirtieth, nineteen hundred and eight, and any distinctive
aper that may be on hand at the time of the passage of this act may
e used in the discretion of the Secretary for the purposes of this
act, and should the appropriations heretofore made be insufficient
to meet the requirements of this act in addition to circulating^ notes
provided, for by existing law, the Secretary is hereby authorized to
use so much of any funds in the Treasury not otherwise appropriated
for the purpose of furnishing the notes aforesaid: Provided, how­
ever, That nothing in this section contained shall be construed as
exempting national banks or Federal reserve banks from their liabil­
ity to reimburse the United States for any expenses incurred in print­
ing and issuing circulating notes.

f

[ I t shall be the duty o f every Federal reserve bank to receive on
deposit, at par and without charge for exchange or collection, checks
and drafts drawn upon any o f its depositors or bv any of its depositors
upon any other depositor and checks and drafts drawn by any de­
positor in any other Federal reserve bank upon funds to the credit
o f said depositor in said reserve bank last mentioned, nothing herein
contained to be construed as prohibiting member banks from mak­
ing reasonable charges to cover actual expenses incurred in collecting
and remitting funds for their patrons.] .

Every Federal reserve bank shall receive on deposit from member
banks or from Federal reserve banks checks and drafts drawn upon
any of its depositors, and when remitted by a Federal reserve bank,
checks and drafts drawn by any depositor in any other Federal
reserve bank or number bank upon fluids to the credit of said de­
positor in'said reserve bank or member bank. Nothing herein con­
tained shall be constmcd as prohibiting a member bank from making
reasonable charges for checks and drafts so debited to its account, or
for collecting and remitting funds, or for exchange sold to its patrons.
The Federal reserve board may, by rule, fix the charges to be col­
lected by the member banks from its patrons whose checks are
cleared through the Federal reserve bank and the charge rvhich may
be imposed for the service of clearing or collection rendered by the
Federal reserve bank.
The Federal reserve board shall make and promulgate from time
to time regulations governing the transfer o f funds [a t par] and
charges therefor among Federal reserve banks and their branches, and
may at its discretion exercise the functions o f 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 o f a clearing house for its member banks.
S e c . 18. That so much o f the provisions o f section liftv-one hun­
dred and fifty-nine o f the Revised Statutes of the United States, and
section four of the act o f June twentieth, eighteen hundred and




56

BANKING AND CUBBENCY.

seven ty-four, and section eight o f the act o f J u ly tw elfth , eighteen
hundred and eigh ty-tw o, and o f any other provision s o f existin g stat­
utes, as require that b efore any national banking association shall be
authorized to com m ence ban k in g business it shall tran sfer and de­
liver to the Treasurer o f the U nited States a stated am ount o f U nited
States registered bonds be, and the same is hereby, repealed.
R E F U N D IN G

BO NDS.

[ S e c . 19. That upon application the Secretary o f the Treasury
shall exchange the two per centum bonds of the United States bear­
ing the circulation privilege deposited by any national banking asso­
ciation with the Treasurer of the United States as security for cir­
culating notes for three per centum bonds o f 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 here­
inbefore provided to an amount exceeding five per centum o f the total
amount of bonds on deposit with the Treasurer by said bank for cir­
culation 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 hold­
ings of bonds. At the expiration of twenty years from the passage
of this act every holder of United States two per centunl bonds then
outstanding shall receive payment at par and accrued interest. After
twenty years from the date o f the passage of this act national bank
notes ill 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 o f lawful money to be deposited in the
Treasury of 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 o f the
Currency based up*n the deposit of two per centum bonds or o f any
other bonds hearing 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 o f any
substitute for such circulating notes in the form of clearing-house
loan certificates, cashier's checks, or other obligation.]

Sec. 10. Upon application by a Federal reserve bank the Secretary
of the r r< usury shall, for the account of such bank, assume the reT
derupt ion of circulating notes of any national bank requesting the
same and surrendering in writing the two per centum bonds held in
trust by the Treasurer of the United States as security for its circula­
tion. Such two per centum bonds shall, at the ovtion of such Federal
reserve bank, be reissued by the Secretary of tne Treasury as bonds
bearing three per centum interest, due July first, nineteen hundred
and thirty-three, or as one-year notes renewable from year to year




BANKING AND CURRENCY.

57

until July first, nineteen hundred and thirty-three, and bearing in­
terest at the rate of three per centum per annum. The amount o f
the redemption of such notes shall not exceed $36,000,000 per annum
and shall be apportioned pro rata among the national banks apply­
ing fo r such redemption at the end of ewch quarterly period of any
fiscal year. The circxdating notes of any national bank, the redemp­
tion of which is so. assumed, shall%when delivered to the Treasury
for redemption, be canceled and redeemed out of funds to be furnished
the Secretary of the Treasury by the Federal reserve bank making
the application aforesaid; and the Federal reserve board shall there­
upon deliver to the Federal reserve bank an equal amount of Federal
reserve notes without interest or penalty of any kind, and the two per
Centura bonds aforesaid, oi% three per centum bonds or notes issued
the
in lieu thereof, shall be held in trust for such Federal reserve bank
by the Treasurer of the United States as security for the redemption
of such notes.
BANK RESERVES.
[ S e c . 2 0 . T h a t from and a fter the date when the Secretary o f the
Treasury shall have officially announced, in such manner as he m ay
elect, the fact that a Federal reserve bank has been established in any
designated district, every banking association within said district
w hich shall have subscribed fo r stock in such Federal reserve bank
shall be required to establish and maintain reserves as fo llo w s :
(a ) I f a country bank as defined by existing law, it shall hold and
maintain a reserve equal to twelve per centum o f the vaggregate
amount o f its deposits, not including savings deposits h erein after
provided for. F ive-tw elfth s o f such reserve shall consist o f m oney
w hich national banks may under existing law count as legal reserve,
held actually in the bank’s own vaults; and fo r a p e rio d o f fourteen
months from the date aforesaid at least three-tw eliths and thereafter
at least five-tw elfths o f such reserve shall consist o f a credit balance
with the Federal reserve bank o f its district. T h e rem ainder o f the
twelve per centum reserve hereinbefore required may, fo r a period o f
thirty-six months from^and after, the date fixed bv the Secretary o f
the Treasury as hereinbefore p rovid ed, consist o f balances due irom
national banks in reserve or central reserve cities as now defined b y
law. F rom and a fter a date th irty-six months subsequent to the date
fixed by the Secretary o f the Treasury as hereinbefore provided the
said rem ainder o f the twelve per centum reserve required o f each
country bank shall consist either in w hole or in part o f reserve m oney
in the bank’s ow n vaults or o f credit balance with the Federal reserve
bank o f its district.
(b ) I f a reserve city bank as defined by existing lawT it shall h old
,
and m aintain, fo r a period o f sixty days from the date fixed by the
Secretary o f the Treasury as hereinbefore p rovided, a reserve equal
to twenty per centum o f the aggregate amount o f its deposits, n ot
inclu din g sayings deposits hereinafter provid ed fo r , and perm anently
thereafter eighteen per centum. A t least on e-h a lf o f such reserve
shall consist o f m oney which national banks m ay under existin g law
count as legal reserve, held actually in the bank’s ow n vaults. A ft e r
sixty days from the date aforesaid, and fo r a period o f one year, at
least three-eighteenths and perm anently thereafter at least five-




58

BANKING AND CUBRENCY.

eighteenths o f such reserve shall consist o f a cred it balance w ith the
F ederal reserve bank o f its district. T h e rem ainder o f the reserve
in this paragraph required m ay, f o r a period o f th irty-six m onths
fro m and a fter the date fixed by the Secretary o f the T reasu ry as
herein before p rovid ed , consist o f balances due fro m national banks
in central reserve cities as now defined by law. F rom and a fter a
date th irty-six months subsequent to the date fixed by the Secre­
tary o f the T reasury as h erein oefore p rovid ed, the said rem ainder o f
the eighteen p er centum reserve required o f each reserve city bank
shall consist either in w hole o r in p art o f reserve m oney in the ban k ’s
ow n vaults or o f credit balance with the F ederal reserve bank o f its
district.
(c)
I f a central reserve city bank as defined by existin g law , it
shall h old and m aintain fo r a period o f sixty days fro m the date
fixed b y the Secretary o f the Treasury as hereinbefore p rov id ed a
reserve equal to twenty per centum o f the aggregate am ount o f its
deposits, n ot in clu d in g savings deposits hereinafter p rovid ed fo r, and
perm anently thereafter eighteen per centum. A t least on e -h a lf o f
such reserve shall consist o f m oney w hich national banks m ay under
existin g law count as legal reserve, held actually in the bank’s ow n
vaults. A ft e r sixty days from the date aforesaid, and th ereafter f o r
a p eriod o f one year, at least three-eighteenths and perm anently
thereafter at least five-eighteenths o f such reserve shall consist o f a
credit balance with the Federal reserve bank o f its district. T h e
rem ainder o f the eighteen per centum reserve required o f each cen­
tral reserve city bank shall consist either in w hole or in p art o f
reserve m oney actually held in its ow n vaults o r o f cre d it balance
with the Federal reserve bank o f its district.J

Sec. 20. Demand liabilities within the meaning of this act shall
comprise all liabilities maturing within thirty days, and time depos­
its shall comprise all deposits payable after thirty days.
When the Secretary of the Treasury shall hare officially an­
nounced* in such manner as he may elect, the establishment of a Fed­
eral reserve bank in any district\ every subscribing member bank shall
establish and, maintain reserves as follou's:
(а) A bank not in a reserve or central reserve city as now or here­
after defined shall hold and maintain reserves equal, to twelve per
centum of the aggregate amount of its demand liabilities and five per
centum, of its time deposits, as follows:
In its vaults for a period of thirty-six months after said date fourtwelfths thereof.
In the Federal reserve bank for a period of fourteen months after
said date two-twelfths, and permanently thereafter five-twelfths.
For a period of thirty-six months after said date the balance of
the reserves may be held in its own vaults, or in the Federal reserve
bank, or in banks in reserve or control reserve city banks as now
defined by law.
After said thirty-six months’ period said reserves, other than those
hereinbefore required to be held in the reserve bank, shall be held, in
the vaults of the member bank or in the Federal reserve bank, or in
both%at Us option.
(б ) A bank in a reserve city , as now or hereafter defined, shall hold
and maintain reserves equal to eighteen per centum of the aggregate




BANKING

a

ND

CUBBBNOY.

59

amount of its demand liabilities and five per centum of its time depos­
its, as follows:
In its vaults six-eighteenths thereof.
In the Federal^ reserve bank for a period of fourteen months after
the date aforesaid at least three-eighteenths and permanently there­
after six-eighteenths of said reserve.
For a period of thirty-six months after said date the balance of
said reserves shall be held in its vaults, in the Federal reserve bank,
or in central reserve city banks as now defined by law.
After said thirty-six months’ period all of said reserves, except
those hereinbefore required to be held permanently in the Federal
reserve bank, shall be held in its vaults or in the Federal reserve bank,
or in both, at its option.
(<?) A bank in a central reserve city as now or hereafter defined
shall hold and maintain a reserve equal to eighteen per centum of the
aggregate amount of its demand liabilities and five per centum of its
time deposits, as follows:
In its vaults six-eighteenths thereof.
In the Federal reserve bank for a period of fourteen months after
the date aforesaid at least three-eighteenths, and permanently there­
after six-eighteenths.
For a period of thirty-six months after said date the balance of
said reserves shall be held in its own vaults or in the Federal reserve
bank at its option.
After said thirty-six months’ period all of said reserves, except
those herein permanently required to be held in the Federal reserve
bank, shall be held in its own vaults or in the Federal reserve bank,
or both, at its option.
Any Federal reserve bank may receive from the member banks as
reserves, not exceeding one-half of said installment thereof, eligible
discounted paper properly indorsed and acceptable to the said reserve
bank.
If a State bank or trust company is required by the laws of its
State to keep its reserves either in its own vaults or with another
State bank or trust company, such reserve deposits so kept in such
State bank or trust company shall be construed, within the meaning
of this section, as if they were reserve deposits in a national bank
in a reserve or central reserve city for a period of three years after
the Secretary of tJ Treasury shall have officially announced the
ie
establishment of a Federal reserve bank in the district in which such
Stale bank or trust company is situate. Except as thus provided
no member bank shall keep on deposit with any nonmember bank a
sum in excess of ten per centum of its own paid-up capital and sur­
plus. No member bank shall extend directly or indirectly the benefits
of this system to a nonmember bank, except upon written permis­
sion of the Feder'al reserve board, under penalty of suspension.
The reserve carried by a member bank with a Federal reserve bank
may, under the regulations and subject to such penalties as may be
prescribed by the Federal reserve board, be checked against and
withdrawn by such member bank for the purpose of meeting existing
liabilities: Provided, however, That no bank shall at any time make
new loans or shall pay any dividends unless and until the total reserve
required by law is fully restored.




60

BANKING AND CURRENCY.

S ec . 21. [ T h a t s o ] So m uch o f sections tw o and three o f th e act
o f J u n e tw entieth, eighteen hundred and seven ty-fou r, en titled “ A n
act fix in g the am ount o f U nited States notes, p ro v id in g f o r a redis­
trib u tion o f the national bank cu rren cy, and f o r oth er purposes,”
as p rovid es that the fu n d deposited by any n ational b a n k in g asso­
ciation w ith the Treasurer o f the U nited States f o r the redem ption
o f its notes shall be counted as a part o f its la w fu l reserve as p r o ­
vided in the act a foresa id , be, and the same is hereby, repealed.
A n d fro m and a fte r the passage o f this act such fu n d " o f five p er
centum shall in n o case be counted b y any n ation al b an k in g asso­
cia tion as a part o f its la w fu l reserve.
S ec . 2 2 . [ T h a t every F ederal reserve b a n k ] In addition to the

reserve required against the Federal reserve notes emitted by a
Federal reserve bank\ it shall (Tat all times have on h a n d ] maintain
in its ow n vaults, in g o ld , o r la w fu l m oney other than Federal re­
serve notes, a sum [e q u a l t o ] not less than th irty-th ree and o n e-th ird
per centum o f its outstandin g dem and liabilities other than its Federal riser re notes.
T h e Federal reserve board m ay n o tify any F ederal reserve bank
whose la w fu l reserve shall be below the am ount required to be [ k e p t
on h a n d ] maintained, to make g o o d .s u ch reserve; and i f such l>ank
shall fa il f o r th irty days th ereafter so' to m ake g o o d its la w fu l re­
serve, the Federal reserve board m ay [a p p o in t a receiver to w in d u p
the business o f said b a n k ] suspend and take possession of such re­

serve bank and administer the same during the period of suspension.
BANK EXAMINATIONS.
S ec . 2 3 . [ T h a t the exam ination o f the affairs o f every nation al
ban k in g association authorized b y existin g la w ] Every member
bank shall [ta k e p la c e ] be examined by the Comptroller of the Cur­
rency at least tw ice in each calendar year and as m uch often er as the
F ed eral reserve board shall con sider necessary [ , in ord er to fu rn ish
a fjull and com plete know ledge o f its co n d it io n ], [ T h e S ecretary o f
the T r e a s u r y ] The Federal reserve board may authorize examina­

tions by the State authorities to be accepted in the case of State banks
and trust companies and m ay [ , h o w e v e r ,] at any tim e d irect the
h o ld in g o f a special exam ination. T h e person
assigned to t h e ]
m a k in g [ o f s u c n ] the exam ination [ o f the affairs o f any [n a tio n a l
b an k in g a ss o cia tio n ] member bank shall have p o w e r to ca ll together
a quorum o f the d irectors o f such [a s s o c ia tio n ] bank, w h o shall,
u n aer oath , state to such exam iner the ch aracter and circum stances,
o f such o f its loans or discounts as he m ay 'designate [ ; and fro m
and a fte r the passage o f this act all bank exam iners shall receive
fixed salaries, the am ount w h ereof shall be determ ined b y th e ].
The F ed era l reserve board shall fix the salaries of all bank examiners
and [a n n u a lly r e p o r te d ] make report thereof to C ongress. [ B u t
t h e ] The expense o f the exam inations herein p ro v id e d f o r shall be
assessed b v authority of the F ederal reserve board u pon the [a s s o ­
c ia tio n s ] banks exam ined in p rop ortion to assets o r resources held
b y such [a s s o c ia tio n s ] banks upon [ a date d u rin g the yea r in w h ich
such exam inations are held to be established b y the F ed era l reserve
board. T h e C om p troller o f the C u rrency shall so arrange the duties




J

BANKING AND CURRENCY.

61

o f national-bank examiners that no two successive examinations o f
any association shall be made by the same examiner] the dates when

the various banks are examined.
In addition to the examinations made and conducted by the Comp­
troller of the Currency, every Federal reserve bank may, with the
approval o f the Federal reserve agent or of the Federal reserve
board, [arrange] provide for special [o r periodical] examination of
[t h e ] 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 o f 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 bv the latter concerning the
condition o f any [national bank located] member bank within the
district o f the said Federal reserve bank.

No association shall be subject to any visitor!al powers other than
such as are authorized by lair, or vested in the courts of justice, or
such as shall be or shall hare been exercised or directed by Congress,
or either House thereof, or any committee thereof.
[T h e Federal reserve board shall as often as it deems best, and in
any case not less frequently than four times each year, order an ex­
amination 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,
4jnd upon joint application of ten member banks the Federal re­
serve boaixl shall order a special examination and report of the con­
dition o f any Federal reserve bank.
S ec. 24. [T hat no national] No inember bank or any officer, di­
rector , or employee thereof shall hereafter make any loan or grant
any gratuity to any examiner of such bank. Anv bank officer. director, or employee thereof [offending against] violating this provision
shall be deemed guilty of a misdemeanor and shall be imprisoned not
exceeding one year or fined not more than $5,000, or both; and fined
a further sum equal to the money so loaned or gratuity given [ ; and
the officer or officers of a bank making such loan or granting such
gratuity shall be likewise deemed guilty of a misdemeanor and each
shall be fined not to exceed $5,000]: Any examiner accepting a loan
or gratuity from any bank examined by liim or from an officer, direc­
tor *or employee thereof shall be deemed guilty of a misdemeanor and
shall be imprisoned not c,receding one year or fined not more than
$5,000, or both; and fined 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 national-bank ex­
aminer shall perform, any other service for compensation [w hile
holding such office] for any bank or officer, director,
employee
thereof.
[N o officer or director of a national bank shall receive or be bene­
ficiary, either directly or indirectly, o f any fee (other than a legiti­
mate fee paid an attorney at law for legal services), commission, gift,
or other consideration for or on account o f any loan, purchase, sale*




62

iiANKING AND CURRENCY.

payment, exchange, or transaction with respect to stocks, bonds, or
other investment securities or notes, bills o f exchange, acceptances,
bankers' bills, cable transfers or mortgages made by or 011 behalf o f
a national bank o f which he is such officer or director.] Other then
the usual salary or directors fee paid to any officer, director. or em­

ployee of a member bank and other than a reasonable fee paid to such
officer, director, or employee acting as an attorney at law for legal
services rendered to such banlc, no officer, director, employee, or
attorney of a member bank shall be a beneficiary of or receive,
directly or indirectly, any fee , commission, gift, or other considera­
tion for or in connection with any transaction or business of the
bank. No examiner, public or private, shall disclose the names of
bori'owers or the collateral for loans of a member bank to other than
the proper officers of such bank without first having obtained the ex­
press permission in writing from the Comptroller of the Currency,
except when ordered to do so by a court of competent jurisdiction, or
by direction of the Congress of the Untied States, or either House
thereof, or any committee thereof. Any person violating any pro­
v ision o f this section shall be punished bv a fine o f not exceeding
$5,000 or by imprisonment not exceeding [five years] one year, or
both [such fine and imprisonment, in the discretion o f the court hav­
ing jurisdiction].
ISxcept so fa r as already provid ed in existin g law s this p ro v isio n
shall not take effect until [ * ix m o n th s ] sixty days a fte r the passage
o f this net.
S ec. !> > [That from and after the passage o f this act th e] The
.* .

stockholders o f every [national banking association] member bank
shall be held individually responsible for all contracts, debts, and en­
gagements o f such [association] bank, each to the amount o f his
stock therein, at the par value thereof in addition to the amount in­
vested in such stock. The stockholders in any [national banking
association] member bank who shall have transferred their shares or
registered the transfer thereof within sixty days next before the
date o f the failure o f such [association] bank to meet its obligations,
or with knowledge of such impending failure. shall be liable to the
same extent as if they had made no such transfer, to the extent that
the subsctfttf nt transferee fails to meet such liability ; but this pro­
vision shall not be construed to affect in any way any recourse which
such shareholders might otherwise* have against those in whose names
such shares are registered at the time o f such failure. [Section fiftyone 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.

S ec. 2<l. CThat a n y ] Any national b an k in g association not situ­
ated in a reserve rity o r central reserve citv m ay m ake loans secured
by im proved and unencum bered fa rm land, situated within its Fed­
eral reserve district, but no such loan shall be m ade f o r a lo n g e r tim e
than [twelve m o n th s ] five years, n or f o r an am ount exceed in g fifty

>er centum o f the
value o f the property offered as security
1and such propertyactual be situated within the Federal reserve dis­
",
shall
trict in which the bank is located].




Any such bank may make such

BANKING AND CURRENCY.

63

loans in an aggregate sum equal to twenty-five per centum o f its
capital and surplus.

The Federal reserve board shall have power from time to time to
add to the list o f cities in which national banks shall not be permit­
ted to make loans secured upon real estate in the manner described
in this section.
[SAVINGS DEPARTMENT.]
[ S e c . 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 o f said national bank have by a majority vote appor­
tioned a specified percentage o f their paid-in capital and surplus to
said savings department, and to that end have segregated specified
assets for the uses of said department, or that cash capital for the
said sayings department has been,obtained by subscription to addi­
tional issues o f the capital stock o f said national bank: Provided,
That the capital thus set apart for the uses o f the proposed savings
department aforesaid shall in no case be less than $15,000, or than a
sum equal to twenty per centum o f the paid-up capital and surplus
o f the said national bank.

In m aking the application aforesaid any national banking associ­
ation may further apply fo r power to act as trustee for mortgage
loans subject to the conditions and limitations herein prescribed or
to be established as hereinafter provided.
Whenever the Comptroller o f the Currency shall have approved
any such application as hereinbefore provided, he shall so inform
the applying bank, and thereafter it shall be authorized to receive
savings deposits as so defined, and the organization and business con­
ducted or possessed bv said bank at the time o f making said applica­
tion. except such as has been specifically segregated for the savings
department, and subsequent expansions thereof shall be known as
the commercial department o f the said bank. The said departments
shall, to all intents and purposes, be separate and distinct institu­
tions save and except as hereinafter expressly provided. The capital,
surplus, deposits, securities, investments, and other property, effects,
and assets o f each o f said departments shall, in no event, be mingled
with those o f the other department, or used, either in whole or in
part, to pay any o f the deposits o f the other department until all
o f the deposits o f its own department have been fully paid and satis­
fied. National banks may increase or diminish their capital stock in
the manner now provided by law, but whenever such general increase
or reduction o f the capital stock o f any national bank operating upon
the provisions o f this section shall be made such increase or reduc­
tion shall be apportioned between the commercial and savings de­
partments o f the said bank as its board o f directors shall prescribe,
notice o f such increase or reduction, and o f the apportionment
thereof, being forthwith given to the Com ptroller o f 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 o f this section,




64

BANKING AND CUBBBNOY.

notifying the Comptroller o f the Currency as hereinbefore provided.
The savings department for which authority has been solicited and
granted shall have control o f the cash or assets apportioned to it
as hereinbefore provided, and shall be organized under rules and
regulations to be prescribed by the Comptroller o f the Currency.
Iioth the savings and commercial departments so created shall,
however, be under the control and direction o f a single board o f
directors and o f the general officers o f said bank.
All business transacted by the commercial department o f 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 commer­
cial business.
The savings department o f each such national bank shall be author­
ized to accumulate and loan the funds o f its depositors, to receive
deposits o f current funds, to purchase securities authorized by the
Federal reserve board, to loan any funds in its possession upon real
estate or other authorized security, and to collect the same with
interest, and to declare and pay dividends or interest upon its de­
posits. The Federal reserve board is hereby authorized to exempt
the savings departments o f national banking associations from any
and every restriction upon classes or kinds o f business laid down in
the national banking act, and it shall be the duty o f the said board
within one vear after its organization to prepare and publish rules
and regulations for the conduct o f business by such savings depart­
ments. The said regulations shall require every national bank which
shall conduct a savings department and a commercial department to
segregate in its owA vaults the cash and assets belonging to such
departments, respectively, and shall prescribe the general forms o f
separate books o f account to be used by each such department for its
exclusive and individual u*e. The regulations aforesaid shall further
specify the period o f notice for the withdrawal o f deposits made in
tne said savings department and shall forbid the acceptance o f de­
posits by one department o f such national bank from the other de­
partment o f such bank. The Federal reserve board shall make and
publish at its discretion lists o f securities, paper, bonds, and other
forms o f investment, which the saving departments of national banks
shall be authorized to buy or loan upon: and said lists need not be
uniform throughout the United States, but shall be adapted to the
conditions of business in different sections o f the country.
It shall be the duty of every national bank to maintain, with re­
spect 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 |>er centum of the total deposit liabilities o f
such department, and every national bank authorized to maintain
a savings department i* hereby exempted from the reserve require­
ments o f the national banking act and o f this act in respect to the
said deposit liabilities o f its savings department, except as in this
section provided. Every regulation made in pursuance o f this sec­
tion shall be duly publi>hed. and also posted in every member bank
having a savings department.
Every officer, director, or employee of any member bank who shall
knowingly or willfully violate any o f the provisions o f this section.




BANKING AND CURRENCY.

65

or any of the regulations o f the Federal reserve board, or of the
Comptroller o f the Currency, made under and by virtue of the pro­
visions of this section, shall be guilty o f a felony, and on conviction
thereof shall be punished by a fine not exceeding $5,000 or by im­
prisonment not exceeding two years, or both, in the discretion of the
court.]
FOREIGN BRANCHES.

Sec. 28. That any national banking association possessing a capi­
tal and surplus o f $1,000,000 or more may file application with the
Federal reserve board, upon such conditions and under such cir­
cumstances as may be prescribed by the said board, for the purpose
o f securing authority to establish branches in foreign countries or
dependencies of the United States for the furtherance of the foreign
commerce o f tne United States and to act, if required to do so, as
fiscal agents o f the United States. Such application shall specify,
in addition to the name and capital o f the banking association filing
it, the [foreign country or countries or the dependencies of the
United States] place or places where the banking operations pro­
posed are to be carried.on and the amount o f capital set aside by the
said banking association filing such application for the conduct o f
its foreign business at the branches proposed by it to be established
in [foreign countries] such place or places. The Federal reserve
board shall have power to approve or to reject such application if, in
its judgment, the amount 0 1 capital proposed to be set aside for the
conduct o f foreign business is inadequate or if for other reasons the
granting o f such application is deemed inexpedient.
Every national banking association which shall receive authority
to establish foreign branches [in foreign countries] shall be required
at all times to furnish information concerning the condition of such
branches as 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 o f its home office, and shall at the end
o f each fiscal period transfer to its general ledger the profit or loss
accruing at each [su ch ] branch as a separate item.
Sec. 29. rThat a ll] All provisions of law inconsistent with or
superseded by any of the provisions o f this act [be, and the same are]
are to that extent and to that extent only hereby[,] repealed[: Pro­
vided, That nothing]. Nothing in this act contained shall be con­
strued to repeal the parity provision or provisions contained in an
act approved March fourteenth, nineteen hundred, entitled 4An act
4
to define and fix the standard o f value, to maintain the parity of all
forms o f money issued or coined by the United States, to refund the
public debt, and for other purposes,” and the Secretary of the Treas­
ury may for such purposes, or to strengthen the gold reserve, borrow

gold on the security of United States bonds or for one-year notes
bearing interest at a rate of not to exceed three ver centum per an­
num, or sell the same if necessary to obtain gold. When the funds




66

BANKING AND CURBENCY.

of the Treasury on hand justify, he may purchase and retire such
outstanding bonds and notes.
Sec. S9a. The provisions of the act of May thirtieth, nineteen hun­
dred and eight, authorizing national currency associations, the issue
of additional national-bank circulation, and creating a National
Monetary Commission, which expires by limitation under the terms
of such act on the thirtieth day of June, nineteen hundred and four­
teen, are hereby extended to December thirty-first, nineteen hundred
and fourteen, and sections fifty-one hundred and fifty-three, fifty-one
hundred and seventy-two fifty-one hundred and ninety-one, and
fifty-two hundred and fourteen of the Revised Statutes of the united
States, which were amended by the act of May twentieth, nineteen
hundred and eight, are hereby reenacted to read as such sections read
prior to May twentieth, nineteen hundred and eight subject to such
amendments or modifications as are prescribed in this act.

,

,

Sbo. 80. That the right to amend, alter, or repeal this act is hereby
expressly reserved.




Aggregate resources and liabilities of national banks, 1908 to 1912.
1906 (July 15).

I

1909 (Apr. 28). j 1910 (June 30).

1911 (June 7).

1912 (June 14).

7,277 banks.

7,372 banks.

Classification.
6,824 banks.

6,893 banks.

7,145 banks.

RESOURCES.

1 oana on real es­
tate.......................
$67,070,962.46......................
$65,112,003.29
$74,831,997.2$
Loans on other col­
lateral security. . i $1,990,152,632.00 1,939,431,702.85 $2,050,590,293.00 2,004,993,992.88 2,135,767,904.3#
Other loans and
discounts.............
2,625,522,899.59 2,966,608,204.24^3,379,568,893.75 3,540,732,790.84 3,743,304,530.1$
Overdrafts..............
24,705,023.68
23,397,257.78
19,849,391.66
24,584,065.22
25,743,314.27
U n i t e d St at es
bonds...................
732,599,187.16; 740,167,972.67 748,797,808.97
754,744,891.34
783,497,976.72
State, oountv, and
municipal Donds.
* 179,384,137.05, 156,012,965.93 * 161,998,193.97
176,284,278.64
210,426,073.3$
Railroad b o n d s
and stocks...........
* 507,425,613.60 351,371,063.96 298,692,105.00
384,321,275.41
361,221,071.31
Bank stocks...........
Bonds of other
public-service
corporations.......
148,643,966.78 153,025,132.00
196,707,106.26
182.297.622.00
O th er stocks,
bonds, etc...........
153,305,600.23 208,165,517.21 249,447,101.58
287,328,644.09
287.840.448.00
Due from other
b anks and
1,104,458,684.94 1,232,556,106.45 1,201,606,823.38 1,376,785,821.33 1,424,091,680.31
bankers...............
Real estate, furni­
ture, e t c ...........
198,279,190.33 216,966,786.14 236,463,370.67
266,626,008.79
263,009,304.09
Checks and other
cash items.........
296,215,400.39
271,464,243.39 338,333,768.51 482,805,231.42
317.477.121.00
996,142,823.46
Cash on hand.......
889,213,394.43 926,776,902.82 866,462,856.21
998,061,441.06
44,664,163.0$
Other resources___
62,593,847.89
41,090,650.76
37,553,793.69
42,433,572.51
Total...........

8,714,064,400.00 9,368,883,843.13|9,896,624,696.731
10,383,048,694.31 10,861,763,877.16

LIABILITIES.

Capital stock
O
919,100,850.00 933,979,903. C 989,567,114.00 1,019,633,152.25 1,033,570,675.00
693,990,419.06
671,946,796.68
564,045,022.80 587,132,286.31 644,857,482.82
Surplus fund..........
Other undivided
256,837,096.57
241,554,106.09
184,656,57& 85 207,944,821.08 216,546,125.10
profits..................
1,622,660.16
1,851,823.47
2,849,822.39
1,130,750.07j
15,144,463.48
Dividends unpaid.
I n d i v i d u a l de­
4,374,551,208.33 4,826,060,384.38|5,287,216,312.20 5,477,991,156.45 5,825,461,163.36
posits...................
United States de­
58,945,980.66
48,455,641.64
130,266,023.63
70,401,818.99!
54,541,349.41
posits «................. I
Due to other banks
and bankers........ j 1,822,853,669.00 2,036,753,287. 4711,900,135,622.01 2,147,440,999.04 2,178,163,418.11
813,172,666.21
774,175,018.79
715,741,227.09 705,480,591.83! 788,616,227.71
Other liabilities___
Total,...........

8,714,064,400.09 9,368,883,843.1319,896,624,696.73 10,383,048,694.31 10,861,763,877.16

i Classification as of September call.
* Includes State, etc., and railway bonds held by Treasurer of United States to secure public deposits.
> Includes bonds of other corporations.
« Includes deposits of United States disbursing officers.
Note.—For consolidated statement of all banks, see text of this report.




67

68

BANKING AND CUBRENCY.

Aggregate resources and liabilities of State banks from 1908 to 191M.
1906

1909

11,MO banks.

11,319 banks.

1910

1911

1912

12,664 banks.

13,361 banks.

CiaBttottlon.
12,166 banks.

BStOUBGBS.
Loins on m l estate........ 1188,358,186 $414,620,660.12 $472,428,486.63 $469,660,662.27 $672,934,870.29
L oom on otter collateral
security......................
137,270,669 669,690,467.10 694,419,426.26 606,377,469.16 663,942,284.11
Other loons anddisoounts. 2,090,944,681 1,112,841,061.34 1,306,646,666.62 1,311,064,107.63 1,379,686,928.04
Ovwdnfts.....................
29,447,901
34,316,874.»
30,972.194.67
32,860,006.94
32,322,218.37
United 8totes bonds.......
2,888,614
2,050,780.00
6,221,710.94
4,330,639.47
2,846,777.60
Bto^ooungr, oad munio»
3,729,479
66,682,211.21
81,967,470.66
63,952,194.59
66,096,142.18
Railroad bonds and stock
2,698,260 76,0)6,949.01
69,343,006.36 75,763,869.86
71,649,647.21
Bonk stocks...... ............
184,386
Bonds of other public
60,977,866.08 44,484,912.86
service corporations.....
63,609,977.26
62,742,067.88
96,892,443.89 123.793.906.69 129,109,896.01 130,339,491.96
Other stocks, bonds, etc.. 492,936,633
Due from other bonks and
bonkers....................... 649,297,601 491,961,366.43 486,361,866.14 525,822,785.89 630,161,901.29
Reel estate, furniture, etc. 136,146,988 119,702,242.64 130,641,382.91 136,115,689.73 138,428,767.36
Gheoks and other cash
76,096,440.72 106,187,734.96
71.261,438
77,865,345.68
77,762,380.62
Hems..........................
308,736,342 227,039,134.90 240,680,836.12 236,662,497.38 241,766,724.46
Cash on hand.................
10,180,096.61
Other resources..............
28,764,607
22.892.480.69
17,364,546.x 18,550,760.18
Total.................... 4,032,638,485 3,338,669,134.19 3,604,968,766.81 3,747,786,296.35 3,897,770,826.71
LIABILITIES.
Capital stock.................. 602,613,303 416,069,900.00 436.822.833.68 452,944,684.44 459,067,206.61
Surplus fund.................. 217,112,086 162,639,306.36 187,571,006.45 170,566,937.42 271,373,944.18
66,678,941.67
86,603,972 91,213,767.67
Other undivided profits..
92,786,739.26
1,039,492.86
2 441,796.41
682,749
1,236,652.15 ........829,045*46
Dividends unpaid...........
Individual deposits........ 2,937,129,698 2,466,968,666.76 2,727,826,966.08 2,777,566,836.81 2,919,977,897.99
Due to other banks and
207,432,967 168,968,649.87 129,768,627.00i 144,578,103.41 142,644,643.99
|
bankers......................
61,799,462.77 146.748.676.68lj 108,106,343.86 103,878,088.34
81,263,791
Other liabilities..............
fi
Total................... 4,032,636,485|3,338,669,134.19 3,694,968,766.81 j3,747,786,296.3 3,897,770,826.71

Aggregate resources and liabilities of savings banks (mutual and stock savings)
from 1907-8 to 1912.
1907-8
ClaHifloation.

1909

1910

1911

1912

1,453 banks.

1,703 banks.

1,759 banks.

1,884 banks.

1,922 banks.

mxsouacxs.
Loans on real estate........... $1,440,061,603 $1,620,131,445.62 $1,832,097,713.03 $1,963,906,841.51 $2,067,677,677.90
Loons on other ooUateral
security
66,624,786 232,893,152.82 226,704,806.91 205,912,380.77 240,472,906.77
Other loons and disoounts. 364,362,059 177,977,483.04 233,707,955.82 243,857,140.37 259,374,577.22
Overdrafts............................
1,050,343
1,906,951.03
2,266,509.26
1,978,070.99
1,595,816.33
United 8tatee bonds.........
13,860,645
43,566,428.18 32,082,745.00 13,226,534.10
29,031,138.46
State, oounty, and munic­
ipal bonds........................ 587,156,390 710,159,643.86 743,463,260.89 779,927,236.80 776,431,140.75
618,193,416 769,980,508.90 783,704,137.70 792,998,933.33 794,083,006.66
Railroad bonds and stocks
Bank stocks.........................
24,266,271
Bonds of other publio
96,554,513.65 120,134,242.69 101,139,974.97 143,565,265.60
service corporations.......
93,009,919.88 117,727,439.77 161,976,217.67 179,809,612.84
343,466,167
Other stocks, bonds, etc. .
Due from other banks and
163,616,708 218,477,832.87 214,327,121.92 242,389,433.46 258,280,430.86
bonkers.............................
57,010,988
Real estate, furniture, e tc .
68,123,675.81
75,866,650.82
73,955,091.77
80,830,846.66
Checks and other eash
3,944,728.46
779,228
5,39!', 201.49
4,552,812.46
4,594,881.48
items..................................
43,483,533
32,697,021.94
50,880,340.23
42,408,336.78
45,452,063.85
Cash on hand....... ..............
85,604,217
2,927,330.95
22,554,993.25
Other resources...................
45,782,436.65
21,141,671.69
Total.......................... 3,809,533,152 4,072,710,105.34|4,481,871,444.90 4,652,313,302.62 4,922,723,290.63
LIABILITIES.

59,506.420.00
68,320,822.30 72,177,899.09
Capita) stock.......................
36,013,4^5
76,871,811.79
244,711,801 224,424,711.93 276,229,027.77 261,834,083.46 280,036,025.43
Surplus fund.......................
53,814,779.06
Other undivided profits..
39,412,250 62,160,100.11
77,264,792.69
89,595,370.89
92,707.96
364,639.25
51,294.48
Dividends unpaid..............
262,835.16
Individual deposits........... 3,479,192.891 3,713,405,709.80 4,070,486,246.70 4,212,583,598.53 4,451,555,687.72
Due to other banks and
8,234,513.44
3,187,417
6,690,451.96
8,084,294.10
10,181,417.50
bankers.............................
4,885,942.10
7,015,338
5,965,477.86
20,317,340.27
14,220,142.14
Other liabilities..................
Total.......................... 3,809.533.152 4.072, HO, 105.34 4,481,871,444.90 4,652,313,302.62 4,922,723,290.63




69

BANKING AND CUBKSNCY.

Aggregate resource* and Habilitie* of private bankt from 1908 to lilt.
1908

1909

1010

1911

1913

1,007 banks.

1,407 banks.

934 banks.

1,116 banks.

1,110 banks.

Classification.
RESOURCES.

Loans on real estate..................... 919,610,740 •36,636,702.07 $22,746,018.18 $37,536,422.83
Loans on other collateral se­
curity...........................................
7,521,009 21,096,873.66 13,832,195.89 16,316,121.33
Other loans and discounts.......... 80,226,810 103,569,194.24 70,224,281.77 71,559,680.31
Overdrafts......................................
4,616,218.90
1,646,968.46
1,796,144
3,633,647.85
United States bonds....................
609,219.30
389,190.00
297,157
410,383.47
State, county, and municipal
bonds...........................................
3,228,802.32
2,336,285.00
3,466,506.73
1,100,443
Railroad bonds and stocks.........
1,213,577.66
584,460.18
448,547.38
500,901
Bank stocks....................................
205,348
Bonds of other public service
1,760,406.73
corporations................................
1,418,865.04
1,106,865.55
Other stocks, bonds, etc.............
5,135,443.71
6,187,297.87
5,992,780.67
5,821,870
Due from other Danks and
bankers........................................ 27,298,378 40,832,801.79 24,069,188.01 36,168,941.51
7,482,500.61
9,631,350.43
Real estate, furniture, etc...........
6,448,497 13,026,388.49
1,039,496.54
704,623.55
1,387,731.95
Checks ana other cash items___
1,529,589
7,189,337.84
Cash on hand................................
6,764,890.90
8,497,540 11,053,706.52
889,584.93
Other resources..............................
1,037,343.91
2,135,304.04
636,340

01,611.77
19,775,746.64
18,108,577.60
3,370,427.64
433,117.74
3,486,189.30
1,413,833.37
1,906,671.33
7,667,677.00
39,633,664.53
14,314,049.3$
800,306.87
7,450,404.38
1,083,330.04

Total..................................... 161,541,480 246,256,355.41 160,015,552.81 182,824,220.68 196,940,397.43
LIABILITIES.

|

Capital stock.................................. 21,122,836 27.726.922.00 18,809,561.74 21,872,416.34 22,348,040.33
9,333,680.83
7,329,974.38
6,541,431.06
Surplus fund.................................. 5,556,230 10.195.237.01
4i 250,634.46
3,421,956.92
5,533,006.44
3,160,559.55
Other undivided profits..............{ 3,475,238
74,638.22
189,643.09
Dividends unpaia. ......................
62,003.43
62,448.49
35,160
Individual deposits...................... 126,673,158 193,263,224.31 124,644,003.22 ;143,377,224.21 152,404,618.90
1,707,139.16
3,404,236.54
1,644,318.25 | 1,583,296.84
Due to other banks and bankers. 1,561,453
6,731,645.53
Other Liabilities............................. 3,117,396
5,063,230.50 | 6,149,708.90
6,071,725.68
Total..................................... 161,541,480 246,256,355.41 160,015,552.81 182,824,220.68 196,940,397.43

Aggregate resources and liabilities of loan and trust companies from J908 to
1912.
1908
Classification.

1909

1910

1911

1912

842 compa­
nies.

1,079 compa­
nies:

1,091 compa­
nies.

1,251 compa­
nies.

1,410 compa­
nies.

BESOUBCE8.
Loans on real estate.......... $153,727,485 $377,318,280.19 $369,161,435.56 $467,531,456.44 $526,509,702.60
Loans on other collateral
821,341,681 1,222,881,129.16 1,230,282,986.02 1,289,452,721.54 1,279,983,539.16
security............................
Other loans and discounts. 404,412,308 460,550,850.39! 655,016,724.24 668.650.649.78 900,350,885.96
860,744
3,786,253.54
3,916,235.40
Overdrafts...........................
2,111,764.82
4,397,620.37
555,303
3,222,380.20 l
2,224,692.43
United States bonds..........
1,271,940.00
5,985,004.50
State, county, and munic­
89,639,659 155,647,931.87 144,495,162.24 187,123,910.87 202,293,176.75
ipal bonds........................
29,576,312 362,404,241.30 312,518,321.28 371.707.846.78 380,190,967.79
Railroad bonds and stocks
4,805,843
Bank stocks........................
Bonds of other publio168,589,933.84 i 159,294,782.36 212,593,716.76 208,673,579.15
service corporations.......
Other stocks, bonds, e tc .. 651,298,154 / 468,914,756.87 541,978,126.32 341.128.520.22 421.996.627.13
\ 300,324,823.03 382,683,343.96
Due from other banks and
bankers............................. 391,573,223 578,243,506.14 467,643,271.31 617,605,590.281 606.669.507.26
97,112,461 127,216,448.81 125,486,325.05 143,081,102.71 157,188,150.08
Real estate, furniture, etc.
i
Checks and other cash
5,878,676
items.................................
19,129,908.471
26,374,390.56
21,763,736.38
51,677,976.00
Cash on hand...................... 118,398,874 254,447,910.16' 260,129,890.91 269.825.566.23 282.151.463.26
96,452,153
Other resources..................
34,641,394.691
80,379,723.21
68,635,104.75
80.375.993.13
T o t a l ................... . 2,865,632,876 4,068,534,982.65 4,216,850,061.52 4,665,110,868.71,5,107,444,382.27
LIABILITIES.

Capital stock............„......... 278,408,750 362,763,223.09 367,333,556.37 385,782,933.44 418,985,771.77
Surplus fund....................... 370,145,308 351,699,101.89 432,718,233.98 400,406,067.99 424,313,939.08
Other undivided profits...
45,894,591 141,683,091.23
65,448,601.52 138,464,384.81 136,428,039.39
Dividends unpaia.............
467,115
985,990.44
2,842,956.53
2,360,771.04
850,048.81
Individual deposits........... 1,866,964,314 2,835,835,180.79 3,073,122,706.20 3,295,855,805.27 3,674,578,238.92
Due to other banks and
bankers............................. 163,014,678 276,753,308.05 187,141,876.31 319,368,254.43 299,938,456.82
Other liabilities..................
98,815,087.25
140,738,111
88,242,130.61 122,872,561.73 152,349,887.48
Total.......................... 2,865,632,876 4,068,534,982.65 4,216,850,061.52 4,665,110,868.71 5,107,444,382.27

208t><*> 0 — 5*-------1(5




70

B N IN A D C B B C .
A K G N UBNY

Aggregate resources and liabilities of national and other reporting banks on or
about June SO 1908 to 1912.
,
1108

1000

mo

1011

1012

81,146 banks.

23,401 banks.

28,006 banks.

34,802 banks.

36,106 bonks.

Cfcsstfieatlon.

USOUBCES.

Loans on m l to­
tal#.................
loans on other
oollattrral
security...........
Other kions and
dJsoounts........
Overdrafts..........
United 8 1 a t o s
bonds..............
Stato^ountr, and
mnnloipal
bonds.. . . . . . . . .
Railroad bonds
and stooks.......
Bonds of other,
publfc • ssrvice
corporations
Bank stooks.......
Other s t o o k s ,
hand#, etc

......

Bue from other
b a n k s and
bankers..

61,801,751,013.00 *82,505,077,070.46

■t** ftQ 747 A7A 5 *83,801,486,760.08
A
U

------- j -------------------

8.013.011.466.00 8,075,008,315.00 4,115,820,707.0 | 4,123,052,706.66 4,380,043,88a 07
6
5,565,468,763.50 4,821,546,812.26 5,647,164,421.40 5,886,854,860.06 6,850,733,400.00
ftt M l IQft
M
61,455,604.60
67,800,155.68
60,600,502.96
750,300,706.10

702,787,711.20

784,502,468.07

773,455,177.84

838,366,86a 07

*861,000,108.05 1,001,541,455.10 1,116,245,006.60 1,200,806,075.21 1,278,554,05a 84
1.158.444.501.00 1,560,006,8M 83 1,464,842,082.51 1,602,180,858.08 1,631,544,470.36
.

30,460,847.00
1,646,836,833.38

608,543,601.50

466,526,687.08

478,045, 035.46

550,102,206.65

708,580,001.88

070,644,571.67

025,180,526.51 1,026,075,888.46

3,336,344,506.04 2,562,071,702.68 2,893,008,26a 76 2,788,772,577.47 3,847,002,848.08

Beal estate,'fur-*
niture, e t c . . . . . .

404,006,134.88 644,035,541.80
574,231,671.01
616,603,007.78 657,300,66a 86
Checks and other
350,003,174.30 437,892,578.11
620,460,182.00 422,688,514.06 430,101,355.82
cash Items..........
Gash on hand...... 1,868,330,683.43 1,452,014,676.34 1,423,808,814.37 1,554,147,160.28 1,573,053,470.48
111,880,014.05
340,001,010.60
103,623,517.10
150,534,870.80
Other reeouroes...
165,805,006.04
Total......... 10,583,410,396.00 21,005,054,420.72 22,450,820,522.77 23,631,083,382.67 34,086,643,774.18
LIABILITIES.

Capital stock........ 1,757,150,303.00 1,800,036,368.00 1,879,043,887.09 1,052,411,065.56 2,010,843,505.70
Surplus fund........ 1,401,570,455.80 1,326,000,642.50 1,547,917,181.06 1,512,083,850.93 1,584,081,10a 44
Other undivided
404.649.006.00 553,400,970.77
581,178,042.47
profits.................
506,534,786.43
350,042,627.85
Circulation
613,668,063.00 636,367,526.00 675.632.565.00 681,740,513.00
708,600,503.00
(national banks),
04,034,846.30
3,310,044.76
20,856,304.16
3,630,127.76
5,680,184.23
Dividends unpaid
Individual 1
deposits............. 12,784,511,160.33 14,035,523,165.04 15,283,396,254.35 15,906,274,7ia 27 17, 024,067, eoa 80
United S t a t e s '
70,401.818.99
54,541,349.41
130,266,023.63
58,045,080.66
48,455,641.54
deposits..............
Due
to other

ba n k s and;
bankers........... I 2,198,050,204.00 2,484,103,805.37 2,225,380,705.62 2,621,054,047.82 2,632,635,075.68
358,003,178.26 340,882,46a 55
381,661,735.60
344,211,000.00 230,685,273.63

Other liabilities...

Total........... 10,583,410,303.00|21,005,054,420.72 22,450,320,522.77 23,631,083,382.67 24,086,642,774.18
i Includes mortgages owned.

* Includes bonds of other corporations for national banks.

Summary of reports of condition from 25,195 banks in the United States and
island possessions (including National, State, savings, and private banks and
loan and trust companies), showing their condition at the close of business
June U, 1912.
BF.80UBCES.
Loans and discounts:
Secured by real estate (including
mortgages o w n e d )______________ $3,301,486,759.93
Secured by collateral other than
real estate------------ ---------------------- 4, 239,942,380.07
All other loans_____________________ 6,350, 722,499.00
O verd ra fts____________________________
61, 455,604.59
-----------------------------$13,953,600. 243. 59




71

BANKING AND CURRENCY.

Bonds, securities, etc., including pre­
miums thereon:
United States bonds_______________
State, county, and municipal bonds.
Railroad bonds___________________
Bonds of other public-service cor­
porations (including street and interurban railways bonds)________
Other bonds, stocks, warrants, etc_,

$823, 266, 866.97
1, 273, 554,050. 84
1, 631, 544,479. 26

003, 542,601. 59
1,026,975,383.45
-----------------------------$5,358,883,382.31
Banking house, furniture, and fixtures____________________
550,326, 884. 44
Other real estate owned__________________________________
106,972, 775. 92
Due from banks----------------------------------------------------------------2, 847,992, 843. 93
Checks and other cash items______________________________
55, 236, 223.74
Exchanges for clearing house_____________________________
374, 865,032. 08
Actual cash on hand:
Gold coin __________________________
238, 389, 386. 74
Gold certificates___________________
1643, 547, 000. 00
Silver dollars_____________________
22,957, 395.00
Silver certificates_________________
194, 374,169.00
Subsidiary and minor coins________
37,738,008.29
Legal-tender n otes________________
253,122,053. 00
National-bank notes_______________
108, 281,687.00
Cash not classified________________
74, 543, 690. 40
---------------------------1, 572,953,479.43
Other resources___________________________________________
165, 805,908.94
Total resources____________________________________

24,986,642,774.18

L IA B I L IT I E S .

Capital stock paid in_____________________________________
S u rplu s__________________________________________________
Undivided profits_________________________________________
National-bank circulation_________________________________
Due to banks_____________________________________________
Dividends unpaid________________________________________
Individual deposits subject to check
Without notice______________________ $8,323,485,623.53
Saving deposits or dei>osits in interest
or savings department_______________ 6,496,192, 707. 60
Certificates of deposit__________________ 1,952, 784, 093. 94
Certified checks_______________________
135, 241, 263. 20
Cashier’s checks outstanding___________
116,363,918.62
---------------------------United States deposits___________________________________
Notes and bills rediscounted______________________________
Bills payable, including certificates of deposit representing
money borrowed_______________________________________
Other liabilities___________________________________________
Total liabilities____________________________________

$2,010, 843, 505. 70
1,584,981,106.44
581,178,042.47
708,690,593.00
2,632,635,075.58
3, 639,127. 75

17,024,067,606.89
58, 945,980. 66
21,836,346.24
127, 778, 722. 66
232,046,66(5. 79
24, 986, 642, 774.18

Aggregate loans, resources, capital, and deposits for the fiscal years 1908 to
1912, inclusive, of banks reporting to Comptroller of the Currency.
[In millions of dollars.)

Year.

Num­
ber of
banks.

Loans.

Resources.

1908...
........................
1909............................................................................
1910............
.....................................
1911..............
......................................
1912............................................................................

21,346
22,491
23,095
24,392
25,195

110,437.9
11,393.1
12,521.7
13,046.4
13,953.6

119,583.4
21,096.0
22,450.3
23,631.0
24,986.6

1 Includes $80,4 7 9 ,0 0 0 clearing-house certificates.




Capital.

$1,757.1
1,800.0
1,879.9
1,952.4
2,010.8

Individual
deposits.

$12,784.6
14,035.5
15,283.3
15,906.3
17,034.0

11,191.7

11
^OOOCCOrtOaCNiOO®®^ N^aO-H’t^WONh-HUSOOOWNWHhi

1393.7

Individ­
United
States
ual de­
deposits.* posits.

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Capital.
Paper
cur­
rency.1

Total
c sh in
a
bank.

:

«

•i
I

m*

• • • • . • • I • .' • • • 1 'NtO^1*C^O>OX CIO
'
'

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and
bankers.

Specie.

i* ***********

Loans
a d dis­
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counts
(includ­
in over­
g
drafts).

Bonds,
stocks,
etc.

Due
from

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Surplus
and
profits.

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tion.*

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o banks
f
report­
ing.

(Amounts i millions o dollars.]
n
f

18 3 t 1872, inclusive, data fr m various souroos; fr m 1 7 compiled fr m reports obtained b th Comptroller o th Currency.]
6 o
o
o
83
o
y
e
f e

D
ue to
banks.

Total
assets.

BANKING AND CURRENCY.

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BANKING AND CUBBENCY.

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I

74

BANKING AND CUBBBNOY.

National banks in the United States (7,488) :
Capital____________________________________________________ $1,056,345,786
Surplus___________________________________________________
725, 333,629
Undivided profits_________________________________________
259,549,156
Circulation_______________________________________________
724, 459, 849
Individual deposits________________________________________
5, 761,338, 731
Total resources___________________________________________ 10, 876, 852,343
State banks (13,381*) :
Capital____________________________________________________
459,067,206
Surplus____________________________________________________
177,307,042
Undivided profits__________________________________________
94,066,902
Individual deposits________________________________________
2,919,977, 897
Total resources____________________________________________
3, 897,770, 826
Mutual savings banks (630‘ ) :
Surplus___________________________________________________
248, 983, 429
Undivided profits---------------------------------------------------------------66,440,676
Individual deposits________________________________________
3,608,657,828
Total resources----------------------------------------------------------------3,929,091,986
Stock savings banks (1,292 ‘ ) :
Capital........................ ...................................................... ...............
76,871,811
Surplus_______________________ ___________________________
31,052,596
Undivided profits..................................................................... .....
23,154,694
Individual deposits.______________________________________
842, 897,859
Total resources----------------------------------------------------------------993,631,303
Loan and trust companies (1,410*) :
Capital___________________ _____ ____________ _____________
418,985,771
Surplus----------------------------------------------------------------------------424,313,939
Undivided profits______________________ _________ _________
136,428,039
Individual deposits_______________________________________
3,674,578,238
Total resources___________________________________________
5,107,444,382
Private banks (1,110 l)
Capital___________________________ _________ ________ ______
22,348,040
Surplus----------------------------------------------------------------------------9,338,680
Undivided profits_________________________________________
4,250,634
Individual deposits-----------------------------------------------------------152,494,618
Total resources___________________________________________
196,940,397
State, savings, and private banks, loan and trust companies
(17,823 *) :
Capital____________________________________________________
977,272,830
Surplus__________________________________________________
890,990,687
Undivided profits_____________ ___________________________
324,340,946
Individual deposits_______________ ________________________ 11,198,606,443
Total resources___________________________________________ 14,124,878,897
All banks (25,309*) :
Capital______________ ________ ____ _____ ___________________
2,033,618,616
Surplus___________________________________ ______________
1,616,324,316
Undivided profits_________________ ______ __________________
583,890,102
Individual deposits________________________________________ 17,959,945,174
Total resources------------ ---------------------------------------------------- 25,001,731,240
1Comptroller’s report, 1912.




*No dates given.

75

BANKING AND CURRENCY.
C lassifica tion o f d ep osits in ea ch class o f banks as o f J u n e 14, 1912.

Number
of banks.

Classification.

Individual de­
Savings deposits
or deposits in
Certificates of
posits subject to
deposit,
check without interest or savings'
notice.
department.
|

state banks.................................
Mutual savings banks.............
Stock savings banks.................
Loan and trust companies____
Private banks............................

13,381 SI, G09,117,009.91
(>30
15,907,801. 72
ITS, 127,748. 36
1,292
1,410 2,319,055,959.95
78,339,000. 91
1,110

Total, State, etc., banks
National banks..........................

17,823
7,372

4,200,548,180. 85
4,122,937,442. ti8

5,702,548,771. 49 | 1,140,038,702.08
733, <>43,936.11 j
812,745,391.86

Grand total.......................

25,195

8,323,485,623.53

6, 496,192,707.60 j 1,952,784,093.94

Certified
checks.

Classification.

State banks............................
Mutual savings banks.........
Stock savings banks.............
Loan and trust companies..
Private banks........................

1610,207,548.25
96,528.65
87,099,928.02
395,983,407.02
46,651,290.14

$657,477,220.31
3,592,530,070.33
574,822,459.57
910,850,167.60
20,84>8,853.68

Cashiers’ checks
outstanding.

$32,254,762.10

Total.

795, 385. 48
16,658,017. 77
304,237.00

45,458,386. 76
70,905,531.86

11,198, 606,443. 53
» 5,825, 461,163.36

135,241,263. 20

Orand total.

$2,919, 977,897.99
3,608, 657,828.11
842, 897,859.61
3,674, 578,238.92
152, 494,618.90

50,012,402. 35
85,228,860. 85

Total, State, etc., banks.
National banks.............................

$10,921,297. 42
123,427.41
2,052,338.18
32,030,686.58
330,637.17

116,363,918. 62

17,024,067,606. 89

1 United States deposits hot included.
MEMORANDUM

R E L A T I V E TO TA B L E S NO.

1 AN D NO. 2.

As to the New Y ork C ity figures of O ctober 21, showing losses in loans of
$2t>,272,715, and in cash of $29,059,727, w hile a gain of $79,102,171 in in d ivid u a l
deposits is reported, attached T able No. 1 shown that this loss in cash was offset b y
an increase in exch anges for clearing house an increase since August 9 of $94,038,0001.
B y reference to T a b le No. 2 it w ill be noted that the colu m n of cash reported b y
New Y ork City banks shows this to be at an e b b in the fall of the year.
R ela tive to the item of loans and discou nts and in divid u al deposits com parisons
for the past three years have been m ade (see T able No. 2) showing the am ounts
reported each date- also the amounts shown b y all the reporting banks for co m ­
parison.
T a b l e N o. 1.
Statem ent o f N ew

York C ity Banks for Oct. 21 compared nith last call A u g . 9 avrf a
year ago. N o r . 26, 1912.
R E SO U R C E S.

I
, Oct. 21. 1913.

.................
Hond Investment..................................................
Due from banks.................................................... ..........................
...............
Kxchange for clearing house..............................
Law ful monev.......................................................
.. .
Aggregate....................................................

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

Aug. 9. 1913.

Nov. 26, 1912.

225,398,000
122,536,000
149,811,000
273,986,000

$936,908,000
233,893,000
85,133,000
55,773,000
300,707,000

$874,616,000
232,580,000
93,503,000
178,700,000
257,690,000

1,722.68 4,000

1,655,642,000 ! 1,682,275,000

LI A B I L I T I E S.

National bank circulation...............................................................
Due to banks.....................................................................................
Individual deposits..........................................................................
I nited States deposits.....................................................................
lUmds borrowed................................................................................
Bills payable and rediscounted....................................................
Per cent reserve.....................................................................




$45,847,000,
641,256,000 715, t>40,000
3,506,000!
S. 247,000 I
7.873.000:
25.37

$47, 018,000
656,385,000
» 36,544.000
’
»
2,835,000
<,221,000
2.977.000

$48,382,000
586,043,000
742,932,000
1,737,000
7,819,000
500.000

26.42

24.69

76

BANKING AND CUBBENCY.
T a b l e No. 2.

Table thawing loans, cash, and individual deposits held by New York City and total
United States at each call for pcLst three years.
Loans and discounts.

Cash.

Individual deposits.

Date of report.
New York
City.

Total banks.

New York
City.

Total banks.

New York
City.

Total banks.

1913.
Oct. 21.
Aug. 9.

1910,635,729
936,908,444
886,966,803
910,727,161
953,792,810

Apr. 4..
Feb. 4..
1912.
Nov. » ...........................
Sept. 4
June 4 ..
Apr. 18.
Feb. 90.

874,616,719
950,893,024
959,068,755
939,218,163
971,498,585

6,058,982,029
6,040,841,270
5,953,904,431
5,882,166,597
5,810,433,940

257,690,470
286,158,326
321,478,638
303,486,295
333,471,111

859,098,737
895,951,094
945,202,895
931,689,162
950,497,398

742,932,490
767,845,606
805,383,121
742,693,664
734,506,849

5,744,561,069
5,891,670,007
5,825,461,163
5,712,051,088
5,630,559,231

838,672,447
885,628,747
903,566,432
915,917,556
808,646,569

5,659,109,826
5,663,411,073
5,610,838,787
5,558,039,050
5,402,642,351

265,388,742
304,359,507
329,815,391
319,263,311
259,659,227

862,794,196
$95,475,406
946,330,109
908,036,627
836,267,359

686,417,818
766,024,815
776,964,554
692,763,534
562,020,067

5,536,042,281
5,489,995,011
5,477,991,156
5,304,624,091
5,113,221,817

1911.
Dec. S..
Sept. 1.
June 7..
Mar. 7..
Jan. 7 ..

$6,260,877,853 $271,647,803 $889,632,454 $715,646,351 $6,051,689,087
6,168,555,525 300,707,530 899,169,371 636,544,180 5,761,338,731
6,143,028,132 292,517,948 913,982,640 701,998,318 5,953,461,551
6,178,096,379 279,655,691 888,283,735 717,610,317 5,968,787,045
6,125,029,165 304,643,384 933,417,231 754,284,535 5,985,432,295




Comparative statement showing the amount of loans and discounts, cash, and individual deposits held by national hanks in reserve cities and country banks according to the geographical sections as shown
by the reports of condition on Oct. 21, 1913, Aug. 9, 1913, and Nov. 26, 1912.
Loans and disoounts.

Cash.

Individual deposits.

Lo cation.
Aug. 9, 1913.

Oct. 21,1913.
Reserve d ty (Boston).........................
Country banks......................................

$205,136,237.15
312,527,699.40

$189,872,991.74
306,266,615.18

Excess.

Nov. 26, 1912.

$15,263,245.41
6,261,084.22

$199,745,658.06
316,632,261.35

Excess.

Oct. 21,1913.

Aug. 9, 1913.

Excess.

Nov. 26,1912.

Excess.

$5,390,579.09
-4,104,561.95

$31,529,566.94
25,128,955.62

$30,835,728.90
22,148,520.49

$693,838.04
2,980,435.13

$28,330,982.90
24,116,564.86

$3,198,584.04
1,012,390.76

$189,658,386.31
329,710,641.68

Oct. 21,1913.

Aug. 0, 1013.

Excess.

Nov. 26, 1012.

$171,327,303.04
316,293,285.31

$18,330,002.37
13,417,356.37

$182,867,600.35
324,076,637.28

$6,700,786.06
4,734,004.40

507,844,237.63

11,524,700.36

New England States.................

517,663,936.55

496,139,606.92

21,524,329.63

516,377,919.41

1,286,017.14

56,658,522.56

52,984,249.39

3,674,273.17

52,447,547.76

4,210,974.80

510 360,027.90

487,620,670.25

31,748,348.74

New York City......................................
Other reserve cities..............................
Country banks.................................... .

910,635,729.74
494,899,316.99
874,833,692.00

936,908,444.96
480,035,966.08
859,979,495.86

-26,272,715.22
14,863,350.91
14,854,196.14

874,616,719.65
486,798,720.39
839,552,426.03

36,019,010.09
8,100,596.60
35,281,265.97

271,347,803.12
76,229,542.10
78,765,243.36

300,707,530. 79
73,067,182.81
71,943,066.99

-29,059,727.67
3,162,359.29
6,822,176.37

257,690,470.67
74,784,780.03
73,137,302.59

13,957,332.45
1,444,762.07
5,627,940.77

715,646,351.77
410,121,734.38
1,121,704,090.15

636,644,180.46
382,364,158.05
1,001,704,030.16

70,102,171.31
36,757,576.33
20,000,150.09

Eastern States.................... .......

2,280,368,738.73

2,276,923,906.90

3,444,831.83

2,200,967,866.07

79,400,872.66

426,642,588.58

445,717,780.59

-19,075,192.01

405,612,553.29

21,030,035.29

2,256,472,176.30

2,110,708,277.67

146,768,898.63

146,666,408.26
661,944,162.09

-4,851,952.98
39,952,851.02

16,087,878.16
47,809,667.59

16,036,642.04
41,950,202.75

51,236.12
5,850,464.84

18,261,383.50 -2,173,505.34
45,322,748.71
2,486,918.88

116,329,640.84
610,295,506.58

114,385,060.67
564,063,074.26

1,043,680.17
55,232,422.32

122,414,380.05 - 6,084,730.21
614,602,162.53
4,603,344.06

63,584,132.21

57,176,121.40

737,016,542.58 -

Reserve cities....................................
Country banks.......... ....................

141,814,455.28
701,897,013.11

135,828,629.34

676,516,603.83

5,985,82594
25,380,409.28

843,711,468.39

812,345,233.17

31,366,235.22

808,610,570.35

35,100,898.04

63,897,545.75

57,995,844.79

5,901,700.96

Chicago....................... .........................
St. Louis........ ........... .......................
Other reserve cities.................
Country banks......................................

330.122.983.81
107.132.567.81
456,236,681.96
872,859,621.34

329,024,370.83
109,161,973.15
447,140,265.47
860,383,178.40

1,098,612.98
- 2,029,405.34
9,096,416.49
12,476,442.94

312,601,824. 74
110,952,331.16
438,271,155.67
835,701,993.41

17,521,159.07
-3,819,763.35
17,965,526.29
37,157,627.93

83,662,072.25
21,576,157.79
62,033,701.68
72,076,410.82

82,446,563.40
24,365,294.99
64,452,236.35
60,653,160.29

1,215,508.85
-2,789,137.20
-2,418,534.67
2,423,250.53

Middle Western States. . . . . . .

1,766,351,854.92

1,745,709,787.85

20,642,067.07

1,697,527,304.98

68,824, M9.94

239,348,342.54

246,917,255.03

-1,568,912.49

Reserve cities.................... ...................
Country banks.....................................

104,127,255.11

1,822,337.49
9,619,844.03

106,734,391.38
293,863,652.62

-2,607,136.27
19,877,798.39

18,369,377.75
26,580,816.32

18,992,148.11
25,814,258.64

-622,770.36
766,557.70

Southern States........

742,032,400.21 -27,286,138.44
421,847,005.08 - 2,725,361.60
1,060,885,601.72
60,818,308.43
2,225,665,277.01

30,806,808.30

313,413.54

735,625,156.42

678,440,084.93

80,566,974.75
3,095,097.50
28,901,585.42 -7,325,427.63
2,978,483.00
59,055,218.69
67,707,300.98
4,369,109.84

215,663,806.29
358,493,976.04
986,772,876.06

202,335,910.84
61,380,096.04
350,813,434.02
080,324,536.82

236,231,079.83

3,117,262.71

1,623,249,172.01

1,608,803,970.62

10,306,102.30

18,121,982.50
25,733,931.54

247,395.25
846,884.80

106,506,210.55
350,744,202.63

101,740,168.74
337,568,482.00

4,747,050.81
13,175,800.64

107,811,240.70 - 1,215,021.15
333,002,898.60
17,741,304.03

62,318,513.60

1,301,386.16

13,327,805 45 ~ 2127451,301.14 ~ 3,212,505715
~
938,415.56
66,140,508.22 - 3,830,004.62
7,680,541.12
340.426.405.21
0,067,480.83
-2,551,659.74
044.068.072.21
42,703,003.87
1,572,006,276.78

51,152,805.23

313,741,451.01

102,304,917.62
304,121,606.98

Western States.______. . . . ____

417,868,706.12 j

406,426,524.60

11,442,181.52

400,598,044.00

17,270,662.12

44,950,194.07

44,806,406. 75

143,787.34

43,855,914.04

1,094,280.05

457,340,512.18

430,317,651.73

18,022,860.45

440,814,130.30

Reserve cities............................. .........
Country banks......................................

2447i 567733^21 1
189,083,069.30 |

242,464,891.17
186,767,969.78

” 1^6917842.04
2,315,099.52

251,048,414^08
182,303,054.13

87
6,780,015.17

38,066,699. 76
19,323,656.49

37,563,067.10
18,605,728.04

503,632.66
717,928.45

37,013,550.17
19,681,860.16

1,053,149.50
-358,203.67

226,083,046.63
231,658,953.09

220,106,044.93
210,371,538.90

5,077,001.70
12,287,414.10

228,240,810.56 - 2,165,863.03
776,007.27
230,882,045.82

433,239,802.51 j

429,232,860.95

4,006,941.56

433,351,4€8.21

—111,6€5. 70

57,390,356.25

56,168,795.14

1,221,561.11

56,695,410.33

694,945.92

457,742,809.72

430,478,488.83

18,264,415.80

450,131,856.38 - 1,388,056.66

104,258.48

1,548,856.28

124,490.15

744,904.65

579,042.80 |

165,861.85

672,100.25

72,804.40

1,890,143.07

1,015,624.74

92,322,328.35

6,058,982,029.30

201,895,824.15

880,632,454.40

899,169,374.49 1
1

-9,536,920.09

850,098,737.71

30,533,716.69

Pacific States.. . . .
Hawaii (islands)....... ..........................
Total United States. . . . . . ___

1,673,346.43 |

6,260,877,853- 05 | 6,168,555,525.30

20 3 6 6 O— 58h-8. Rept. 133, 63-1, pt 2.




1,777,604.91

(To faoe page 76.)

-

6,051,689,087.60 6,761,338,731.77

—

25,481.67

290,350,355.02

1,002,730.33 5,044,561,060.01

16,526,372.88

102,506.26
107,128,017.78

77

BANKING AND CURRENCY.

Bank balances reported Apr. 14, 19IS.
j New York. '

Chicago.

. St, Louis.

1
$85,035,506 $36,406,146
7,691,507
3,630,529

1153,987,595
16,314,119
137,673,476
Net......................................................................................................... I1137,673,476

77,343,999

32,775,617

124,839,276
&3,416,397
4,321,843 j
586,549

Due to country banks___
Due from country banks..

21,691,7X0
295,932

120,517,433
Net.........................................................................................................j 120,517,433

62,829,848

21,395,848

278,826,871 j 148,451,904
Due from all banks....................................................................................... I 20,635,962

58,097,926

Net.........................................................................................................

258,190,909 - 140,173,848

54,171,464

Respectfully,
W. J.

F o w le r ,

Deputy Comptroller.
The amount and class of loans of all national banks on approximate dates in
1902 to 1910 and 1911 and 1912 are shown in the following table:

Date.

On time,
On de­
On de­
On time,
single­
mand, pa­ mand, se­ paper with name paper
cured by
per with
Num­
two or
stocks,
(one person
one or
ber of
or nrm),
and more indi­
banks. more indi­ bonds,per­
vidual or
other
without *
vidual or
firm names. other secu­
firm names. sonal secu­
rity.
rities.

Millions.
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.

4,601
5,042
5,412
5,757
6,137
6,544
6,853
6,977
7,173
7,277
7,372




$ 3 .3
27
2*3.1
279.8
320.1
374.7
428.2
395.9
441.5
524.3
529.7
571.3

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
971.5
1,068.3
1,124.7
1,198.5

On time,
secured by
stocks,
bonds, and
other per­
sonal secu­
rities, or on
mortgages
or other
real estate
security.

Total.

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

Millions.
13,280.1
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

78

BANKING AND CURRENCY.

DISTRIBUTION O MONEY IN THE UNITED STATES.
F
In the following table is shown the distribution o f money in the United States,
giving the amount in the Treasury as assets, amount in reporting banks, and
elsewhere, from 1892 to 1912. inclusive:

Year
ended
June 30—

Coin and other Coin and
Coin and other
not in
Coin and money in Treas­ money in report­
ing banks.*
banks.
ury as assets.1
other
money
in the
United
Per
Per
States.
Amount. cent. Amount. cent. Amount.

Millions. Millions.
1 8 9 2 ...........
1883.............
1804.............
1805.............
1806.............
1807.............
1808..............
1800.............
1000.............
1001.............
1002..............
1003.............
1004.............
1005.............
1006.............
1007.............
1008.............
1000.............
1010.............
1011.............
1012.............

11,752.2
1,738.8
1,806.5
1,810.3
1,700.0
1,006.7
2,073.5
2,100.0
2,339.7
2,482.1
2,663.2
2,684.7
2,803.5
2,883.1
3,060.0
3,115.6
3,378.8
3,406.3
3,410.5
3,555.0
3,648.8

$1$O.0
142.1
144.2
217.4
203.5
265.7
235.7
286.0
284.6
307.8
313.0
317.0
284.3
295.2
333.3
342.6
340.8
300.1
317.2
341.0
364.3

Millions.
8.60
8.17
7.00
11.95
16.31
13.93
11.37
13.06
12.16
12.39
12.24
11.80
10.14
10.24
10.86

1 .0
10
10.08
8.81
9.27
9.61
9.98

$586.4
515.9
688.9
631.1
531.8
628.2
687.7
723.2
749.9
794.9
837.9
848.0
982.9
987.8
1,010.7
1,106.5
1,362.9
1,444.3
1,414.6
1,545.5
1,563.8

other money
Treasury or

Per
cent.

Per
capita.

57.02
62.15
53.84
53.36
54.14
53.13
55.46
53.02
55.70
55.50
55.07
56.61
54.80
55.40
66.22
53.49
40.58
48.78
40.36
46.08
47.16

$15.50
16.14
14.21
13.89
13.65
13.87
15.43
15.51
17.11
17.75
17.00
18.88
18.77
10.22
20.30
10.36
10.15
18.68
18.68
17.75
17.08

Millions.
33.48
29.68
38.17
34.96
29.55
32.94
33.17
33.02
32.05
32.02
32.69
31.59
35.06
34.27
32.92
35.51
40.34
42.40
41.37
43.46
42.86

$1,014.9
1,080.8
972.4
070.8
074.6
1,012.8
1,150.1
1,180.8
1,306.2
1,380.4
1,411.4
1,510.7
1,536.3
1,600.1
1,725.0
1,666.5
1,675.1
1,661.0
1,687.7
1,668.5
1,720.7

In circulation,
exclusive of coin
and other money
in Treasury as
assets.

Amount.

Per
capita.

Millions.
$1,601.3
1,506.7
1,661.3
1,601.9
1,506.4
1,641.0
1,837.8
1,904.0
2,055.1
2,175.3
2,249.3
2,367.7
2,519.2
2,587.9
2,736.6
2,773.0
3,038.0
3,106.2
3,102.3
3,214.0
3,284.5

$24.60
24.06
24.56
23.24
21.44
22.92
25.10
25.62
26.03
27.08
28.43
20.42
30.77
31.08
32.32
32.22
34.72
34.03
34.33
34.20
34.34

1 Public money in national-bank depositaries to the credit of the Treasurer of the United States not
included.
* Money in banks of island possessions not included.




79

BANKING AND CURRENCY.

Cash on hand in banks reporting to the Comptroller of the Currency Juno

14, 1912.

Number
of banks.

Classification.

National banks.......................
State banks.............................
Mutual savings banks...........
Stock savings banks..............
Loan and trust companies..
Private banks.........................
Total..............................

Classification.

Gold coin.

7,372 $149,294,41J. 78 $437,081,380.00
43.475.473.23
13,381
55,832,110.00
630
3.040.620.00
2,613,101.74
1,292
3.292.340.00
13,099,102.11
1,410
28.720.390.23 143,797,940.00
1,110
502,700.00
1,186,901.65
25,195

Minor coins.

238,389,386. 74

643,547,090.00

Legal tender.

National
bank notes.

National banks............... $22, 555, 692. 68 $188,440,207.00
9, N 4, 263. 50
N
35,374,475.00
State banks......................
1,378,566. 00
Mutual sa v mgs ban ks...
245,994.27
Stock savings banks___
828, 452. 46
2,579,310.00
24,
336.00
Iakui and trust companies .{,932,351. S3
291,251 53
.
766,159.00
Private banks.................
Total....................... 37,738,00N. 29




Gold
certificates.

253, 122,053.00

Silver
dollars.
$12,637,221.00
7.483.824.00
21,575.00
809.660.00
1.571.391.00
433.724.00

$138,569,628.00
28.669.217.00
1.522.101.00
1.445.841.00
23.694.632.00
482,750.00

22,957,395.00

194,374,169.00

Cash not
classified.

$47,564,277.00
24.568.164.00 $36,479,195.75
3.370.411.00
3,993,692.28
3.400.118.00
3,811,178.99
28.347.109.00 27,504,313. 18
2,755,310.20
1.031.608.00
108,281,687.00

Silver
certificates.

$996,142,823.46
241,756,724.48
16, 186,061.29
29,266,002.56
282,151,463. 26
7,450,404.38

74,543,690.40 1,572,953,479.43

BANKING AND CUBBENCY.

80

Schedule of loans running 90 days or less from Aug. 9, as shown by the reports
of condition of 7,096 national banks.

St. Louis
New York Chicago
(36 banks). (9 banks). (7 banks).

A . On demand
(one or more
names)........
B. On demand,
secured by
stocks,
bonds, e tc ...
C. On time (two
or
more
names).........
D. On
time,
single name,
v thou t
other secur­
ity.................
£ . On time, se­
cured
by
stocks,
bonds, e tc ...
F. Secured by
real estate
mortgages,
etc.................

$7,004,969 $6,196,249 $2,412,125

Central
reserve
cities
(52 banks).

Other
reserve
cities
(308 banks).

Country
banks
(6,736).

Total banks
in United
States
(7,096).

$15,613,363

$79,186,557 $157,344,961 $252,144,881

5,276,533

153,397,816

107,692,020

123,493,347

125,527,742 73,754,071 23,814,102

223,095,915

305,571,196

766,028,358 1,294,695,469

116,680,948 52,386,018 11,096,501

180,163,467

243,326,078

350,301,629

773,791,174

121,086,821 44,740,103 20,025,680

185,852,604

194,391,557

321,164,876

701,409,037

3,647,050

17,258,736

21,431,413

128,361,990 19,759,293

208,864

384,583,183

12,951

525,627

90 days or
less........ 498,966,302 197,044,598 62,637,892
Over 90
days___ 437,942,142 131,979,772 46,524,081

758,648,792

933,814,458 1,735,591,907 3,428,055,157

616,445,995

639,924,756 1,337,980,689 2,594,351,440

303,812

Total, all
loans... 936,908,444 329,024,370 109,161,973 1,375 '**4.787 1,573,739,214 3,073,572,596 6,022,406,597
Sept. 25,1913, Office Comptroller of Currency.

The following table shows amount of cash, loans, individual deposits, and banks
deposits held by national banks:




81

BANKING AND CURRENCY.

Capital, specie, circulation, etc., of the great European single banks of issue on or about
June SO, 1906.
[Amounts are expressed in millions.)

Capital.

Imperial Hank of Germany. .
Bank of Austria-Hungary___
National Bank of Belgium...
National Hank of Bulgaria...
National Hank of Denmark..
Bank of Spain..........................
Bank of Finland......................
Bank of France........................
National Hank of Greece........
Bank of Italy............................
Bank of Naples........................
Bank of Sicily..........................
Bank of Norway......................
Bank of Netherlands..............
Bank of Portugal.....................
National Hank of Roumania.
Imperial Hank of Russia.......
Bank of Kngland......................
National Hank of Servia........
Royal Hank of Sweden..........

$28.9
41.9
9.0

Total (20banks).




l.H
6.8

28.9
1.9
35.2
3.9
28.9

11.6
3.5

5.0

Circula­
tion.
$412.0
376.5
136.5
S. 6

34.9
305. 7

18.2

908.8
23.1
213.3

66.6

14.8
21.4
113.0
74.5
43.1
591.0
146.8

Deposits.

$149.9
31.6
16.3
17.0
.8
134.2
4.2
189.1
23.4
90.6
16.1

10.6

1.9
2.5
29.3

Total
specie.

$211.1
299.2
24.1
7.6
27.2

200.2
5.2
803.4
.4
152. 7
32.8
9.1

8.0

6.6

109.8
280.3
.6

57.1
13.7
15.0
455.9
1S7.8
4.5

11.9

52.2

340.5

3,567.6

1,120.4

2,525.6

14.6
2.9
28.3
70.8

1.1

12.2

20.6

Savings banks, including postal savings banks. Number of depositors, amount of deposits, average deposits per deposit account and per inhabitant, by
specified countries.
[Compiled by the Bureau of Foreign and Domestic Commerce, Department of Commerce and Labor, from the official reports of the respective countries.]

Countries.

Austria.......................................................
Belgium...............
Bulgaria..............
t hile.....................
Denmark *..........

Egypt.................
Franco.................
Algeria.........
Tunis............
Germany ..........
Luxemburg.
Hungary «...........
Italy.....................
Japan..................
Formosa___
China and Korea.
Netherlands.................
Dutch East Indies.
Dutch Guiana........
Norway............................
Roumanian.....................
Russia 6............................
F inland....................
Spain •.............................
Sweden............................
Switzerland....................




Popula­
tion.1

Date of
report.

Dec. 31,1909
Dec. 31,191;)
— do............
7,501, J) Dec. 31,1911
Dec. 31,1910
4,285, OJ) ____do.............
3,415,00J June 30,191J
2,757,00) Afar. 31,1910
11,629, J ) Dec. 31,1911
O
29, G02,003 /Dec. 31,1911
\Dec. 31,191)
5,232, JO Dec. 31,1908
1.923.0 M Dec. 31,1910
64.432.00) ....... do.............
246, J ) ___ do.............
O
do............
20.886.0),) — .do............
/ June 30,1911
34.657.000
\June 30,1910
I/Dec. 31,1910
51.547.000 \Mar. 31,1912
/Dec. 31,1910
3.341.000 \Mar. 31,1911
28,572, X
)J

;........ dO
..............

{/Dec. 31,1909
5.945.000 \Dec. 31,1910
___ do............
37.717.000 /\Dec. 31,1911
86,000 Dec. 31,1910
2.393.000 ....... do............
6.866.000 July 1,1910
Hi3,779,000 June 30,1912
(Dec.
ii, 120,000 \ ....d o31,1910
............
19.588.000 Dec. 31,1910
/Dec. 31,1910
5,522,000
\Dec. 31,1911
3,047,00) Dec. 31.190S

Form of organization.

Communal *and private savings banks.........
Postal savings banks, savings department..
Postal savings banks, check department. . .
Government savings hanks.............................
Communal and private savings banks.........
Postal savings banks........................................
Caja de ahorros. . . / ..........................................
Communal and corporate savings banks___
Government savings banks.............................
Private savings banks......................................
Postal savings banks........................................
Municipal savings banks.................................
Postal savings banks........................................
Public and corporate savings banks.............
State savings toank............................................
Postal savings banks, savings department..
Postal savings banks, check department.. .
Communal and corporate savings banks.
„
Postal savings banks....................................................................
Private savings banks.
Postal savings banks.......................................
Private savings banks....................................
Postal savings banks.......................................
....... do..................................................................
Private savings banks....................................
Postal savings banks.......................................
Private savings banks....................................
Postal savings banks.......................................
....... do..................................................................
Communal and private savings banks........
Government savings banks...........................
State, including postal savings banks.........
Private savings banks....................................
Postal savings banks.......................................
Private savings banks....................................
Communal and trustees savings banks----Postal savings banks........... v.........................
Communal and private savings banks........

Number o«
depositors.

Deposits.

4,119,295
2,305,703
102,574
2,901,753
46,997
180,775
268,731
1,166,007
104,095
8,411,791
5,786,035
19,301
5,701
21,534,034
69,202
775,970
20,716
2,294,063
5,100,006
7,500,470
11,950,158
6,779
100,819
307,195
433,309
1,510,033
13,238
91,896
9,478
1,001,310
218,690
8,189,734
291,003
59,733
495,772
1,500,317
565,759
1,899,332

$1,161,149,241
46,623,889
79,682,452
194,534,158
11,679,721
9,129,423
10,543,275
174,182,302
2,255,464
754,255,333
329,974,970
934,380
1,288,268
3 ,993,775,184
11.863.592
21,894,118
20,075,888
472,879,910
324,279,617
73,106,674
91,896,942
121,327
955,592
3,086,571
41,718,485
66.039.592
2,887,566
3,616,685
337,925
135,886,457
11,616,820
784,117,885
44,068,779
1,396,856
46,931,094
216,755,326
12,645,957
303,196,216

Average
deposit
•ooount.

$381.88
21.14
776.83
67.04
248.53
32.53
39.23
149.28
21.67
*9.67
.R
7.03
48.41
225.97
185.46
171.43
28.22
T69.10
306.13
63.84
9.75
7.69
17.90
9.48
14.95
96.30
43.73
218.39
39.36 ;
35.65
135.71 j
53.13
95.74
151.13
33.39
94.66
138.93
23.35
159.63

Average
deposit
per in*
habitant.
$40 64
3.63
2.79
25.93
1.56
2.13
3.09
63.18
.19
9.0>
8.33
.18
.67
61.98
48.23
1.05
.96
13.63
9.35
1.42
1.78
.04
.28
7.02
11.11
.08
.10
3.86
56.78
1.09
4.79
14.12
.45
2.40
39.25
2.29
*3.11

/N ov. 20,1911 Trustee savings banks.......................................................
\I>ec. 31,1911 Postal savings banks.........................................................
! Mar. 31,1910 ....... do....................................................................................
British India*................................. i 244.127,000
Government, trustee, and joint-stock savings banks.
Australia, Commonwealth........... I 4,425,000 ,
_ .
1910-11
Postal savings banks.........................................................
New Zealand................................... j l.oos.ooa ! { ^ * d 0
31,19IU Private savings banks.......................................................
Postal savings banks.........................................................
7.205.000 I/June 30,1912 Dominion Government savings hanks..........................
Canada *•..............................
-do..........
I ♦1,745,000 !V 1909-10
British South Africa..
Government, post-office, and private savings banks.
1.679.000
1909-1(1
Government and post-office savings banks..................
British West Indies..
20.427,000 '
British colonies, n. e. s
1909-10
....... do....................................................................................

tinted Kingdom •.................................

45,2»9,tH)0

Total, foreign countries............. I 859,620,000
I nited States..........................................! 95,411,000
\June 14,1912
Philippine Islands..........................
\ 460,000 June 30,1912

Postal savings banks1.................
1
Mutual and stock savings banks..
Postal savings banks....................

1,849,043 i
12,370,646 i
1,378,916 !
1,600,112
3X0,714
51,508
146,310
35,031
222; 772
91,881
219,967

*258,083,128
859,027,319
51,478,416
289,039,353
68,641,934
7,375,302
42,6*3,232
14,171,966
25,103,835
6,301,465
12,921,863

109,725,758
11,096,223,947
300,000
28,000,000
10,010,304 j 4,451,818,523
1
35,802 |
1,177,435

139.58
69.44 1
37.33 !
180.64 1
180.30
143.19
291.73
404.55
112.69
68.58
58.74

5.70
18.97
.21
65.32
68.10
7.32
5.92
1.97
3.72
3.75
.63

101.13
93.33
444.72
32.89

46.66
.14

12.91

AND
C l ’ R R EN CY,




BANKING

1The figures of population are for the nearest date to which the statistics of savings banks relate.
* Exclusive of 1,909 deposits of $173,0! 1 in savings banks in Faroe Islands, and of data for savings departments of ordinary banks, which comprised 155,160 accounts, credited with
vines d
<
$*1,370,748 on Mar. 31.1910.
* Exclusive of Brunswick
« No separate data available lor private and communal savings banks in 1910. The ordinary banks savings banks, and land-credit banks of Hungary held 1,768,455 savings
.ici'ounts credited with 9699.288,107 on Dec. 31,1910.
* Figures for the Casa d'Economie.
* Includes 38,95* depositors in school savings depositories, credited with $105,060. The above total is exclusive ol $162,1^5,345 worth of securities held by the savings banks to the
credit of depositors.
7 The peseta has been converted at the rate of 18 cents. Data taken from “ Espafia EconOmica y Financiera,*' Oct. 21,1911. Exclusive of data for savings departments of com­
mercial bulks, which comprised 124,657 accounts credited with 128,588,964 on Dec. 31,1910.
9 Exclusive of Government stock held for depositors, which, at the end of the year, amounted to $120,776,096 in the postal savings banks and to $12,934,743 in the trustee savings
banks.
* Exclusive of the population of the feudatory States.
*• Exclusive of data for special private savings banks, which on June30,1912, held deposits amounting to $40,828,420. The above total does not include the savings deposits in
(‘bartered hanks (“ Deposits payable after notice or on a tixed day” ), which on June 30,1912, amounted to $631,317,687.
m Number of offices, 12,823.

00
O
O

84

BANKING AND CURRENCY.

Bank of England.
Issue Department.
liabilities .

ASSETS.

Notes Issued............................................... £51.241,210

Government debt.....................................£11,015,100
Other securities.........................................
7,434,900
32,791,210
Gold coin and bullion.............................

51,241,210

51,241.210

Hanking Department.
Proprietors’ capital..................................£14,553,000 •
Rest.............................................................
3 ,3tj0,154
Public deposits (including exchequer,
savings banks, commissioners of na­
_____.._______ , commissioi
tional debt, and dividend accounts).
9,930,777
Other deposits........................................... 49,139,180
7-day ana other bills................................
18,040

Government securities.............................. £17,507,945
'
------------- *
---------—
Other securities......................................... 30,211,0_ _
N o te s ........................................................ 22,375.490
Gold and silver coin................................
912,633

77.007,157

77,007,157

Dated January 6,1910.
The above is the statement as it api>cars in the weekly returns.
>ve

I. G. Nairne, Chitf Catkin.

Balance Sheet, Jan. 6 , 1910.
(Arranged so that it corresponds in form with the balance sheets of the other banks given here.|
LIABILITIES.

|

ASSETS.

Capital and rest.........................................£17.913,154 j ('old coin and bullion and silver coin.. £33,703,843
Notes in circulation.................................. 2s.s«5,720 !
Government securities in both depart*
28,523,045
7-day and other bills................................
Ix.WO
inents......................................................
Public deposit*.........................................
9,<ttt>,777 ' Other securities......................................... 43,654,989
Other deposits........................................... 49,139. iso j
105, S72.877 !

105,872,877

[N
. ote.—All per contra entries, as those of the notes of the banks held by themselves, etc., are omitted
we
so as to show the real i
-------- "ow the real i>osition of the accounts.)
--------- *
-

It will thus 1 * observed that the note issues are covered by #2.7 per cent cold.
m
The public and private deposits are covered in the banking department by 38.3 per
cent of notes am! coin, nearly all such reserve being in notes, which, measured by
actual «roM, would make a irold reserve of only about 25 per cent against the deposits.
It will be observed under the tables of interest rates that this narrow margin has
been supplemented bv frequent changes of the rate of interest to attract sold from
other countries when fcnirHsh commerce requires gold, and it would also appear that
in 1847, 1S.Y , and 1K the Hank of England was permitted to issue legal-tender
T
I>7
notes against commercial paper in times of panic in order to extend needed loans,
restore confidence, ami *iU
‘eiruard the commerce and industry of Kngfaud.




BANKING AND CUBBENCY.

85

Imperial Bank qf Qtrwumy
Balamcb S u i t , D ec. SI, IO b.
O
[ Marks converted at 2 0 -£ l .l
UABIUTKBa.
Capital and
•................................... £12,458.581
Notes in elrculatfcra..................................
96,771,474
Amount due on clearing and current
accounts...................................................
89,944,901
Deposits (not bearing interest)..............
25,167
Sundry liabilities and reserve for doubt*
ful debts...................................................
720,072
1,587,287
Net profits for 1007....................................

Gold in bars.........................£16,702,076
German gold coin...............
806
Divisional money......................................

£36,412,073
10,504,046
40,007,010

Notes of imperial treasury (Hafchakassenacheinen)......................................
Notes of other banks................................

2,876,248

Bills held:
Doe within 16 days.................. .........
Due at later dates............................ .

22,660.990
28,960,520

Bills on foreign places..............................

61,600,110
6,457.406

......................................................
Securities.....................................................
Value of real property belonging to the
bank___ . . . . . .\T.. . .TTT^T.T?............
Sundry assets.............................................
146,756,872

66,067,612
6,706,468
10,724,627
2,840,450
4,010,848
146,766,872

[ N ote .—A ll per contra entries, as those of the notes of the banks held by themselves, etc.. are omitted
so as to show the real position of the accounts.)

It will be observed that the Bank of Germany carries 50 per cent of sold against
its notes and 37.1 per cent of gold against its notes and deposits, but tne Bank of
Germany can also issue legal-tender notes against commercial paper of a qualified class.
It will be observed that the Bank of Germany also carries a large volume of quick
assets. Thus (he Bank of Germany, like the Bank of England and the Bank of
France, holds its reserves liquid and always available for loaning for commercial
and industrial needs.
20366 O— 5 8 -




BANKING AND CURRENCY.

86

Bank of France.
Balance Sheet, Dec. 31,1908.
[Francsconverted as 25—£1.1
LiABILITIES.

ASSETS.

Capital of the bank............................... £7,300,000 Coin and bullion at Paris and at the
branches................................................ £175,401,607
Reserve and profits in addition to cap­
1,700,774 Bills due yesterday to be received
ital.......................................................
1,757
this day................................................
Notes payable to bearer in circulation
(bead office and branches)................ 197,972,408 Amount of bills:
Paris............................. £9,920,192
914,397
Drafts.....................................................
Branches..................... 18,886,626
Current account with the treasury___
7,199,491
28,806,818
Current accounts and deposit ac­
Advances on securities:
counts:
Paris.............................
6,332,341
Paris............................. £22,780,727
2, ?21,524
Branches..................... 14,478,603
Branches...................
Dividends unpaid, etc..........................

25,502,251
l,S76,386

20,810,944
Advances to Government (laws of
June 9, 1857; June 13, 1878; Nov.
17, 1897)................................................
Government stock reserve fund..........
Disposable funds, Government stock.
Immovable funds, Government stock
(law of June 9,1857)...........................
Amount appropriated to special re­
serve......................................................
Office and furniture of the bank and
buildings at the branches, etc..........

7,200,000
519,230
3,9*5,234
4,000,000
336,298
1,403,814
242,465,702

242,465,702

[Note.—All per contra entries, as those of the notes of the banks held by themselves, etc. , are omitted

so as to show tne real position of the accounts.)

This table shows that the Bank of France c arries 88 per cent in coin against notes,
the coin including both gold and silver, however, and carries 75 per cent of coin
against notes and deposits. Its authorized issue of notes is 5,800.000,000 francs, or
£232,000,000, which leaves a margin of over <£35,000,000 sterling, or $175,000,000
maigin of notes, besides the quick assets which it constantly carries, just as the Bank
of England does.
The need for large cash reserves in France is due to the fact that the check system
(currency) against deposits is not developed in France as in England and in the Cnited
States
Bank'of the Xethcrlands.
Balance Sheet, Mar. 31,1909.
[Guilders converted as 12=£1.]
ASSETS.

LIABILITIES.

Capital.......................................................... £l,tititi,667
l oin, bullion, etc..................................... £13,605,502
435,955 | Inland bills.
lulls................................................
3,514,247
Reserve.
bills.................................
!, 79K, 200 ■ Foreign bills..............................................
1,550,309
Notes in circulation............
Loan accounts.............................
173,200
accounts..........................................
4,144,240
Transfers................................
Advances on current accounts.
539, M9
accounts..............
1. ss2,021
Current accounts.................
Investments:
Discount oil—
10,521
332,662
Capital................................
Inland bills....................
3,060
Reserve..................................
432,708
Foreign bills..................
59,59S Sundry assets, buildings...........
255,721
Sundry liabilities................
90,360
Net profit for distribution.
777,41*»

25,777,416

|Note .— All per contra entries, as those of the notes of the banks held by themselves, etc., are omitted

so as to show the reol position of the accounts.)

This bank carries gold against its notes of 58 per cent and gold against notes and
deposits of 57 per cent, its deposits being very small.




87

BANKING AND CURRENCY.

National Bank of Belgium.
B alakcx Si i k

t

, D sc. 31,1908.

IFranc* converted as 25—£ 1 .1
LIABILITIES.

Capital paid up........................................... £2,000,000
1,444,899
Reserve fund..................... .......................
Notes in circulation................................... 32,275,122
Current accounts........................................
4,028,662
titamp duty, share of profits due to the
Government, employees’ superannua­
tion, provident funds, dividends due,
1,029,776
etc..............................................................

£6,326,529
Specie and bullion
lelfii
Bills discounted (bills in Bel turn,
£ 19,738,332; IV* CU
foreign bills, £7 ,421 ,l
,639;
27,189,971
------------- 71)..
total, £27,150,971)
191,849
Securities due for collection.
2,066,765
Advances on Government securities.. .
Government and reserve fund securities 3,418,343
1,623,002
Securities for current accounts, etc........

40,778,469

40,778,469

[ N o n .—All per contra entries, as those of tbs notes of the banks held by tbemasives, etc., art omitted
to as to show tne real position of the accounts.)

The Bank of the Netherlands carries 58 per cent of gold against its notes and 57
per cent of gold against its notes and deposits. Thia bank only carries very small
line of deposits.
The National Bank of Belgium carries 19 per cent of gold against its notes and 17
per cent of cold against its notes and deposits.
The three great banks of England, France, and Germany, as above mentioned,
practically provide the gold accommodation needed by western European commerce,
the two latter banks, however, serving a useful local purpose.

a

Reserve of actual gold versus notes only, versus notes and deposits against deposits only.

Ratio of gold reserves against notes and deposits.

Versus
notes
only.

Percent.
Bank of England...................................... ................................................................
Relchsbank.............................................. ................................... ............................
Bank of France..........................................................................................................
Netherlands................................................................................................................
Belgium......................................................................................................................




1 Banking department.

62.7

6a o
88.0
68.0
19.0

Venus
Versus
both
notes and
-s S "
deposits.

Pm csat. Pm 9—t.
28.3
27.1
76.0
67.9
17.9

126

E U R O PE A N

T able

00
oo

INTEK EH T KATEH.

I.—Rate of discount—Number of changes in each year at the Banks of England, France, Germany, Holland {1844-1909), and Belgium (18511909.)
Bank of England.

Bank of Germany
iany

Bank of France.

Bank of Holland.

Bank of Belgium.

Year

Perct

(*)

(')

Fall.

Rise.

Total.

Perct. Perct. Perct. Perct. Per ct. Per ct.
1
1
(‘ )
0)
<»)
2 0)
1
0)
1
1
C
1)
(>)
(>)
i
1
9
3
1
0)
(')
(') '
1
(' )
0)
C)
(')
1
I1) 1 O
C)
C»
0)
(')
(')
(!)
O
C)
1
1
2
(*)
C)
6
1
1
1
1
2
1
2
1
8
2
2
1
2
3
7
1
4
4
8
9
4
4
4
1
6
1
2
5
1
1
1
1
(')
0)
3
1
1
4
7
(')
(»>
3
5
1
4
(')
0)
1
1
2
5
3
8
3
15
7
11
4
4
16
3
2
6
14
1
2
5
7
3
2
2
0)
0)
2 ( l)
(>)
(l)
0)
0)
1
7
0)
(*)
I1)
2
4
4
1
0

1
0

1

14
24
13

1
2
5

1
0
5
2
6

2
(»)

1
1
2
2
I
i

1
1
1
2

i
l

2
1
4
2

(>) I
1
1
2
2
2

Total.

Rise.

Fall.

Total.

Rise.

Fall.

Total.

Per ct. Perct. Perct. Perct. Perct. Per ct. Per ci.
<*)
1
(*)
(*)
(' )
(■
)
0)
5
5
2
(*)
(*)
(2)
(*>
2
2
<>
*
2
(*)
1
1
1
(* )
(*)
(*)
4
1
3
2
(*)
<*)
(*)
1
1
(2)
(*)
1
<
*)
1
1
(2)
(l )
C)
(*)
(>
)
0)
0)
(*)
(*)
0)
C)
1
1
(«)
0)
C)
0)
2
1
2
(*)
C)
C)
1
1
C)
C)
(')
C)
(>;
(*)
2
2
1
(l)
0)
(l)
1
4
3
1
3
4
3
1
8
3
6
5
4
5
4
6
6
2
1
1
2
O
0)
C)
2
1
1
C)
<*)
O
0)
2
2
5
2
3
V)
3
4
2
2
1
2
(l)
3
6
4
2
1
3
6
9
5
4
4
4
2
6
5
11
6
3
3
5
6
4
11
4
7
2
8
1
6
1
2
4
(*)
2
2
0)
(*)
0)
0)
1
5
5
(»)
(*)
(*)
5
3
2
5
4
8
12
11
6
5
2
2
2
9
3
1
6
1
6
5
17
8
5
4
9
7
9
9
3
3
3
6
4
9
1
1
3
6
5
2
6
2
(*)
(*)
0)
1
2
1
7
(l)
(!)
0)
3
1
2
2
2
3
2
4
1
3
2
5
2
1
1
5
(*)
(‘ )
(*)
3
7
3
3
4
3

CURRENCY,




Per ct.

Total

AD
N

1844..
1845..
1846..
1847..
1848..
1849..
1850..
1851 .
1852..
1853..
1854..
1855..
1856..
1857..
1858..
1859..
1860..
1861..
1862.
1863..
1864.
1865.
1866.
1867.
1868.
1869.
1870.
1871.
1872.
1873.
1874.
1875.
1876.
1877.
1878.
1879.
1880.
1881.

Fall.

BANKING

Rise.

(’ )

3
2
3
4
1
2
1
1
2
4
4
4

202
i No change.

3
5
3
5
3
4
5
4
7
7
3
6
2
(')
4
3
2
5
4
2
2
2
1
2

3
6
2
241 |

6
6
7
7
7
6
9
8
11
12
4
12
2
(*)
3
6
6
6
6
6
3
3
2
3

6
7
6
6

443

3
1

3
1
(')
0)
0)
(»)

0)
0)
(')
2

0)
(>)

0)
0)

0)
(*)
0)
(»)
0)
(0

( ,) 2
2
<
*>
(1)1
0)

(')
0)

1
2
1

2

(»)
50

2

0)
(*)
<»)
(i)

(1)1
0)
(>)

0)
(*)
(*>
(*)
0)
(»)

(*>
0)
0)
0)
(l)
0)

2
(')

65

1
1
1
2
4

2
2

0)
115

1
3
2
2
2
1
1
2

4
2

3

(•)
(*)
0)
(1)
0)
0)

(»)

!
I
1

1
2
2
4
4
1
1
1
1
4
3
2
2
91 1
1

2
1
(>>

2
2
2

3
2
2
6
1

3
5
2
2
4
3
4
2
3
2
1
3
5
6
7
3
4
3
2
1
7
5
4
f>
3

105

196

2
1
3
1
1
2
1
3
2
3
3
3
2
1

3
4
1
1

5

4
1
0)

(>)
(i)
0)
(0

4

<
*>
0)
(>)
(>)

2

0)
0)
0)
0)
3
1
2
2

4
(*)

8
4
1
1

<>)

(>)
1
1

4
3
1
0)

1

0)

0)

4
3
1
6
2
2
1
1
4
3
1

1

2
3
I

1
1
2
3
3
3
2

94

94

188

1
3
1

* Operations commenced in 1851.

1
1

4 .
1
1
1
4
1

10
1
2
6
4
2
6
4
2

6
1
1
3
4
2
3
2
<>
■

(*)
1
(>)

1

(>)
1

0)
0)

1
(>)

1
4

0)

(l)
2
2
2

(*)

(»)

0)

(*)
1
3

2
2
5

1
86 1

(>)
(*)

106

1
1
1
1
1
6
2
2
3
1
3
3
5
1

192

CURRENCY.




3
1
4
2
4
2
4
4
4
5
1
6

AND

1882 ...............................................................................
1383 .............................................................................
1884 ...............................................................................
______ _____________ __________
1*K
. _________
______________
_____ _
..............................
.
1888.................................................................................
1889 .............................................................................
1800 ...............................................................................
1801.................................................................................
1892 .............................................................................
1893 .............................. ; ...............................................
1894 ..............................................................................
1 8 9 5 ........................................... .................................
1896.................................................................................
1897.................................................................................
1898.................................................................................
1899...............................................................................
1900.................................................................................
1901.................................................................................
1902.............. .................................................................
1903.................................................................................
1904.................................................................................
1905.................................................................................
1900.................................................... .............................
1907.................................................................................
1908...............................................................................
1909.................................................................................

00
<o

T a b le

I I —Lowest and highest rates charged and extent of fluctuation during each year, Banks of England, France, Germany, Holland (1844-1909),
and Belgium (1861*1909)v




(»)
(l)
(*)
(»)
2
1
<
*>
(')
4
(l)
(')
*
(')
(»)
1

(*)

4
3
3
3
3
4
3
3
3
3
3
3
3
3
4

5

(>)

0)

3$
3
3*
4
3

0)
(‘ )
(*)
(! )
(*)
(')
4
4

4i
$
4
3*

Si
6
5
I'K
5
5
5
44
5
5*
4
5
5
4
5
0
«
*
7
7
4*
4
4
5
t
>
7
4
5

1*
2
1
(l).
1

2
2
H
2r
H

2J
1
2
2
1
2
2
3
9
2
1
1
4
1
3
2*
2
1?

* Operations commenced in 1*51.

1
2
2
4
4

44
4
3}
3
24
(l)
(l)
(')
(')
2J
3
24
2}
(«)
2J
3
24
2|
3*
3
(*)
3
3
2}
3
5
3
24

$

54
34
3
0)
(')
(l)
(*)
44
44
3
5
34
(*)
31
34
3
5
5
34
(l)
34
34
3
5
6
5
3

(»)
(*)
(*)
(')
2
14
4
24
l
(')
l
2
1
(*)
4

4
2
1
2
ik

2}
3
3

0)
24
24
(>)
24
(*)
3
34
4
3
(l)
3
(>)
3
34
4
3
3

2
4
t
*
1
4
l
24
2
1

•
H
6
4
4
4
4
34
5
5
4

4
34
3
3
24

0)

3
3
(l)
3
3
0)
4
5

(‘ >

4
1
(‘ )

*
4
(l)
4
(‘ )
4
44
6
6
3*

4
4

(l)

0)
(‘ )

l
14
l
l
l
l
l
2
3

4

CURRENCY,

0)
(')
(*>
(')
<
*>
(>)
4

1 No change.

4
4
4

u

H
i

AND




5
5
3*
(>)
(l)
(»)
(»)
44
4
0)
(*)
3
(l)
(»)
24
(l)
0)
3
44

<
0

92

BANKIHQ AND CUBBENCY.

T abls

I I I .—Rate of discount, 1844-1909— The number of days at sack rate, arranged

from the lowest rate to the highest.

Bank of
England.'

Rate.

2 per oent...................
2 f per oent...........
2$ per oent. . . .
3 per oent...................
3$ per oent___
4 per oent...................
4J per oent................
5 per oent...................
5§ p ercent.. . . _____
• per oent......... ........
6} per oent. .
7 per cent. . .
7} per oent
8 percent
9 percent
10 per oent

Imperial Bank
of Germany.*

Bank of
France.*

Bank of the
Netherlands.*

National Bank
of Belgium*

Num­
Num­
Num­
Num­
Num­
ber of
ber of
ber of
ber of
ber of
Num­
Num­
Num­
days
Num­
days
days
days
Num­
days
ber of per cent ber of perttttt ber of percept ber of
ber 9* percent
days. of total days. of total days. of total days. W
days. of total
(total(total—
(to ta l(total(total1,000).
1,000).
1,000).
1,000).
1,000).
3,409
28
3,599
5,8fi9
1,981
3,772
008
2,195
263
975
91
633

143
1
151
246
80
158
26
98
11
41
4
26

268
95
141

ii
4
e

Total................ 23,857

1,000




2,735

116

1,328

56

2,579
7,828
2,060
4,579
353
2,061
120
1,170
8
21*6
21
41
16

108
S29
86
192
15
86
5
49

5,058
8,013
3,737
2,167
811
1,823
375
260
150
135

212
336
157
91
34
76
16
11
6
5

23,857

1,000

12
1
2

3,073
644
12,192
1,626
4,094
707
970
72
269
no
37
63

129
27
511
68
172
30
41
3
11
5
1
2

23,857

1,000

3,169
9,412
2,966
3,416
698
944
378
540

147
437
138
159
32
44
18
25

27
*

23,857

1 Lowest rate 2 per cent; highest rate 10 per cent.
* Lowest rate 2 per oent; highest rate 9 per cent.
* Lowest rate 3 per cent; highest rate 9 per cent.
* Lowest rate 2 per cent; highest rate 7 per cent.
» Lowest rate 2} per oent; highest rate 7 per oent.

1,000

21,549

1,000

BANKING AND CURRENCY.

93

T a b l e I V .— R a t e o f d i s c o u n t , 1 8 4 4 - 1 9 0 9 — T h e n u m b e r o f d a y s a t e a ch r a t e , a r r a n g e d f r o m
th e h ig h e s t n u m b e r o f d a y s t o th e l o w e s t .

Bank of England.

Bank of Belgium.

1,000
It will thus be seen that these great banks holding the national reserves have been
able to furnish commerce with a very low rate of discount for nearly all the time and
only occasionally have been compelled to raise the rate to a high point.
These low rates illustrate the enormous value of these great banks to European com­
merce and the urgent necessity for ad ion by the United States along similar line'*.




94

BAXKIXG AND CURRENCY.
AMERICAN INTERE8T RATES.
ItMMt'

Jan. 29.
Cash (in thousands)............
Loans......................................
Individual deposits.............
Bank deposits.......................

Apr. ft.

pm,:m

June IK.

| Sept. 4.

SH20.000
4.141.17ft
:i,97S.4t»7
1.357.257

$651,233 ! $626, ot3
4,206,890 1 4,298.9*3
4,055,873
4.199.93K
1.555,2ft7
1,589,001

Per cent.

4,071, (Ml

4. OSS,420
I. olio. 494

P tr a n t.

Nov. 12.
$634,550
4,366,045
4.289,7Ti
1.509,043

Hate* for motny.
New York call loans:
Stock exchange—
Range................................
Average............................
Banks and trust companies.
Time loans:
:Wdays.....................................
60 days.....................................
90 days.....................................
4 months..................................
5 months..................................
« months..................................
7 months..................................
Commercial paper:
Double names—
Choice 60 to 90 days___
Single names—
Prime, 4 to 0 months . . .
(*oo*!, 4 to ft months___

2 *1
0
M
4 - ti*
5

K

5 ft{ 1
i
5 - ft"
5 ft
5 ft
5 - V.

PtrcfHt. | Per cent.
i

2 ft
3*
21 :<

2 4(1
:{

4 -41

7 7)
ft.J 5|

Vi

41 5
4}-5
if 5
5|-5|

ti -27

ft 1
:
I
!

til fti
tit ftj

7 (U6* ft ft -

s
71
7*
64
ftj
ti
6*

4 - :*

4| ft

ft

4}

42 ft
5 tiA

ft - 64
ft - 7|

5.; .

.»! « I

1907.
Jan. 2ft.

Mar. 22.

May 20.

Individual deposits.......
Bank deposits................

St,95,503
4,4ti3,2t»7
4, U5,(i50
l,(i7ft,92ft

$ft5ft,22G
4,535,844
4,269,511
l,(i37,15S

1
$091,581 j $701, (123
4,(131,143
4, (>78,583
4,322,880
4,319,035
1,085,540 | 1.595,493

Rat<* for mom y.
New York call loans:
Stock exchange—

P tra n t.

Per ant.

U 45
5
2 - 3

P tra n t.

2 - 25

('ash (in thousands).

Range.............................
Average..........................

Banks and trust companies.
Time loans:
30 days............. .......................
HOdays.....................................
90 days.....................................
4 months..................................
5 months..................................
ti months..................................
7 months..................................
Commercial paper:
Double names—
<*hoice, 00 to 90 days-----Single names—
Prime, 4 to o months—
(food, 4 to 6 months____




.

i

* ft
3 - '**

!

53- 7

ti

5 1 -7

Dec. 3.
$060,785
4,585,337
4,176,873
1,387,88ft

i

1

k V

Aug. 22.

l*-2|

M

P tra n t.
12-fi *
3
2 - 2*
5
5
(i
ti

-ti
t»
A
-7
-7

Per cent.
2-25
14
15-18
8-12
8-12
7- 8
7
t'- 8
ft- 7

i - l

5 j- ft
55 ft

4* 4!
«|-4j

21 •
?

5*

ti

5 3| j

ti tiA

8nom.

5 5J
S|-fi

ft 4
H -7

8 nom.

(*4 |

5J- ( »
►
t»A- 7 i
1
1

ti|

ti - ft!
t*4- 7

95

BANKING AND CURRENCY.
am briban

INTEREST

rates — continued.

1908.
Feb. 14.
Gash (in thouMndf).
Individual deposits.
Bank deposits..........

May 14.

July 16.

Sept. 23.

9788,896
4,422,863
4,106,814
1,684,426

9861,326
4,628,346
4,312,666
1,692,421

9849,018
4,616,676
4,374,661
1,822,863

9868,424
4,760,612
4,648,136
1,941,666

Percent.

Percent.

Per cent.

Percent.

Nov. 27.
9844,769
4,940,367
4,720,294
1,968,831

Rates for money.
New York call loans:
Stock exchange—
Range............................
Average.
Banks and tri
[trust companies.
Time loans:
30 days..................................
C days..................................
O
90 days..................................
4 months..............................
5 months..............................
6 months..............................
7 months..............................
8 m onths.............................
Commercial paper:
Double names—
Choice, 60 to 90 days..
Single names—
Prime, 4 to 6 months.
Good, 4 to 6 months..

1J-2

1 -2
1-ii

1 -1
<
1
1
1

1 -2

Per cent.

1—
3
i-ll

2 -24
2 -3

&

6f-6
6 -6
6H
>

n-4*

3*-4

3M

3*-4*

W|

3*-4
4 -6

3J-4*
4*-6

4 -5
4»

1909.

Apr. 28.

June 23.

Sept. 1.

$800,117
4,840, 7(56
4,699,682
2,035,169

S
87S, 457
4,963,110
4,826,060
2,046,753

$885,915
5,035,883
4,898,576
2,034,663

$854,071
5, 128,882
5,009,893
2,018,813

Per cent.

Per cent.

Per cent.

Per cent.

Feb. 5.
Cash (in thousands).
Individual deposits.
Bank deposits..........

Nov. 16.
$804,860
5,148,787
5,120,442
1,886,260

Rate* for money.
New York call loans:
Stock exchange—
Range................................
Average............................
Banks ana trust companies.
Time loans:
30 days.....................................
60 days.....................................
90 days.....................................
4 months..................................
5 months..................................
6 months..................................
7 months........ .........................
8 months..................................
Commercial paper:
Double names—
Choice, 60 to 90 d ays___
Single names—
Prime, 4 to 6 months___
Good, 4 to 6 months___




l*-3 .

2J

l*-2

'*1;
1H:

n!

ih

2J
-3

Per cent.
3H>

21-2|

2*-2j

HI
% ‘ 2!
2 -2|
2-3

2;-3
3 -3*

3J
-4

3 -3J

3 -3}

3 -3*

3H ,

3M

3J-*

4 -4*

4 -4 1

4-4J

4*-5*
4 -5

4J-5

5 -6

5H*

96

BANKING AND CURRENCY.
ambrican interest rates — continued.

1 9 1 0.

Jan. 31.
Cash (in thousands)........................................
YrfH lS..........
U
Individual deposits.........................................
Bank deposits...................................................

Mar. 29.

June 30.

Sept. 1.

<833,079
5,229,503
5,190,835
1,966,594

$834,895
5,432,093
5,227,851
1,988,000

$820,773
5,430,150
5,287,312
1,900,135

$851,685
5,467,638
5,145,658
1,943,691

Per cent.

Per cent.

Per cent.

Per cent.

Nov. 10.
$816,071
5,450,644
5,304,788
1,906,360

Rates for money.
New York call loans:
Stock exchange—
Range........................................... .
Average...............................................
Time loans:
60 days......................................................
90 days........................................................
4 months...........................................
5 months....................................................
6 months...................................................
Commercial paper:
Double names—
Choice, 60 to 90 days........................
Single names—
Prime, 4 to 6 months.......................
C.ood, 4 to 6 months.........................

*-14
4j

2 11

*H

4 -4J

4*- 5
4J- 5

4 -51
4 -5±
4 -5 *
4 -6
4 -5

4J-5

5*- 5}

4f-6

4|-5i
5 -6

5*- 6
6 - 6*

41-6
5p6l

31-4
3i-4J
3^-44
3}-4i
3J-4J

313I

4J- 5

4 -5
41-5
4J—
5|

Per cent.

* i- 5

3 i- 4}
4-4}
4 ~ 4J
4-44
4-4$

4 j- 5
5 -5 *

1J 13
—
2

3 -3*

1911 •
Jan. 27.
Cash (in thousands)........................................
Loans.................................................................
Individual deposits.........................................
Bank deposits..................................................

Mar. 7.

June 7.

Sept. 1.

Dec. 5.

$856,267
5,402,642
5,113,221
1,991,188

$908,036
5,558,039
5,304,624
2,224,719

$946,331
5,610,787
5,477,991
2,147,441

$895,475
5,663,411
5,489,011
2,088,187

$862,794
5,659,109
5,536,042
2,085,106

Per cent.

Per cent.

Per cent.
2 -2k

Per cent.

Rates for money.
New York call loans:
Stock exchange—
Range................................. ...............
A verage..............................................
Time loans:
30 davs.......................................................
60 davs.......................................................
90 davs....................................... ...............
4 months....................................................
5 months....................................................
6 months....................................................
Commercial paper:
Double names—
Choice, 60 to 90 davs......................
Single names—
Prime, 4 to 6 months.......................
Good, 4 to 6 months.......................




Per cent.

2|

U11

2*~6
4

2*-2J
2f-3
3 -3J
3 -3J
3 -3*

2V-3
2f-3
2^3
3 -3\
3J-3*

2*-3|
3J-3J
3M
32-4
32-4

31-5
3M *
3H 1
4 -4$
4 -4*
4 -4J

3H J

3J-4J

3J-4

4 -5

4 -5

3*-4\
41-5-

3J-4J
4S-5

3|-4
4i-5

41-5
5 -5*

41-5
4*-5*

3J

li-2*
2J

3
3 -3}
3 -3$
3J-4
3H
3H

97

BAXKINC. AXD CURRENCY.
ASI K H K 'A \ I NTKKEST BATKS— C 0 1ltillU e«l.

i» i* .
Apr. lv

June 14.

So|»i. 4.

2,3*1,214

SMI.tMl
‘•.M2, i«M
i
.*>,712,051
2.24S.2 4

.*>.903,1**
.*>,825,461
2,17*. I«3

$M»,9SU
6, OKI,Ml
*>,*91,670
2.177,4#*

Ptr ctul.

Ptr etnl.

Ptr ant.

Ptr etnl.

Keli. 3».
C a s h ...................................................

S .V1,497
H

Loans.............................................
Individual deposits.....................
Bank <le|>osits...............................

X jv . 2(>
.
<K
‘>9,<N
M
6,Mix,982
5,944,561
2,101,805

Jiilct for mrmtf.
Call loans, New York:
Stock fxriuuv*-

Kanjw.......................

2

Average......................
Time loans:
30 days...............................
40 days...............................
90 days...............................
4 months...........................
5 months...........................
6 months...........................
Commercial pa|wr:
Double names—
Choice, 00 to 90 days..
Single names—
Prime, 4 to 6 months,
tiood, 4 to 6 months..

i f
:» -:»i

3

2 -3
2]

« •

3
3 -3J

:»M

3J-I

4 -4J

$.03,417
*
Cadi (la thousands)......................................
Loans...............................................................’ *.125,029
Individual deposits....................................... • 5,«S5,492
Bank deposits................................................ 1 2.310,5M
Rale*for montf.

(l)
<‘ >

34-4

H-»J

5 ~6

(»)

3H>
t> -6J

<*)
(')

n

41 ‘

Apr. 4.
$ k. k, 2«<3
h
S.IT*,096
5,9tW, 7*7
2,192,345

June 4.

Aug. 9.

9913,9*2
A. 143,02*
5.953.461
2.120,551

$899,769
G, 16ft,555
5,761,338
2,1OK,550

(

S ew York rail loans:
Stock exchange—
Range...........................................
Average........................................
Time loans:
tiOdavs................................................
90 davs................................................
4 months.............................................
5 months.............................................
• months.............................................
Commercial paper:
Double names—
Choice, 60 to 90 days..................
Single names—
Prime, 4 to 6 months.................
Good, 4 to 6 months...................




<‘ )
(*)

41-6
5 -ti
.* -6
>
.• -ti
5 -6

IM S .
Feb. 4.

Ptr etnl.

3J-4J

;!:!!

‘H I

9 11

Per cent.

2 11

1!
5J-6

6-6J
fi -6J
1 None compfled.

<•)
(»)
0)

98

BANKING AND CUBBENCY.

Reports of New York City banka from January, 1907, to January, 1908, shotting
loans, individual deposits, and reserves during that period.
Banks
Date of call by office of the comptroller. reporting.

Jan. 38,1907................................................
Mar. 22, 1907................................................
May 20,1907................................................
Aug. 22, 1907...............................................
D«0. J, 1907..................................................

40
37
39
38
40

Loans.

Deposits.

1728,319,528 $857,875,410
688,703.472
803,590,176
866,332,979
752,566,083
712,121, O K 825,703,785
A
775,1S1.207
824,394,509

Reserves
held.

$230,116,200
211,379,340
233,329,867
221,349,657
180,448,128

Percent
of
reserves.
20.82
26.30
26.93
26.81
21.89

It will be observed that the March statement shows loss of forty millions
loans and fifty-four millions of deposits; the May statement a relative increase
of sixty-four millions loans and sixty-two millions increase in deposits; the
August statement a relative decrease in loans of forty millions and a decrease
in deposits of forty-one millions; the December statement an increase in loans
o f sixty-three millions, with no increase of de|*>sits. These violent changes
and the violent fluctuations of the interest rates, running to 45 per cent in
June and 125 per cent in October, explain the panic and the ruinous changes
In stock values due to these contractions and expansions o f credits by the
unscrupulous manipulators of credits.




Fluctuation o f principal ttochi during 1907.
Value of stock.
Name.

Range o'
prices.

Capital.
Jan. 12.

50ft,405,200
38,000,000
20,006,350

1|
2

Hi

10}
86|

a*

10

06

02|

74|

16J

15*

13

16

80

72*

110

00*

122

42
183.
132
31:

123

1
0
4

1101

24
136
116

138

120}
22

}

180

32
117*
171}

$
10
4^

150

122

Aug. 10.

1*
8

130

158
3'r i
>

July.

07J

13*

85

131,551,400
152, 165,500
112.370.900
140,577,300
178.202.100
110.900.000
5.000.000
22,553.600
38,T O
H ,000
16.000.000
105.470.100

June 8.

431

1
«*

144

2J
0
1«U

110

37
14
146.

2
1

9
6
22*

127}

*

10*

112

148*
37*
14
143)

142.

10
1

Oct. 5.

<
1

34

1
2

Nov. 0.
5*

71*

50*

11

12

11

54*

36]
130
27|
105
136}

41
145
20

Sept. 7.

48

62

Dec
61
48j

10
90
80
171
113*
08

30 to

7

•04 to

*

103
82:

1
«

2*
1

30
141
31

36

12*
30

28
54
131)

25|
40
127

111*

U
ti|

2A
J

241

27J

47

70

142*

3

142

a

128

102*
26
85
127

31!

12

141

»i

133

I

16J

25*
135
114

20

27 to

130 to 33

10

122

11

1|
2

22

08;
40
27

1J
H

20]

20

y

22

10*

186 to S8
125 to 55
52 to 10
348 to 107
174 to 80
42 to 10

ititi to

54 lo i:<
141 to 1>
190 to 44
5 to 8
.‘>
36 to 6
23.) to 32

CURRENCY.




15,000,000
10,020,400

May.

81

43

110)
21|

193.287.900

Apr. 6.

AND

Volume of sale* for the
week, In number of
■hare*...............................

919.830.000

Mar. 4.

BANKING

Allis-Chalmers Co.......
Amalgamated Copper
Co...............................
American Boet Sugar
Co...............................
American Ice Securi­
ties Co........................
American Telephone it
Telegraph Co............
Baltimore 6 Ohio.......
Erie...............................
Oreat Northern...........
New York Central___
Southern Railway.......
Tennessee Copper.......
Tennessee Coal <( Iron.
<
Texa* Pacific...............
Third Avenue..............
Union Pacific..............
United Staten Steel
Corporation..............
Wabash.........................
Weetinghouse E . i U .

Feb. 4.

4,032,000 6,205,615 5,802,476 6,176,753 3,786,060 3,100,313 2,301,758 4,436,082 2,588,258 2.481,097 1,817,501 4,613,552

CO
CO

BANKING AND CURRENCY.

100

Condition o f 25,193 banks o f all kinds, as shown by the Report o f the Comptroller o f the
Currency, June 30, 1912.
CO M PA R A TIV E B A N K

R E S O U R C E S , 1804—1912.

[The national-bank notes are included in the demand obligations. The 5 per cent redemption fund is
also included in the total cash.)
[ Amounts in millions.)

Years.

1864.
1865.
1806.
1867.
1868.
1869.
1870.
1S71
1872
1873
1874
1S75
1876.
1S77.
1878.
1S79.

18 0
8.

18X1.
1882.
1883.
1SS4
1885.
1886.
1887
1888.
1889.
1890.
1891
1892.
1893
1894.

1 6.
*9

1897..
1898
1899..
1900 .
1901
1902..
1903..
1904 ,
1905..
190t).
1907..
1908..
1909..
1910..
911..
1912..

1912—25,000 banks in above tab!*1
.




Total
Capital
Loans
(iovernTotal
demand
and
and
ment de­ cash in
obliga­
surplus. discounts. posits.
all banks.
tions.
$391.0
451. 5
’>61.2
577. 7
595. 8
615.7
646. 4
659. 8
748.0
748. 5
750. 2
846. 8
863. 9
874. 7
825.4
82*'.. 5
825. 4
864.3
900. 7
973. 4
1.036. 0
1,040.0
1,080.5
1,267.0
1,347.4
1,425.2
1,552.7
1,648.9
1,721.4
1,781.1
1,752.2
1.759.6
1,756v
3
1,725.2
1.724.7
1.734.7
1,906.9
2.031.7
2 .29S. 5
2.595.3
2.753.4
2.902.7

3.634.6
3 832.5
4.018,0
4. 176.9

$70. 7
362.4
" *58. 0
550. 4
39. 1
588. 5
33.3
655. 7
28.3
686.3
12.8
719.3
13.2
789. 4
11.1
871.5
12.4
1,439. 9 1
15.1
1,564. 5 {
10.6
1,748. 1
10.2
1,727. 1
11. 1
1,720.9
10.9
1,561.2
25.6
1,507.4
252.1
1,662. 1
10.7
1,901. 9
12.2
2,050. 3
12.6
2.133.6
13.9
2.260. 7
14.2
2,272.3
14.0
2,456.7
17.1
2,944.9
23.2
3,161.1
58.4
3,475.2
46.7
3.842.1
30.6
3,965.9
25.9
4,336.6 I
14.2
4.368.6
13.7
4,085.0
14.1
4.268.8
13.2
4,251. 1
15.4
4.216.0
16.4
4,652.2
52.9
5,177.6
76.3
5,657.5
98.9
6.425.2
99.1
7.189.0
124.0
7, 738.9
147.3
7,982.0
110.3
9,027.2
75.3
9,893.7
89.9
10. 7f>3.9
180.7
10.438.0 1
130.3
11,373.2 I
70.4
12,521.7 !
54.5
1 13.046.0 |
48.4
58.9
13.953.6 !

$198.3
$544.8
199.4
830.5
231.9
1,122.7
205.6
1,101.7
2(H 7
).
1,291.8
162.5
1,337.5
187.7
1,356.3
194.0
1,578.2
177.6
1,693.3
218.2
1,776.5
252.2
1,875.8
238.7
2,115.3
226.4
2,084.5
230.5
2.115.0
214 6
2,043.4
216. 3
2,254.0
2,279.7
285.5
295.0
2,621.5
287. 1
2,781.9
2,899.5
321.0
321.2
2,875.9
3.017.5
414.3
375.5
3,067.1
432.8
3,498.2
446.1
3,636.6
499.1
3,953.8
4,219.6
478.3
478.1
4,346.2
586.4
4,820.3
515.9
4,8%. 1
688.9
4,837.1
631.1
5,113.1
531.8
5,160.7
628.2
5,221.7
687.8
5,831.0
723.3
6.944.4
749.9
7,603.1
807.5
8.878.7
9,838.1
848.1
857.2 10,060.1
990.6 10,509.9
994.1 11,871.4
1,016.4 12,816.6
1,113.7 13,828.2
1,368.3 13,528.5
1,452.0 14,743.2
1,423.8 16,013.5
1,554.1 16,640.5
1,572.9 17,790.0

Per cent
of cash
to obliga­
tions.
$18.5
24.0
20.0
17.1
15.5
12.1
13.9
12.2
11.6
12.3
13.4
11.2
10.8
10.8
10.5
9.6
12.5
11.2
10.5
11.0
11.1
13.7
12.9
13.1
13.0
14.0
11.3
11.0
12.1
10.7
14.2
12.3
10.3
12.0
11.7
10.4
9.8
9.0
8.9
8.5
9.4
8.3
7.9-6.5
8.0-6.6
10.0-8.6
9 .8-8.8
8.8-8.0
9 3 -8 .0
8.2

and approximate stocks of money, in the aggregate and per capita, in the principal countries o f the world, Dec. S1, 1911.
Stock of silver.

Stock of gold.

Monetary unit.

1

2
3
4

6

6
7

8
9

10

11

12

13
14
15
16
17
18
19

20

21

22

23
24
25
26
27
28
29
30
31
32
33
34
35
36
67
38
39
40
41
42
43
44
45
46
47
48
49

Population.

In banks
and publio
treasuries.

In circula­
tion.

T ota.

Thousands. Thousands. Thousands. Thousands.
Dollar..
Crown.
Franc..

94,800
49,400
7,300

1,429,800
265,700
36,500

Pound sterling___
Dollar......................
Pound sterling___

4.400
6,200
45.000

207,800
139,200
1375,000

Pound sterling and
rupee.
Pound sterling___
Dollar......................

295,000

■44,600

7.800
1,600

50,400
6,800

Lev............
Peseta___
Crown
Piaster___
Markkaa..
Franc........
Mark.........
Drachma..
Gourde___
Lira...........
Yen......... .
Peso..........
Florin____
Crown___
Milrels___
Lei.............
Ruble.......
Dinar........
Tical........-

4.000
2,700
11.300
2.900
39.300
64.900
2,600
1,500
33.900
52,200
15.000
5.900
2.400
5.400
6.800
160,100
2,800
7.000

Peso..........
Boliviano.
Miireis___

j

|
;
i

7.000
2.300
20,500
3.500
4.300
1.500 ;

Pew ..........

Dollar.. . . .
Sucre.. . .

Pound sterling.
F lorin.... . . . . . .
Franc...............
Peso...................
Sol.......................
Peso..................
Bolivar..........
Peseta.. . . ___
Crown................
Franc— . . . . . .
Piaster___
Peso.....................

1,100

2,600 |
19,700
5,400
3.300
24.000
5.300 i
1. 040. 600

$7.76
2.49
1.52

$8.07
4.00
19.04

$34.81
13.70
25.56

50.54
22.29
15.80

2.27
1.24
2.59

12.76
2.56

52.81
36.29
20.95

.14

.48

.16

8.38
4.25

2.56

45.000

142,400

45,400

Nil.

20.000
19.000

Nil.
N il.
Nil.
Nil.
Nil.
347,400
Nil.
Nil.
1,000
22,700
Nil.
52,000
Nil.
Nil.
Nil.
Nil.
Nil.
Nil.
N il.

4,800
5.000
7,900
14,300
500
63,700
253.600
3.000
1,500
1.400
64.200
4.000
29.000
3.700
33,100
12,600
78,800
1,300
52.200

Nil.
Nil.
Nil.

9,400
700
25,000
8,500

9,400
700
25,0 0
8,5) •

1,300

1 \
,:> >

65,400

42,000
38,300
< 182,700
10,600

16,900

133,900

19,200
4,600
8,000

75,600
20,800
14,500
32,700
946,300

2,100

334,600

1, 200,000

24S.300
7.S00
116,500
500

Nil.

2.100 !

5,400

100

15/200
8.300
15 200
600
74.900
22,800
31.000
14.900
1.300

$18.98
7.21
5.00

Nil.

15,000

100

800 '
4.500

764,500
197,600
139,000
79,100
115,200

200

100

Thousands.

735.900
122.900

7.700
116,800

4.400
3.400

300
100

Thousands.

10,000
7.700
116,800

222,400
1710,800

2,100

3.300

Thousands.

Nil.
Nil.
Nil.

14,600
335,800

1,900

30,
611

Thousands.

Oold.

167.600
122,900
2.400

2

1,
288,
117,
31,
56,
16,

Total.

568,300
Nil.
8,700

18,500
174,500
3,700
565,000

635,
• 205,

Limited
tender.

1,799,600
356,300

i9,
6
.

I

Full tender.

97,400

369,800
90,600

7, 700

2,100

Par capita.
Uncovered
paper

3,900 I
2,500 !
138,200
3.200
34,700
127,500
100

3,100
213,100
26.000
65,700
142,400
1,400

5. 107. bO
O

Nil.

Nil.

Nil.
Nil.
Nil.
Nil.
Nil.
Nil.
Nil.
Nil.
Nil.
Nil.
Nil.

400
300
100

11,100
10,000

20,000

19.000

4,800
5.000
7,900
14,300
500
411,100
253,600
3.000
2,500
24.100
64.200
56.000
29.000
3.700
33.100
12,600
78,800
1,300
52.200

400
300
100

Nil.

2,400
4,300
10,800
256,800
8,600 :
13,500 |
26,400
9,200

2,400
4,300
10,800
256,800
8,600
13.500
26,400
9,200

1,097,500

1,523,700 I

2,621,200

7,500 |

Silver.

1.93

1.20

4,900

14.19
16.17
3.66
30.53
3.16
1.69
2.26
8.51
2.57
2.08
12.81
8.67
2.69
4.81
5.91
2.32

2,100

01

2.38
2.92
1.26
.17
10.46
3.90
1.15
1.67
.71
1.23
3.73
4.92
1.54
6.13
1.85
.49
.46
7.46

692,200

35.47
3.39

1.34
.30

.14

2.43

8,200

182,300
101,700
51.200
64,700
8,700
69.900
43.200

2,000

5.68

'•77,900
19,000
' 10,000
1,700

3.60

.87

.33
2.00

100
300
600
42,900

1.34
3.00

1.00
19.00
2.71

8,000
800
76,000
34,700
27,900

13.82
1.19
10.82
4.81
19.91
5.93
.26

89,900
3,567, 500

1.22

1.00

.53
3.90
4.15
13.04
1.59
4.09

1.10

1.74

Total.

.78
10.94
20.81

11.88

20.00

9,900 1
17,300 i
6,600 i
14.900
245,900
276,100
27,600

Paper.

2.47
6.41
.58
5.13
6.26
4.24
10.62
5.47
5.38
1.95
3.41
10 97
3.62
12.94
6.35
1.75
.30

5.60
22.38
23.52
18.01
8.96
47.25
11.30
13.46
9.40
14 60
5 55
9.22
28.70
13.83
21.76
13.01
6.40
4.53
7.77

98.89
.87
3.80
5.43
2.33
1.13

135.70
4.56
10.70

.33
3.00
6.00
53.63

2.00

7.28
.31
3.85
6.43
S. 45
16.96

8.00

2.33
5.60

8.00

8.00

72.63
3.24
25.00
5.65
27.71
12.83
32.45
7.03
18.96

9

10

11

12

13
14
15
16
17
18
19

20
21

22

23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42

43

44
45
46
47
48
49

j

is table signify that no satisfactory information is available
res

of




igdom prior to that lor 1910 were lor coin only; these figures include *100,000,000 for bullion in the Bank of England; also 112,200,000 gold belonging to Indian gold-standard
ency reserves. Fred. J. Atkinson, accountant general of India, in 1908, estimated the active rupee circulation at 2,040,000,000 rupees: small silver coin at 140,000,000 rupees,
he Malay States, and Johore
calculation made by Messrs. P. Arminjon and B. Michel in 1908, who estimated the stock of gold in the country at from 33 000 000 to 41.000,000 Egyptian pounds. The mean
s table last year. Since their estimate was made the net imports o, gold into Egypt to Dec. 31,1911, have amounted to $28,919,061; but as there is said to be a considerable
o change in the estimate of the monetary stock has been made
>.
9
iai Bank of Germany. No definite information as to other holding*. The coinage o? gold since the establishment of the Empire, less recoinage, amount* to ^1,125,023,299, but
s has been an industrial consumption.

1to a eold basis; that is, 100 pesos equai
a Honduras (gold-standard countries).
t, 63-1, pt 2.

(To face page 80)

No. 2

I United State' gold dollar.

Statement shotting money in circulation from 1860 to 1912.

Gold in cir­
culation.

$228, 304,775
246, 400,000
309, 697,744
570, 394,038
644, 641,478
689, 971,860
648, 591,701
63V,126,128
655, 886,198
640, 573,364
651, 284,427
693, 616,114
716, 548,708
728, 799,412
751, 083,051
729, 101,947
702, 609,388
697, 314,883
704, 132,634
110, 505,362
225, 695,779
315, 312,877
358, 251,325
344, 653.495
340, 624,203
341, 668,411
358. 219.575
376, 540,681
391, 114,033
376, 481,568
374, 258,923
407, 319,163
408, 568,824
408, 535,663
495, 976,730
479, 637,961
454, 905,064
517, 589,688
657, 950,463
679, 738,050
610, 806,472
629, 790,765
632, 394,289
617, 266,739
645. 817.576
651, 063,589
668, 655,075
561, 697,371
613, 244,810
599, 337,098
590, 877,993
589, 295,538
610, 724,154

United
States notes
in circula­
tion.

Average
gold value
of United
States
notes.)

$72, 865,665
312, 481,418
415, 115,990
378, 916,742
327, 792,305
319, 437,702
328, 571,665
314, 702,094
324, 962,638
343, 068,970
346, 168,680
348, 464,145
371, 421,452
349, 686,335
331, 447,378
337, 899,344
320, 905,895
301, 644,112
327, 895,457
328, 126,924
325, 255,427
323, 242,177
318, 687,214
331, 218,637
323, 812,699
326. 667.219
300, 000,040
316, 439,191
334, 688,977
343, 207,360
309, 559,904
319, 059,426
266, 589,602
263, 648,985
224, 249,868
245, 954,622
284, 569,022
308, 351,842
313, 971,545
330, 045,406
334, 291,722
334, 248,567
333, 759,425
332, 420,697
335. 940.220
342, 270,055
339, 396,322
340, 118,267
334, 787,870
338, 989,122
337, 097,321

88.3
68.9
49.2
63.6
71
72.4
71.6
75.2
87
89.5
89
87.9
89.9
87
89.8
94.4
99.2

100

100

100
100
100

100

100
100
100
100
100
100
100
100
100
100

100

100
100
100
100
100
100
100
100
100
100
100
100
100
100

100

100
100

Silver in circulation.
Gold certifi­
cates in
circulation.

None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
$15, 279,820
7, 963,900
5, 759,520
5, 029,020
59. 807,370
71, 146,640
126, 729,730
76, 044,375
91, 225,437
121, 094,650
117, 130,229
130, 830,859
120, 063,069
141. 093.619
92, 642,189
66, 339,849
48*381,309
42, 198,119
37, 285,339
35, 811,589
32, 655,919
200, 733,019
247, 036,359
306, 399,009
377, 258,559
465, 655,099
485, 210,749
516, 561,849
600, 072,299
782. 976.619
615, 005,449
802, 754,199
943. 435.618
943. 435.618

Standard
silver dollars.

Total cir­
' Silver certificulation
National
; cates in
bank notes
per capita
Subsidiary I circulation. in circulation of national
silver.
bank notes.

8
8

(*
>

$1,^09,251
81, 036,439
20, 110,557
29, 342,412
32, 403,820
35, 651,450
40, 690,200
39, 086,969
52, 668,623
55, 548,721
55, 527,396
54, 457,299
56, 278,749
58, 826,179
56, 817,462
56, 929,673
52, 564,662
51, 980,043
52, 110,904
51, 940,281
58, 482,906
01, 481,426
65, 889,346
06, 921,323
68, 747,349
72, 391,240
71, 313,826
73, 584,336
77, 001,368
81, 710,444
76, 328,657
71, 987,900
72, 432,514
72, 446,049
70, 399,574

i)

$53, 918,322
61, 346,584
48, 511,788
46, 839,364
46, 379,949
46, 474,299
45, 660,808
43, 702,921
46, 173,990
48. 583.865
50, 362,314
51, 477,164
54,-032,587
58, 219,220
63, 293,704
65. 469.866
58, 510,957
00, 350,014
00, 204,451
59, 016,409
04, 056,920
69. 005,824
70. 100,988
79, 235,214
85, 721,228
92, 726,694
95, 528,343
101, 437,707
111, 509,624
121, 777,401
124, 178,165
132, 331,798
135, 583,731
139, 421,723
145, 034,198

i
;
;
!

None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
None.
$7,080
414,480
5, 789,569
39, 110,729
54, 506,090
72, 620,686
96, 427,011
101, 530,946
88, 116,225
142, 118,017
200, 759,657
257, 155,565
297. 556.238
307, 235,966
326, 693,465
326, 823,848
326, 990,726
319, 022,941
330, 657,191
357, 849,312
390, 126,510
402, 136,617
408, 465,574
429, 643,556
446, 559,662
454, 733,013
461, 138,698
454, 864,708
471, 520,054
470, 211,225
465, 287,705
477, 717,324
487. 597.238
453, 543,696
469, 224,400

$31, 235,270
146, 406,725
276, 116,170
286, 889,020
295, 151,410
292, 876,157
289, 719,714
314, 132,781
332, 276,164
340, 880,078
340. 265.544
340. 546.545
310, 120,702
301, 289,025
311, 724,301
321, 404,990
337, 415,178
349, 746,293
352, 464,788
348, 598,488
330, 689,893
309, 124,222
304, 976,044
276, 855,203
245, 306,780
207, 220,633
181, 604,937
162, 220,646
167, 221,517
174, 669,786
200, 718,200
200, 953,051
215, 108,122
226, 318,003
•22, 990,987
2
237, 805,439
300, 115,111
345, 110,800
345, 476,516
399, 996,709
433, 027,835
480, 028,849
548, 001,238
589, 242,125
631, 648,680
665, 538,806
683, 659,535
687, 701,283
705, 142,259

$0.09
4.12
7.77
7.92
7.98
7.75
7.51
7.94
8.18

8.22

I
!
|
j

7.97
7.74
7.00
6. 4S
6.13
6.16
6.72
6.81
6.73
6.49
6.00
5.50
6.09
4.71
4.16
3.38
2.90
2.54
2.56
2.63
2.96
3.00
3.00
3.16
3.06
3.19
3.93
4.43
4.30
4.09
5.29
5.76
6.48
7.08
7.44
7.48
7.56
7.31
7.37

Capital of na­
tional banks.

$7, 188, 393.00
86, 782, 802.00
393. 157. 206.00
415. 472. 369.00
420. 073. 415.00
420. 634. 511.00
426. 399. 151.00
435. 356. 004.00
460. 225. 866.00
482. 606. 252.00
490. 266. 611.00
495. 802. 481.00
505. 485. 805.00
497. 482. 010.00
477. 128. 771.00
464. 874. 996.00
454. 498. 515.00
458. 540. 085.00
465. 639. 835.00
484. 883. 492.00
511. 837. 575.00
524. 089. 065.00
529. 360. 725.00
550. 698. 675.00
580, 733, 094.42
593, 848, 247.29
617, 840, 164.67
657. 877. 225.00
677. 356. 927.00
689, 698, 017.50
681. 812. 960.00
666. 271. 045.00
650. 956. 245.00
047. 186. 395.00
029. 655. 365.00
620. 516. 245.00
606. 725. 265.00
032. 353. 405.00
665. 340. 664.00
714. 616. 353.00
758. 315. 170.00
776. 089. 401.00
808. 328. 658.00
847. 514. 653.00
901. 681. 682.00
921, 019, 383.66
953, 963, 472.81
1, 004, 288, 107.37
1. 026. 440. 500.00
1. 046. 012. 580.00

Surplus of naUonal banks.

$128, 030.26
2, 010, 286.10
38, 713, 380.72
53, 359, 277.64
66, 695, 589.01
77, 995, 761.40
86, 165, 335.32
94, 705, 740.34
101. 573. 153.62
111, 410, 248.98
120. 961. 267.91
130. 485. 641.37
133. 085. 422.30
131. 390. 664.67
121, 618, 455.32
116, 402, 118.84
115, 429, 031.93
121, 824, 629.03
129. 867. 493.92
135. 930. 969.31
144. 800. 252.13
146, 867, 119.06
150. 155. 549.52
159. 573. 479.21
175, 246, 406.26
187, 292, 469.97
198. 506. 794.14
214. 965. 133.67
228. 221. 530.31
239, 931, 932.08
246, 739, 602.J
99
244. 937. 179.48
246. 177.563.53
247. 399. 567.15
246. 416. 688.48
246,695,552.28
250,367, 691.89
262, 387, 647.59
287. 170. 337.92
335. 763. 730.38
375.503. 102.21
399. 961.534.15
420. 785. 055.00
504. 548. 213.62
549, 614, 684.05
568. 159. 292.92
603, 246, 750.20
652. 462. 489.68
672. 891. 252.01
701, 021, 452.71

I “

S g ta S f* -

$8, 497, 681.84
122, 160, 536.40
500, 910, 873.22
564, 616, 777.64
540, 797, 837.51
580, 940, 820.85
511, 400, 196.63
507, 368, 618.67
596, 586, 487.54
598, 114, 679.26
540, 510, 602.78
682, 846, 607.45
618, 517, 245.74
619, 350, 223.06
604, 512, 514.52
598, * 775.56
405,
755, 459, 996.01
1. 006. 452. 852.82
1, 102, 679, 163.71
1, 06* ' " 1, 719.85
1,10
3, 118.23
987,(0 ,0 5 5 68
1, 111, 429, 914.98
1, 169, 716, 413.13
1. 235. 757. 941.59
1. 331. 265. 617.08
1. 436. 402. 685.65
1, 485, 095, 855.70
1. 602. 052. 766.59
1, 764, 456, 177.11
1, 539, 399, 795.23
1, 695, 489, 346.06
1, 720, 550, 2#1.03
1. 639. 688. 393.60
1. 916. 630. 252.25
2. 225, 269, 813.21
2, 380, 610, 361.43
2, 623, 997,521.86
2. 964. 417. 965.82
3. 152. 878. 796.66
3, 176, 201, 572.89
3, 707, 706, 530.93
3, 969, 582, 834.59
4. 289. 773. 899.26
4, 176, 873, 717.48
4, 720, 284, 640.40
5. 120. 442. 963.08
5, 304, 788, 306.45
5, 536, 042, 281.16
5, 891, 670, 007.00

Number
of na­
tional
banks.

66

506
1,513
1.664
1.642
1.643
1,617
1,648
1,790
1,940
1,976
2,027
2,086
2,082
2,074
2,055
2,052
2,095
2,164
2,308
2,529
2.664
2732
2875
3070
3150
3326
3573
3692
3784
3787
3737
3,706
3,661
3,607
3,590
3,602
3,942
4,291
4,666
5,118
5,477
5,833
6,199
6,625
6,865
7,006
7,204
7,328
7,397

Popula­
tion.

31, 443,321
32. 064.000
32. 704.000
33. 365.000
34. 046.000
i 34, 748,000
I 35, 469,000
36. 211.000
! 36, 973,000
37. 756.000
38, 558,371
; 39, 555,000
i 40, 596,000
41. 677.000
42. 796.000
43. 951.000
45. 137.000
46. 353.000
47. 598.000
48. 866.000
50, 155,783
51. 316.000
52. 495.000
53. 693.000
54. 911.000
56. 148.000
57. 404.000
58. 680.000
59. 974.000
61. 289.000
62, 622,250
63. 844.000
65. 086.000
66. 349.000
67. 632.000
68. 934.000
70, 254,0100
71. 592.000
72. 947.000
74. 318.000
76, 303,387
77. 754.000
79. 117.000
80. 487.000
81. 867.000
83. 260.000
83. 662.000
86. 074.000
87. 496.000
88. 926.000
90. 363.000
93. 963.000
95. 656.000

* Specie payments suspended 1862 to 1879.
* No figures available.
faU State
Total of alTState banks June 14,1912, and all mutual savings banks, stock savings banks, private banks, loan and trust companies:
Capital.................................................................................................................. . ..................... . .................................................................................................. .............................
$964,235,780.49
Surplus....................................................................................................................... ............................................... ....................................................................................................... 870,684,492.80
In case all banks and trust companies in the United States and the island possessions of the United States would join the different Federal reserve banks and take out their 20
per cent capital stock as provided in the act they would deposit in these regional banks the sum of $402,049,672.09.
20366 O - 58 - 8 . Kept. 133, 68-1, pt 2.




(To face page 80.)

No. 1.

Total cir­
culation
per capita.

$13.85
13.98
10.23
17.84
19.67
20.58
18.99
18.29
18.42
17.63
17.51
18.17
18.27
18.09
18.13
17.16
16.12
15.58
15.32
16.75
. 9.41
21.71
22.37
22.93
22.65
23.03
21.78
22.45

22.88

22.52
22.82
23.46
24.60
24.06
24.56
26.24
21.44
22.92
25.19
25.62
26.93
27.98
28.43
29.42
30.77
31.06
32.32
32.22
34.72
34.93
34.33
34.20
54.34

1889
1890
1891
! 1892
1893
1894
1895
1896
i 1897
1898
! 1899
1 1900
1901
1902
1903
1904
1905
I 1906
1907
1908
1909
1910
1911
1912

T a b le

Ho, 59.— Abstract oj reports of earnings and dividends of national banks in the United States for year ended July 1, 1912.
1Figures in boldface ty[»e Indicate loss.l

chanced olf.
Location.

1
2
3
4
5
6
7

Num-1
!
■berof; Capitalstock. ,

8urplus.

Capital aed
surplus.

Oro«i

Ratios.

*
, Loese* and
premium*.

Net earnings.

Dividends
to capital
and
surplus.

Dividend*.

Maine
New Hampshire....................
Vermont..................................
Massachusetts........................
Boston...............................
Khode Island...........................
Connecticut.............................
New England States...

s | New York...............................
9
Albany......................... .
10 |
Brooklyn......................
11
New York City.................
12 i New Jersey................................
13 { Pennsylvania..........................
14 J
Philadelphia....................
15
Pittsburgh........................
I» ! Delaware..................................
17 i Maryland.................................
I> I
»
lialtiniore..........................
19 District of Columbia..............
30 j
Washington......................
j

«

22

23
24
25
27
28
29
30
31

32

Eastern States..............

1,833 j 338,312.175.00 , 344,304.716. 40 «te,618,9»1.40 100,428,741.86

Virginia.............
1West Virginia.. ......... ........ . . .
!
. . ................
North Carolina......................
South Carolina........................
(icoreia.....................................1
Savannah..........................
Florida......... ............................
Alabama.................................
Mississippi...............................
Louisiana............... ................
New Orleans............... .
Texas........................................
Dallas................................
Fort Worth........................
Galveston..........................
Houston............................
San Antonio.....................
Waco .......................
Arkansas..................................
Kentucky................................
Louisville...................... .
Twin

11. 547, 6*4,00
S.W(,1IW.7«
2,«U!t,273 no i
1.934.250.00
M K t.m flQ
700, fW . (M
O l
2,tor.TOO. 00
.Vi33.OM.00
1,582.09.74
2.24%8H5.K3 |
2.980.000.00 i
l 6,K l7.X 4<i. < j
r.>

2.350, 000.00
1.915.000.00 '
2SMMMK) I

l, H i.n .n i
K on o
l.oso.imaoo I
so*. * 10. 0 0 ;

1.776.020.00 •
4,793,067.22 I
J.W.ofln.on |
.->,2><4,H*ii.ai

Southern States..

164,556,900.00 I Kt, *33,711.83

28, « » » * * . 00 I 8,754,485.97
15, 237, 15ft. 76 j 3,.vw.:m <7
*
u.fcu. 273.00 a.MM.mi «4
7 . 394. 250.00 2,291.668.38
22, 242,730 00 S5,371,016.44
1,600,000.00 , 408,009.84
8, 7*7 , 700.00 I 2,922,701.82
14, 90S, 025 .00 i 8,509,560.3»
4, 887, 32#. 74 ' 1,323,412.72
5, .WO, 81*5.83
‘
1,542,000.94
S. ISO,0 0 0 .00 2,124,478.19
48, 9K3, * 46. 02 ,12,900,934.67
1,570,189.61
5. 000. 0(10.00
4. 790. 000 .00 ! 1,266,294.68
750, 000 .00 ,
201,017,75
5. 790. 000 .00 ; 1,873,676,04
3, IMI.WM.0 0 ‘
822,017.87
518,13s at
1. 758. 300.00 '
« , o-io, oo I 1,830,428Ji»
16, > 8 , 91.7 .2 2 ' 3 ,» 4 ,8 8 4 .»
0
1,793,484.06
8. 140. 0 00 .00
17. 7M , 901.26 , 4,665,333.59

13.833.!®*.44 s 90,967,729.80
36$. 650.05
330.681.13
H . flO . :)7
O K
165,70X58
341.S84.31 ,
78,071.77
222.446.54
320. a « . 12
131,441.92
130.981.95
309,361.61
1,240.979.92
147.89S.67
97,065.79
27, MO. 80
191,887.12
14,030.05
51,715.52
114,960.03
397,524.51
154,850.80
471,918.24

f8 ® S ,
t.42t,ft4R40
1,383,995.37
2,7*6, 709.46
#5,213.90
1,867,580,98

1,814,8*0 04
770,131.38
• I*.014.51

1,289.338.59
0,224,527.77
721.2lit.39
080,892.24
ltH 4341.13
i,
987,498 20
380,133.15
302.485.2*
1.013,074.72
1,074.349.56
1.024,41(5.66
2,0*3,932.54

248,390,611.83 63,135,316.26 i 5,2®,948,80

33,WO,433.67

Ohio.................................
355 j 34,307,10ft 00
7.820.440.63
17,H42,1»42.87 52,250.042.87 13.385.1«». 72 1,405,784.08
Cincinnati................
8 ; 13,900,000.00
2.011,509.84
i,,:«»0,000.00 20. 200,000.00 : 3,92*1,987.25 2,547,714.73
Cleveland.................
363,523.H
O
2,334,291.60
7 1 9,350,000.00
32
4,0.*rfi,000-00 13.400,0110.00 ■3, till,
Columbus.................
118,779.36
916,587.66
3,000,000.00
1,.170,500.00
4,570,800.00 [ 1,540,211.82
8
Indiana............................
555,682.22 ; 4,798,996.11
250 j 21,133,(100,00
9,305,180.54
30,438,180.54 >7,989,472.97
Indianapolis.............
5 I 5,400,000.00 ” 2,745,000,00
S29.369.63
1,277,7»».45
8.145,000.00 ! 2.365.241.24
Illinois.............................
7,598,102.75
432 i 31,235,000.00 i 17,450,455. HI 48,(«85.455,84 i3,2W,9fl9.S» 1,915,964.64
10 4. , 1*10. 000.00 2IS, 100.000.00 t», 700,000.00 lH,W5t.374.3»» 1,645,344.53
Chicago.....................
1
11,403.149.97
Michigan.........................
315,809.51
96 j 10,260,000.00
15.60?.300.00 5.140.5S3.05
3,304.144.57
5,342,30a 00
Detroit......................
271.3IM.38
1.520.508.22
3
4.750,000100 , 1,780,000.00
6,500,000.00 > 2,350,335,89
Wisconsin.......................
4,583,400.00
365,420.24
3.555,703.36
15,773.400.00 5.319.81ft. 92
m | 11,180,000.00
Milwaukee................
2, WO,000.00
191,208.71
6,280.000,00
9,010,000.00 2,990,364.61
1,953,252.76
•
Minnesota.......................
361,591.00
4,7^5,8M. 61
18,088,0(11.57 7,452,013.47
6,277,008.57
260 ! 11,811,000.00
Minneapolis.............
12,600,000.00 8,808,701.77
99,823.15
2,101,648.42
» i «, soo.ooa oo • 5,860,000.00
St. Paul....................
289,559.96
1,134,:m.03
3,450,574.84
7,550,574 34 2,140,505.80
6 1 4,100,000.00
Iowa.................................
588.454.96
5,036,149.07
314
17,715,000.00 j 7,328,710.75
24,963,710. TS 8,293,2*0.14
Cedar Rapids...........
36,387.86
400,000.00 i
708,000.00
361,887.71
308,000.00
3!
«o ,m at
D*a Moines..............
4 j 2,000,000.00 !
600,000,00
2,600.000.00
98,892.93
551,655.93
932,m .m
Dubuque..................
3
5,350.40
207.782.47
131,974.99
600,000k00
130,000.00
739,000.00
Sioux C ity..............
5I
950,000.00 1
1,350,000.00
606,340130 1
43,948.34
429,770.89
400,000.00
Missouri...........................
110
6, 6ks, <*».«» | 2 .««,8 1 6 .^
1,34*1,4;*,. W
!*,S31,916.62 2.352,095.94
Kansas City.............
12
7,860,000.00 ! 3,3K{,006.1)0
11,232,000.00 4,884,019. W
410,245,90
3.274,933.67
t
St. Joseph................
4
1,100,000.00
;mi7,64K.;»
61,330.90
675,000.00
1,773,000.00
7|t,830.21
St. Louis..................
8 a», 4oo,aiw. o o ! 11,990,000.00
870. .386. M
32,300.0110.00 7,816,242, T
5,270.111.58
O
Middle Western States.) 2,036 274,756,100.0I» j 142,887,9^4.53 417,644,084.53 119,987,918.42 \12,:W4,%t&.&l
2,016
North Dakota................
5,a»v«w.t*> 1 1.K7N600.33 ■ 7,146,809.33 3,180,634.82 j
m
235,W ,. 22
2,«»2,282.«l
South Dakota................
4,i8u,tm .«>
1.802.295. W
m
1,238,m o o
5,418,450.00 2.650, W«. 75 !
137.140.70
4,281,3^.00
Nebraska.........................
to. 415, 000.00
231
14,«*a,368.<» 4 ,^ ,m 9 8 i
343,417.50
2,690,44?. 13
Lincoln.....................
4
1,000,000. (H
I
;«3»,OHO.OO
ItM 0,«».00
498.144.73 i
2 2 ,695 .33 :
318,057.44
Omaha.....................
7
3.700.000. Wl 1 2,KH>,0m.0»
0 ,5 t0 ,0 0 0 .0 0
3 ,« l^ » e .4 3
272,052.11
1,808,5 50 .7 9
South Omaha..........
3
1.100.000.0n *
3no. ooh. oo
358,194.94
548,852.27
1,480,000.00
38,742.50 :
Kansas............................
10,662,500.00
202
4,<>lii,W<5,60
2 ,6 82,1 09 .4 6
15,2X2,485.00
425,804 15 ,
Kansas City............
* .
300,000.00 f
300,1100.00
342,278.45
800,000.00
2 4,851.56
343,876.93
Topeka.....................
2
300, 000.00 ;
100,000,00
M i,m .94 i
400,009.00
15 ,999.32
130,818.13
Wichita....................
500,000.00 1
3
1,005,000,00
5(6,000.00
453,024.93 t
27 ,292 .90
315,383.83
Montana..........................
m
4,9 60,0 00 .0 0 1 2 ,7 74,2 50 .0 0
7,734,250.00 3,176,080, 31
507,035.42 | 1 ,608,665.95
Wyoming.......................
29
1,735,000.00
1,050,500.(11
2,791,5 00 .0 0
1,192,234.78
56,21X19 i
K 5 .8 1 0 .3 8
Colorado..........................
118
6,6 90,0 00 .0 0 !
3.079.2 90 .7 4
9,7 *9,29 0.74
3,350,315.87
506,514.43 1 1,872,416.74
Denver.....................
6
3,fl02,W »l.60
3 ,0 00,0 00 .0 0 ;
2,961,449.27
7,502,0 00 .0 0
393,887.29
1,707,389. M
Pueblo.....................
3
650,000.00
450,0110.00
463,135,21
1,100,000.00
339,733.46
102,344.84 ,
New Mexico..................
2, OS*),000.00 S
980,350.00
3,0 70,350.00
6 0 4,94 3. 85
1,210,074.79
128,099.17
Oklahoma.....................
10,545,000.00 | 2,818,245.21
5,566,733 22
13,363,245.21
3,0 85,5 57 .7 5
657,081.13
Muskogee ............
850,000.00
8
250.500 00
362,328.01
1,100,500.00
4 ^ t ,m e
33,300.80
Oklahoma City___
270,000.00
l , m o n o , oo
6
1.820,000,00
ITS. 988.14
484,616.11
7 6 « ,7 0 7 .»
Western States..
1,238
32,064,608. 28
70,295,500.00
102.360,108.28 j39,069.043.01
4,115,380. 79
Z2,718,35;t. 79
80
87
88

Washington.........................
Seattle............................
Spokane.........................
Tacoma.........................
Oregon..................................
Portland........................
California..............................
Las Angeles..................
Saa Francisco...............
Idaho....................................
Utah......................................
Salt Lake City..............
Nevada.................................
Arizona.................................
Alaska...................................

66

92

93
9»
95
96
97

98
99

100

101
1
I

9,329,943.56

149,096,603.23

120,300,872.22 |

864,426.42

1Capital and surplus as shown a* the cioae of the year.

1
,

!
1
;

1 .0
11
1X 80 >
13.88
13.88
5.81 I

618,575.00
589,000.00
356,000.00
94 ,000.00
C , 936. 19
CW
448,158.20
1,769,480.00
908,250.011
2,265,000.01]
375,100. (M
240,382.65
166,000.01 1
15 9,02 0.0
127,000. W

9 .78

8.34
9.88
8.59
10.15
8.87
7.04
11.38
14.28
9.35
8.42
11.50
9.38
14.04
1ft 41
Mi. 7*
11.84

8.19

8

5.92
8,88
8.37 1
7.31
5.56
8.441
8.97 i
7.04 ]

-

9.67
9.46
9.71
5 .9 4

5.35

.
1
i
!
j

11.95

2S 8J30.516.71

7,307




12,-235,302.43

4 2 ,2 5 6 ,13a 15

United States.

(To tace page 100.)

!
|
1

»
10.98
13.77
18,13
9 .9 8
47

10.60

S .® j

11.03
919

34,000.00
57 ,000.00
900,900.00
290,250.00
768,990. Ob
472,750.06 i
73 ,090 .00
372,500.00
1,644,713.32 *
u s,m o o j
106,000.00 '

10.03
7.83
7.87
M 36
l.

5.41 •
8.78 ;
5.99
6.68 !
6.16
4.67
7.23 j
8.93
8-W ;
8.15
8.15
8.51
9.17 i
5.S0 I

10*

36,000.00

i
'
j
t
!

14.80
13.29

5«>
5.11
7 « ;

T.96
3.13 '
6.82
11.06
S. 88
6.85
9.80
8.34
9.75
8.59
8.87
9l38
12.85
&75
9149
18.13
15.89
lft«8 .
9.85
• .»
9. t<
»o. m *
8.08 <
8.17 ;
8.M \
1X38 j
13.32!
11.80 t

23

m.m

7.38

11.81
11.39 1

1,735,730,131.70 450,043,250.09

4

20366 O— 5 8 —8. Rept. 133, 81-1, pt 2.

79,000.00
348,000.00
9 0 ,000 .00
1,301,587.85

;
!
,

81 ,305.48

121,704,478.03 33,277,461.77

>1,001^83,425.00 > 704,346,706.70

157,391.98
734,679.52
151,914.83
1,884,881.06
73 .549.96
44,054.50
110,319.30
1,0 65,378.94
45 0.21 Z 2J
972,384.70
860,292.44
121,196.91
388.031.77
1,8 34,094.34
152,721.12
i« 2 ,ia .4 *

67,0(15.60

38 ,503 ,67 8.03
254,426.42

n<ksm .t»
2,678,659.11
113,479.44
285.032.92
70,457.08
a s t s
86,000.00
132,621.07
^5a,«4&W
*a,6&.m»
6i5,000.00
1,198,109.87
96.5110.oe
142,841.22 .
1,675.744. *4 1 2.259. M O00
O.
34.202,140.5* ; 29,402,378.18 |
8W,^5i. U j
690,78.1.21
512,700.41
721,.m 16 i
1,732,498.26 i 1,424,572.97

3,145.54

8 3,200,800.00

11.52
*.77
20.42

7.08

2,fC8,327.67
1,370.000.00
803,000.00
301,500.00
1,875,433.06
380.000.00 I
3,518,100.00 ;
6,226.000.00 *
969,731.9b ,
400,000.00 :
1,285.450.00
588,350.00
1,658,349.08
708,000.00
440,200.00 :
2,044.807.»
6i,ooaoo

151,476.82

470

j

5.86
4.80

9.m

11,414,694.34

398,499. 85
2 t* , 130. 02
178,7(>7.29
8 7 ,2»i4. 09
228,49 0. 56
317,441.19
684,537.27
342,3:10.68
(>44,953. 44
•203,558.89
50,895.88
160.822.70
128,48(>. 44
104,815.22
95 ,587.46

8.99

11.99
13.47
9.35
10.42
6.91
7.85
8.73

17,970,180.45

2 ,310,295.02
2,263,475.87
1,427.605.47
449,184. 35
2,092.837.5(1
1,879,815. 83
7,891, 103.62
2,987,864. 9£
7,308.656. U
1,5 80,5 50 .8(
790,162. SI
89 9,180.8(
560,941.39
868,758.58
157,998.81

oio.ooaoo-

8.73
•.08
7.66
It.tl
14.09
10.19 !

23,.SOI,015.79 ; 17,437,139.08

4,158,939.01
832.237.32
913,550.12
504.844.80
2,834,884.64
558,101.16
4 ,6 2 4 .8 4 1 .:
5.814,879.88
1.5-20,598.97
558,463.29
1,398,093.3S
845,908.14

8.97
14. 3* |30
10.40 31
12-73 I 33
16. 9!
9.43
7.30

.63 *
6.51 i
6.04
8.35 '
6.61

> «'

292.100.00
450.400.00 ’
541.000.00 {
4,095,523.94
448.000.00 >
271.000.00 !
36.000.00
667.000 00
279.000.00
359.000.00
497.350.00 <
943.543.00
4W, MO. 00
1.278.200.00

3,892,5 86 .9 8

5
2
76
4
197
9
9
48
17
5
11
13
2

6.0 60,9 15 .9 9
5,570,000.(10
4 ,1 65,000.00
1,350.000.00
6.704.187. 14
5,827,0 00 .0 0
26.804.447.55
8,926,0 00 .0 0
43,055,000.00
4 ,3 32,2 40 .9 0
1.505,186.45
3,1 15,0 00 .0 0
2 ,2 16,0 00 .0 6
1,830,000.00
153,50 a00

Hawaii.....................

89
90
91

9 .2
71 s.«»

9 .6 0
7.92

0.78 j

14.07

59 2, 7K». 13
121,565. 12
374,290.94
96,098.25
822,833.79
612,495. 38
2 ,»tl,8M i.6 1
1,116,477.59
2,94«i,nt3.80
461,163. 38
378,145. 79
111,440.33
152,280. 46
216,410.75
29,129.98

1,965,915.99
1,370, (B0. 00
765.000. 00
850,000. 00
2.088,187. 14
1 .827,000.00
7 .9 31,6 47 .5 5
2 .8 26,0 00 .0 0
14.805,000.00
1,392,240.90
440,186.45
965.000.00
474,000.00
725.000.00
XI, 500.00

0

501.538.00
1.725.850.00
57,500.00
495.050.00

a
6.39

8.36;

7.94
9.81

'ft-74. ft.

3.39 1

8.38

A79.ftftn.rn

1,319,033.04
1,3 75,7 71. 73
874,.547.24
205,822.01
1,041,513. 15
949,909.26
4,2»>4,739.74
1,5 29,0 56 .6ti
3,717,668.94
915,828.57
361,120.91
626,917.77
280,174. 49
347,532.61
91,541.33

4.0 75.000.00
4.2 00,000.00
3,4 00.000.00
500.000.00
4,6 11.000.00
4 ,000,000.00
18,872.800.00
6.100,000.00
28,250.000.00
2,940.0 00 .0 0
1,155.000.00
2,1 50,0 00 .0 0
1,742,000.00
1,105,000.00
100,000.00

Pacific SUtea..

,

1,209,385.32
1,101.575.07
741.970.43
2.242,722.67
234,724.17
1,032,665.30
1,374.662.23
421.839.42
m m 48
625,777.99
5,441,4*1.**
781.029.55
488, m 65
87.870.82
8W.290.72
#28,454.07
104.418.48
701.764.08
1,183.OW.tl
614,210.00
1,549,482.81

i.M
6.04 >
6.06 !
?,W

1.512.390.00
920,019.14

2,413.007.14

6 .0 8
8 .5 3
4 .3 8
7 .8 9
»
5 .8 7
11.76
10.40
7 .8 8
«38
8 .8 4
1X 13

43
44
4&
46
4?
48
48
j 50
151
! 52
S3
54
! 55
j 58
I 87
; 58
89
S
7.79 80
8.33 ' 81
906 83
‘^24 63
7.98 64
8.77 65
11.07 86
10.70
13.11 C7
IX ^ < 8
8
u .m 89
7 .8 8
9.41

79

&18
IX 3t
7 .»
11.33

73
73
14
15
76
77
78
79
88
81

10.47
5.98

11.40
18.34
18.73
lt .U
« 1X 13
11.23
1 7 .»
15.60
13. S8
6 .9 7

9.11

13.27

1X31

10.21
10.57
8.5 5
6.9 6
9.53
7.6 9
6 .6 0
10. 18
5.26
8.6*i
15.07 i
5.33
7.18
6.94

15.18
14.02
10. 47
18.80
13.86
11.20
9.3 8
14.89
8.02
12. 76
20.81
7. Ti
9. U
1 1 .«

J

11.16
8.9 9
7.12
12.27
10.51
10k 98
12.51
6.84
10.64
23.71
3.5 8
6.87
11.83
18.98

j

9.3 8

7 .1 9

44 ,500 .00 1

9.41

5 .1 5

7 .3 0

8.S 0

6.93

11.66

8,754,8 52 .0 4

71

82
»

84
85

86
87
i 88
i 89
90
| 91

9

93
1 94
i 96
! 96
1w
; w
1 99

10.52 j
101

8

101

BANKING AND CURRENCY.
Daily statnnent oj the United States

Treasury at close oj business Sept. 16. 1913.

CASH ASSETS AND LIABILITIES.
G e n e r a l F u nd.

ASSETS.

LIABILITIES.

Ccuh.

Current liabilities.

In Treasury offices:
Gold coin........................................ *48,098,805.49
Gold certificates............................ 04,872,850.00.
Standard silver dollars................
3,740,127.00
Silver certificates.......................... 13,183,004.00
United States notes......................
5,837,393.00
4,488.00
Treasury notes of 1890 .................
Certified checks on banks...........
301,582.00
National-bank notes......... .......... >51,792,262.02
Subsidiary silver coin..................
18,527,844.30
Fracttonal currency................. ..
347.20
Minor coin......................................
1, ros,335.03
Silver bullion (available for sub*
sidiary c o in a g e ) .................
2,091,539.21
210,658,577.97
In national-bank depositaries:
To credit ol Treasurer United
States..........................................
To credit of postmasters, Judi­
cial otlicers, etc..........................
In treasury, Philippines:
To credit of Treasurer United
States..........................................
To credit ol disbursing olficcrs..

02,670,478.39
(, 340,020.80
3,010,850.05
3,430,790.73

In Treasury offices:
Disbursing officers’ balances___ 176,262,786.16
Outstanding warrants.................
1,823,348.93
Outstanding Treasurer's checks.
7,476,697.99
Post Office Department balances 12,361,628.18
1,509,009.64
Postal-savings balances...............
Judicial officers’ balances, etc...
0,343,080.42
National-bank notes, redemp­
tion fund *.................................. 20,666,42a 00
National-bank 5 per cent fund.. 28,071,077.85
Assets of failed national banks.. 10,110,129.54
Coupons and interest checks___
131,107.19
Miscellaneous (exchanges etc.).
7,171,832.34
Total............................................ 171,927,124.12
Subtract chocks not cleared
23,472,913.67
148,454,210.45
In national-bank depositaries:
Judicial otlicers’ balances, etc...
Outstanding warrants. . . . . . . . . .
In treasury, Philippines:
Disbursing officers’ balances___
Outstanding warrants.................

(3,346,620.86
509,200.06
3,430,796.73
1,291,932.00

160,032,76a 10
Net balance in general fu n d ........... 126,096,569.90
Total............................................ 280,129,330.00
TH E CURRENCY TRUST FUNDS

THE G ENER AL FUND, AND THE GOLD RESER VE
FUND.

ASSETS.

LIABILITIES.

Currency trust funds:
Gold coin..................................
Gold bullion.............................

$806, 0 is,9to.00
217,015,205. 00

Total cold............. ...............
Silver dollars............................
Silver dollars of 1890 ...............

1,084,234,109. IX
»
4S8.916.000. 00
2,014,000. O
t)

Total currency trust funds.

1.575.764, 109.00

General fund: Total cash assets,
as above........................................

Gold reserve fimd:
Gold coin..................................
Gold bullion............................

Total........................................... 286,129,330.00

129.330. oo
#

100, 000, 000. oo
50,000,000.00

Grand total cash assets in
Treasury............................ 2,011, S93,499.»*)

Outstanding certificates:
Gold certificates outstanding. *1,084,234,169.00
Silver certificates outstand­
ing
488,916,000.00
Treasury notes outstanding..
2,614,000.00

Total outstanding certifi­
cates...................................
General fund liabilities and bal­
ance:
Total liabilities, as above___
Balance
in
general
fund, a a
above........ *120.090,569.90
Gold reserve
» 150,000,000.00
Total net balances...............

1,575,764,169.00
W2.760. 10

276,096,569. 90
2,011,893, 499. 00

1 This includes $4S,11 8 ,308.0 which the Treasury has redeemed and lor which it will rcceive p yment
*2
'rom national banks.
•The act ot July H, 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
*
Reserved against $346,6M 016 ol United S t a t e s notes and $2.01-r000 of Treasury notes of 1890.




102

BANKING AND CURRENCY*
Bond$} Sept. 13, 1913.
Bonds held for nation;;) tanks.

Kinds of bonds.

Kate of
interest;.

To secure deposits of
public moneys.

Tolal amount
outstanding
Total.

To secure
circulation.
Value at
par.

Value at
rate ap­
proved by
depart­
ment.

GOVERNMENT.

U. S. loan of 1925,
at par...................
U. S. loan of 19081918........ at par..
U. S. Panama of
1961........ at par..
U. S. consol of 1930,
at par...................
U. S. Panama of
1936........ at par..
U. S. Panama of
1938........ at par .
Philippine loans,
at par...................
Porto Kico loans,
at par...................
District of Colum­
bia..........at par..
Territory of Ha­
waii. 3§ per cent
bonds at 90 per
cent of par: all
other Hawaiian
bond^ at market
value not ex. ceeding par........

4

*118,489.900

.<37,9S 4lX)
ft?.

534, <90,700

*3,001,700

3

63,945. 460

25.891.200

22,132,200

3.759.000

3.759.000

3

50,(N >,<K
M X)

17.296.200

17,296,200

17,296,200

2

646,250.150

616.521.300

603, 775,900

12,745,400

12,745,400

2

54,631.980

54,249,360

52,964,860

1,284,500

1,284,500

2

30,000, 000

29,424,140

28,822,140

602,000

602,000

4

16, (XX), (M )
X

5, ‘167.000

5.967.000

5.967.000

4

5,225,000

1,821,000

1.821.000

1.821.000

3.65

6,949, 650

1-33, 000

933, (X )
X

933,000

1,998,000

1,998,000

1,950,900

918,000

600,271

10,000

6,750

0)

6,515,000 |

13,601,700

MISCELLANEOUS.

Philippine Rail­
way Co.................
Manila Railroad
Co., at 90 per i
III.cent o. market
value, not ex­
ceeding 90 per
v cent par............... !
IV . State, county,city, i
and other securi- 1
ties*......................
Total.

>•,551,000 |

I IS,000 ].

735. (X)0

0.000
33.UI9.254

33,009,254

22.576,308

1.013.293.140

>26.630.854

742,085,80) , 84,545,054

73.144,029

(*)
I

I

1 Various.
* As security lor deposits made in connection with <rop 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.
Other outstanding bonds, 1186,662,286.
When banks have occasion to withdraw bonds held by the Treasurer to secure deposits ol public moneys,
the following shal1 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 substiution 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 bondj
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 ->hall be used as security for additional circulation.




103

BANKING AND CURRENCY.

Paper currency oj the United Stales, by denominations, outstanding June SO, 191t.
Denominations.

United
States notes.

SI..................
$6..................
$10.................

$1,830,994
1,374,959
169.049,930
114,137,926
12,192,432
1,841,375
4,696,400
4,470,000
38,077,000

$2 ..................

120 ......................

$50......................
$100

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

$500....................

$ 1,000..................

$5,000...................

$10,000............

Treasury
notes, 1890.

1
l
I
j.
j

$373,006
$343,588
241,744
164,312
688,160
141.565,470
898.470 , 32S,508,870
434,970 ! 224,856,140
14,550
16,373,800
160,500 | 35.032,350
89,500
*ii i *666
23,000

10,000 I.

.1

Fractional parts.
347,681,016 | 2,929,000

Total........

Nationalbank notes.

Silver cert iflcates.

Gold certifi­
cates.

$226,435,300
256,496,964
55.053,055
80,127,550
18.239.000
66,765,500
95.020.000
241,920,000

Total.

$161,327,436
62,854,116
227,178,187
20.757,611
4,488,670
4,417,760
480,220

22,000
23,000

50,684
747,007,714

481,549.000

1,040,057,369

$163,875,624
64,635,131
538,481,747
690.738.177
498,469,176
77,700,540
120,503,020
22.820.500
104.999.500
95,020,000
241,930,000
50.684
2,619,224,099

Classification o f cash in banks June 14, 191 f.
7,372 national
banks.

Classification.

Cold coin........................ , ............
Gold certificates............................
Gold clearing-house certificates.
Silver dollars.................................
Silver certificates..........................
Subsidiary and minor coin........
Legal-tender notes.......................
National-bank notes....................
Cash not classified........................

$149,294, 417. 7*
350, mz, 3.s0.00
S , 479, 000.00
O
12,637, 221.00
138,569, 628.00
22,555, 692.08
18S, 440, 207.00
47,564, 277.00

Total.,

996,142,823. 46 i

25,195 reporting
banks.

17,K23 State.etc.,
banks.
.<89, 094,968.96
206, 405,716.00
320.174.00 ‘
804.541.00 ;
182,315.61
081.546.00
717.410.00 •
543,684. 40
576,810,055.97

$238,389,386.74
503.068.096.00
80,479.000.00
22.957.395.00
194.374.169.00
37, 738, 008. 29
253.122.053.00
108.281.087.00
74,543,684.40
1.572,953,479.43

Distribution oj money in the United States,
i
Coin and
other
Year
money
ended
in the
June 30—
United
States.

Coin and other
money in Treasury as assets.»

Coin and other
money in rej>ortin e b a n k s.2

I’er
cent.

Millions.
Millions. Millions.
1882..:... $1,752.2
8.60
$586.4
$150.9
1,738.8
142.1
1883
8.17
515.9
144.2
1894
1,805.5
7.99
C88.9
1895..
217.4
1,819.3
11.96
631.1
1,799.9
293.5
531.8
1806......
16.31
1897.,
1,906.7
165. 7
13.93
628.2
1898..
2,073.5 ;
?35.7
11.37
687. 7
2,190.0 i
-'86.0
13.06
1899.... .
723.2
1900.....
284.6 i 12.16
749.9
2,339.7
2,483.1
307.8
12.39
794.9
1901.... .
1902....
2,563.2
313.9
12.24 !
837.0
1903
! 2,684.7
11.80
317.0
848.0
1904
2,803.5
284.3 1 10.14
982.9
1905....
2,883.1
295.2 l 10. 24
987.8
1906....
0 6 1,010.7
3,060.9
333. 3 | 1 .8
3,115.6
1907.... .
1 .0 1,106.5
10
342.6
3,378.8
1908..
340.8 , 1. 08
0
1,362.9
1909....
3,406.3
300.1 j 8.81
1,444.3
1910....
3,419.5 '
317.2 ! <. 27
*
1,414.6
341.9
1,545.5
9. 61
1 1 . . . . 3,555.9
01
P 98 ! 1,563.8
.
1912.... . 3,648.8
304.3 !

Coin and other money
not in Treasury or
banks.

In circulation,
exclusive of coin
and other money
in Treasury as
assets.

Per
capita.

Per
capita.

Per
cent.

Amount

33.48
29.68
38.17
34.96
29.55
32.94
33.17
33.02
32.05
32.02
32.69
31.50
35.06
34.27
32.92
35.51
10.34
42.40
41.37
43.46
42.86

$1,014.9
1,080.8
972.4
070.8
974.6
1,012.8
1,150.1
1.180.8
1,305.2
i.aso.4
1,411.4

Millions.

1,519.7
1,536.3
1,600.1
1,725.9
1,666.5
1,675.1
1,661.9
1,687.7
1,668.5
1,720.7

Per
cent.

Millions.

.'7.92 $15. 50 $1,601.3
62.15
16.14
1,596.7
14.21
53.84
1,661.3
53.36
13.89
1,601.9
13.65
54.14
1,506.4
S3.13 | 13.87
1,641.0
15.43
55.4'!
1,837.8
53.92
15. 51
1,904.0
17. 1
1
55. 79
2,055.1

55.59 I 17.75
17.00
.'5.07
18.88
56.61
18.77
54.80
55.49
19.22
56.22
20.39
53.49
19.36
49.58
19.15
48.78
18.68
49.36
18.68
46.93
17.75
47.16
17.98

2,175.3
2,249.3
2,367.7
2,519.2
2,587.9
2, 73a 6
2,773.0
3,038.0
3,106.2
3,102.3
3,214.0
3.2S4. 5

*24.60
24.06
24.56
23.24
21.44
22.92
25.19
25.62
26.93
27.98
28.43
20.42
3a 77
31. O
S
32.32
32.22
34.72
34.93
34.33
34.20
34.34

1Public money in national-bank depositaries to the credit of the Treasurer of the United States not
included.
2Money in banks of island possessions not included.




104

BANKING AND CURRENCY.

Planks

of

D e m o c r a t ic

and

R e p u b l ic a n P l a t f o r m s
S in c e

on

B a n k in g

and

C urrency

1S96.

Democratic.

Republican.
lHtttt.

i n t e r e s t - b e a r in g

F IN A N C E .

bo n d s.

We are opposed to the issuing of
Interest-bearing bonds of the United
States in time o f peace, and condemn
the trafficking with banking syndi­
cates, which, in exchange for bonds
and at an enormous profit to them­
selves, supply the Federal Treasury
with gold to maintain the policy of
gold monometallism.
a g a in s t

n a t io n a l

h anks.

Congress alone has the power to coin
and issue money, and President Jack­
son declared that this power could ,not
be delegated to corporations or indi­
viduals. We therefore denounce the is­
suance of notes intended to circu­
late as money by national banks as
in derogation of the Constitution, and
we demand that all paper which is
made a legal tender for public and pri­
vate debts, or which is receivable for
dues to the United Slates, shall be is­
sued by the Government of the United
States, and shall be redeemable in coin.

The Republican Party is unre­
servedly for sound money. It caused
the enactment o f the law providing for
the resumption of specie payments in
1879; since then every dollar has been
as good as gold.
We are unalterably opposed to every
measure calculated to debase our cur­
rency or impair the credit o f our coun­
try. We are therefore opposed to the
free coinage o f silver except by inter­
national agreement with the leading
commercial nations o f the world, which
we pledge ourselves to promote, and
until such agreement can be obtained
the existing gold standard must be pre­
served. All our silver and paper cur­
rency must be maintained at parity
with gold, and we favor all measures
designed to maintain inviolably the ob­
ligations of the United States of all
our money, whether coin or pai>er, at
the present standard, the standard o f
the most enlightened nations of the
earth.

1900.
T H E CU RREN CY B IL L DENOUNCED.

FREE COINAGE OF SILVER OPPOSED.

We denounce the currency bill en­
acted at the last session o f Congress as
a step forward in the Republican policywhich aims to discredit the sovereign
right of the National Government to
issue all money, whether coin or paper,
and tQ bestow upon national banks the
power to issue and control the volume
of paper.money for their own benefit.
A permanent national-bank currency,
secured by Government bonds, must
have a permanent debt to rest upon,
;»nd if the bank currency is to increase
the debt must also increase. The Re­
publican currency scheme is therefore
a scheme for fastening upon the tax­
payers a perpetual and growing debt.
We are opposed to this private cor­
poration paper circulated as money
but without legal-tender qualities, and
demand the retirement of the nationalbank notes as fast as Government
paper or silver certificates can be sub­
stituted for them.

We declare our steadfast opposition
to the free and unlimited coinage o f
silver. No measure to that end could
be considered which was without the
support of the leading commercial
countries o f the world.
However
firmly Republican legislation may seem
to have secured the country against
the peril of base and discredited cur­
rency, the election o f a Democratic
President could not fail to impair the
eountiy’s credit and to bring once more
into question the intention o f the
American people to maintain upon the
gold standard the parity of their
money circulation. The Democratic
Party must be convinced that the
American people will never tolerate
the Chicago platform.




105

BANKING AND CURRENCY.
11104.

1 HE r.0LD STANDARD MUST BE UPHELD.

We believe it to be the duty of the
Republican Party to uphold the gold
standard and the integrity and value
of our national currency. The main­
tenance of the gold standard, estab­
lished by the Republican Party, can
not safely be committed to the Demo­
cratic Party, which resisted its adop­
tion. and has never given any proof
since that time of belief in it or fidelity
to it.

1W K
O.
BANKING.

The panic of 1907, coming without
any legitimate excuse, when the Re­
publican Party had for a decade been
in complete control of the Federal Gov­
ernment, furnishes additional proof
that it is either unwilling or incompe­
tent to protect the interests of the
general public. It has so linked the
country to Wall Street that the sins of
the speculators are visited upou the
whole people. While refusing to res
cue the wealth producers from spolia­
tion at the hands of the stock gamblers
and speculators in farm products, it
has deposited Treasury funds, without
interest and without competition, in
favorite banks. It has used an emer­
gency for which it is largely respon­
sible to force through Congress a bill
changing the basis of bank currency
and inviting market manipulation, and
has failed to give to the ir».000,<M deK)
positors of the country protection in
their savings.
Wo believe that in so far as the
needs of commerce require an emer­
gency currency, such currency shot j Id
be issiM l and controlled by the Fed­
M
eral Government and loaned on ade­
quate security to national and State
hanks. We pledge ourselves to legis­
lation under which the national banks
shall be required to establish a guar­
anty fund for the prompt payment of
the de|)ositors of any insolvent na­
tional bank, under an equitable sys­
tem which should be available to all
State hanking institutions wishing to
use it.
We favor a postal savings* bank if
the guaranteed bank can not be se­
cured. and believe that it should be
so constituted as to keep the deposited
money in the communities whore the
depositors live. Rut we condemn the
policy o f the Republican Party in pro
|M
>shig fHisfal savings banks under a
plan o f conduct by which they will




We approve the emergency measure
adopted by the Government during the
recent financial disturbance, and es­
pecially commend the passage by Con­
gress of the law designed to protect
the country from a rei>etition of such a
stringency. The Republican Party is
committed to the development o f a per­
manent currency system responding to
our greater needs and the appointment
of a national monetary commission by
the present Congress which will im­
partially investigate all the proposed
methods and insure the early realiza­
tion of this purpose.
The present currency laws have fully
justified their adoption, but an ex­
panding commerce, a marvelous growth
in wealth and population, multiplying
the centers of distribution. Increasing
the demand for the movement o f crops
in the West and South, and entailing
periodic changes in the monetary con­
dition. disclose the need of a more
elastic and adaptable system. Such
a system must meet the requirements
of agriculturists, manufacturers, mer­
chants. and business men,in general;
must be automatic in operation, mini­
mizing the fluctuations in the interest
rates: and all must be in harmony
with the Republican doctrine, which
insists that every dollar shall be based
upon and as good as gold.
l'O S T A L

S A V IN O S .

We favor the establishment o f a
|M
>stal savings bank system for the
convenience of the i>eople and the en­
couragement of thrift.

106

BANKING AND CURRENCY.

aggregate the deposits o f the rural
communities and deposit the same
while under Government charge in the
banks o f Wall treet, thus depleting
the circulating medium o f the produc­
ing regions and unjustly favoring the
speculative markets.

1012.
BANKING LEGISLATION.

BANKING AND CURRENCY.

We oppose the so-called Aldrich bill
or the establishment o f a central bank,
and we believe the people o f the coun­
try will be largely freed from panics
and consequent unemployment and
business depression by such a system­
atic revision of our banking laws as
will render temporary relief in local I
ties where such relief is needed, with
protection from control or dominion by
what is known as the Money Trust.
Banks exist for the accommodation
o f the public and not for the control
of business. All legislation on the sub­
ject o f banking and currency should
have for its purpose the securihg o f
these accommodations on terms o f ab­
solute security to the public aud o f com­
plete protection from the misuse o f the
power that wealth gives to those who
possess it
We condemn the present methods of
depositing Government funds in a few
favored banks, largely situated in or
controlled by Wall Street, in return for
political favors, and we pledge our
party to provide by law for their de­
posit by competitive bidding in the
banking institutions of the country, na­
tional and State, without discrimina­
tion as to locality, upon approved se­
curities and subject to call by the Gov­
ernment.

The Republican Party has always
stood for a sound cuirency and safe
banking methods. It Is responsible for
the resumption of specie payment and
for the establishment o f the gold
standard. It is committed to the pro­
gressive development of our banking
and currency system. Our banking
arrangements to-day need further re­
vision to meet the requirements of
current conditions. We need meas­
ures which will prevent the recurrence
o f money panics and financial disturb­
ances and which will promote the pros­
perity o f business and the welfare of
labor by producing constant employ­
ment. We need better currency facili­
ties for the movement o f crops in the
West and South. We need banking
arrangements under American auspices
for the encouragement and better con­
duct of our foreign trade. In attain­
ing these ends the independence o f in­
dividual banks, whether organized
under national or State charters, must
be carefully protected, and our bank­
ing and currency system must be safe­
guarded from any possibility o f domi­
nation by sectional, financial, or po­
litical interests.
It is of great importance to the
social and economic welfare o f this
country that its farmers have facilities
for borrowing easily and cheaply the
money they need to increase the pro­
ductivity o f their land. It is as im­
portant that financial machinery be
provided to supply the demand o f
farmers for credit as it is that the
banking and currency systems be re­
formed in the interest o f general busi­
ness. Therefore we recommend and
urge an authoritative investigation o f
agricultural credit societies and cor|x>ratlons in other countries and the
passage o f State and Federal laws for
the establishment and capable super­
vision o f organizations having for
another purpose the loaning o f funds
to farmers.

RU R AL CRFDITS.

Of equal importance with the ques­
tion of currency reform is the ques­
tion o f rural credits or agricultural
finance. Therefore we recommend that
an investigation o f agricultural credit
societies in foreign countries be made,
so that it may be ascertained whether
a system o f rural credits may be de­
vised suitable to conditions in the
United States; and we also favor legis­
lation permitting national banks to
loan a reasonable proportion o f their
funds on real estate security.
We recognize the value of vocational
education and urge Federal appropria­
tions for such training and extension
teaching in agriculture in cooperation
with the several States.




BANKING AND CURRENCY.

107

L aw fu l M oney.

Memorandum prepared for the Treasury Department by Mr. Broughton.
T reasury D epartment ,
Office of th e S ecretary,

Washington, August 22, 19J3.
Tlio terms * lawful money ” and “ legal tender” are different names for the
•
same thing. The term “ lawful money ” originated in the act o f February 25,
1KG2. authorizing tho issue o f United States notes. It was probably used in sub­
sequent acts, because the term was comprehensive and, notwithstanding the
fact that gold and silver coins were not then in circulation, it would necessarily
embrace them, as well as legal-tender notes, whenever specie payments should
be resumed. However, commonly the term “ lawful money ” has been applied
to the United States notes. “ Legal tender” is a quality given a circulating
medium by Congress, and (possessing this quality it becomes “ lawful money.”
The fact is interesting that the Continental Congress which authorized the
issues of Continental currency did not ordain it legal tender, but asked the
States to do so; it is stated all did so except Rhode Island.
Act of February 25, 1802. authorizing the issue of United States notes:
“ * ♦ ♦ and such notes herein authorized shall be receivable in payment of
all taxes, internal duties, excises, debts, and demands o f every kind due to the
United States, except duties on imports, and o f all claims and demands against
the United States o f every kind whatsoever, except for interest upon bonds and
notes, which shall be paid in coin, and shall also be lawful money and a legal
tender in payment o f all debts, public and private, within the United States, ex­
cept duties on imports and interest as aforesaid.”




o

Calendar No. 107.
68 d G bw roxM , |

M Smion.

SENATE.

)

J R kpt. 188,

j

P a rt 8.

B A N K IN G A N D C U R R E N C Y .

November 22, 1913.—Ordered

to be printed, with the individual
berg o f the committee.

views of mm-

M r. H it c h c o c k ( f o r him self, Messrs. N el so n , B r is t o w , C raw fo r d ,
M c L e a n , and W e e k s ) , from the Com m ittee on B a n k in g and C u r­
rency, subm itted the fo llo w in g

VIEWS.
[To accompany H. R. 7837.]

T h e undersigned members o f the B an k in g and C urrency C om ­
mittee, constitu tin g on e-h a lf o f its m em bership, regret their in ability
to present to the Senate the m a jority report, w hich until lately ap­
peared to be probable, on H . R . 7837, know n as the F ederal R eserve
A ct.
W e take leave, how ever, to present the fo llo w in g statement o f ou r
views and to recom m end the passage o f the b ill w ith the amend­
ments which we incorporate in the print o f the b ill w hich we have
submitted. W e also append hereto and ask to have printed herewith
the b ill as it w ould rend i f so amended.
T h e H ouse b ill was received bv the com m ittee Septem ber 18 last
past. W e had com m enced to hold hearings upon it p rio r to that
time, and they were continued up to O ctober 25. In these hearingB
many witnesses from all parts o f the country, inclu din g bankers o f
all classes, merchants, business men, publicists, experts, and p olitical
econom ists, were examined. M uch valuable in form ation was ob­
tained and m any useful suggestions were m ade w hich greatly aided
the com m ittee in p erfectin g the bill. T h e testim ony covers over
3/000 pages and has been printed fo r the use o f the Senate.
O n O ctober 27, fo llo w in g the close o f the hearings, the com m ittee
went into executive session and began at once consideration o f the
vital provisions o f the bill. Discussion was follow ed in each case
by a vote in fu ll com m ittee on the vital provisions o f the bill and,
am ong others, the fo llo w in g im portant changes were tentatively de­
cided o n :
B y a vote o f 6 to 4 the com m ittee decided that the reserve board
shall do the work o f an organization committee.
B y a vote o f 9 to 1 the Secretary o f A gricu ltu re was taken o ff the
reserve board.
B v a vote o f 8 to * the C om ptroller o f the C urrency was taken off
2
the board.
B y a vote o f 9 to 3 the Secretary o f the Treasury was retained
upon the board.




2

BANKING AND CURRENCY.

By a vote of 6 to 4 the membership of the reserve board was in­
creased to nine and the term of members fixed at eight years, one re­
tiring each year.
By a vote of 7 to 5 the number of Federal banks was reduced to
four, and at one time this vote for four reserve banks stood 8 to 4.
By a vote of 7 to 5 it was decided that the new system should, so
far as possible, be owned by the people and that the stock should be
offered to the public at par for 60 days, the banks being merely re­
quired to underwrite the issue and take what the public did not
subscribe for.
B y the same vote it was decided that the b an k in g interests shall
elect fo u r directors and the Federal board represen tin g the G ov ern ­
ment shall select five directors o f each F ederal reserve bank.
B y a vote o f 10 to 2 it was decided that the ca p ita l stock o f the
regional banks shall be G per cent o f the capital and surplus o f the
n ational banks in the d istrict and, w hether taken b y the p u b lic o r
the banks, shall be p aid fo r one-third cash, on e-third in 30 aays, and
one-third in 60 days.
B y a vote o f 8 to 4 it was decided that the F ed eral reserve notes
shall be payable in gold.
B y a vote o f 4 to 8 the effort to substitute bank notes guaranteed
b y the G overnm ent fo r U nited States notes was beaten.
T hus we w ere g o in g th rou gh the bill ta k in g one im portant p r o ­
vision a fter another and v otin g u pon it in a nonpartisan spirit, and
m akin g such progress that it was h oped the b ill cou ld be reported b y
the 15th o f this month. C onsideration and decisions had been n o n ­
partisan in character in accordance w ith the view s expressed in the
open Senate O ctober 9 b y Senators on both sides o f the Cham ber.
A t this juncture, how ever, in the com m ittee deliberations, a m otion
to reconsider one o f the im portan t questions was m ade and carried,
and the w h ole subject was throw n open again. A ft e r several days o f
discussion it was fou n d on takin g a vote that the com m ittee had be­
com e even ly d ivid ed and finally six o f our colleagues on the com ­
mittee w ithdrew fro m ou r m eetings and proceeded to consider the b ill
in separate session. W e continued w ith the consideration o f the b ill,
although la ck in g a quorum , accepting the decisions w hich had already
been tentatively m ade in fu ll com m ittee as above specified.
W a iv in g a stron g p referen ce w hich prevailed in com m ittee in fa v o r
o f a single G overnm ent bank w ith branches, we accepted the region al
bank plan as the on ly h op efu l outlook fo r action b y this Congress, but
retained the am endm ent substituting 4 regional banks fo r 12. W h ile
the single G overnm ent bank plan w ould p rodu ce the on ly p erfect
m ob iliza tion o f reserves, as has been dem onstrated b y the experience
o f other countries, the a dop tion o f fo u r regional banks under a single
control w ill, it is th ou ght, a pproxim ate this result and, in a cou n try
so large as ours, w ith so m any banks, p robably p rove efficient. E v ery
addition to this num ber o f reserve nanks must inevitably tend to
dissipate the reserves and weaken the system. T h e m ore reserve
banks the less p erfect w ill be the use o f reserve funds, w hich means
that asset cu rren cy w ill be issued w ith greater frequency and in
larger volum e. It w ill often happen with a system o f 12 reserve
banks that n num ber o f them w ill be ca llin g fo r currency and ch a rg ­
in g a high interest rate when other reserve \>anks w ill be in their dull
season w ith slack dem and fo r m oney and large balances. W ith fou r




BANKING AND CURRENCY.

3

reserve banks, each embracing a large territory served by branches
a n d having a variety o f climate and interests, this would rarely occur.
Moreover, to cut the country up into many reserve districts means
that most o f the reserve banks would be comparatively weak and
would not inspire confidence. They would not even equal in size
some o f their member banks supposed to depend on them.
It would probably be difficult to sell to the public the stock in these
small reserve banks because they might not be able to earn dividends
and would probably be frequently compelled to call upon the stronger
ones for assistance.
In our opinion the ownership o f the stock by the people is highly
important. I f $10(>,000,000 o f stock ijn these four reserve banks
can be sold to the public as a 5 per centum investment there will
be thereby added to the banking capital o f the United States that
great sum o f money. W e think this very desirable. A t present
there is a deficiency in the banking capital.in many sections o f the
United States. The tendency o f each bank has been to do as large
a volume o f business on as small an amount o f capital as possible
for the purpose o f maintaining dividends, and the result has been a
grow ing disparity in the proportion o f capital to deposits. T o
compel national banks to subscribe for the capital in the proposed
reserve banks simply means the shifting o f $100,000,000 o f capital
now actively employed with great efficiency and benefit to the public
by the various banks to a place where the return is limited to 5 per
centum. Such a contraction from the working capital would be to
aggravate the evil now existing, and we greatly prefer the plan o f
bringing this new capital into the banking world and giving to
small investors the tax-free, highly desirable 5 per centum invest­
ment which they wilUeagerly take. In this waVxtens o f thousands
o f our people will be directly interested in this great Governmentcontrolled banking system. This is easily possible with a system o f
four reserve banks, and it is very doubtful with a larger number.
It has seemed to us, moreover, wise that upon these reserve banks
the Government should have a majority o f the board o f directors. W e
have, therefore, proposed an amendment giving the Government five
and the banking interests four o f these directors.
In the division o f earnings we have provided that after the pay­
ment o f 5 per cent dividends and the accumulation o f a surplus
the net profits, instead o f being divided between the stockholders and
the Government, shall be disposed o f by giving the Government onehalf and with the other half creating a depositors’ insurance fund,
so that when a member bank shall fail in spite o f this new system
the depositors may be reimbursed out o f these accumulated profits.
This method levies a tax upon no bank, but it will add immensely to
the feeling o f confidence and security among depositors and stop
bank runs.
W e have proposed that the national banks shall decide whether to
join this new system or not within six months, as it has seemed to
us that a year is an unnecessary length o f time.
W e have recommended that the size o f the Federal reserve board
be increased to nine, because o f the vast interests which are intrusted
to it, the great country which must be covered, and the many ques­
tions and complaints which must l>e considered. We have thought
also that every member o f the board should give his whole time to




4

BANKING AND CURRENCY.

the w ork , and we have therefore exclu ded the Secretary o f A g r i­
culture and the C om p troller o f the C u rrency, the duties o f whose
offices already absorb all their time.
W e have extended the lim it o f com m ercial paper w hich m ay be
discounted b y Federal reserve banks fro m three m onths to six m onths,
because we have fou n d that thousands o f banks in the W est and
in the South necessarily take six m onths’ pap er because o f the longer
tim e required fo r agricu ltu ral processes than fo r the m an u factu rin g
and m ercantile processes o f the E ast. W e hfrve, how ever, p rovid ed
that o f the discounted p ap er o f any bank n ot m ore than 50 p er
centum o f it shall be fo r tne long-tim e p eriod, and w e have sought
to furth er lim it this by p ro v id in g that in no case can any bank have
over $*200,000 o f paper discounted exceedin g a m aturity o f 00 days.
W e have recom m ended an am endm ent by w hich every mem ber
bank is given, as a m atter o f righ t, the p rivilege o f discount at its
reserve bank to the am ount o f its capital stock at the lowest current
rate o f interest, p ro v id in g it presents eligible paper. T h is is done
to prevent discrim ination against a bank and to make every bank
feel certain that it w ill receive the benefits o f the system. O n the
other hand, we have also recom m ended that a Federal reserve bank
shall not discount the paper o f any mem ber bank to a greater extent
than tw ice its capital stock. T h is is to prevent favoritism and undue
expansion. W e design, jilso, to place a check upon undue expansion
o f bank credits by p ro v id in g that when a bank is allow ed to discount
paper to a greater am ount than its capital stock it shall pay a
high er rate o f discount.
have raised the reserve against notes in Federal reserve banks
from
to 45 per cent because the experience o f the great cou n ­
tries o f the w rrld and because our ow n experience w ith greenbacks
has indicated that this lim it is the safe one. W e have p rovid ed ,
how ever, that in case o f em ergency the reserve board may authorize
a reserve bank to fa ll below its lim it o f 45 per cent when it is neces­
sary to g ive relief to m em ber banks, but in such case it shall p ay a
tax fo r each 2J p er cent o f deficiency. W e have p rovid ed that the
reserve against notes must be g o ld o r g o ld certificates, and we have
therefore recom m ended that the w ords “ o r law fu l n oney ” in the
H ouse bill be stricken out. W e feel that no argum ent upon this is
necessary, as it is obviou sly unsafe to p rovid e that one G overnm ent
ob ligation m ay be redeemed by another G overnm ent obligation .
W e have recom m ended that the reserve against deposits in reserve
banks be raised from
per centum to 35 per centum , but that the
reserve board may perm it a bank in em ergency to run its reserve
dow n to 25 per centum , paying, however, a tax fo r each deficiency o f
2 i per centum. T h is is thought to Ik? desirable so as to make the re'^ ^ e rv e less rigid.
^ ^ W e think it w ould be undesirable to perm it the Federal reserve
board to have discretionary pow er in issuing currency to a Federal
reserve bank which in all respects com plies w ith the provision s o f
this net. W e therefore recom m end that the Federal reserve board
shall issue reserve notes to any reserve bank which com plies w ith
the requirements as to g old reserve, as to the deposit o f security, and
con form s to the other provisions o f this act. T h is is a necessary
change because i f we give the member banks the right to secure d is­
counts o f the Federal reserve bank it is necessary fo r the F ederal




BANKING AND CURRENCY.

5

reserve bank to count on getting currency to meet the needs o f busi­
ness, provided, o f course, the reserve bank can com p ly with the re­
quirements as to gold reserve and security. B y placin g a lim it to
the amount o f discounts that can be made by a reserve bank to any
member bank we have placed a limit on excess. It should be noted
also that the Federal reserve board has the pow er to check excessive
loans and discounts by requiring reserve banks to raise their discount
rates at any time.
W e have recom m ended a change in the section relating to the
han dlin g o f individual checks by reserve banks under which banks
collectin g checks w ill still be perm itted to make reasonable charges
under regulations provided by the Federal reserve board. W e have
recom m ended changes in the refu nding provisions o f the bill, so that
the reserve banks may utilize about $50,000,000 a year o f their funds
tor the purchase o f 2 per centum Governm ent bonds at par with in ­
terest. Th is w ill afford em ploym ent fo r funds w hich m ay otherwise
be idle in the reserve banks; it will make a market fo r 2 per centum
bonds at par and thus preserve the G overnm ent credit, and it w ill
enable the retirement o f that national-bank currency which national
banks fo r any reason m ay desire to retire. W e have then recom ­
mended that the 2 per centum bonds so acquired by the Federal
reserve banks may be presented at the Treasury and exchanged fo r 3
per centum one-year gold Treasury notes. O rdin arily these notes
w ill be retained in the reserve banks and held as an investment.
W h ile the G overnm ent w ill be p ayin g 1 per centum more interest
than it pays on 2 per centum bonds it w ill also be receiving the sur­
plus profits from the operations o f the bank which w ill be an offset.
These 3 per centum one-year gold Treasury notes w ill be an invest­
ment in ordinary times, but they w ill also afford a means to the
reserve banks by which they can be useful in protecting the gold
su pply o f this country. W hen gold exports are threatened or when a
larger supply o f gold is desired in this country, the reserve hanks can
sell these notes at home or abroad and bring the proceeds to the
U nited States in gold , so as to maintain gold reserves. W h ile the
notes are one-vear notes they are only such fo r the purpose o f m ak­
in g them marketable, and the reserve banks will be under contract
with tjie Treasury to renew them year by year fo r 20 years i f desired.
W e have sought to m itigate the severity o f the shock that m ight
result from .the rapid transfer o f reserve when this bill is placed in
operation by p rovid in g that the transfer shall be gradual over a
period o f 30 months.
W e have also felt justified in reducing the reserve which city banks
are required to keep to 15 per centum, and in the case o f country
banks, while the reserve remains at 12 per centum, we have provided
that only 4 per centum o f this need be in Federal reserve banks, fo r
the reason that country banks in the immediate future are likely to
use the facilities o f reserve banks to a less extent than the city banks.
W e recommend that national banks located outside o f central reserve
cities be perm itted to use a portion o f their time deposits fo r m aking
five-year farm mortgages. This is done because the m aking o f a
farm m ortgage fo r one year is an im practicable and useless privilege
and because in practice it has been fou n d entirely safe fo r banks in
agricultural neighborhoods to invest a part o f their time loans in
this way.




6

BANKING AND CURRENCY.

"We have recom m ended that the savings-bank p ro v isio n be stricken
fro m the bill, as it disrupts a practice now in safe and successful
operation.
W e have recom m ended that the A ld rich -V re e la n d A c t be extended
fo r one year, so that it shall exp ire in June, 1915. T h is we have d on e
so as to brid ge over the p eriod o f organ ization w h ich w ill be required
to establish this new system.
R esp ectfu lly subm itted.
G il b e r t M. H it c h c o c k .
K n u te N elson .
J o se ph L . B r is t o w .
C oe I. C r a w f o r d .
G eo . P . M c L e a n .
J o h n W . W eeks.

T h e b ill, if am ended as suggested b y ou r prop osed am endm ent, w ill
read as fo llo w s :
H . R . 7837.
AN ACT T o 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 o f 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, T h a t the short title
o f this act shall be the u Federal reserve act.”
T h e terms “ national b a n k ” and “ national ban k in g a sso cia tio n ”
used in this act shall be held to be synonym ous and interchangeable.
T h e term “ m em ber bank ” shall be held to mean any national bank,
State bank, or trust com pan y w hich has becom e a m em ber o f one o f
the reserve banks created by this act. T h e term “ b o a r d ” shall be
held to mean Federal reserve b o a r d ; the term “ d is tr ic t” shall be held
to mean F ederal reserve d istrict; the term “ reserve b a n k ” shall be
held to mean Federal reserve bank.
FEDERAL RESERVE D ISTR ICTS.

S ec . 2. T h a t the F ederal reserve board, h erein after p ro v id e d fo r ,
^hall, as soon as practicable a fter their appointm ent and confirm a­
tion , designate from am ong the reserve ana central reserve cities now
established a number o f such cities to be term ed F ed era l reserve
cities, and shall d ivid e the continental U n ited States into districts,
each d istrict to em brace one o f such F ed eral reserve citie s: Provided,
T h a t the districts shall be form ed w ith due regard to the convenience
and custom ary course o f financial and com m ercial business in each
d istrict, and need not necessarily coin cide w ith State o r cou n ty
boundaries. T h e districts thus established shall be know n as Federal
reserve districts, and each o f them shall be designated b y the name
o f the F ed eral reserve city located therein. T h e F ed eral reserve
board shall, as soon as practicable a fter the said districts have been
established, proceed to organize, con form ab le to the p rovision s o f this
act, in each Federal reserve city designated as aforesaid, a F ederal
reserve bank, w hich shall be known b y the nam e o f the city in w hich




BANKING AND CURRENCY.

7

it is established, as, fo r exam ple, “ Federal reserve bank o f C h icago.”
F o u r Federal reserve cities, and appurtenant to them fo u r F ederal
reserve districts, and no m ore, shall in the first instance be designated
and established as such by the F ederal reserve b o a rd : Provided, T h a t
after Federal reserve banks have been organ ized and in op eration
fo r a period o f tw o years in said fou r Federal reserve cities, the
Federal reserve board m ay, in its discretion, from time to time,
designate not to exceed in all eight additional F ederal reserve cities,
w ith the requisite Federal reserve districts appurtenant thereto, and
fo r that purpose m ay alter and change the lim its and areas o f exist­
in g Federal reserve districts.
There shall be allotted to every
national bank w ithin a Federal reserve district, o f the capital stock
o f the Federal reserve bank o f such district, a sum equal to six per
centum o f the fu lly p aid-up capital stock and surplus 01 such national
bank, which stock so allotted shall be underw ritten by said bank and
fo r a period o f sixty days after allotm ent be offered fo r subscription
at par to the public at large, but no ’more than one hundred shares
shall be allow ed to be subscribed fo r or held bv any person, firm, or
corp oration , and all o f the allotted stock not subscribed fo r and taken
b y the public shall im m ediately be subscribed fo r and taken by
the national bank to which the same was in the first instance allotted.
T h e preparation, allotm ent, subscription to, and sale o f stock shall be
under the con trol o f the b oard, which in case o f oversubscription shall
give preference to the smaller subscriptions. T h e national banks
shall in the first instance act as agents o f the Federal reserve board
to take subscriptions from the general public and receive pa}rment
therefor which shall be held subject to the order o f the board. T h at
said stock subscription shall be paid fo r in gold coin or gold certi­
ficates as fo llo w s : O ne-third at the time o f subscription, one-third
w ithin thirty days, and one-third w ithin sixty days thereafter. T h e
board is hereby em powered to app oin t such assistants, to subpoena,
swear, and examine witnesses, to em ploy counsel and experts, and to
incur such expenses as may be necessary fo r establishing, organizing,
and p uttin g in operation the Federal reserve banks and designating
the Federal reserve cities and reserve districts provided fo r in this
act, and such expenses shall be paid b y the Treasurer o f the U nited
States upon vouchers approved by the Secretary o f the Treasury,,
and the sum o f $100,000, or so much thereof as may be necessary, is
hereby a ppropriated, out o f any money in the Treasury not other­
wise appropriated, fo r the paym ent o f such expenses. F iv e members
o f the reserve board shall constitute a quorum with pow er to do
business.
STOCK ISSUES.

S e c . 3. The capital stock o f each Federal reserve bank shall be
divided into shares o f $100 each, and shall be w ithout votin g power.
T h e Federal reserve board shall have p ow er to prescribe regulations
fo r the transfer o f said stock. W ith the consent and approval o f
the board, reserve banks may establish such branch offices, within
their respective districts, as they deem necessary to con form to the
convenience and established course o f business.




8

BANKING AND CURRENCY.
FED ER AL RESERVE B A N K S .

S ec. 4. W h en the F ed era l reserve board has established F ederal
reserve districts, as prescribed in section tw o o f this act, the g o v ­
ernor o r vice g ov ern or o f such board shall, under his hand and seal,
execute a certificate d esign atin g the territorial lim its o f such districts
and the F ederal reserve city in each district, and shall file such cer­
tificate w ith the S ecretary o f the T reasury. W h en such certificate
has been executed and filed, as a foresa id , the b oard shall allot to
each and every national bank stock in the reserve banks as prescribed
in section tw o o f this act, and when, con form a b le to section tw o o f
this act, an am ount o f such stock has been subscribed f o r in any
Federal reserve d istrict eaual to $6,000,000, and on e-third o f such
subscription has been paid in, the b oard shall, b y its go v e rn o r or
vice g ov ern or, under his hand and seal, issue a certificate in w ritin g
sp e cify in g the name and location o f the reserve bank in such district,
the territorial lim its o f the district, the am ount o f the ca p ita l stock
subscribed, and the am ount p aid in on such su bscription, and the
name and am ount o f stock taken b v each subscriber. S u ch certifi­
cate shall be ackn ow ledged b efore the clerk o f a cou rt o f record, o r
a n otary p u blic, and shall be filed w ith the S ecretary o f the Treasury.
U pon tne filin g erf such certificate w ith the Secretary o f the T reas­
u ry as aforesaid, the said reserve bank so form ed shall becom e a b o d y
corporate and as such, and in the nam e designated in such org an iza ­
tion certificate, shall have p ow er—
F irst. T o adopt and use a corp ora te seal.
Second. T o have succession fo r a p eriod o f tw enty years fro m its
organization unless it is sooner dissolved b y an act o f Congress, o r
unless its franchise becom es fo rfe ite d b y som e violation o f law.
T h ird . T o make contracts.
Fourth. T o sue and be sued, com plain and d efen d , in any cou rt o f
law and equity as fu lly as natural persons.
F ifth . T o ap p oin t by its board o f directors, elected as hereinafter
p rovid ed , such officers as are not otherw ise p ro v id e d f o r in this act,
to define their duties, require bonds o f them and fix the penalty
thereof, to dismiss such officers or any o f them as m ay be appoin ted
b y them at pleasure, and to app oin t others to fill their places.
S ixth. T o prescribe bv its. b< a id o f directors by-law s not in con ­
sistent with law regulating the manner in w hich its general business
may be conducted and the privileges granted to it bv law may be e x ­
ercised and enjoyed.
Seventh. T o exercise bv its bvard o f directors, o r duly authorized
officers or agents, all powers specifically granted by the provision s o f
this act and such incidental pow ers as shall be necessary to carry on
the business o f banking within the lim itations prescribed by this act.
No Federal reserve bank shall transact any ban kin g business, e x ­
cept such as pertains to the p erfection o f its organ ization and m an­
agement, until tw o-thirds o f its stock subscribed fo r has been paid in
as prescriln'd in section tw o o f this act.
Kverv Federal reserve bank shall be conducted, m anaged, and con ­
trolled by a board o f nine directors, five o f whom shall be appointed
by the Federal reserve board, and shall be known as directors “ A ,”
and fou r « f whom shall be known as directors u B ,v and w’ ho shall be
selected and appointed by the member banks as fo llo w s :




BANKING AND CURRENCY.

9

As soon as practicable after a reserve bank has been incorporated
as above provided, the board shall notify the member banks in said
Federal reserve district to elect four directors within a certain date to
be named in the notification. Said board shall supply to each mem­
ber bank a blank for the purpose of recording the vote of said mem­
ber bank. Each member bank shall vote for four 4 B ” directors upon
4
the blank so forwarded, shall certify that they are the choice of the
board of directors of said member bank, which certificate shall be
signed by the officers of said bank and forwarded to the board within
the time which said board shall limit. Said board shall canvass the
ballots so received from said member banks and forward a certificate
of the result to each of said member banks. The candidate for direc­
tor receiving the largest number of votes shall be elected for four
years; the candidate for director receiving the second largest number
of votes shall hold office for three years; the candidate for director
receiving the third largest number of votes shall hold office for two
years; the candidate for director receiving the fourth largest number
of votes shall hold office for one year. During each subsequent vear,
the election shall be held in the same manner except that each bank
shall vote for only one director unless in case of vacancies, when the
number to be elected shall be certified by the board to each member
bank, and in such cases a plurality vote shall elect.
No person shall be qualified to hold the office of director “A ” or
director “ B ” while he is an officer, director, stockholder, or employee
of any other bank or of any trust company, and no person shall be
appointed or elected director who is not at the time of his appoint­
ment or election an actual and bona fide resident of the Federal
reserve district for which he is appointed or elected. The Federal
reserve board shall designate and appoint one of said directors “A ”
as chairman of the board of directors, who shall be known as 4 Fed­
4
eral reserve agent.” Directors 4A ” shall hold therr offices for four
4
years, except the Federal reserve agent, who shall hold his office at
the pleasure of the board. Of the directors 4A ” first selected one
4
shall hold office for one year, one for two years, one for three years,
and one for the full term of four vears, as designated by the Board.
Directors 4 B ” shall hold their offices for four years, except that as
4
fo the first election one shall be elected for one year, one for two
years, one for three years, and one for four years.
The salaries of the directors shall be fixed by the board and shall
be payable from the revenues of the Federal reserve bank of which
they an* directors. The board of directors shall have authority to
fix the salaries and wages of all the employees of their bank.
Vacancies that occur in either class of directors of reserve banks
may be filled in the manner provided for the original selection of
such directors, the men so selected to hold! office ior the unexpired
terms of their predecessors.
Upon its own initiative, for cause, or upon written complaint un­
der oath presented by ten or more member banks charging any di­
rector of a reserve baiik with incompetency, dishonesty, or other'mat­
ter affecting his efficiency as a director, the board shall have the
power, after hearing ana proof and pursuant to a written notice
specifying the grounds thereof, to remove such director. The ac­
cused director snail be allowed thirty days in which to make defense
208H O— 58-----H




10

BANKING AND CUBBENCY.

thereto. Pending the hearing the board may within its discretion
suspend the accused director.
IN C R E A S E O F C A P IT A L .

Sec. 5. That the capital stock in the reserve banks shall be main­
tained as nearly as practicable in an amount equal to six per centum
of the capital and surplus of the member banks in said district, and
the board is authorized from time to time to sell to the public such
additional stock in any reserve bank as may be required to main­
tain this proportion. The price at which said stock shall be offered
to the public shall be at its fair market value, but in no case below
ar. Any bank applying for membership in a reserve bank shall
e required by the board to underwrite, at the price fixed by the
board, such an amount of capital stock in said reserve bank equal to
six per centum of the capital and surplus of such applying bank, as
may be allotted to it by the board, and to purchase and pay for such
portion of said allotment as may not be purchased by the public, as
provided for in this act.
When the capital stock of any reserve bank has been increased, the
board shall certify the same to the Secretary of the Treasury.
S ec. 6. That in case the Federal reserve board shall decide, after
two years’ operation of the reserve banks first established, that one
or more additional banks herein authorized should be established it
shall make the necessary change in lines of existing districts, desig­
nate the new reserve city or cities, and notify the member banks
affected by such change to associate thertiselves with the new reserve
bank or banks and change the deposit of their reserves accordingly.
Stockholders in previously established reserve banks affected by tne
change .shall be invited to exchange a portion of their stock certifi­
cates as indicated by the reserve board, and for all stock so exchanged
the reserve board shall direct the transfer to the new reserve bank or
banks from the old reserve bank or banks of the corresponding
amount of cash capital in gold.
If sufficient stock certificates are not thus exchanged the reserve
board may offer to the general public at par stock in the newly cre­
ated district or districts to an amount necessary to make up the dif­
ference.
As an inducement to make the exchange of stock the reserve board
may direct that the stock of the old reserve bank or banks so ex­
changed shall be entitled to payment in cash of its share of the ac­
cumulated surplus.

E

D IV ISIO N OF E A R N IN G S .

S ec. 7. That after the payment of all necessary expenses and taxes,
including its share of the expenses of the Federal reserve board, the
stockholders of each Federal reserve bank shall be entitled to receive
an annual dividend of five per centum on the paid-in capital stock,
which dividend shall be cumulative. Net earnings over and above
expenses and the aforesaid dividend shall be applied as follows:
Twenty-five per centum of such net earnings to be carried to a surplus
fund until such fund shall amount to twenty per centum of the
>aid-in capital stock of such reserve bank, and thirty-seven and onelaif per centum of said net earnings shall be set aside in a trust

1




BANKING AND CURRENCY.

11

fu n d to be know n as the depositors9 insurance fu n d and shall be
used fo r the paym ent o f the depositors o f insolvent m em ber banks
under rules and regulations made b y the board. W h en , in the ju d g ­
m ent o f the board, there has been accum ulated in such depositors*
insurance fu n d a sufficient sum fu lly to insure the p aym en t o f the
depositor^ o f insolvent m em ber banks, the board shall have p ow er
to suspend the setting aside and accum ulation o f the said thirty-seven
and on e-h alf per centum o f such earnings, and thereafter such th irtyseven and on e-h a lf per centum o f such earnings shall be paid to
the U nited States, except that in the event the depositors’ insurance
fu n d is depleted bv the paym ent o f depositors o f insolvent m em ber
banks such fun d shall be replenished by again setting aside such
thirty-seven and on e-h a lf per centum o f the earnings or so much
th ereof as, in the judgm en t o f the board, m ay be necessary. T h e
rem aining net earnings shall be paid to the U nited States: Provided,
T h at the am ount so paid shall be applied to the purchase, at par,
with accrued interest, o f the tw o per centum bonds o f the U nited
States, said bonds then to be retired ; or i f such bonds can not be so
purchased said amount shall be a pplied to the purchase o f other
interest-bearing obligations o f the U nited States, which obligations
shall thereupon be retired.
E v e ry Federal reserve bank incorporated under the terms o f this
act and the capital stock therein and the incom e derived therefrom
shall be exem pt from Federal, State, and local taxation, except in
respect to taxes upon real estate.
S e c . 8. T h at w ithin six months a fter a national bank shall have
been notified bv the Federal reserve board o f its allotment o f stock
under section tw o o f this act, said national bank shall h old a m eeting
o f its stockholders and decide by a m a jority vote whether it w ill
becom e a member bank under the terms o f this act or whether it will
give up its charter as a national bank. In case the stockholders o f
said national bank shall decide that said national bank shall become
a member bank, the officers o f said bank, upon a blank provided by
the board, shall forw a rd the form al acceptance by said national
bank o f the terms o f this act to the board, p rop erly attested before
a notary public. In case any national bank shall fa il to forw ard its
acceptance to the board w ithin six months from the time said board
makes the allotm ent o f stock to said bank, it shall be deemed to have
declined to become a member bank and shall thereupon have six
m onths w ithin w hich to surrender its charter and abandon its exist­
ence as a national bank. In any case, however, every national bank
shall be and is required to accept the allotm ent o f stock as p rovided
in section tw o, which stock m ay be freely sold and disposed o f as
other assets o f the b an k : Provided, however, T h a t any national bank
actin g as a reserve agent in a reserve or central reserve city shall be
required to accept the terms o f this act w ithin six months from the
date o f notification o f its allotm ent o f stock, or, upon failure to do so,
shall cease to be a reserve agent fo r national banks.
S e c . 9. T h a t any bank or banking association incorporated by
special law o f any State or o f the U nited States, or organized under
the general law s o f any State or the U nited States, and h avin g an
unim paired capital sufficient to entitle it to becom e a national
ban kin g association under the provisions o f existin g laws, m ay,




12

BANKING AND CURRENCY.

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 Cur­
rency, 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 bank­
ing association a certificate that the provisions of this act have been
complied with, such bank or banking association and all its strickholuers, 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.
ST ATE B A N K 8 AS M E M B E R S .

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
to become a member of the Federal reserve bank organized or to be
organized within the Federal reserve district where the applicant
is located. The Federal reserve board, under such rules and regula­
tions as it may prescribe, subject to the provisions of this act, shall
permit such applying bank to become a member of the Federal re­
serve bank of the district in which such applying bank is located,
in which case stock shall be allotted to it as provided in this act.
No such applying bank shall be admitted to membership in a Fed­
eral reserve bank unless it possesses a paid-up unimpaired capital
sufficient to entitle it to become a national banking association in the
place where it is situated, under the provisions of the national bank­
ing act, and it shall thereafter be required to make the same reports
and be subject to the same examination and supervision as national
banking associations and subject also to the reserve requirements of
this act.
If at any time it shall appear to the Federal reserve board that
a member bank has failed to comply with the provisions of this
act or the regulations of the Federal reserve board, it shall be within
the power of the said board, after due hearing, to suspend or expel
the said bank from membership. The Federal reserve board may
restore membership upon due proof of compliance with the condi­
tions imposed by this act.
FEDERAL RESERVE BOARD.

S e c . 11. That the President of the United States shall appoint, by
and with the advice and consent of the Senate, a Federal reserve
board consisting of eight members, in addition to whom the Secretary
of the Treasury shall be an ex officio member. Of the eight members
appointed in the first instance, the President shall oppoint one for
a term of one year, one for a term of two years, one for a term of
three years, one for a term of four years, one for a term of five years,




BANKING AND CURRENCY.

13

one f o r a term o f six years, one fo r a term o f seven years, and one
fo r a term o f eight years, and thereafter all appointm ents shall be
m ade fo r a term o f eight years. Not less than one nor more than
three o f said members shall be appointed from any one Federal
reserve district. A ppointm en ts to fill vacancies in the board shall
be fo r the unexpired term and may be made by the President when
the Senate is not in session, which appointm ents shall expire at the
end o f the next session. In selecting members o f the reserve board
consideration shall be given to experience in com m erce and banking.
T h e eight members o f the Federal reserve board thus appointed by
the President shall devote their entire time to the w ork and duties
o f the board and shall not w hile in office be officers, directors, o r
em ployees o f any bank or trust com pany, nor hold stock in any such
institution, and they shall each receive a salary o f $12,000 per year,
payable m onthly out o f the Treasury o f the U nited States upon the
order or warrant o f the Secretary o f the Treasury. The President
shall designate, other than the Secretary o f the Treasury, one member
o f said board as gov ern or thereof, and one member as vice governor
th ereof w ho shall act in place o f the governor d u rin g his (usability
o r absence. T h e govern or shall be the active executive and presiding
officer o f the board. T h e Secretary o f the Treasury shall provide the
necessary office room s fo r said board in the Treasury Department
B u ild in g, or the board m ay select quarters elsewhere in the city o f
W ashington i f sufficient office room can not be fou n d in said building.
The said board shall hold its office in the city o f W ashington, D istrict
o f Colum bia. Th e first m eeting o f the board shall be held as soon as
mav be, upon the call o f the Secretary o f the Treasury, at a time
and place designated by him.
The Federal reserve hoard shall have power to levy semiannually
upon the Federal reserve banks, in proportion to their capital stock
and surplus, an assessment sufficient to pay its estimated expenses
and salaries fo r the h a lf year succeeding the levyin g o f such assess­
ment, together w ith any deficiency carried forw a rd from the pre­
ced in g h a lf year.
T h e Federal reserve board shall annually make a full report o f its
operations to the Congress.
Section three hundred and tw en ty-fou r o f the R evised Statutes o f
the U nited States shall be amended so as to read as fo llo w s : “ There
shall be in the Departm ent o f the Treasury a bureau charged with
the execution o f all laws passed by Congress relating to the issue and
regulation o f national currency secured bv United States bonds and,
under the general supervision o f the Federal reserve board, o f all
Federal reserve notes, the ch ief officer o f which bureau shall be called
the C om p troller o f the C urrency, and shall perform his duties under
the general direction o f the Secretary o f the T reasury.” N oth in g in
this act contained shall be construed as taking away any pow ers here­
tofore vested by law in the Secretary o f the Treasury which relate to
the supervision, management, and control o f the Treasury D epart­
ment and the bureaus under such departm ent.
S e c . 12. That the Federal reserve board hereinbefore established
shall be authorized and em pow ered:
(a )
T o examine at its discretion the accounts, books, and affairs
o f each Federal reserve bank and o f each member bank and to re­
quire such statements and reports as it may deem necessary. The




14

BANKING AND CURRENCY.

said board shall publish once each week a statement sh ow in g the
con d ition o f each F ederal reserve bank and a consolidated statement
fo r all F ederal reserve banks. Such statements shall show in detail
the assets and liabilities o f such Federal reserve banks, single and
com bined, and shall furnish fu ll in form ation reg ard in g the am ount
and character o f the m oney held as reserve and the am ount, nature,
and m aturities o f the paper and other investments ow ned or held by
Federal reserve banks.
(b ) T o perm it or require, in time o f em ergency, Federal reserve
banks to rediscount the discounted prim e com m ercial paper o f other
Federal reserve banks, at least six members o f the F ederal reserve
board being present w hen such action is taken and all present con ­
senting to the requirement. In such case the Federal board shall fix
a special rediscount rate o f not m ore than three per centum in excess
o f the discount rate o f the accom m odated reserve bank.
( c ) T o supervise and regulate the issue and retirem ent o f F ederal
reserve notes and to prescribe the form and tenor o f such notes.
(b ) T o add to the num ber o f cities classified as reserve and cen­
tral reserve cities under existin g law in w hich national ban k in g asso­
ciations are subject to the reserve requirements set forth in this a ct;
o r to reclassify existing reserve and central reserve cities or to
terminate their designation as such.
(e ) T o require the w ritin g o ff o f d oubtfu l or w orthless assets
upon the books and balance sheets o f Federal reserve banks.
( f ) T o require bonds o f Federal reserve agents fo r the fa ith fu l
perform an ce o f the duties o f their office.
FEDERAL AD VISO R Y C O U N C IL .

S e c . 13. T here is hereby created a Federal advisory cou n cil,
w hich shall consist o f as m any members as there are Federal reserve
districts. E ach Federal reserve bank, by its board o f directors, shall
annually select from its own Federal reserve district one member
o f said cou n cil, w ho shall receive such com pensation and allow ances
as m ay be fixed by the board o f directors, subject to the ap p rov al o f
the F ederal reserve board. T h e m eetings o f said advisory council
shall be held at W ash in gton , D istrict o f C olum bia, at least fo u r times
each year, and often er i f called by the F ederal reserve board. T h e
cou n cil m ay select its ow n officers and adopt its own m ethods o f
procedure, and a m a jority o f its members shall constitute a auorum
-fo r the transaction o f business. V acancies in the council snail be
filled by the respective reserve banks, and members selected to fill
vacancies shall serve fo r the unexpired term.
T h e F ederal a dvisory council shall have p ow er by itself or
th rou gh its officers (1 ) to meet and con fer directly with the Federal
reserve board on general business con d ition s; (2 ) to make oral or
w ritten representations con cerning matters w ithin the ju risd iction
o f said b o a r d ; (3 ) to call fo r com plete in form ation and to make
recom m endations in regard to discount rates, rediscount business,
note issues, reserve con dition s in the various districts, the purchase
and sale o f gold or securities bv reserve banks, open-m arket op er­
ations by said banks, and the general affairs o f the reserve banking
system.




BANKING AND CURRENCY.

15

REDISCOUNTS.

Sec. 14. That any Federal reserve bank may receive from ai\y
member bank and from the United States deposits of current funas
in lawful money, national-bank notes, Federal reserve notes, and
checks and drafts upon solvent member banks of the Federal reserve
system, payable upon presentation; and, solely for exchange purposes,
may receive from other Federal reserve banks deposits of current
funds in lawful money, national-bank notes, and checks and drafts
upon solvent member or other Federal reserve banks, payable upon
presentation. Reserve banks shall not pay interest on deposits.
Upon the indorsement of any member bank with a waiver of
demand notice and protest any Federal reserve bank may discount
notes, drafts, and bills of exchange arising out of actual commercial
transactions; that is, notes, drafts, 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; notning herein contained shall be construed to
prohibit such notes, drafts, and bills of exchange, secured by staple
agricultural products, or other goods, wares, or merchandise from
being eligible for such discount; but such definition shall not include
notes, drafts, or bills covering merely investments or issued or
drawn for the purpose of carrying or trading in stocks, bonds or
other investment securities, except bonds and notes of the Govern­
ment of the United States and interest-bearing obligations of its
dependencies the principal and interest of which have been guar­
anteed by the United States. Notes and bills admitted to discount
under the terms of this paragraph must have a maturity at the time
of discount of not more than one hundred and eighty days: Pro­
vided, however, That not more than fifty per centum of tne paper
discounted for any member bank shall have a maturity exceeding
ninety days and in no case shall any member bank have more than
$200,000 of rediscounts having a maturity longer than ninety days.
Any Federal reserve bank may discount acceptances of member
banks which are based on the exportation or importation of goods
and which have a maturity at time of discount of not more than
six months and of acceptances based on domestic shipments of goods
and which have a maturity at time of discount of not more than four
months and bear the signature of at least one member bank in addi­
tion to that of the acceptor. The amount so discounted shall at no
time exceed one-half tne 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 re­
discounted for any one bank shall at no time exceed ten per centum
of the unimpaired capital and surplus of said bank; but this restric­
tion 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 and growing out of transactions involving
the importation or exportation of goods having not more than six




16

BANKING AND CURRENCY.

m onths to run or g r o w in g out o f the dom estic shipm ent o f g o o d s and
h a v in g not m ore tnan fo u r m onths to r u n ; but n o bank shall accept
such b ills to an am ount equal at any time in the a ggregate to more
than the p ar value o f its p a id -u p ana unim paired capital.
T h e F ederal reserve b oard m ay authorize the reserve bank o f the
d istrict to discount the direct obligation s o f m em ber banks, secured
by the pled ge and deposit o f satisfa ctory secu rities; but in no case
shall the am ount so loaned b v a reserve bank exceed th ree-fou rth s
o f the actual m arket value 01 the securities so pledged o r on e -h a lf
the am ount o f the p aid-u p and unim paired capital o f the m em ber
bank.
T h e rediscount by any F ederal reserve bank o f any bills receivable
and o f dom estic and foreig n bills o f exchange shall be subject to such
regulations as m ay be im posed by the board. T h e d iscou n t p r o v i­
sions o f this act shall be equitably extended to all o f its m em ber
banks by each reserve bank upon equal terms, and each m em ber bank
shall be entitled as a m atter o f righ t to the rediscount o f eligible
p aper to the fu ll am ount o f its capital stock upon the low est current
rate o f discount, and 110 m em ber bank shall be perm itted to discount
an am ount o f paper exceedin g the amount o f its capital stock except
upon paym ent o f a h igh er rate o f discount, the increase in rate o f
d iscount to be one per centum f o r an additional fifty per centum o f
discounts or part tn ereof and tw o per centum fo r all in excess. In
n o case shall a Federal reserve bank discount paper fo r a mem ber
bank in excess o f tw ice the am ount o f its capital stock w ithout special
authority bv the board.
O P E N -M A R K E T O P E R A T IO N S.

S ec. 15. A n y Federal reserve bank m ay, under rules and regu la­
tions prescribed b y the F ederal reserve board, purchase and sell in
the open m arket, either fro m o r to dom estic o r fo re ig n banks, firm s,
corp oration s, or individuals, prim e bankers’ bills, and bills o f e x ­
change o f the kinds and m aturities by this act m ade eligible fo r re­
discount, and cable transfers.
E v e ry F ederal reserve bank shall have pow er (a ) to deal in g o ld
coin and b u llion both at hom e and abroad, to make loans thereon,
and to con tract fo r loans o f g old or bullion , g iv in g th erefor, when
necessary, acceptable security, in clu d in g the h ypoth ecation o f inter­
est-bearing obligation s o f the U nited States: ( b ) to buy and sell
interest-bearing ob ligation s o f the U nited States and o f its depen den ­
cies when paym ent o f p rin cip a l and interest is guaranteed by the
U nited States, and bonds or warrants o f any State, cou n ty, or m u n ici­
p ality , or short-tim e interest-bearing ob ligation s issued by fo re ig n
governm ents, w ith a m aturity from date o f purchase o f not exceedin g
one year, such purchases to be m ade in accordance w ith rules and
regulations prescribed by the Federal reserve b o a r d ; ( c ) to purchase
fro m a member bank and to sell, with or w ithout its ow n indorse­
ment, bills o f exchange arising out o f com m ercial transactions, as
h ereinbefore d efin ed: ( d ) to establish p u b licly from time to tim e,
subject to review and determ ination o f the F ederal reserve board, a
rate o f discount to be charged b y such bank fo r each class o f paper,
w hich shall be fixed w ith a view o f accom m odating the com m erce
o f the cou n try and p rom otin g stability in business; and (e ) establish




BANKING AND CURRENCY.

17

accounts w ith other reserve banks, and w ith the consent o f the F e d ­
eral reserve board, to open and m aintain bankin g accounts in fo re ig n
countries and establish agencies in such countries wheresoever it m ay
deem best fo r the purpose o f purchasing, sellin g, and colle ctin g bills
o f exchange, letters or credit, and travelers* checks, and to b uy and
sell w ith or w ithout its indorsem ent, th rou gh such correspondents
o r agencies, bills o f exchange arising out o f com m ercial transactions
w hich have n ot exceedin g ninety aays to run and w hich bear the
signature o f tw o o r m ore responsible parties.
G O V E R N M E N T DEPOSITS.

S ec. 10. T h a t all m oneys now held in the general fu n d o f the
T reasury, except the five per centum fu n d fo r the redem ption o f ou t­
stan ding n ational-bank notes and the fu n d s p rovid ed in this act f o r
the redem ption o f F ederal reserve notes, shall, u pon the direction o f
the Secretary o f the Treasu ry, be deposited in F ederal reserve banks,
w hich banks shall act as fiscal agents o f the U n ited S tates; and there­
a fte r the revenues o f the G overnm ent shall be regu la rly deposited
in such banks and disbursem ents shall be m ade b y checks draw n
against such deposits.
T h e Secretary o f the T reasu ry shall, subject to the a pp rov al o f
the F ederal reserve board, fro m tim e to tim e a p p ortion the G overn ­
ment deposits am on g the said Federal reserve banks, in p rop ortion
to their capital stocK as fa r as p ra ctica b le: Provided, T h a t f o r the
purposes o f collection and tran sfer on ly the Secretary o f the T reas­
u ry m ay designate national banks as G overnm ent depositories.
NOTE

ISSU ES.

S ec. 17. T h a t Federal reserve notes, to be issued under authority
o f the Federal reserve board f o r the purpose o f m akin g advances to
F ederal reserve banks as hereinafter set forth and f o r no other p u r­
pose, are hereby authorized. T h e said notes shall be obligation s o f
the U nited States and shall be receivable f o r all taxes, customs, and
other public dues but shall n ot be held as reserves b v m em ber banks
o r by a reserve bank. T h ey shall be redeemed in g o ld on dem and at
the Treasury D epartm ent o f the U nited States, in the city o f W ash ­
ington, D istrict o f C olum bia, or at any Federal reserve bank.
A n y Federal reserve bank m ay, upon vote o f its directors, m ake
a pplication to the local Federal reserve agent fo r such am ount o f the
Federal reserve notes hereinbefore p rovid ed fo r as it m ay require.
Such application shall be accom panied w ith a tender to the loca l
Federal reserve agent o f collateral security in am ount e(jual to the
sum o f the Federal reserve notes thus applied fo r and issued p u r­
suant to such application. T h e collateral security thus offered snail
be notes and bills accepted fo r rediscount under the p rovision s o f this
act, and the Federal reserve agent shall each d ay n o tify the F ederal
reserve board o f all issues and w ithdraw als o f F ederal reserve notes
to and bv the Federal reserve bank to w hich he is accredited. T h e
said Federal reserve board shall be authorized at any tim e to call
upon a Federal reserve bank fo r additional security to p rotect the
Federal reserve notes issued to it.




18

BANKING AND OURAENOY.

W h en ever any reserve bank shall pay out o r disburse F ederal re­
serve notes issued to it as hereinbefore p rovid ed , it shall segregate
and turn over to its reserve agent g o ld coin or g o ld b ullion o r U nited
States g o ld certificates to the am ount o f the face value o f the notes
so outstanding, or, at its op tion , shall segregate and turn over to the
reserve agent g o la coin o r g o ld bullion or U nited States g o ld cer­
tificates to the am ount o f forty -fiv e per centum o f such face value
and in a dd ition thereto collaterals con sisting o f prom issory notes and
b ills accepted fo r rediscount under the provision s o f this act, o r re­
fu n d in g notes o f the U nited States hereinafter p rovid ed fo r, o r both
such ccdlaterals and refu n d in g notes equal at their face value to one
hundred per centum o f the race value o f the notes so outstanding.
S u ch collaterals m ay be exchanged from tim e to time fo r other c o l­
laterals o f like quality and o f equal face value o r re fu n d in g notes
w ith in the lim itations a foresa id : Provided, T h a t whenever and so
lo n g as such reserve shall fa ll and remain below fo rty -fiv e per centum
the reserve bank shall pay a special tax u pon the deficiency o f reserve
at a rate increasing in p rop ortion to such deficiency, as fo llo w s : F o r
each tw o and on e-h a lf per centum o r fra ction th ereof that the reserve
fa lls below forty -fiv e per centum a tax shall be levied at the rate o f
one per centum per ann u m : Provided further, T h a t no additional
circu la tin g notes shall be issued whenever and so lo n g as the am ount
o f such reserve fa lls below th irty per centum o f its outstanding n otes:
Provided, T h a t the am ount o f such tax p aid b y the bank d u rin g a
fiscal year shall be charged to the m em ber banks in its district in
p ro p ortion to their average discounts d u rin g that year. N otes so
p aid out shall bear upon their faces a d istinctive letter and serial
num ber, w h ich shall be assigned by the F ed era l reserve board to each
F ederal reserve bank. W henever F ed eral reserve notes issued
th rou gh one F ed eral reserve bank shall be received by another F e d ­
eral reserve bank they shall be returned p rom p tly fo r redem ption to
the F ed era l reserve bank th rou gh w h ich they were o rigin a lly issued.
N o F ed eral reserve bank shall p ay out notes issued th rou gh another
u n der penalty o f a tax o f ten p er centum upon the face value o f notes
so p aia out. N otes presented fo r redem ption at the Treasu ry o f the
U nited States shall be paid out o f the redem ption fu n d and snail n ot
be reissued except u pon com plian ce w ith the con d ition s o f an origin al
issue.
F ederal reserve banks shall m aintain on deposit in the Treasu ry
o f the U n ited States a sum in g o ld equal to five per centum o f such
am ount o f Federal reserve notes as m ay be issued to them and out­
standing under the p rovision s o f this act, and such additional sums
as the Secretary o f the Treasury m ay fro m tim e to tim e decide to
be necessary, n ot exceedin g in the aggregate ten p er centum , but such
deposit o f g old , w hich shall be segregated and m aintained as a trust
fu n d , shall be counted and included as part o f the reserve against
said notes. T h e said board shall gran t tne application o f any F ederal reserve bank fo r Federal reserve notes, provid ed said reserve
bank com plies w ith the requirements o f this act as to g o ld reserve and
collateral security and otherwise con form s to its provisions. T h e
bank shall be char