The representative. [volume] (St. Paul, Minn.) 1893-1901, 1896-06-03


that of the other on the same capital, and
should be compelled to pay he commu-
nifty where it is located some considera-
tion for the revenue drawn from them;
but the law prohibits it,
Thus we see, while these regulations
are drawn in the words of fairness they
really favor the bankers every time.
These lnadvertencies are all in the bank
er's favor-all FOR the banks.
CHAP. w.
REGULATION OF THE BANKING
BUSINESS.
Reserve cities are required to keep on
hand at all times, in lawful money of the
United States, sum equal to twenty
hve percentum of the aggregate amount
of deposits, and every other association
an amount equal to Is per cent Of it's ag-
gregate deposits"
The above seems positive enough, and
certainly hazardous enough, for the de-
positors, and is generally obeyed.
The next section, however, says:
whenever such banks do fall below the
requirements Of the preceding section,
they shall make no new loans except
bills of exchange payable at sight, nor
make any dividends until the required
proportion is re-established; yet, ST.
Louis, for five out of nine years, was re-
ported below the required reserve
The reserve may consist of balances
due to an association from associations
approved by the comptroller of the cur
rency, clearing house certificates of any
clearing house association, the five per
cent redemption fund, and certificates is
sued by the secretary of the treasury;
all the above, for the purpose of reserve.
are counted as lawful money, which
would seem to contribute very largely
to the elasticity of money. What is to
hinder two or more banking associations
short on this reserve from swapping bal
anceS to cover three-ffths of their re-
serve-that is to say, Does bank gets a
balance Of $4,000 due to Roe's bank, and
Roe's bank gets an equivalent balance
due to Does bank. This would comply
with the law, and the other matter,
make up the balance Of fifteen thou
sand reserve, which would keep out
100000 in circulation. That every &C
commOdation in a reserve line seems to
go the banks way, and thus they are
permitted to count as lawful money
among themselves what with the people
at large is no money at all
How useful this banking system has
become as a crypt for financial legisla-
ton, 1t is only necessary to cite proviso
to Sec II, Of the act of July IL, 1882:
''Provided That the secretary of the
treasury shall suspend the issue of gold
certificates whenever the amount of gold
coin and gold bullion in treasury re-
served for the redemption of United
States notes falls below 100000, OO0." It
is needless to add that this is the nearest
tn Ia for
on the statute books.
An act, to provide for the resumption
of specie payments, was approved Jan.
IA, 1875, which provides that whenever
the national bank currency was in
creased, the secretary should retire and
redeem Legal tender United States
notes to the amount of eighty percentum
OF the national bank notes so increased"
and he should continue such redemption
until there shall be outstanding the sum
OF S30O,00O,0 600 and no more
Then, "On the first day of January,
1879, the secretry of the tresury shall re-
deem, in coin, the United States legal
tender notes then outstanding, on their
presentation for redemption at the office
OF the assistant treasurer in the city OF
New York, in sums OF not less than fifty
dollars
1t will be seen by the above just how
gleenbacks were to be contracted 1t
was to be done at the instance and re-
quest of the national banks In adj the
history of our financial legislation, not
single person outside the banking frater-
nifty requested this contraction of the
green backs. The banks wanted to get
them out of the way simply to make
room for their notes. The immense con-
80 o.
notes and other kinds of paper which cir
culated as money, had caused the people
to clamor for more money. Congress
passed a bill to increase the greenbacks,
but Grant vetoed it. The banks under
took this way to supply the deficiency.
The aggregate circulation of all the ma
tional banks had been limited to 1884,
100000. This act contracting the green
backs repealed section SIT of the re-
vised statutes, and the banks had it, as
they supposed, safe.
Before, however, the amount was re-
duced to the required 5000, 100000, the
people rose, and in the fall of 1878 the
vote Of the Greenback party rose to L.
400, 900 votes, and contractor was stopped
when $346 6S1 ,016 of greenbacks were
outstanding The above clause provides
for absolute redemption. 1t was under
the Law of Jan IA, 1875, that the redemp-
ticn clause crept in on the back of the
greenback, by order of John Sherman
secretary of the treasury.
This last clause is limited in two ways;
first, no greenbacks could be redeemed
in coin until those outstanding fell be-
low $3O0,000,000, and, second not even
then until Jan. l, 1879. When these
limits as to amount and time were not
reached, the same section 3, act approved
Jan. IA, 1875, provided that the "secre-
tary of the treasury might use any sur
plus revenues from time TO time not 9TH
erwise appropriated for the redemption
of green backs, and to issue, at not less
than par In coin, bonds described in the
act approved July Ia, 1870"
1t will be seen from the above that
such thing as the $100 100000 geld re-
serve fund has no law to back it, Cleve-
land and Sherman both admit 1t and were
it not for this provision above quoted at
tached to section II, act approved July
II, 1882, the $1O0,OOO,O0o gold reserve
would never have been heard of.
REAL ESTATE
The next regulation for us to consider is
the one which provides that except for
it's necessary accumulation for the trans
action of business no bank shall acquire
and hold real estate, except where it is
mortgaged to it, to secure debts pre-
viously contracted. such as shall be con-
yeyed to it in satisfaction of debts pre-
viously contracted in the course of it's
dealings, and such as it shall purchase
at sales under judgments, DEGREES as
ha1 NV a or