The Worcester spy. [volume] (Worcester, Mass.) 1898-1904, 1898-12-06

!
Canada, with its 9S central banks of
issue, as compared with 5000 scattered
national banks i'm this country, fur
nishes the only exception to this rule.
/ Fourth-The necessity of the prefer
! ence under any such system in this
country to give security and credit to
the notes, demonstrates that it is the
depositors of the country, and not the
banks, upon whom the great weight
of the guarantee of the note issue must
fall.
Fifth A farer system would pro-
vide that when a receiver took charge
of an insolvent bank he should not first
pay into the general redemption fund
held by the government an amount de-
rived from the assets of the bank suffi-
cient to pay the note holders in fun
before paying anything to depositors
but he should pay into the fund that
rata share of the proceeds derived
from the assets which should go to the
note holders, not as preferred creditors,
but as creditors in the same class as
depostors.
"The tax upon the solvent banks for
the currency privilege should not, then,
be limited to not exceeding / per cent
per annum of their annual note issue,
or in any other amount, but should be
made sufficiently large to provide for
the deficit, whatever it should prove to
be.
Sixth If, under such a system,
owing to causes to which we have re-
ferred, the tax upon the solvent banks
would be so large as to render the issue
of such currency Improbable and I'M
attractive to the banks, it would be a
demonstration of the radical difference
in the environment and condition Of our
banking system as compared with the
more centralized and older systems of
Europe. 1t would be a. demonstration
of the fact that under the proposed
Legislation, while the banks would take
the profits upon the circulation, the
depositors would take the bulk of the
losses.
TT would be conclusive demonstra-
ton of what We believe to be the fact
that, under our banking system as at
present organized, the absolute safety
of notes secured only by commercial
assets and issued to the extent pro-
posed in these plans can be secured
only by resort to a grave injustice upon
depositors, which can not be justified
upon any grounds of public policy.
Seventh. Such a system of uncOv-
cred notes as this proposed, providing
for a preference of the note, holders
over other creditors. would interfere
radically with the more important func-
tions of national banks to which the
note issuing function is secondary and
subordinate
This would be against public policy
and would operate against banking in
the smaller communities, and in the
western, southern, and central portions
OF our country.
Eighth. The government of the
United States is not in such straits, in
connection With it's present currency
system, as to compel it to enter into
plan of currency changes by which
it in effect sells extended and Valua-
BILE currency privileges to the national
banks of the country in exchange for
assistance from them in meeting its
present governmental currency obliga
tons payable in gold.
Ninth. If the present conditions of
governmental currency demand re-
forms, to secure which will entail cost
it is better for the government as the
representative of all the people, and
under all the circumstances connected
with our banking system, to pay as
ascertained and exact cost direct than
to endeaVor to evade it by granting
extensive currency privileges to banks
which of necessity must reimburse
themselves from the community and
the depositor class for any cost which
they incur in assuming the burden Of
gold redemption or maintaining the
credit of their notes.
The comptroller then discusses the
question of the elasticity needed in
bank currency, commenting upon the
great elasticity of the check and draft
circulation of the country
The comptroller, under the head of
Limitation of loans" urges an amend
ment to section 5000 of the national
banking law by which he viii be given
power to enforce a personal penalty for
infractions Of the law prohibiting ex-
cessive loans, something which the law
does not at present give. He then re-
cOmmends an amendment which Will
allow the banks of larger communities
to have more nearly the privilege Of
loaning a given per cent of their assets
to one individual, which now belongs,
under strict compliance with the pres
ent law, to the banks of the smaller
communities.