The Worcester spy. [volume] (Worcester, Mass.) 1898-1904, 1898-12-30
THE BANKING SYSTEM.

Whatever decision may be reached
with reference to the disputed
question as to whether United States
legal tender notes shall continue to
hold their place as part of the paper
currency of the country, it is certain
that the maintenance of some system of
bank issues win be Indispensable. This
system should without doubt, be under
federal control and should take such
form as to insure much greater elias
ITCHY than exists in the present Sys-
tenn, provided always that the security
of the issue shall be in no wise i'm
paired.
AS respects the method to be en-
ployed for attaining this needed in
crease in elasticity, it is believed that
the really successful one must involve
issuing some portion of the circulation
upon ordinary banking assets.
The chief reason for this, as already
indicated, is that such ordinary bank
ing assets are the only ones which are
universally and readily available when
expansion is needed. The superiority
of such a system is further insured by
the fact that there is a very close cor
respondence between the amount of
such assets in the possession of the
banks and the need of the community
for currency; since these assets, like
the need for money, vary in amount
1t may, however, prove impossible to
secure Legislation of the character de-
scribed. In such event, the existing
system of notes based on United States
bonds should be so amended as to give
to it as large measure of elasticity
as is possible. The provisions of the
law of 1882. which limits the amount
of notes that may be retired in any
one month, and prohibits reissue within
six months after retirement, should be
repealed.
AS already remarked, there is a real
need for increased banking and cur
rency facilities in the newer or more
backward parts of the country, and leg
islation could do something towards
satisfying this need. In the Judgment
Of your committee, the most effective
as well as the safest expedient for ac-
complishing this object, is some system
of branch banking similar to those in
vogue in Canada, Scotland and other
countries.
Under such system. banking facili-
ties can be furnished to communities
too small to support even the smallest
independent bank of issue; and capital
can he most cheaply and easily trans
ferred from districts over-supplied
to those needing it: while. at the same
time. the dangers of fraud or misnan-
agement incident to all banking. are
tar less serious than under a system of
small independent banks.
If, however. the apparent tendency
towards excessive concentration of cap
ital shall prove too strong an objection
to this system, other alternatives offer
themselves. A decision to permit the
issue of any portion of the circulation
upon general assets would greatly in
crease the banking facilities OF the
country districts; since the chief OBJ
stacle at the present time to the estab-
lishment of naional banks of issue in
such districts is to be found in the cir
cumstance that they could not afford
TO invest their capital in assets so UNI
productive as United States bonds An
other remedy for the difficulty in ques-
ton would be the exemption from the
federal 10 per cent tax on circulation of
such state banks as should comply with
the regulations of federal law and sub
NIT to federal supervision.
This change would, without doubt.
greatly increase banking facilities,
while, at the same time, it would prob
ably prove quite safe. Again, a lower
ing of the minimum capital for a ma
tional bank from present figure to 100000
or $25 600 would be better than nothing,
and would probably work no evil effect
of any moment,