The times. [volume] (Richmond, Va.) 1890-1903, 1902-01-19
BOND ISSUING
BANKING SYSTEM.
Plan to Relieve Financial
Situation by Plan Of
Associated Banks.
BY w. NJ. HABLISTON.

" ? e
By w. NJ. HABLISTON.
president Of the National Bank of Fir-
GINA, Richmond, Va
The plan is practically branch sys-
temo banking. with the power of a cur
rency bond issue.
Every nation Of importance, except
this has in successful operati n The
branch system Of banking.
The system was first introduced into
Scotland
Before its introduction into Engllnd,
between 1888 and 1926, there w,re ever
200 bank failures. and only one IN Scot
land anu that one paiG as obligations in
full.
The system was first introduced into
England, and gradually aWalganated
the independent banks.
In the great panics of 1SS7-SS over 1000
banks in this country failed; in England
and Scotland. with the connected sys-
tenn OF banking, rot one.
In 1857 another great panic occurring
here. with a commercial crisis abroad.
nearly every bank in this country failed;
in England and Scotland not one.
In 1873 another great panic caused
great many failures in this country; in
England and Scotland Only one-tEe City
of Glasgow Bank, which was caused by
fraud.
In 1S90-93 another financial crisis caused
many banks to fail in this country. an6
although the crisis was brought about by
the Barings' failure, an English firm,
not one in Great Britain.
Mr. A. e. Sticlney. president of the
Chicago Great Western Railroad, before
tho American Bankers Association laSt
October, said:
would that had the ability to arouse
the American people to the Importance
of banking system.
TN panic after panic they have suf-
fered but their minds seem to be pos
sessed with the fatalism of TIE Turk-1t
it the will of Allah But | say that It is
not the will OF God which produces
panics. History abundantiy proves that
srcI, panics as occurred in this country
In 1897. 1857, 1873 and 1893 arc prcventable
by d known system.
To relieve our financial situation the
present banks must associate themselves
ogether The ind pendent sc hstness
OF the individual banks are their menace
To-Day instead of presenting United
front, their individual action is one OF the
greatest meIlaces of the situation. Inc
scramble of one bank to build up its re-
serve at the expense Of another bank
brings about the very thing they try to
nrevent. United the banks stand. Dir
yided they fall. United they present
soiiC, front, moulding public sentiment
Divided they create disturbance. Let ths
banks associate thu mselVes together sim
ply to make general rules and fesS'sa-
tons to insure conservative banking alin
to provide for the issuing OF an eid7'ic
credit obligation
Tet them organize a company to Issue
and guarantee bonds secured by the as
sets of the banks. The company 10 OF
2 depository for securities.
The associated banks to require ali
hanks in the association to be SUBJECT |"
examination, the examiners to be EN-
plove6 by the association, the expense
Of the examination to be paid for by the
banks.
| The banks in each state to form a Stat
Association. the state Association to elect
delegates to a National Association, the
National Association to make the genera
rules and regulations governing the asso
ciated banks.
Banks in the association, subject to It's
rules and inspection, to be allowed 10 Is
sue bonds bearing one per cent lnteresi
to the extent of their capital stock, upo'
depositing with the company securities
Bonds to be issued only to the extent o
| seventy-dve per cent of the market Fd!t''
| of approved bonds and approved stocks
ana 10 only seventy-tlve per cent. of ap
rroved negotiable paper. The company L"
| issue BONDS to no one bank over five pc
cent of its capital stock on any on
! security or any one line of paper, eXcep
| of government, State and municipal bonds
Bonds can be issued to the par Valu'
| against United States Government, State
| and municipal bonds.
All bonds issued shall be guarantee
| by the company issuing the bonds aho
| the bank for whom issued. ana be re
| deemable in cash with one per cent. IN
| ty,f
| The company to have the right to cali
| for additional collateral whenever th'
market value Of the securities IS I'M
| paired.
| THE securities shall be inspected twice q
| wear bv a committee appointed by thu
! associated banks. Th:s committee shal
| have the power to order any security to
| be changed for securities acceptable u
( said committee
Bonds from 81 to $50 to bear no interest
| for a fraction OF year
Bonds from $50 to $500 to bear no inter
est for g fraction OF q month.
Bonds from $500 and over to GEAR no IN
terest for a fraction OF q month.
The rules governing the issue or bonds
shall be those governing the issue of bank
notes by the United States Government
In addition to the expense of redemption
and printing, the banks owned and cor
troIel by the company shall pay one-hasf
per cent. per annum on the par value oil
zach bond to the company for holding
| the securities and guaranteeing the bonds.
| The plan outlined has a great many
features to recommend it above the ordl-
nary method OF Issuing bank notes. The
| bonds unlike unsecured notes, which
p;ArK ANN pINU