The Washington times., 1903-12-07
ELASTIC CURRENCY
THE COUNTRY'S NEED
Comptroller Ridgely's Plan
for Insuring 1t.
MORE LATITUDE FOR BANKS
Circulation Should Be Extended Beyond
Amount Of Notes Covered by
Deposit Of Bonds.
MORE LATITUDE FOR BANKS

Issue Of a part Of the notes Of national
banks uncovered by the deposit Of bonds
is the recommendation made by Comp
troIler w. B. Ridgely in the annual
report Of the Comptroller of the Cur
rency. rs the safest simplest. and most
practical way TO secure elasticity in the
eountry,s ba1kznote circulation
The one serious defect in the currency
system. Mr. Ridgely holds, is the fact
that the variation in the volume OF
the currency, instead of responding 10
the demand, depends on the market
price of bonds. Until our bank-note
circulation is made automatically to re-
spond to demand for currency for daily
cash transactions. without reference TO
the price of bonds he says. sit will
never be entirely satisfactory or eff
cient
Great Increase in Volume.
The report says the most rfotable fact
/ in regard to the national bank circula-
j ton is the great Increase in its volume.
which reached 81 -. 4s9 on September
] 5. 1896, the largest amount ever in cir
/ culation 1t is 55.4s per cent OF the ma XII
mum possible circulation, which Is
higher than this percentage has been
since 1856. Just as the circulation vas
reaching its maximum and the demands
+ for bonds advanced their price. the de-
post OF lawful money 10 retire cir
cuIation. which had been light FOR
months. suddenly Increased and in the
latter half Of September applications
! were received taking up the maximum
OF Ss.0eeeeo per month for as far ahead
as December This state of things. Mr.
( RidgeIy- holds. is a strong illustration of
the fact that the volume of currency,
depends on the market price Of BOMBS
Public Confidence.
i Comptroller Ridgely attributes the
fact that there has been so little sroublc
with bonds and so little disturbance of
business during the year. although the
strain due TO a great decline in the
market prices of all classes of securi-
ties was severe. to the confidence Of the
people. II. there had been the slightest
doubt as 20 the monetary standard or
any Of the currency In circulation,
grave crisis would have resulted.
There have been. considering all the
circumstances. fewer bank failures than
might have been anticipated says the
ComntrolIer As a rule. the reports
of the bank examiners shows the ma
tional banks TO own very few stocks.
and almost none of a very speculative
character"
/ The Comptroller renews the recon-
tmendations of his 1902 report for legis-
lation in regard TO liquidation and con-
solidstion of national banks and ex-
{ tension OF corporate existence He says
the necessary method of effecting con-
solidation under the law as it now ex-
lists is inconvenient and cumbersome
Attention is again called to the fact
: that the national bank act does not
sufficiently protect the rights of minor
: ity stockholders on the question of ex-
= tension Of expiring charters, and action
by Congress is urged.
Increase in Resources.
Comparing the detailed statement o.
, the resources and liabilities OF all the
national banks of the United States with
that for September To- 1902. it is snowr
E there has been an increase in numbe
! OF banks reporting of All and a net in
= crease Of S196. 50l, e53S7 in aggregate re
[ sources The increases or the prineipa
] items of resources are as follows: Loan.
: and discounts, S2O1, S19, 291; United State
bonds, $65, 7e9, $50; specie $31 zee. 0i7 90; le
= gal tenders, S14 992, 241.
e February .. 1903, the national banking
h system had been in operation fort,
years, and up to October 81 of this yea
= 1923 national banking associations Ia,
e this number have been chartered sine
: the act of March Il, 1890, went into ef
a feet This gave great impetus TO tn
tons