The Birmingham age-herald., 1906-11-16
Bankers Submit Plans fo
 Elastic Currency
NOTES SUBJECT ID 4 TAX
Report Is Unanimous and the Commit. tee Says That Some Changes In the Present System Are
 Imperative.

| Washington. November 15.=-The plan of
 currency reform agreed upon by the conn
 mittees of the American Bankers asso-
 e..~s.a and .he New York Chamber of l Commerce, upon which they have been
 at work for four days. was made public
 today.
 The committee was made up of repre- | sentative financial men from all over the | United States, with President A. B. Hep burn of the Chase National bank of New
 York, as chairman. The chamber of l commerce committee was composed of | Frank A. Vanderlip of the National City bank of New Y YorlI and Charles A Con ant of the Morton Trust company The conclusions reached were unanimous and will be submitted in the form of a re- port to the members of the American Bankers association.
 Before adiourning today. committee was appointed consisting of Mir. Hep burn, James R. Morgan of Chicago. and John l.. Hamilton of Hoopstown. Ill.,, to whom was intrusted the drafting of bill for presentation to Congress, which will embody the ideas Of the bankers | committee.
 Issue Credit Bank Notes. The plan agreed upon contemplates the issue, under government supervision. of credit bank notes by national banks. equal to 40 per cent of their bond se- | cured circulation. subject to tax of 2lA per cent per annum: an automatic
 increase of credit notes under certain conditions; q further issue of credit notes equal to 12ia per cent of banks capi- tai at a tax of per cent per annum ! the establishment of a guarantee fund ! for the redemption of credit notes; re- pealng the existing law limiting the
 retirement of bond secured sfnotes to
 $3,0OO.0OO per month, and the deposit of 1 all public moneys above reasonable work 1 ing balances In national banks, without collateral security. on which the banks are to pay per cent
 Unanimity of Opinion. ! In the report. the statement is made that there Is unanmlty of opinion that changes in the existing bank note sys- tenn are imperatively required and that the present volume of bank notes is wholly unresponsive to the demands of commerce It does not, the report says. expand with the need for currency in the crop moving period, causing string ency nor contract when the uses for currency are less extensive, causing re- dundancy. Banks are under the necessity of parting with their reserve money to supply the demand for currency at eer- tain seasons, although that demand would be quite as we'll satisfied if banks could supply their credit notes instead of de- pleting their reserve and causing con tra ctiou injurious to business.
 gro meet this situation the national banking act, the report says, should be so altered to permit under ample safe guards the issue of credit bank notes which would automatically adjust the volume to the demands for currency. The report sets out q series of principles which are believed to underle "a correct solution of the currency. and says:
 "We therefore unanimously recommend the enactment into law of the following:
 Recommendations by Committee.
 .F'irst credit bank n0tes-any national bank having been actively doing business for one year and having surplus fund equal to twenty per cent Of it's capital. snail have authority to issue credit notes as follows:
 Subject to the rules and regulations to be determined l-y the comptroller of the currency.
 "(O An amount equal to forty per cent of it's bond secured circula tion; subject 10 s tax al the rate of 2]a per cent per an- mum upon the average amount outstand- ing. Provided that if at any time in the future the present proportion Of the total outstanding unmatued United States bonds to the total capitalization of all national banks shall diminish, then the authorized issue of credit notes shall bo increased to 2 correspondngly greater percentage of it's bond secured notes.
 n cent of its capital. subject to tax at the rate of five per cent per annum upon the average amount outstanding, in excess of the amount first mentioned The total of credit bond secured notes shan not cx- ceed the capital
 Second reserve The same reserves shall be carried against credit nors as are now required by law to be carried against deposits.
 Third guaranty fund:-The taxes pro- vided upon credit notes shall ba paid in gold to the treasury of United States and shall constitute a guaranty fund Of the re- demption of notes Of failed banks and for the payment of expenses of printing and the cost of redemption. In order that the guaranty fund may be ample. any bank making application to takc out credit notes for ssue shall deposit at the treas rry in gold an amount equal to five per cent thereon. The unused portion shall
  spectiycly and shall Dc refunded from time to time when this may be down without reducing inc guaranty fund below an amount equal to ; per cent of the credit notes taken out
 "4 Redemption: The comptroller shall designate numerous redemption cities conveniently located in the various parts of the country.
 ''J The provision of existing law limit ing the retirement of bond-secnred notes to $I,0oO@0 per month shall be re- peated.
 'G. All public moneys above a reason able working balance shall he currently deposited from day 10 day Tn nauonai ba nl<s without requiring collateral secur- | fty or special guaranty therefor, but Tn no case shall the balance carried with any bsnl exceed 51 per cent of the cap- ! fla, thereof All banks receiving such ni.bli, moneys on deposit shall pay into 1 inc United states treasury interest there i on at the rate Of per ccnt per ann,m. CONTINUED ON PAGE 1l