The Washington herald., 1906-11-14

The proposition to issue a bank circula-
ton upon approved securities other than
United States bonds was rejected yester-
day by a vote of the currency commits
sion OF the American Bankers Associa-
tion, now holding sessions IN Washington
This action practically sounds the
death knen Of a plan for relieving cur
rency stringency which has had many
advocates among the hnanciers Of the
country for the past ten years.
Fhe method of using municipal, street
railway. or other bonds approved by COM
potent authority as the basis of bank cir
culation. in leu OF government securities,
has been strongly advocated by many
bankers Of the American association.
II was one of the propositions referred
10 this commission to be considered in its
efforts 10 solve the currency problem.
The vote Of yesterday is its answer, and
probably decides the question for all time
IN this country, OF until such time as
there are no government bonds to serve
as security for bank circulation.
At the close of the session yesterday
afternoon il was stated that about two
thirds of the business 90 come before the
commission had now been disposed Of
Though much has been accomplished. IL
Is feared the commission may be COM
PEELED 10 adjourn without reaching a set
Element. In this ease a meeting would
probably be called later TO decide upon
definite plan of currency reform to be
presented to Congress at the coming
session
Consider Graduated Tax.
Among the other Important subjects
taken up yesterday by the commission
was that of the graduated tax 10 be inn
posed upon credit or emergency circula-
ton, If this should be decided upon. This
proposition, as it came from the legisla-
tive committee of the Bankers AssOCia-
tion, was that such tax should be levied
upon emergency circulation for time
specified by the national commission ~
the rate of 8 per cent per annUm In addi-
tion, If any bank failed To redeem its Cir
culation within the time specified or 10
pay its allotment Of tax. a tax at the rate
Of per cent per annum should be imposed
for each week the bank should be in ar
rears. This subject was referred 10 @ spe-
cial committee for consideration, com
posed Of T. A Vanderlip, James 3. For
gan, and solomon WeXier. Other ques-
tions correlated with this subject will be
taken uD by the committee and later sub
mitted TO the commission in q report
This subcommittee viii also determine
the status OF bank reserves to be used in
different parts of the country under vary
ing conditions.
The Chamber of Commerce Of New
4+-A-
subject, suggested that the proceeds Of
this graduated tax should pass inJo Jhe
hands of the government and should con-
stitute a guaranty fund for use i'm the
redemption OF the notes of failed banks.
Could Invest Excess IN Bonds.
If the taxes yield d sum more than
adequate for this purpose. the Secretary
of the Treasury should be given authority
10 turn the excess into the general fund
of the Treasury and TO invest a certain
proportion Of the fund in government
bonds. II has been the experience of
the bankers that this guaranty fund
would be more than adequate for the
purpose. The guaranty fund would be
used as a sinking fund.
The question whether notes issued by
the national banks should have first lien
on securities was before the commission,
and the decision that they should not was
passed The general opinion seemed to
De that the bank notes should have an
equal show with all other means Of
circulation
It was believed that better system
would be TO issue the notes on a general
banking credit The commission voted
against any segregation of assets as Sc
cuTities for the note issues. A system of
credit notes is now in use in Scotland
Great Britain and Germany. and other
countries was considered
Consider Note Redemption.
The commission also devoted some
time yesterday to the consideration Of
ample redemption of government bank
notes, The clearing house proposition
FOR redemption was also taken uD and
many were in favor OF this system With
clearing houses established for redemp-
tion, it was argued, there would be less
strain on the banks when there was a
stringency in the money markets of the
country
1t is possible that to-day s,ibcon-
mittee will be appointed TO consider many
of the general details which have been
brought before the commission.
While perfect harmony has acconpanied
the meetings of the commission, most Of
the time has been devoted to discussion
Of the principles and plans for a more
elastic currency II is evident. however
that none Of the plans as a whole. sub-
United up 20 the present time, or which
viii be submitted, win be accepted by tba
commission. Each Of the ideas suggested
is receiving careful consideration and
by extracting the best points and the best
systems from the various plans. the com
mission hopes TO solve the currency
problem in such a way that there will be
no doubt that a bill enbOdying the com
missions views would be acted UpoD
faVorabiy by Congress
sweeping Reform Not Favored,
As far as q sweeping currency reform
IS concerned. the members do not look
upon It with favor IN the first place
those who are advocating an extensive
change Of the present laws are aware
that it would be a hard matter TO have
the plan accepted by Congress without
great modification.
Members of the commission are inclined
TO compromise upon a currency reform
which viii be effective in its purpose and
at the same time receive favorable atten-
lion from the legislators
To q certain extent there is a differ
ence OF opinion among the members Of
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