New-York tribune., 1906-11-16
CREDIT CURRENCY PLANNED.
Bankers Reach Unanimous Agreement on Measure
to Relieve Financial Stnngency
WILL. RECOMMEND 1T TO CONGRESS
National Banks May Issue Credit Notes Not Exceeding Is Per
Cent of CapitaEProvions for Redemption and Security

: 20 per cent of it's capital shall have authority
to issue credit notes as follows. subject to the
rules and regulations TO be determined by the
controller OF the Currency:
(a) An amount equal to 40 pe:- -nt Of its
pond secured circulation, subject 10 a tax at
ule rale OF z1e per cent per annum upon the
average amount outstanding Provided that IL
at any time in the future the present proportion
OF the total outstanding unmatured United
states bonds 70 the total capitalization of all
going national banks shall diminish then the
authorized issue Of credit notes shall be in
cseased 70 correspondingly greater percentage
OF lLs bond secured notes.
GOD A further amount equal to 121a per cent
OF us capital subject TO a tax at the rate Of
per cent per annum upon the average amount
toned
The total of credit notes and bond secur.d
notes snail not exceed the capital.
RESEFeVE-The same reserves shall bs
carried against credit notes as are now required
by Jaw 10 be carried against deposits
j. GUARANTEE FUND.-The taxes provided
upon credit notes shall be paid in gold TO the
Treasurer Of the United States and shall con-
stitute a guarantee fund for the reclamation
of notes of failed banks and for the payment
OF the expenses of printing and the cost OF re-
dempt1on In order that the guarantee fund
may be ample from the beginning. any bank
making application to take out credit notes for
issue shall deposit with the Treasurer OF the
United States In gold amount equal to 5
per cent thereof. The unused portion OF This
initial payment shall be an asset OF the contrib
uttng banks respectively. and shall be refunded
from time TO time when this may be- done with
out reducing the guarantee fund below an
amount equal TO per cent OF the credit notes
taken out.
4. REDEMPTION.-The Controller OF IN.
Currency shall designate numerous redemption
cities conveniently located in the various parts
OF the country. Through the agency OF the
banks in such cities adequate facilities shall he
provided for active daily redemption OF credit
notes
s. The provision of existing law limiting the
retirement of bond secured notes to So O0DO OOO
month shall be repealed
o. All public moneys above reasonable work.
ing balance, from whatever source derived
snail De currently deposited from day to day in
national banks without requiring collateral Sc
cur1ty or special guarantee therefor but in no
case shall the balance carried with aDv banlr
exceed 90 per cent OF the capital thereof All
banks receiving such public moneys on deposir
shall pay into the United States Treasury inter
est thereon at the rate of per cent per annum
VIEWS OF BANKERS COMMITTEE.
James R. Branch. secretary Of the American
Bankers Association and secretary OF its cur
rency COMMITTEES. who has attended all the meet
| inss OF the bankers. made an explanatory state
| ment after the gathering adjourned giving the
opinion in popular language of the members OF
the bankers committee of the operations of tho
proposed bill This statement in part sets out
| the following:
The provision limiting the issue of credit notes
| TO 40 per cent OF the bond secured circula ton
| and not exceeding % per cent of the capital
| stock Is for the purpose of preventing any ten
dency by banks to sell government bonds nOv-
held 10 secure circulation. in order TO avail
| themselves Of the circulation Such action
| is taken because 1t is desired that the measure
proposed If enacted shall not tend 70 depress the
market for government bonds No part Of the
assets of banks are TO be specially pledged TO
secure the credit notes. but they are 10 be pro-
| tected by the same legal reserve now required
| against deposits-in reserve cities % per cent,
| and IN country banks 15 per cent The men,
bers OF the committee think that the claim OF
the credit notes of failed bank upon its assets
should not be given lien prior TO that OF the
depoSitors. but that the guarantee fund with the
addition of a pro rata claim upon the assets
with the depoSitors. would afford adequate pro-
lection. The members believe that the tax on
the note issues will create a guarantee fund
many times larger than necessary to meet the
notes of failed banks.
The committee of the Bankers Association
was made UP of representative financial men
from all over the United States. with A B. Hep
| burn president of the Chase National Bank OF
New York as chairman. while the committee
I from the Chamber Of Commerce was composed
OF Frank A. Vanderlip. of the National City
| Bank Of New York, and Charles A Conant. OF
| the Morton Trust Company Before adjourn
| ing finally to-day committee appointed,
| consisting of Mr.. Hepburn James B. FOrgan- OF
| Chicago and John L Hamilton. OF HOopeston.
ILL., TO draft bill for presentation to Congress
| which will embody the ideas expressed IN the
statement made public by the COMMITTEES OF
| bankers to-day. This committee will confer
with Chairman Fowler OF the House Currency
| Committee. Controller Ridgely and other Treas
ury officials in the preparation Of the bill