Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1906-11-16
Banks TO Issue bills IN 60 80 Per
Cent of Bond-secured CircuIR-
ton Subject 70 Tax of
21-2 Per Cent.


Of Hopeston, H., to whom was instructed
the drafting OF a bill for presentation to
congress, which will embody the ideas ex-
pressed in the statement made public by
the committee Of bankers today.
The plan agreed upon by the two COM
mittees oontemplates the issue under guv-
eminent supervision of. credit bank notes
by national banks equal to 40 per cent of
their bond-secured circulation, subject to
a tax Of ~ per cent per annum; an auto
matte increase Of credit notes under GER
tain conditions; further issue of credit
notes equal to 1914 per cent Of a banks
capital at a tax Of per cent per annm;
the establishment Of a guarantee fund for
the redemption Of credit notes Of failed
banks; provision for active daily redemp-
ton Of credit notes; repeating existing
law limiting the retirement Of bond-secured
notes to $S,000.00O per month, and the de-
post of all public moneys above reasonable
working balances in national banks with
out collateral security, on which the banks
are to pay per cent.
Demand for Elasticity.
In the report addressed to the members Of
the American Bankers association the
statement is made that there is unanimity
Of opinion that changes in the existing
bank note system are imperatively required
and that the present volume of bank notes
is wholly unresponsive to the demands of
| commerce. 1t does not, the report says,
expand with the need for currency in the
crsp moving period, causing a stringency;
nor contract when the uses for currency
are less extensive, causing redundancy
To meet this situation the national bank
ing act the report says. should be so al
tered as to permit under ample safeguards
he issue of credit bank notes. which would
automatically adjust the volume of the de-
mands for currency.
The report sets out series Of principles
which we're agreed upon by the bankers and
which they believe underlie "a correct So
/ luton Of the currency problem so far as il
! relates TO the issue of Nbank note cur
rency.
Text OF the Report.
The report says:
We therefore unanimously recommend the
| enactment into law of the following hav-
| Ing the firm conviction that thereby will be
| provided a bank note currency, safe beyond
/ peradventure and automatically varying in
volume as needs of commerce vary.
| First-Credit bank notes. ANY national
bank having been actively doing business
/ Tor one year and having a surplus fund
equal to 20 per cent of its capital, shall
| nave authority to Issue credit notes as fol-
| lows, subject to the rules and regulations
TO be determined by the comptroller of the
| currency
tals An amount equal to 40 per cent of its
| pond-secured circulation, subject TO a tax
| az the rate of 2lS per cent per annum upon
| me average amount outstanding; provided,
! that II at any time in the future the pres
| ent proportion of the outstanding unma-
| tured United States bonds TO the total cap
| ltalzauon OF all national banks shall d.
minish, then the authorized issue Of credit
| notes shall be increased to a correspond
lngly greater percentage OF it's bond-se-
| cured notes OBJ A further amount equal TO
! l2lR per cent Of its capital shall be sIbiact
! TO tax at the rate of per cent ner an
mum upon the average amount outstanding
/ in excess OF the amount first mentioned
/ The total Of credit notes and bond-secured
] ~"t eNcood the capital
~, s,llS.5 Heserye-The same reserves shall
De carried against credit notes as are now
posits. "ss'"s' ue-
warranty Fund Provided.
Third-Guaranty Fund-The taxes pro-
vided upon credit notes snail be paid I'm
gold TO the treasurer of the United States
ana shall constitute guaranty fund for
the redemption OF notes Of failef banks and
for the payment Of the expenses of prIntinE
and the cost of redemption IN order thai
the guaranty fund may be ample from the
beginning any bank making application In
take out credit notes for issue shall de-
post with the a ca urer OF the 4 nited States
~ golo an amount equal TO 5 yer cent
thereof. The unused portion of this paw
ment shall be an asset for the contributing
banks respectively, and shall he refunded
from time to time when this may be done
without reducing the guaranty funds to be-
low an amount equal to per cent of the
credit notes taken out.
Observation-Disclosures comptroller OF
lie n-.nerOus re-
demption cities, conveniently located in the
various parts Of the country. Through the
agency of the banks In such cities adequate
facilities shall be provided for active daily
redemption OF credit notes.
tillu-Ihe provision OF existing law lm-
iting the retirement Of bond-secured notes
to $3,OVO,00O per month shall be repealed.
Sixth-A1l public moneys above n reason
able working balance, from wha tever source
derived shall be currently deposited from
day TO day in national banks, without re-
curing collateral security or special guar
anty therefor but in no case shall the bal
cent Of the capital thereof All banks re-
ceivins such public moneys on deposit shall
o.. .el o,atas treasury inter
annum.
Branch Explains Bill.
James Il, Branch, secretary of the
American Bankers association and secre-
tary OF its currency committee, made an
explanatory statement Nafter the gathering
adjourned giving the opinion in popular
language Of the members OF the bankers
committee OF the operations Of the pro-
posed bill. This statement in part sets out
the following;
The provision limiting the issue of credit
notes 10 40 per cent OF the bond-secured
circulation ana not exceeding IS per cent
OF the capital stock is TOR the purpose oI
preventing any tendency BY banks to sell
government bonds now Held TO secure cir
culation in order 10 avail themselves OF the
new circulation, such action Il taken be-
cause Il IS desired that the measure pro-
posed, n enacted, shall not tend to depruss
the market for government bonds. No part
OF the assets or banks are to be specially
pledged TO secure the credit notes, but they
are 10 be protected by the same legal re-
serve now required against dcposits-in re-
serve cities IS per cent and In country
banks 10 per cent. The members OF the
committee think that the claim OF the
I a "a failed - Z.
sets should not be given a lien prior "a
that Of the depOsltors, but that the guar,
anty fund, with the addition OF a pro rata
claim on the assets with the depOsitOrs
would AFFORD adequate protection. The
members believe that the tax on the note
issues will create a guaranty fund many
times larger thar necessary 10 meet the
notes Of failed banks.
Final adjournment of the committee v,aj