The Montgomery advertiser., 1906-11-18

will afford adequate protection for the notes, and 1t is not necessary to im- pair the share of the depositor in the assets of failed bank by giving pref- erenee to the holder of A note.
 Measure of Conservation.
 "Another measure of conservatism proposed In order to prevent the issue of notes by weak banks when the notes might not be required by legiti- mate connmercfaIA conditions, is that no bank shall have the power of issuing the new notes which has not Q surplus of 20 per cent and which has not been in operation for at least one year.
 'Srhe tax upon the new issue of notes at the rate of Ia per cent per annum Is to be paid semi -annual- Iy to the government and and will form a guarantee fund out of which the government will promptly redeem the notes of failed banks and will pay the cost of printing, etc.
 'In the case of failure of bank its notes will be at once redeemed by the government.
 "The commission is confident that the tax proposed will create a fund many times larger than the demand upon 1t to meet notes eof failed banks but it recognizes that in casS of faiI- ure of several issuing banks imfnedi- ately after the passage of the law and before any considerable amount had been paid into the guarantee fund, the fund might be insufficient temporal rily to meet demands upon 1t. To guard against such c contingency bank shall, on applying for new cur reney at once pay into the tpsastfy 20 per cent of the amount applied for, the contributions by each bank of this special fund to remain as part of it's assets to such an extent as it is un- f,..rr kzy Fn V1ah hn fla. ficiency in the guarantee fund. As the guarantee fund grows, through the natural operation of the 2 1-2 per cent tax on outstanding circulation the spe- ciaI $ per cent contribution will be returned to the contributing bank.
 Additional Bank Issue.
 ''In addition to the fight to issue cent of the capital of the bank and related to the outstanding bond se- cured circulation, as I have said. before any bank may issue an additional twelve and one-haIf per cent. of notes, such issue to be subject only to' a tax of five per cent. per annhm and sub ject to the same reserve regulations. but shall beare no relation to the amount of bond secured currency
 It is provided, However, that no bank may issue an amount of bond secured and additional notes that will in the aggregate exceed its capital. so that the total amount of bank notes authorized will not exceed the, amount authorized under the present law.
 In view of the high tax and the re- serve required against these notes, there will be no profit In tho issue of these notes unless rates for money are very high. The means for securing prompt and frequent redemption of the new notes involves provisions for re- demption bureaus connected with the clearing houses located at convenient points throughout the country, and such redemption centers will be so nu- merous that there will be a redemption point conveniently near every national bank While the burden of the redemp- tion Is to rest upon the banks them selves the rules and regulations gov- erning such redemption are to be es- tablished by the comptroller of the currency"