Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1906-12-09

posed changes in the currency
law:
- The new currency plan, If that
is wnat It can be called. is g COM
recent meeting of the American Bank
ignated by the New York Chamber Of
Commerce 10 consider the same uimculL
subject, reached an unexpectedly speedy
agreement, IL Is proposed that any national
bank, which has been actively In business
for one year or more and has a surplus of
at least 20 per cent. may issue credit notes
lation, subject TO a tax thereon at the rate
or "a per cent per annum on the average
outstanding amount; also a further issue
up to l2la per cent Of its capital, subject to
a per cent tax on the average amount out
standing in excess OF the amount first
mentioned. There seems a little unCer-
tanty Of meaning in this last expression,
but the total both OF credit notes and OF
bond-seCured notes outstanding is not to
exceed the banks capital, and the issue
under the 40 per cent rate is not to exceed
- per cent OF the capital The relation pro-
Vided between the new issues and the pres
ent bond-secured notes is INTENDED to pre-
vent sale by the banks of their bonds now
held to secure notes In order to avail them
selves OF the new note issues, which they
might deem more profitable, so as to avoid
the possibility of any action that might
tend to depress the bonds i'm the market IL
the ratio of the total capitalization OF all
going national banks to the total outstand-
lng amount of unmatured bonds should
hereafter increase, then the allowed issue
of credit notes shall be increased 20 a cor
respondngly higher ratio to each bank's
bond-secured notes. The ratio Of reserve
now required 70 be carried against deposits
shall also be required as to the credit notes.
and the taxes upon the latter shall be held
as against the expenses Of printing and re-
d6mptiOn, and as a guarantee fund for re-
demption Of notes ~ failed banks. SO that
this fund may be ample from the start,
each bank which wishes to take out the
new notes must deposit per cent IN gold
on the amount desired, the unused portion
OF this initial payment TO stand as an as
set of the contributing bank, and may be
withdrawn whenever practicable without
reducing the fund below the per cent limit
OF credit notes outstanding The existing
10 100000 a month is 70 be repealed.
Iris proposition, II Is TO be noted, Is for
a distinct credit or assets currency, with
no specific guaranty deposit behind II ac-
cording to the existing rule, but depending
upon the general substance OF going
bank with good surplus plus the prac-
teal restraint Of a tax, and also having
a redemption rund as dernier resort, the
present reserve OF Is ana 10 per cent re-
notes and 70 be carried especially against
them. IL would only be repeating what
every business man knows (yet has seemed
thus FAR TO make very little impression
upon congress, because it has made no
vigorous impression upon the country II
We say that the present currency Is ut
terly unrespOnsive TO the demands OF COM
merce-as inelas1c as track ratl-and
forms one OF the obstacles to healthy trade
strong country IL able To overcome We
get on somehow with IL, but IL becomes
increasingly a structure upon trade move
ments. The plan now proposed comes after
very matured consideration, and Is COM
mended by the weight OF authority Of
representative banks all over the country
as well as by the Chamber OF Commerce.
IL Is distinctly better than the plans di-
rectly before the bankers convention, In
that II does not put the proposed issue
In the hands OF any governments commits
siOni the specific regulations fall under
the action is 10 be according to the option
Of the banks and not according to the dis
erection OF any government ohicer. This
leaves the process to determination by
trade demands-precisely what Is lacking
under the existing scheme-and its cor
we DO not think there is anything In the
idea OF a so-called credit currency which
should suggest alarm, and the safety OF
this one seems ample. AS the joint COM
mlttee point out, bank note Is the same
IN essence as a demand deposit, equivalent
that Il commands acceptance. The pro-
posed note Is equivalent 60 an Individual
check possessing general convertibility and
credit: or II may be called the equivalent
OF d cashiers check or "a demand certificate
OF deposit-"a current deposit liable Of the
bank" and carrying the warrant OF the
bank with A. The proposed ultimate Sc
curty behind a seems most ample In the
committees opinion. arguing nom past eN-
perience the tax viii create r. fund many
times larger than viii be required for the
purposc OF redemption.
Whether this tax viii suffice 20 perform
the other important function OF holding the
home question on which there may be