The Columbia herald. [volume] (Columbia, Tenn.) 18??-1935, 1906-01-26
2 Plan For Monetary
Relief Suggested.
~ BY j. r. HRoWNLoW IN TRoTWooDs MONTHLY.

90 90 %%%$%%~%>>%%%
such note. The solvency of the col
lateral to be certified to by at leas
three directors of such banking asso
ciation-other than officers who may
be directors said notes should moi
be made for a longer period than six
months; and bearing interest at the
rate of per cent per annum, with
the provision to renew on the substi
tuition of other solvent notes as col
lateral, but at 8 per cent per annum
That upon the receipt of such note and
collateral, said National Banking AS
sociation be authorized to issue circu-
lating notes against this security
as are now issued against U. S. bonds.
! The department should be charged
with the expense of issue, etc, and
from the interest or tax received on
said circulation, pay the expense of
maintaining said department. Said
act should also provide for a more
thorough examination of national
banks and the Comptroller Of the Cur
rency's Department should be com
bined with this, and inquiries should
be made through this department in
each community as to the solvency of
collateral notes offered, and in case of
insolvencies, the right to call for other
collaterals should be reserved.
Said currency should be identical
IN form with that based upon a de
post of bonds, substituting these
words, secured by satisfactory notes
and collaterals deposited with the
Banking Department of the United
States"
The redemption. of the notes should
be the same as in notes secured by
bonds. The bank would take up the
note and collateral at its payment,
and the department would redeem the
circulating notes.
This plan is simple and it is safe.
1t puts the burden where it belongs
and makes the banks the chief ia
cility for supplying the demands of
business, through and by which our
financial system would receive the
elements of elasticity.
The interest rate would be equa
lized and the supply would be always
available for the active seasons of
the year.
There could be no financial strin
gencies under this plan, nor could it
injuriously affect our financial in
situations. Banking would be con-
Quoted as usual, interior banks Dor
rowing or rediscounting with finan-
cial centers when money is plentiful,
and not ruling above 4 per cent, and
in busy seasons as the local demand
increases and rates are marked up in
these centers, notes with collateral
would be placed with the Banking
Department in sums to meet the de-
mands of commerce in all communi-
ties.
The per cent charge, made by the
department, would be in the nature OF
a tax on circulation. and which would
be held to cover the expenses of the
Banking Department, together with
any loss sustained on insolvencies of
banks and collaterals; and the charge
will be sufficient to take care of these
items, as will be seen from Comp
troller Ridgeley's report, in which he
says that only So per cent of the
national banks chartered from 1863 to
October, 1905, have been closed as
the result of insolvency. With very
few exceptions, the failures have been
due to fraudulent management or to
violations Of the provisions of the
National Banking Act. During the
whole period of the existence of these
banks, ont of 1856 organized only
$50 have failed
This is very small per cent and
III Ctll DIObGDI1lg uhQCl lA4C pan vi
placing collateral along with the bank
notes, which would be certified
good" by the directors other than
the officers of banks, the de-
partment would rarely sustain a loss.
even if the bank did fail.
The Comptroller further says:
4 am also equally convinced by
the same experience that, with care
full and efficient work on the part of
the examiner, aided by intelligent and
thorough letters of criticism based on
examiners reports, any board of di-
rectors of fair intelligence, with an |
honest desire to obey the law, can,
by cooperating with the examiner
and the Comptroller make the fail
ure Of their bank practically, if not |
absolutely, impossible"
This is sufficient argument on the |
safety of the plan. That there would |