New-York tribune., 1906-10-01

be relieved in the future by allowing the oanhS ~
to issue notes in times of pressure unuet d 9l So
/ tax without first having TO increase tileir ie
or set aside any particular part OF theli ass
! e. r,,orontee nayn,ent At least this is the We'll
r,gb universal advice received by the speclal CUM
mittee of the Chamber of Commerce OH cui
! reform from European bankers. Letters ,I
during the summer to The governors Oh liio AL -
! Bank of Germany, the Bank of France anu IIo
! Austro-F Hungarian Bank asking thein ~ 80. g.
the committe. on the operation of their systems
Of note issue. -, 4y,,o,-,
| The hank. of Germany and of Austria Hungary
| are legally bound to keep their reserves 'ooFo
certain ne-centage of their loans as are the ma
+io,oI bor,rs IN this country. When, however
! MONEY, stringency occurs. they are allowed oy
bair resnective governments to increase their hoe
issues provided they pay TAX oI d P
every loan made beyond the legal hril'' IT,. -
- o,oor N these bankers the situation IN
/ +bis country which needs remadylng, melioei =,
/ the committee went to Europe .ast su,l , =;
oorferrad with them on the subject letters ~
favor of an emergency Issue under d 'p0
have been received from all or tneih. ..
| The benefits of such an emergency 80 1rnneriaI
| sor+b nv DR. Koch the governor OF the lhpeiI8l
Bank of Germany. as follows
The overissue however did not necessaryn as
more weight was given the cause and 1 the mani
ner Of the money requirements 1II an N 0ocy of the
bank and furthermore in consideration ot an o ~
return to normal eondionts tsptbstandng tfe that
oVerissue was quite Important let the acTce loTeT ats its
own own profts in paying the tax out OF its own
F6r instance the bank retained it's Official dis
count rate during the entire period from m onn time
1903 to osober e st cent at ahongh Pf6 the the contingent
amount was exceeded thirteen times will 900 bv
the foregoing the system adopted In conneceon aIss
n TiLn s AS there no definite boundary line for the
uncovered issue It has been mage at all
times the CHANGING demands Of commerce oy ar II
ranging its circulation Was s enabled to
nIace at the disposal OF the general coInInerGflMdI M
ytbout fme Dnuv increasing the official rate
of discount, and in the same man tsste 1 bt means
OF the penaity incurred through the government
tax has been avoided
The advantages of the taxed circulation are en-
pbasized also by DR.. Arthur salomonsohn, one OF
80 managers OF the Disconto Geseuschaft He
says:
Both the total note circulation and the uncovered
portion of it lowest during the hrst months OF
the wear in which the requirements Of business are
comparatively small They are both at their high-
period is Usually characterized by strong demand
for money Both classes of circulation show quite
eiay at the end Of the quarter year, when the
call t6 for args e the total crcua
ton during the year 1905 between 1161 S54 600
marks rs @ @ % @ on on fe64ay g. ana T%e
between these points. as you will see, was 5l5-
turn of the quarter the Reichsbank finds it neces
sary issue notes that are subject 70 the tax ms
for the return flow of money very soon so increases
the cash reserve that the tax ceases
The advantages Of practically unlimited right OF
note issue by the Bank of France set forth by
the Governor. NJ. PalIain, in the following para
graph:
The limitation of the right of issue by the opera
ton Of restrictive clauses might provoke abnor
justified by the commercial situation. If, In effect,
the circulation was on the point of attaining its
legal maximum. and new demands appeared, the
bank would no longer be able them except
by means of its metallic resources, and even this
tered as a coefTicent into the determination OF the
limit of issue But. outside of this consideration
would constrain it to raise the rate Of discount
with vie view " OF dyertng part art OF the demand The
ton
The governor of the Austro- Hungarian Bank.
DIR. Bilinski, points out how often the prvi-
Iege of issuing notes under the special of per
cent has been availed of, and how 1t has benefited
Austro- Hungarian commerce, follows:
During a period of eighteen years 1SSS-19O5 or sol
working weeks the excessive circulation over and
above that permitted by law, of duty, occurred
Fronens to Ss8oo5 m kTonenS % i75cS G and 't the
amount Of duties paid 70 the government ranged
total payment to the government of $50
kronens. would further point out two notable
periods; that is, of these ffty-ive periods where
the note Issue exceeded. twenty-three occurred
IS the harvest month"; and thus called forth add,
tonal activity both in trade and commerce, and
no decided Influence UPON the discount policy Of the
bank. inasmuch as the council of administration.
had occasion raise discount rates repeatedly
during times when the limitation of its note issue
sions when its limitations were reached maintained
a discount lower than the legal per cent
clients but by the bank itself