The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1906-12-21
SUBMITS CURRENCY REPORT
Chairman Fowler Indicates Advan'
tages of Proposed Law.
Credit Currency Equal To Forty PEI
Cent of Outstanding Bond Secured
Currency TO BE Permitted.

Representative Fowler, chairman of the
House Committee on Banking and Cur
rency. yesterday submitted the report Of
that committee on the credit currency bill.
upon which an agreement was recently
reached. The report is exhaustive upon
the subject of circulating medium, and
presents d strong argument in favor OF
the scheme TO expand the currency, as
advanced in the bin.
The effect Of the bin is set forth as
follows:
'.First-Any national bank may issue
an amount Of credit currency equal 10
20 per cent Of its outstanding bond-se-
cured currency, whatever that may be- but
this amount Of credit currency cannot
exceed p per cent OF its capital. The
bank must pay an annual tax Of per
cent upon the amount OF the issue OF
credit currency in circulation
''Second-The bank may take out an adj
ditional amount of credit currency equal
to 121k per cent of its capital. but it must
pay upon the amount OF this issue OF
credit currency in circulation a tax Of
per cent.
'Third-The total circulation Of bank,
Including its credit currency. shall in no
event exceed the amount Of is capital
.Fourth-The bank must carry the
same reserves against its credit currency
that il now carries against it's deposits
p per cent in reserve cities, and 10 per
cent IN other cities Your committee rec
ognizes no difference between this credit
currency and deposits subject 10 check.
"Fifth-The profits upon this credit cur
rency VIII be precisely the same as upon
a corresponding amount of deposits upon
which the bank is paying either 3 or
per cent. as the case may be
The report cites Scotland, France
Germany, and Canada as countries in
which a somewhat similar system OF
credit currency is operative, and then
continues to set forth its advantages, as
follows;
'.First-It viii lower and equalize yates
Of interest throughout the United States
..Second-It will make the rates practi-
cauy uniform throughout the year.
"Third-It viii give TO the country dis
tricts as economical a form Of credit as
the cities enjoy where checks are chiefly
used.
".Fourth-It viii give the mass Of the
people who use currency in their smaller
purchases, as economical a form Of credi,
as those enjoy who use checks in theiE
/ larger transactions
"Fifth-It Will make it possible for thu
banks generally to serve such of theil
customers as may want currency without
disturbing their reserves to the grea'
injury of other customers. who have
loans which must be paid before the cur
rency can be advanced; for it IS imma
terial to a bank whether it owes a de
! positor or a note holder.
"Sixth-It Will almost invariably pre-
vent any panic whatever, and viii Away.
avert a ruinous crisis.
/ ''Seventh-If at any time contraction
/ Of credits becomes necessary because TOT
much Of the commercial fund has beer
/ diverted and transformed into the IN
/ vestment fund. a credit currency vii
/ facilitate liquidation without that destruc
/ ton of values incident 10 a fixed quantity
/ of currency. such as We now have"
Representative Fowler yesterday intro
duced a bill 10 repeal that part of the act
/ of March T. 1900, which prohibits a IA
/ tional bank from issuing more than one
third Of its circulation in s. notes.