The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1906-10-17


mately $2O00OO,0O0 of United States
notes. gold certificates, silver certifi-
Gates and other forms of lawful or
reserve money. and sent into those
parts OF the country where checks are
not used for the purposes to which
this money will be put
For the sake of being definite and
comprehending fully the effect OF this
movement OF reserve money from the
banks of the country. let us assume
that when the movement began the
banks had loans outstanding up to
the limit provided by law. What effect
would this movement have upon the
credits of the country?
The actuary of the United States
treasury prepared for ME table
showing that the credits which would
grow out of deposits of 100000. made
respectively in a central reserve city
bank. a reserve city bank and in a
country bank. would reach an aggre-
gate of 81 ,906,000. That is. the credit
standing upon 100000. deposited as
stated. would be six and one-third
times that amount. While the total
credits of the reserve city banks would
be exactly $l,000,O00. or five times the
100000 deposited with them. 1t will
be reasonable. therefore. to assume
that. if $200000.0 900 of money in actual
use as reserves is taken out of the
bank vaults and scattered over the
wheat. cotton. corn and other districts
to assist in moving the crops. credits
to the extent of Mt least five times
100000. 900, or $1,000. 900 900, are dis
tributed and displaced With the treas
ury concurrently Withdrawing $50
900 1000. or more. from the channels of
trade. and our credits contracting to
an extent approximately 81. 000. O00, 900,
does anyone wonder that money runs
up to l25 per cent. when the straining
and breaking contraction is on:
Need anyone wonder. when the
flood of money returns to the CEN
ters, the wheat. the cotton. the corn,
the cattle and the hogs. the products
of about One-half of our entire popu-
lation. having been marketed, and
there is no further immediate need of
these tools of commerce in the coun-
try districts. that money. so-called.
but nothing but credit based upon
these reserves. can be had for one
per cent? Need anyone wonder that
"
an abnormal money condition all the
Year aroundo Now too much: now too
little; and never anything like a nat
ural relation between capital and bus
iness-all this because We do not rec
ognize one simple truth about credit.
and put it into operation. What is
there is not the slightest difference IN
hofu thn I.
and Il bank check
said:
What We want, and this is the
truth of the whole matter, is this:
Place our note redemption so located
in the United States that no banker
will be out of the use of his money
for more than twenty-four hours: and
the cost of transmission paid by the
government. Then, bank note credits
will be sent home when their mission
is filled as directly and swiftly as
now are checks and drafts; for the
bankers will want the proceeds of the
note credits precisely as they want
the proceeds of their checks and
drafts.
But will someone innocently in
quire: Will these note credits be
safe?'
NO one has ever lost anything by
holding Canadian bank notes during
the last fifty years. You, Ameri-
can bankers, are just as clever as
your Canadian brothers. If you can't
work out something yourselves, you
can adopt their plan.
"Tho PanEipu apd Crrroro,.
tee has favorably reported currency
Dill to the house of representatives.
providing for an issue of credit bank
notes equal to so per cent of the capt.
tai of the national banks; and the
method of guarantee makes such an
issue safe beyond peradventure. Our
present bank notes are a first lien
upon the assets of the banks issuing
them With this law remaining in
force, taking the entire history of the
national banking system down to
1901, the average tax upon the out
standing note issue after elm
mating all the government bonds de-
posted to secure circulation from
our calculation, would have been eight
one-thousandths of one per cent for
two hundred and fifty years.
Again, assuming tndt tne notes had
not been a first lien and that the en-
tire note issue of all the banks fail
ing during that same period had been
paid out of the guaranty fund, it
would have taken twenty-five one
hundredths of one per cent. or about
one-fifth of one per cent per annum
upon the outstanding notes. In other
words. eleven per cent would last over
fifty years. Two per cent, or one
years tax, would last ten years.
THE banks should pay the govern
ment the same for these note credits
that they are usually paying on large
balances. viz, two per cent per annum.
They should also pay into the treas
ury the same redemption fund of five
per cent that is now required for the
redemption of our bond-secured circu-
lation."