Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-09-26
Mr.. Hepburn's Address.

Inc currency plan recommended by the
commission may b. summarized as follows:
l. Any national bank having been
actively doing business for one year and
having a surplus fund equal to 20 per cent
oi ITS capital shall have authority to issue
credit notes as follows, subject to the rules
ana regulations to be determined by the
controller of the currency:
'taD An amount equal to 40 par cent of
us bond-secured circulation, subject to a
tax at the rate of 2la per cent per annum
upon the average amount outstanding
CD further amount equal to lDIh ner
cent OF us capital. subject to tax at the
rate OF D per cent per annum upon the
average amount outstanding in excess of
the amount first mentioned
=. The same reserves shall he carried
against credit notes as are now required by
law TO be carried against deposits
1t provides a . per cent guarantee fund,
from which to redeem the notes o. any de-
lau!t!nS bank: 1t provides mum rous re-
demptl1n cites conveniently locat ID IN
various parts OF the country A study of
the statistical history of the national bank
ing system from its inception Will leay, no
doubt in the minds of candid men as IN the
goodness of the proposed note issue and
its certainty OF redemption.
by Daslng the amount of the proposed
issue OF credit currency upon the bopd
secured currency of each bank the valua of
government bonds now so largely owned nv
the banks is preserved and protected The
proposed plan is neither comprehensive nor
radical. II seeks to engraft upon existing
laws simple changes which will admit Of
increased bank note circulation in response
10 the increased demands of business which
accompany periods of business activity
witness the CrOp-moving season II also
contemplates the retirement of such circu-
lation with the abatement of such demands
1t seeks to provide such increase at the
instance of the issuing bank, in response To
the demands of its customers; it seeks also,
by convenient points of redemption to So
cure the retirement of such issue whenever
the demand which called the same into
being has been satisfied. Not being secured
by high-prced bonds yielding a low rate of
interest, there would be less feeling of CON
straint TO force such notes into use as
much as possible In fact, with convenient
points of redemption the outstanding period
of such notes would be limited II is the
opinion of those most experienced that the
junction OF such currency would be to serve
the retail and small change purposes of the
immediate constituency of the bank issuing
the same. Banks in central reserve cities
could not issue and put into icirculaton
such currency, unless for use in its imme-
dlate vicinity, except at a time when there
Is a demand for currency shipments from
other localities. Then they might use sucb
currency and serve the public while at the
same time protecting their reserve money.
heneVer the currency demand was
satlShed such far-away notes would seek
the nearest redemption agency of the
bank issuing the same and travel home
at the expense of the bank of issue. You
have expressed fear because in case of
the maximum issue under the proposed
law the liabilities of the banks might be
increased approximately 5000. 600, 900
deposits with national banks, which, like
notes of issue, are demand obligations
redeemable at the instance of the de-
positor or holder. have Increased from
$125,OOO.OOO in 1856 to $6,1S9, 900 900 in
1907, and public confidence in our ma
tional banking system has grown with
each year. Whenever such currency ia
put into circulation and becomes a liza
bility of the bank some good asset pre-
sumably the note of solvent customer
goes into the assets of the bank, thereby
offsetting the liability. There is no fear
to be apprehended from a possible maxi
mum issue under the proposed plan.
Currency and Wall Street.
1T is assumed and asserted in some
quarters that such currency would re-
dound greatly to the advantage of the
speculative market in the city of New
York-'Wall street This is quite err
roneous. The New York Stock Exchange
has clearing house of its own based
house for banks. The stock ex,Eange
produce exchange, cotton exchange ali
the exchanges dealing in commodities as
well as all the varied interests Of anv
considerable magnitude in the citv of
New York, have currency of their own
the certified check. Actual money, or
currency in any form. is practically I'M
known in the city of New York in any
transaction except of a retail character
The proposed currency would not he
disable between banks in the city of New
York. Balances at the clearing house In
that city can be settled only in gold or sill
yer or their representative and legal-tender
money. The present bank notes are not
available for such purpose. Whenever the
present bond secured bank notes come into
the possession of New York banks they
send them to the United States Treasury
for redemption and receive in exchange
legal-tcnder money, which counts as part
of their reserve. National be INK notes to the
amount of $l36 252.:6 were 50 presented for
redemption by the banks of the city of New
York last year. | call attention to these
facts and circumstances in order to show
thai New York has less comparative inter-
est in the proposed note issue than almost
any other locality.
When the interior demand for currency
is strong New York banks can issue and
ship such notes TO their interior correspond
ents, and by SO doing satisfy the CONNER
cial demands without impairnS their re-
Slrx.b tt.nr nd i,,s IN