Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1907-12-11

ing it. That discussion and events
since then seem to have removed |
some facts from the realm of con
troversy. First, financial prosperi-
ty depends on there being suffi-
Gent quantity of money as well as
upon its quality. Second, Stability
of prices and market conditions de-
ponds not SO much on confidence as
on sound basis for confidence.
Third, the banks are the greatest
medium Of commercial activity and
upon the safe and orderly transac-
ton of their business depends the
prosperity Of the entire country. 1t
is necessary then that the banks be
supplied with a sufficient amount of
money Of undoubted quality and
that their business be conducted in
a way to merit world wide conf
dence. Passing by the question
whether there is a sufficient quanti-
ty Of gold to transact the worlds
business, it may be admitted that
under the present laws and condi-
tions it is the only money of I'M
doubted quality passing current in
the settlement of foreign as we'll as
domestic debts. Therefore it is
necessary that banks should be sup
piled with sufficient gold or substi-
stute readily changeable for it with
out loss to transact the business
they have to do, and this is one Of
the chief bases of we'll founded con-
fidence. Present experience shows
that in their anxiety to have every
dollar of deposits earning some
thing banks can not be trusted to
keep as large "a supply of money
readily available as they ought.
Here then lies one of the chief diff
culties OF the present. The arbi.
trary amounts Of reserve required
by state and national laws have
failed to meet the case. The 25 per
cent reserve required Of New York
banks answers but little purpose in
the transaction of business, for as
soon as tits encroached upon, CAPT.
tai becomes alarmed, and it is of lit
tie value except for liquidation and
for that good securities would an
swer nearly as we'll. So in lesser
degree it is with all other banks.
They loan down to what is COM
monty accepted as the danger line
and then some unforeseen occurrence
does the rest. The reestablishment
Of confidence in times like this de-
ponds on the point Of view of the
depositor, small business man and
farmer. From this point and not
as one having expert knowledge
the following suggestions are offered
Do away with the national and state
: laws requiring an arbitrary amour,
, of reserve and in place thereof adop
a graded system. Take New Yorl
banks for illustration. Allow then
to loan for instance GO per cent o
c their deposits free of tax. On til,
a next Is per .cent Of their deposits
loaned levy tax of one-half of
per cent. On the next5 per cent o
their deposits above IS per cen
e loaned levy tax Of per cent o.
e the next 5 per cent above 80 pc
! cent levy tax Of 2 per cent. o.
> the next 5 per cent above 50 pc
cent levy tax of 5 per cent ant
Il lower the arbitrary legal reserve t.
? 10 per cent. Place similar restrie
" tons on alIstate and national banks
IS Place these taxes in a special fun,
= to guarantee depositors availabl
: Immediately when any bank fail
Under these conditions the with
4 drawal Of deposits through fear {
=, loss would never occur, nor woul
T. the sacrifice Of assets to provid
against runs. If, in addition
this. no bank was allowed to acceI
deposits to more than eight or te
ne times Its paid up capital and su
6, plus and the examination of ban
ID securities were somewhat mo
\ thorough, all reasonable grounds f
= distrust would be removed. Ii Il
n amount of money still remained
ae adequate two courses would be OPT
Of onesa slow and ordely liquidatie
ID followed by slightly lower price
l. the other. the addition to the sto,
10 ~ Of money Of something as good
~ gold, possibly silver certificates
ty sued for bullion at market price
ar quantities limited to the necessiti
fl Of the case. d. B. Porte
al !.