Los Angeles herald., 1908-04-10
OF LAW
GOOD FOR BANKS
FOWLER CURRENCY BILL IS
NEEDED, SAYS EXPERT
NEW YORK AUTHORITY CITES
BENEFIT TO ENsuE
Funds Which Would Have to Be
Transferred to Treasury Much
Less Than Represented,
Says ]. r. Bush
BY Associated Press.

BY Associated Press.
NEW YORK. April 9.-Irving I
Bush, vice chairman of the COMMITTEES
on commercial law of the Merchants
association, yesterday made a state
ment on the practical effect of the FoW
Ter currency bill on the balance sheets
of the banks. Mr.. Bush set forth II
figures the status of the national banks
of New York city. If the bill were II
actual operation. He said3
There seem to be many, even among
leading bankers, who have not hao
brought fully to their attention the
benefits which they would derive from
certain provisions of the Fowler bill
Comment has been made on the large
amount which the banks would require
to transfer to the treasury to make III
the per cent guaranty fund which Is
to be deposited against both deposits
and notes. This requirement is really
much less radical than has been repre-
scented.
THE last report of the comptroller oil
the currency, showing the condition oil
the national banks of New York city
on February IA last, showed deposits
subject to reservation requirements &c
be $3.50, SS9, los, making a total amount
subject to the guaranty fund require
ments of the Fowler bill of $971, 077, 300.
anty fund would be per cent of this
amount, or $4S.55S,S95. This looks al
first blush like a formidable amount tc
withdraw from the each resources OF
the banks, but when it is considered
that it is counted as part of their re-
quired reserves the question is reduced
simply to one of the locality where the
money Is kept.
Reserve Would Be Raised
Reserve requirements would be
raised from $225, 547,1 1873 under the OK
listing law to $242, 769,475 of which $4S,-
553S95 would be in Washington and
$194,215,5S0 would be in cash in the GUS
tody of the banks.
1.-THE New York banks held more cash
on February IA than would be required
by the Fowler bill, and their position
in this respect would not be changed tc
their disadvantage.
"One Of the greatest advantages &c
the banks under the proposed new sys'
tenn would be the free control of theii
own resources. Instead of keeping ii
the treasury, as was the case on Feb
ruary IA, United States bonds to secure
circulation to the amount of $70,7S2, 100
United States bonds to secure public
deposits 10 the amount of $4,891, 900, anc
other bonds to secure public deposits &c
be returned to them and they would bt
able to convert them at will into cash
1.-THE United States 2 per cent bonds
would be purchased by the custodian:
of the guaranty fund, with the purpost
of withdrawing them from the market
and maintaining their value. The Fow'
Ter bill provides that they should b.
purchased at the price of 104, in ordel
to guarantee against any loss resulting
o1.a 4 u Gte n
circulation. Under this arrangement
$70,7 1872, 100 of United States bonds would
be handed back to the national banks
of New York to be disposed of to thu
government for cash to about an equa
amount which cash could be loaned II
the market at current rates. while thu
privilege OF issuing notes would remain
unimpaired.
An Aid to Banks
"a little computation will show tina
the ability to lend the proceeds of thu
bonds at the current rate of intereS
would be an advantage to the banks
They would be required to pay 2 pei
cent upon their circulation, which 1;
11a per cent higher than they now pay
and they would lose the interest on tbs
2 per cent bonds, but with the money a
8 per cent they would still make a prof
up their capital in per cent bonds
Moreover, they would have the privi
lege Of issuing notes in addition Il
those now out up to the full amount Of
their capital in case of need, without
tying up one dollar of their resource:
in any investment In bonds. This un'
used power of issue of the New Yorf
city banks by the last report of tht
comptroller was $43,S34,S65. A further
power of issue Is given in emergency
to a second sum. equal to the capital
of SIP, 100000 odd.
1.-The entire scope of the bill Is de-
signed to encourage commercial trans
actions by giving the banks control Of
their own resources for loans to Gus
toners. l am satisfied that If bankers
would take the time to analyze its pro-
visions they would be convinced that
instead of being radical or disturbing
1t is really moderate and conservative
measure which would benefit them as
well as their customers and the public