Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1908-07-03

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points fixed by law, and by order Of
the treasury board.
6. Banks may redeem in gold or
Dominion notes, but as matter of
fact they do redeem by draft in some
commercial centers.
z. The life of note is about one
month.
8. The security of these notes is
two fold, (a) the general assets of
the bank, and (b) a 5 percent guar
antee fund. This has been found
adequate. There is no tax or arti-
fetal device for driving these notes
home for redemption.
United States.
In the United States today we have
some $4,000 banks. OF these $500
are national banks, issuing notes.
This currency Is considered absolute
" safe and absolutely inelastic. Be
ing bond-secured currency, it is
open to the objections, in addition to
its inelesticity, (a) of lessening the
loaning power of banks, (b) Of with
drawing funds from locality where
needed to section where funds are
cheap, (c) Of having a volume de-
pending upon the price Of bonds, not
the needs Of commerce.
There is no question any more
but that deposits and bank notes
are alike, that deposits are ..bank
notes in disguise" Only the notes
circulate more freely and over a
wider area. And, therefore, in dis
cussing the problem Of elastic cur
rency, the real issue is not the elias
ITCHY of the currency-for all coun-
tries have that but the form OF
the currency. We secure elasticity
through deposits; France through
bank notes; Canada by both bank
notes and deposits. Let us examine
our own currency, and see If it is
not already elastic enough. Our
$4,000 banks have $13 1000, 900, 900 due
their 16 million depositors. Deposits
and loans fuctuate daily according
to the needs Of commerce. In the
years 1a00-1907 alone, the national
banks increased their individual de-
posts from So, 450, OOO, 600 to $4,323,-
coo, 900. And for the same periods
state banks and trust companies ex-
banded their total liabilities by over
IS, 0o0, 900, 600. There can be no shad-
oW Of doubt about the power of our
bank currency to expand It's power
to contract is even more self-evident,
In addition to this normal bank cur
rency we have tested emergency
currency, namely, the clearing house
certificates. AS England suspended
her bank act In 1s47, 1857, and 1866,
so likewise did we suspend rather
than break our banking laws in the
following cited cases:
1884 New York hanks is
sue clearing house
certificates s24,915, 900
1890 New York banks Is
sue clearing house
certificates 1925 600
1893 New York banks is
sue clearing house
certificates $3.50 600
1893 Boston, Baltimore,
Philadelphia, Pitts
burg ..:. j ...s.s. 25, 600 900
1907 New York Il. 100, 000, 900
1907 Chicago 4. 81, 505, 600
Philadelphia Ia, 295. 900
Boston So. 1892, 900
st. Louis II. 965, 900
Pittsburg ..5.3. 5, s55,00o
Baltimore s.. Z. J. $500 900
Milwaukee u. 1890, 600
Thus In 1907 We find eight cities
Issuing this emergency currency TO
the extent Of $Is7, 000, 900. Taking
the whole country the issue easily
ran up to 500, 900 900. Thus We have
repeatedly had experience with this
species Of asset currency OF emergen-
cy bank note issue.
Shall We conclude then that our
thirteen billions Of deposits and our
occasional clearing house certificate
AFFORD us an elastic currency as safe,
as eleastic, and as convenient as the
note Issues Of our neighbors?