New-York tribune., 1908-02-11

accepted under its provisions to government issues
legislation under government regulation I think
am justified In DESIGNATING the bonds OF e'aass s
tain the credit and facilitate the borrowing power
portant to the general welfare a it is to take steps
to maintain the credit of the national government
In large portions of the country eonsaeraoie 1an3
and nothns bfns the lHs
n Of OF the
the on tn the part cnres OF ihe Su their G
chase as a basis for security OF note circuia'ioi
BONDS AS SECURITY.
The committee recommend the use of first class
railroad bonds because they the only securi,
ties outside Of state and unlepaal 56n0g assneo so
dition and earnings, now provided by law would
seerfan m the value and the safety Of the security
In theory and by existing Legislation rarodo d Gu
strict governmental control and reguau9n in 1 M
mean future n q 9he Sevslopens Of railroads
Various parts of the country pee nyernment
do within the limits of absolute safety ana
nS TO she any aoad f0sa to seesTes 50
TO provide transportation facll1les IN ehouId
be done without hesitation. ., T.,
The securities named find universal exeent m
settlement OF obligations. No secuTlues eAceP1
United States bonds have better credit ana i1a
Value readily ascert tained all the great great ss5 sx
Of the eGuntg ana s sey Full arg price
These in brief are Of M the of w ihe
bin toe to the two Classes Of securities have named
The objection under betheE fn m it is
prudent desirable for what is known as coin 5
m hans 1o @oney h tbs 0Ft9 eas Of s
part of their invested reserves rsoi1e them If
they desire to avail themselves of the p5ivesnf rfsn
t6s eass oy o sa snis R as as 0 part Of their
The Congress In my 5udgnent so Control over
the investments of national banks require theSe
this class Of securities this without reference
TO use as securities for possible mote ol5 be
In the interest alike of the public and Oh s'ocA-
If all national banks Of the country y;I shoula I'D
hold the entire amount Of bonds that wou,o m +be be
amount Of ooocoooo it would mean the investment
Of Of little than IA M per as ssnt Of Of he
To aIlege that relatively small amount OF casn
to tne assert Gas dangeeons aacy The
Of the oS hold 10 % more %, Rs 10 per
of their demand obligations. -
supplemented by. substantial invested reserve IN
first class The ] hanks OF or the loss nue
500 100000 in first class state. municipal or ralaoas m
that care In management which should charac-
terize institutions which have and expect & to re.ah
of this course finds ample confirmation IN inc
Of the banks in in Th eap
of sS 10000 has an investment of $Sioog" IN NH g''
eaPent eapfai Of osnqo has INIT in its bankng
securities oonnp tn The
Bank Of France with a capital of SIS 10000 has has
government securities amounting to SIS 75000 the the
on Novebe 1901 municipal securities to to ths ths
amount Of ssco0oOO and railway bonds 4es to t9e
cnries held Of s7O0o0o The Canadian banks are re
also required by law hold 20 per cent of Their
fSs Iad m On hand of tbese notes soS
The evidence is Yss }ha5 poPion
OF their assets in securities of the class wnch we
designate In this bill for the security or note cir
Another objection which is urged is that the taxes
of interest on ioans which would necessarliy re &c
paid by the borrower and that TINS Cessna Ia
by the additional issue Of notes but would also
APPLY to S2 1 ali she sanRs is further claimed IN
this connection that the increased rate would lower
think this remarkable claim will disappear upon
very slight examination =, -. .o,,,,+rv or COM
munty IS fixed by the demand for az and asaG genera or
opered 81 srSitrary on small portion Of loans or
in one locality without reference 70 rates on otner
loans or in surrounding communities.
OBJECTS TO ASSET CURRENCY.
IT Is asserted by objectors that the government
should not exact from the banks Peegs 5 Of to oe ac
cept the general credit and assets of the banks as
say hat the banks do not follow this rule in their
dealings with each other The various Clearlls
dividuaI banks, claim against their general
assets. security for advances IN the Issue O..
of carefully selected securities upon which they
advance 70 per cent Of their value. and they follow
the most rigid rules In enforcing payments. I do
not see why the banks should expect the govern
ment OF the United States to accept from them dif
they require in similar transactions between them
The general assets OF bank. outside of it's
specie reserves, composed almost entirely of
debts of individuals, corporations governments
It certainly cannot De claimed that the definite
pledge Of the securities representing debts of gov.
as good security as an indefinite claim upon the
mass Of individual and corporate evidences OF in
ind good usration of the V dference there Soad Sd
be between a general and a special pledge of
in considering the recent bank failures The notes
or these banks are secured by deposit of United
States bonds. and redemption Will be made under
law without delay by the government and with
out loss to note holders or the government. If the
banks the result, as to time or security. would be
10 say the least very questionable II the con-
Vertlbhty depended the failed banks dscredit
would at attach to the entire issue Of notes
Those who propose to base circulation upon general
propose TO give the holder prior lien unon n
bank assets apparently forgetting that the govern
inent now has, and will have by the provisions Of
this Pill not only lien upon specific securities bur
he III hI prior len upon the general assets of
growing out of the redemption of notes = any
sth, 1t Is also Claimed that the holding of the pra
t[ioed securities Will reduce the loaning mower or
me ih banks to the extent to which securities are m
available for loans to Borrowers seIe nd IS , XGd
Lount Is equal TO the entire 1oanabe resources OF
consider it prudent invest the entire an7onnt 80
the capital and deposits his bank in loans nnon
have this character Of nvestments Would mot baIo 1o
should have varied Investments wb ceey csTtsi bank
portion of liquid assets is rule cf universal an
curties reduced the oanng capacity Of baS S
that capacity is reduced a greater extent bv rs
banks and other financial institutions II il in IN
wolves loss to invest part of the funds in first
class bonds upon or per cent basis it involves
greater loss 10 continue deposits in other banks