Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1910-03-11
Material Argument ia c.
A. Coaant's Monograph.
An Interesting Dissertation on
National Bank Of Belgium.
The Institution Mas Stood Well the
Test Of Many Years.

| Washington, March 10.-Both adj.
vocatcs and opponents of the central
b:n.i idea, recently brought into pub
| nc discussion in this country by
| speeches Of President Taft. will find
| material for study and argument in
Inc monograph on The National
Bank OF Belgium by Charles A. CO.
nant, the Wcll-known banker and au
| thor of "A History of Modern Banks
| OF issue and other financial works
IRIS monograph by Mr.. Conant will
be issued tomorrow by the National
Monetary Commission as the latest in
/ the series embodying the product OF
the exhaustive Investigation of the
National Monetary Commission.
The National Bank of Belgium dates
only from the year 1850, twenty wears
after Belgium became an independent
Stale, and was afterwards made the
mo"ei Or the revision of the charter OF
the Bank of the Netherlands and OF
the National Bank of Japan, when
japan abandoned her unsuccessful ex-
pertinent with the American system of
Isolated banks issuing notes on public
securities. The foundation of the Ma
collapse of the system of issuing bank
notes through banks which engaged
largely in financing instead of basing
their issues upon LIQUID assets. The
errors Of previous banking ctxperi-
mcnts were thus avoided in the enact
ireht of the chatter of the National
Bank and, as Mr.. Conant declares,
the institution bears the stamp Of the
two or three characteristics which are
regarded by many economic students
as belonging to the ideal bank of is
sue"
1t was the banking crisis Of l848, at
ter considerable previous trouble be-
tween the Government and the old
banks which led to definite action by
the Government. In this crisis both
the Societe Geherale and the existing
Bank Of Belgium We're compelled to
suspend payments. The Government
aided them for the moment by making
their notes legal tender. but having
demanded that they restrict their in
vestr:cnts to commercial paper and
this demand having been refused. the
Government was in Il position to lay
the foundations of the new institution.
From these conditions sprang the Ma
tiunal Bank. which was established by
a law of May 5. 1850. for a term of
Twenty-Five years. with a capital Of
%. 100000 francs Ga .0OO). The char
ter has been continued by subseuuen:
extensions, with some amendments.
until 1929 and the capital is now So
600. 900 francs.
The bank was subjected to serious
.s nj, q,
handle business by the war between
France and Germany i'm 1870. Bel
GUM was close to the route of the
contending armies but. as a neutral
country. was awaited of as the agent
of many financial transactions con-
Quoted ny French and German finan-
cicrs, The bank met the pressure re-
Sulutcly by reducing its holdings of
foreign bills, importing gold. and rails
| ing tho rate of discount. SO firmly
was the credit of the bank established
by this experience that it was spc-
cially stipulated in the treaty Of peace
which terminated tho war that among
| the forms If payment of the war in
dcmnity accepted by Germany from
Franco notes of the National Eank of
Belgium should be included.
The basis upon which the notes of the
bank are issued is convertible com
merciai paper maturing with tho short
terms. The note issue is unlimited in
amount and is not restricted by tho
charter as to the proportion of cash
| reserve REQUIRED to bc held. The pro-
portion of reserve was loft t" l." fixed
| bv the statutes of the bank, which are
| 10, ,nt i,ot INppn
| the minister Of finance and the admin
| istration Of the bank. BY tins authority
| the DrUrortion of cash to notes has
| beer fived at 20 Is pcr cent. but the
minister of finance has power to sus-
| pend this requirement in an cmcrSen-
cy. Foreign bills of exchange have Ions
been counted as the equivalent of gold
in the reserve and have proved useful
| on critical occasions in maintaining
control of the exchanges.
| Interest is not paid upon deposits III
the national bank, i'm order that such
deposits as are attracted shall be those
| grow ing out of commercial operations
and not those partaking of the nature
of investments made for the sake OF
the interest earned. The outstanding
tissues of notes. which reached in 1905
an amount in excess of SO0.00000(
| francs (s1SO. .O00 for population OF
! less than 100000. constitute the cniei
liability of the bank. Current deposit
! accounts constitute only about one
tenth of the assets of about 1,000.00o,o0C
francs (s2oO. 900 OoO). which represent
the banking and issuing functions of
| tie bank. .....
| Regulation OF the money market Is
attained in part. as in other European
countries lowered with central bank
of issue. by changing the discount
rate The problem of money and ex-
change in Belgium has been compiled
tied by the large amount of silver
coins which were issued before the
s,,spension of free coinage by the Lat,
| in Union in 1873. and by the fact thai
this silver has degenerated into thu
position of token coin. kept at golt
par largely through the control exer'
|cised by the national bank over ex'
,h,,yo Cold baS nractically 0iSap-