El Paso herald. (El Paso, Tex.) 1901-1931, 1910-04-20

themselves engaged in a discussion
which forms one Of the most interesting
portions of their report.
Among the questions most seriously
discussed was whether charge should
be made in what is known in Germany
as the note contingent, or the limit OF
notes which may be issued upon a re-
serve of one-third in gold without pay
ing special tax This limit OF uncoV-
cred issues was. at the time Of the IN
quiry, 472 $4,000 marks (S112,5OO,0OO).
1t was ultimately raised, as the result
of the investiga ton, TO 550,OOo.OOO
marks. with new provision, not pre-
viously known to the law for an ad-
ditional issue of 2OO.OO0,000 marks
(s475O0,000) during the last week OF
each quarter. Above these amounts
there is always 4 considerable issue
covered in full by gold, but when notes
are issued without the gold cover the
tax of 3 percent becomes operative
The question of raising the contin-
gent. and even of abolishinS it alto
gether was discussed. 1t was cOntended
by DR. Wagner that the existence OF a
limit of contingent issue had an IN
furious effect rather than a beneficial
one. He declared that it might even
happen that shipments Of gold from
abroad We're held back until the rate OF
discount SnOuIu De nlSnSf II
had, like France, a maximum note cir
culation. which was not usually at
tanned. there would remain at critical
times a large scope for extended issues
of notes and the granting Of credit
It was noteworthy that the Bank OF
France had, throughout its existence,
been free from such restrictions, and
that it was one Of the functions of the
bank administration to determine the
To- hot ha ma
and the cash funds. One Of the evil eff
fects of a fixed issue which was recalled
by DR.. Wagner was that when the Peel
act was suspended in England IN 1887,
an event Of which Dr.. Wagner had per-
sonal recollection, the crr was heard
from the continental press that the,
step was equivalent TO the suspension or
specie payments. simply because the
Bank of England was allowed. on the
responsibility of the ministry. 10 issue
uncovered notes beyond the legal limit.
Contingent Raised.
Accepting the decision Of the major
ity however, that the contingent would
be retained, DR. Wagner supported the
suggestion that, in addition to raising
the contingent TO 550,0oo,000 marks, il
be raised still higher at the much-dis-
cussed quarterly periods. for at such
times there may be greater need OF
chief function OF the central bank Of
issue comes into play. He suggested,
therefore. that the contingent or I'M
covered and untaxed notes be allowed
a such times to exceed by 100,000,00o
or even O0.0o0,000 marks the author
lied limit at other times.
In this suggestion DIR. Wagner
adopted the proposal made by prac-
teal banker, Arthur Fischel. of Men
delssohn & Co., Of Berlin Mr.. Fischel
expressed a preference for abolishing
the fixed limit and for requiring gold
reserve which should always equal one
third OF the amount of notes, with the
proviso that IL the reserve was less
than two-thirds the additional issues
should be subject to tax. He did not
consider a change altogether wise,
however, under existing conditions. eX-
cept in the extension of the untaxed
issue at the quarter ends. He conSid-
cred il true that when the issues of the
bank crossed the limit of the untaxed
circulation it constituted a danger sig
nal. and he would not admit that the
frequent sounding of the signal should
dull the sense of danger.
Not Abnormal Situation.
He declared on this point. IF we
have had in the last years such a fire.
quent overstepping of the note contin-
gent, this has happened precisely be-
cause we have been in an altogether alb
normal situation fn point OF economic
development as well as IN point of the
condition of our circulation and the
condition OF the Reichsbank. and it was
actually beneficial for US TO receive fire.
Quent warnings. The danger signal,
therefore l would retain, but I ques-
ton whether this danger signal does
not often sound at the wrong time. If
We say that we must be able to have a
certain quantity of uncovered notes in
circulation. We ought 70 keep in mind
that a the quarterly periods the de-
mand upon the currency is much great
er than il is at other times, for an over