davidaulloa/AmericanStories huggingface dataset:
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
PROPOSED FEDERAL
RESERVE DIVISION

SO. As one Of several plans suggested
to mobilize the banking reserves and
provide elastic currency. il has been
suggested that the Treasury Depart.
rent establish a division to be called a
Federal Reserve Division" which
should conduct reserve agencies in each
reserve city to exercise the functions
OF the proposed reserve banks; receive
capital from member banks TO the ex-
tent Of 10 per cent Of their capital, but
without permitting the banks TO man.
age the reserve agencies directly or in
directly; that such reserve agencies
should discount short term prime COM
rercisI paper and furnish Treasury
note currency, where needed, to men,
Der banks under reasonable safeguards
TO prevent imitation, thereby modifying
tho reserves and furnishing elastic cur
rency directly to the qualified banks.
This suggestion carries with il a more
thorough examination Of tho national
banks and makes the indebtedness to
the government by such banks a first
lien on the assets Of the banks. What
do you think Of such a suesestion7
Answer-It is possible for the Treasury
Department 10 furnish the country with a
safe currency II would he very difficult,
II not impossible. to make that currency
elastic. in the sense Of contracting and
expanding according 10 the needs of the
public. The experience OF commercial
nations is that results can be better ac-
complished by the creation of privately
owned central organization dominated
and controlled by the government, as, for
instance. the Imperial Bank Of Germany
or the Bank OF France. 1t serves TO take
the matter out OF politics
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
ELASTICITY LACKlNG;
WASTE is ApPARENI

The use of so much Of the legal reserve
money of the country In actual ciTcuIa-
ton for ordinary business purposes Is
another economical waste. No provision
is made for the use Of any substitute for
legal reserve money as a circulating me-
dunn other than the national bank notes
secured by government bonds. whlch are
as infexibe in their volume and therefore
as irresponsive 10 the huctuatlng coih-
mercial needs for them as the legal re-
serve money itself The gold certhcates
now In circulation. amounting TO sl'oco'-
$4,000, being merely warehouse receipts
for an equal amount Of gold in the gov
eminent Treasury, form the most con-
spicuous example OF this economic waste
The lack Of elasticity in the circulation
all forms of our present circulating iheu-
ium being rigidly fixed in amount Inc
necessities OF commerce for circulatins
medium are arbitrarily met with hAeu
amount of It. which does not respond IN
ITS volume to the fuctuating demands
Assuming that the aggregate amount may
be tust sufficient for an average Voluihe
of general business. then there must ue
a surplus when the volume OF business
falls below the average and dehclehcS
when the volume of business rises above
the average. The actual condition. now
ever, is that in each year there are sea-
sons in which the needs for circulation are
much heavier than they are In other
seasons. so that its inadaptability in vol
ume TO the legitimate existing demand Is
constantly felt. We have as a rule either
q surplus or a deficiency.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
SOME ADVANTAGES
IN PRESENT SYSTEM
2. Enumerate eoncisoly its sdVan
tages.

4. enumerdlc CoHCisoV lNs oSNo'-
taees.
Answer-One advantage Of our banking
system is that II enables each community
70 organize and control its own banking
facilities.
II has for half a century provided the
government with market for its bonds
This was a great advantage to the gov
eminent at the time the banking system
was inaugurated, and IL has since been
taken advantage Of by the government 20
reduce by two-thirds the rate of interest
on its bonds On some issues OF its z
per cent bonds II has obtained a premium,
Notwithstanding the fact that without this
artificial market their investment value
would be about 30 per cent below par.
Another advantage Of no small i'm
portance in view Of the conditions OF the
bankrote circulation Of the state banks
al the time the bank act was enacted Is
that II has provided a banknote circu-
lation Of uniform value. which In spite
Of It's defects is Of undoubted strength and
stability.
Its disadvantages are covered in the
list Of It's defects. 1t might, however, be
stated as an offset 10 the advantages re-
ferred 70. "B" and &C." that the artificial
market maintained for government bonds
has been so maintained at the expense
Of the banking development and CONNER
cial growth OF the country, both OF which
have been seriously retarded by the costly
periodical panics for which the defects OF
the banking and currency system are
principally responsible
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
CENTRAL CONTROL NEEDED
BY RESERVE ASSOCIATIONS.

The smaller the number or regional re-
serve associations. however. the more
effective the reserve control. II. there are
10 be a number OF regional reserve as
sociations they should be under some
kind OF central control. in which both
the government and the various associa-
tons should have representation.
Three objections TO the regional re-
serve associations occur to us:
First-They will divide the cash reserve
OF the country into as many different
ownerships as there are regional associa-
tons. No individual bank can now
strengthen its cash reserves without at
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22

without being provided with proper means
for the protection or replenishment OF
their legal reserves is unscientinc and
economically wasteful.
An unsound system of reserves, under
which in periods of anxiety it becomes
necessary in the protection and mainte-
nance OF individual reserves for each
bank in the national system to contend
against every other bank; the dissipation
and scattering Of the great bulk of the
reserve money of the country into large
number of small hoardines. completely
destroying in times of stringency the
strength and power which might be
GAINED by unifcation and massing of re-
serves for the mutual support OF the
banks and the common good Of the pubic
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
REGULATIONS FOR
DEPOSIT AND DISCOUNT

10. Should il accept any deposits
other than those Of banks and should
il be allowed to pay interest on de-
posts?
Answer-They should not accept any
deposits other than those Of the govern
ment and OF the participating banks and
they should not pay interest on deposits
20. Should il discount doubls-name
commercial paper for it's member
banks on equal terms to all, and should
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
STRICT LIMIT ON
BANK AccEPTANcEs
g. Should there be limit within
which banks should be permitted 10
Give aeceptances? II so, what Iimit7

WHICH Ddnk6 oHOb'O w
give acceptances2 II so, what limit?
Answer.-Banks having less than $1,000
600 capital should not be permitted 10 &C
cept, and accepting banks should De Inn
tied in their acceptances outstanding at
any one time TO an amount equal TO their
paid-up capital, subject TO the statutory
limitations as TO the amount or loans
which may be made to any one individual
firm or corporation
80. What dividends should reserve
associations be permitted to pay their
member banks?
Answer-Resional reserve associations
should be permitted to pay their member
banks. out of earnings dividends Of per
cent per annum.
81. Should any share OF the profits Of
a reserve association be distributed to
the member banks in proportion TO tho
average deposit maintained by them
during tho year?
Answer-We do not deem il advisable
that any share OF the profits Of the re-
gional reserve associations should be dis
tributed TO the member banks in proper
ton TO the average deposit maintained
by them during the year. This would be
equivalent to the payment Of interest on
balances by the regional reserve associa-
lions, which We think should not be per-
mitted
80. Are you familiar with the recon-
mendatons Of the National Monetary
Commission to Congress in January.
1912? II so, what is your opinion Of tho
plan. and what notifications would you
suggest, II any7
Answer-We are familiar with the rec
concentrations OF the National Monetary
Commission made to Congress in jan
uary. 1912. and are on record as having
Endorsed and recommended that measure.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22

II. What device should be provided
10 force the retirement o: this currency
in whole or in part when the legitimate
demands Of trade subside2
Answer-No device will be necessary
10 enforce the retirement Of such a cur
rency when the legitimate demands of
trade subside The volume will automat-
icaly adjust itself 10 the demands OF
trade
IL. II a tax on this currency payable
to the government is provided, should
il be graduated so as to increase with
the volume OF currency issued by tho
reserve association, or graduated so as
to increase with tho length Of time il
ls outstanding2
Answer-A tax upon the deficiency in
reserve graduated on a scale increasing
as the deficiency increases removes all
necessity or reason TO tax notes either
in proportion TO volume or 10 length Of
time outstanding The tax might be
regulated so as TO become prohibitive be-
fore the reserve could fall to what might
be regarded as the danger point.
10. Should thore be central reserve
association, with branches, or a num-
Der of reserve associations with or
without a central control2 II a number
Of reserve associations undor central
control, should that control be wholly
with representatives Of tho various as
sociatons, or wholly by the govern
ment, or by giving both representation
Answer-In our opinion one central re-
serve association. with branches. would
host serve our present necessities Fall
ing that. a small number OF regional re-
serve associations. also with branches.
might be organized TO serve the purpose
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
DANGER OF POLITICS
IN LOANS BY NATION

The great danger Is that II borrowers go
direct TO the Treasury politics would be-
come an all-important and dominating in
nuence. Our government experienced
great difficulty in retiring the greenbacks
in gold as presented at a recent period
although their total amounted to less than
$3.50. 900 600 Four bond issues during one
administration became necessary TO OBJ
tain gold for that purpose. IL the amount
OF the Treasury notes outstanding were TO
be multiplied by seven or eight the re-
sponsibility resting upon the government
would be still greater. With an overflow
ing Treasury and ample gold no anxiety
would be felt, and little difficulty would
be experienced in meeting such oblga-
lions, but we know from the past that
we are bound to have times in the future
when the Treasury will not be overflow
ing and the gold reserve will be en-
croached upon. and the credit of the gov
eminent would then be unnecessarily
brought in issue.
We cannot have any credit in the coun-
try better than that Of the government
under which we live. and It Is for the in
terest of all TO protect that credit against
all possible danger our own experience
for the last fifty years-in fact ever since
the creation OF our government--as well
as the experience OF other nations. mill
tates against this general proposition.
The policy OF the government has been to
protect itself against maturing liabilities
by making even its future obligations
payable on or after a fixed date at it's
pleasure. The proposal that II should as
sumo not only large demand liabilities on
note issues, but also enormous demand
liabilities In the form OF bank reserve de-
posts. would be radical and dangerous
reversal of its policy.
II was stated yesterday that officers Of
national banks In the leading cities OF the
country will hold a conference within a
few days to take action with reference to
the proposed currency law No place has
yet been set for the meeting, but It is be-
lieved that II will be one OF the most rep
resentative ever held
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
ACTIVE ACCOUNTS IN
IMPORTANT CENTRES.

The reserve balances maintained with
correspondent banks are the basis Of
credit as well as other valuable banking
privileges extended TO the banks main
tanning such balances. Being legal re-
serves. the balances are upon the average
fairly steady, the amount OF daily turn
over increasing or diminishing the same,
as the case may be. In order to have
their daily business handled and their
exchanges paid and establish basis OF
credit, the interior banks must maintain
active accounts in important business
centres. II follows that II such balances
may not count as reserve and funds must
in addition be deposited with regional
reserve associations. II will materially
curtall the loaning power Of the country
banks and their power to serve the pub
lie. The requirement imposes the heavi-
est burden upon the banks OF the interior.
which will be under the necessity OF car
rying with their active correspondents
and regional reserve associations COM
bined much larger balances than now.
rs. Should a reserve association be
required TO maintain a reserve against
its deposits, and, IL so, in what amount,
and should il consist Of gold or lawful
money?
Answer-Reglona reserve associations
should be required TO maintain a reserve
against their deposits TO the same extent
required against their note Issues, with
the same penal tax on any deficiency in
the required amount. The reserve should
consist principally OF gold. but II the
government greenbacks. Treasury notes
and silver certificates are to continue in
use and are not to be increased. there
seems no good reason why they should
not continue to he counted as legal re-
serve for The regional reserve associa-
tons as well as for the banks. The silver
certificates and Treasury notes should
continue 10 furnish small bills for circu-
lation, and the government, being re-
sponsible for their redemption. should
maintain a reasonable gold reserve against
them
LIABILITY OF EACH
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
BANK CONTROL TO BE
BASIS OF ANY CHANGE.

II under centralized system Of control
they are 10 be economically protected by
a satisfactory note issue, based OH an
adequate gold reserve and liquid bank as
sets for use by the banks as circulation,
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
BANKS SHOULD BE
THE STOCKHOLDERS

IS. SHOULD such reserve assoe'atIons
have stats banks and trust companies
as stockholders, and II so what re-
ouirements should be made OF such
state banks and trust companies
Answer.-State banks and trust com
panles should be included as we'll as ma
,,onal banks. They should he under the
same requirements as 20 capital, surplus
and examination
is. Approximately how many region
al reserve associations should there De
IL that system is adopted3 what: ~
any, should be tho minimum capital
stock, and what amount OF stock should
each member bank hold7
Answer.-As already indicated. II Is our
oninion that the smaller the number OF
regional reserve associations the better
will they be able 10 command and hold
cold and thus 10 protect the lawful re-
serves Of the banks ~ the country. We
would prefer 10 have only one association,
with branches. hut ~ such centralized
control Of the gold reserves Of the country
is not acceptable. then We are OF the opin-
ion that the number be limited az much
as possible Each regional reserve associ-
etion could have as many branches az
NAV he necessary in ts region. II limited
in number the capital supplied by the
constituent banks connected with each
regional reserve association by contribut-
ing 10 per cent Of their present capital
would be adequate for the use Of the
regional reserve associations. II. on the
other hand. there should he a larger num-
Der OF regional reserve associations then
the capital stock required by each "ouln
have 70 be considered and determined
from the standpoint Of the aggregate
amount Of capital Of the banks In eacn
district The participating banks would
have 10 contribute their pro rata share OF
such amount Of capital rs might he
deemed necessary. which would differ In
different localities
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
q. Should national banks continue TO
have a bond secured currenoy7

Answer-No. In the use OF the govern
ment bonds as security for circulation the
volume Of currency. instead OF fuctuating
with the varying requirements Of trade.
is limited by the volume OF bonds and
fuctuates according to their market
prices These prices are determined not
by the general investment value OF the
bonds. but by the profit possible 10 banks
In using them as security for circulating
notes, resulting in artificial stimulation
OF government bond prices. One unfort-
innate consequence Of this artificial condi-
ton is that the nations bonds, which
should be widely held by its citizens as
their choicest investment. are held almost
exclusively by banks TO secure otrcula-
ton or government deposits.
5. Should the present requirements
OF reserves for national banks be re-
duced, increased or otherwise mod-
fed?
Answer.-Whether the present require
ments Of reserves for national banks
should he reduced, increased or otherwise
modified depends upon how they are 10 be
controlled and protected.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
MANAGEMENT OF THE
RESERVE ASSOCIATIONS
II. How should the directors Of a
reserve association be elected? What
should be their number, powers and
terms OF Officer

Answer-The number Of directors or
regional reserve associations might prop
erly be fixed at nine. six of whom should
be elected by the member banks. OF whom
three should be bankers and three should
fairly represent the agricultural. COM
mercial. Industrial and other interests OF
the region in which the regional reserve
association is located, and should not be
officers, nor, while serving, directors OF
banks. trust companies or other financial
institutions. The remaining three should
he appointed by the President of the
United states.
The powers Of the directors should he
practically those Of national bank d.
rectors. They should have authority to
make the bylaws OF the association. elect
It's officers and supervise and direct them
I'm the conduct of its business. Directors
should he elected for three years. but the
term Of those first chosen should he so
arranged that the term Of one member Of
each OF the three classes will expire each
year
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
HOW THE CURRENCY
SHOULD BE ISSUED.

g. Should all currency be based upon
qold7 II so, how ought il to be issued,
and what per cent OF gold reserves
should be required7
Ans~er-Reserve money should prefer
ably be gold, but the proportion OF green
backs and silver now included in our So
called lawful money. II the amounts
thereof are not increased. is Of diminish
ing Importance. and II continued az
eligible for reserve will not cause embar-
rassment The percentage OF reserve
money against deposits. whether in the
! form Of deposits subject 10 check or in
the form OF circulating notes. should be
left 10 the discretion OF the management
of the central or regional reserve associa-
tons, but II a restriction is imposed II
should be In the form OF a tax upon the
| deficiency In reserves when below 20 per
cent
10. II notes are issued 20 or by an
| association, what should be the limit
in amount Of this currency for each
association. and should this limit be
based on it's capital stock and surplus7
! Answer-As already stated notes should
be issued preferably by one association,
or possibly several regional associations.
and their limit should be regulated by
| the amount of gold reserve such associa-
ton or associations can command and
| hold in readiness for their redemption
| The business needs for circulation viii
thus be supplied within the limits Of the
reserve held by the association or asso-
Citations responsible for their redemption,
and they will automatically respond in
volume 10 the existing demand for them
! The association or associations issuing
| them will be able TO check any undue in
! crease in the issue Of them by raising the
discount rate. AS It's reserve goes down
It's discount rate will 80 up
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
LIABILITY OF EACH
BANK IN MEMBERSHIP.

26. Should the liability OF zach Nom
Der bank in q reserve association be
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
1s. What should be the general nat
ure Of tho business Of such an associa
tion7

Answer Regional reserve associations
should act as the principal fiscal agent
Of the United States for the region In
which they are located, buy and sell
United States and other government ana
state bonds. receive deposits from the
government and member banks. discount
for It's members. buy and sell exchange
here and abroad. buy and sell gold coin
ard gold and silver bullion, have similar
dealings with other regional reserve asso-
Citations and any other transactions with
them which would insure fullest co-opera-
ton for efficiency serving the business In
terests OF the country.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
RELATIONS OF BANKS
TO THE ASSOCIATIONS.

"a. Should every national bank be re-
ouired to keep it's reserve with tho as.
ISOLATION TO which il belongs except
such as il keeps in its own vaults; or
should il be permitted to keep any GER
tain per cent OF its reserve WIN otnes
reserve associations7 II so, how much!
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
CHIEF PURPOSES OF
AN IMPROVED SYSTEM

8. What are the chief purposes TO be
attained in an improved system2
Answer-The chief purposes to be at
tained I'm an improved system are the
correction OF the defects OF our present
system so that II will be placed on a
sound and scientific basis and made to re-
spond adequately to the varying require
ments Of the public in conducting the
trade and commerce Of the country.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22

IS. Should such reserve ASSOCIATIONS
have stats banks and trust companies
as stockholders, and " so "na' 70
ouirements should be made OF sue"
stat. banks and trust companies
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-22
VOLUME OF CURRENCY
WOULD ADJUST ITSELF.

II. What device should be provided
TO force the retirement o: this currency
in whole or in part when the legitimate
demands of trade subsde2