The Birmingham age-herald., 1913-07-08

two of the more important banks
- New York city could not be
persuaded to surrender their state
| s.s.44tels ana to reorganize as national
banks unless exceptions were made in
their favor. 1t was deemed of the ut
most consequence that these two banks,
one of which was the Bank of Com
meree and the other the American Ex-
change bank, should as early as pos
sible become national banks Each of
these banks, however, had especially
advantageous privileges accorded to
them when they were chartered as state
banks. Their managers could not see
how they could afford to give up their
state charters and thereby lose these
valuable privileges simply to become
national banks. The contemplated ma
tional banking law was. therefore, so
amended while under discussion as to
enable these two banks to retain the
privileges granted to them by their
state charters They are exceptional in
that respect among the national bank g
of the United States.
| Now, 1t may happen that if, after a
test of the present bill when 1t is en-
acted into law, some of the national
banks find that they are restricted
that the opportunity for free banking
F, is denied or that they are confronted
with other objections, some of which
are even now looked upon as possible
they may decide that it will be to the
pest advantage of their stockholders
and the business communities which
tney serve If they surrender their ma
tfonal bank charters even though a
surrender would involve some loss ow-
ing to the fact that the 2 per cent
bonds which would be returned to
| them on the surrender of their circula-
tory notes could not be marketed at
par.
A Great Many Details
AS many as 10 or 10 years were need
ed before there was full understand
Ing of the responsibilities. the onnor-
tunities and the privileges created by
the national banking law. There were
many little things that it was neces-
sary to learn from experience. There
are today many little things done by
| national banks apparently in violation
OF the real spirit of the law which are
tolerated by the comptroller of the cur
rency at Washington
AS, Tor instance, the law explicitly
declares that the legal reserves must
be Kept in lawful money. That is to
say, in legal tender or in specie. Ma
tlonal bank note currency is not es-
teemed lawful money. Therefore under
the law national bank currency cannot
De counted as part or all of the legal
reserve.
Yet as matter of fact 1t is SO
counted and is inevitably so counted.
1t is physical, practical impossible
ity constantly to separate or segregate
national bank notes from so-called law
full money. To do that would reouire
each day, at least In the larger banks.
a considerable special force of clerks
Therefore it has become a practice not
unknown to the comptroller of the cur
rency. not unknown to national bank
examiners, occasionally sometimes fre
quently, to count in some of the ma
tionai bank currency. permitting it
thereby to Ieep company with lawful
currency as the legal reserve.
Currency Circulation
Sometimes the banks, especiallv tbosa
i'll the larger cities, have been put to
their wits ends almost to keep national
| bank currency in circulation. All sorts
of lawful and expedient methods are
adopted not merely to put this cur
rency into circulation but to get as
much as possible of 1t into distant
Currency to the Country
The railroad companies of the United
States, at least those whose offices are
in the large financial centers. send 10
their banks few days before their
| employees are to be paid sheets describ-
ing the kind of currency thy want and
now much they want. Railroad EMPLOYEES
excepting the salaried officers, are al
ways paid in cash. The banks there
upon set a special force of clerks at
work who select currency and who
| make up this currency into conyen-
lent bundles and at the proper time
| 1t Is delivered to the railroad paw
master. In this manner it Is distributed
sometimes hundreds of miles away
from the main offices Of the railroad
companies and from the bank. 1t there
V gets into wide and remote cfrcu-
'stion. The railroad companies and the
farmers Of the United states at har
vest time, the manufacturers who have
large pay rolls and who pay cash are
| the chief instrumentalities by which
national bank currency is kept in cir
culation.
IT is easy to see that II the bill now
before CONGRESS- becomes a law all this
Will be changed for ultimately we are
to have no national hank currency as
that term is now understood.
The Clearing House
The clearing house associations OF
the United States will have some i'm
portant problems to solve in case the
Dill now before Congress becomes a
law and there may be some confu-
sion for time before the associations
adjust themselves perfectly to the new
law.
Information has come from Washing
ton that the administration looks uoon
Fl \