The Birmingham age-herald., 1914-06-27
Banks Were Many in 1863

"The passage of the national bank act in 1863 marked the third attempt of the government to identify itself with the banking system of the United States The underlying motive for this act was to provide a market for United States bonds. which were being issued in large quantities to provide funds for the oper- ations of the war. The acceptance of this act by the banks already in exist ence was slow and in marked contras to the readiness with which the national banks of the present day have come into the new federal reserve system, and not until an act was passed placing the prohibitory tax of 10 per cent upon the circulation of state bank notes did the national bank act become a complete success. There are today about S725 O00, ,OO0 of national bank notes in circulation. They furnish a satisfactory medium. and while not a legal tender are received everywhere in the United States, with out the slightest attention being paid to the name of the bank that appears on the face of the note.
 All national bank notes are secured by bonds of the United States, and pro- visions for their redemption are ample The unsatisfactory feature of national bank notes as circulating medium has been their rigidity, and their volume de- bends not at all upon the demands of
 
 market for United States bonds. An ideal currency should expand and contract with the requirements of business During the active seasons of the year when crops are moving freely and trade is brisk in all lines, there should naturally be larger circulating medium than at times Of rest and fnaction. Another feature of the national bank act which has been subject to criticism is it's reserve system, which encourages and almost forces concentration of funds in the larger cities. and in the last analysis imposes upon the banks of New York the responsi- bflity of safeguarding the finances of the entire country.
 The practical operation of the national bank act has been to furnish a cfrculat- ing medium at times entirely inadequate during periods of active and prosperous trade conditions, and to concentrate in times of ease in the money market large volumes of currency in the central re- serve cities. Speculation and stock mar ket operations of all kinds have thereby been encouraged. The collapse in me fall of 1907 convinced everyone that the system of reserves under the national bank law was dangerous and the final determination of the country to adopt another system dates from that period
 "As a temporary makeshift Congress passed in the spring of 1908 was known as the Aldrich-Vreeland act, which au- thorizes banks in contiguous territory to form currency associations, which shall be permitted on deposit of satisfac- tory paper with the joint guaranty of all banks in such associations to issue currency taxed at the rate of per cent per annum for the first month, with a graduated tax of 1 per cent additional until maximum of 10 per cent is reached. No currency has every been issued under this act, but in view of the length of time necessary for the full operation of the new currency law, this act has been extended for one year. until June 30, 1915, and the tax on its issues so lowered as to make it an effective means of currency supply should any expansion be deemed advisable during the next 12 months.'
 Present at Banquet
 Among those present last night were the following:
 Morris Adler F. Aiosi, A. B. Aired, Jr.. Hollis Armstrong, H. M. Beck. E. w. Barrett. J. H. Barr, c. F. Bell T. N. 5alabanos. J. D. Baugh. George A. Blinn. James Bonnyman, Sydney J. Bowie, c. bIacn, James Bowron, Murray Brown, w. L. Brown, Jacob Burger, R. D. Bur nett B. B. Burton, William M Byrd, Jr., > Caheen. c. R. Carter. R. l.. Cason, E. Il. Cabaniss, w. A. Chenoweth, W. K. Clements, Albert c. Chesney, George w. Connors. Phares Coleman, w M. Cosby, E. c. Cox, H, M. Cowart w. w. Craw- ford. J. D. S. Davis. A. R. Dearborn. charles Denegre, J. P. H. DeWindt, A. R. Dearborn, Jr., J. H. Doughty, Alvin M Douglas, E. T. Douglass, w. B. Douglass, George w. Duncan, James T. Dunlap, J. IT. Eddy, W. J. Edwards. w. Thornton Estes William Blanks Everett. Robert w. Ewing. Culpepper Exum. Hill Fergu. son, Harden H. Fitts, John F. Fletcher, F. 8. Foster. F. B. Fowlkes. John H. Frye. V. s. Gage. A. A. Gambill, Frank P. Glass, c. B. Glenn. Leonard Gordon.