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LIBRARY 
 
 University of California. 
 
 Gl FT OF 
 
 
 
 Class 
 
THE CURRENCY 
 
 RBPORT BY TUS 
 
 SPECIAL COMMITTEE 
 
 OP TBB 
 
 CHAMBER OF COMMERCE 
 
 OP THS 
 
 STATE OF NEW YORK 
 
 ADOPTHD BY THE 
 CHAMBER, KOV. 1, 190^: 
 
 SUBMITTED TO THE CHAMBER 
 OCTOBER 4, 1906 
 
THE CURRENCY 
 
 REPORT BY THE 
 
 SPECIAL COMMITTEE 
 
 OF THE 
 
 CHAMBER OF COMMERCE 
 
 OF THE 
 
 STATE OF l^EW YORK 
 
 °'^™^. Nov" rx.- 
 
 SUBMITTED TO THE CHAMBER 
 OCTOBER 4, 1906 
 
^t 
 
 ^^^ 
 
 SPECIAL CURRENCY COMMITTEE OF THE 
 
 CHAMBER OF COMMERCE 
 
 OF THE STATE OF NEW YORK 
 
 JOHN CLAFLIN, Chairman 
 
 FRANK A. VANDERLIP, Vice-Chairman 
 
 ISIDOR STRAUS 
 
 DUMONT CLARKE 
 
 CHARLES A. CONANT 
 
 JOSEPH FRENCH JOHNSON, Secretary 
 
I UNiVEftSlTY \ 
 
 Mr. Morris K. Jesup, 
 
 President of the Chamber of Commerce of the State of 
 New York. 
 
 Sir : 
 
 The Special Currency Committee appointed by you in March, 
 1906, to inquire into the condition of the currency and to suggest 
 desirable changes, beg to submit the following report. 
 
 The Committee held their first meeting on March 14, 1906, 
 and met at frequent intervals from that time up to the date of 
 this report. Suggestions were sought by circular letter from 
 members of the Clearing House Committees of principal cities, 
 consultations were held with leading bankers in the United States 
 and the experience of the heads of the chief European banks of 
 issue was sought by letter and by personal visits of one of the 
 members of the Committee, and is embodied in letters printed as 
 an appendix to this report. 
 
 The gold supply of the United States on July i, 1906, 
 amounted to $1,475,841,821. In addition to this gold, the 
 country contained on that date $1,594,048,919 of other cur- 
 rency, as follows: United States notes $346,681,016, Treas- 
 ury notes of 1890, $7,386,000, silver dollars (or certificates) 
 $560,864,855, National bank notes $561, 1 12,360, subsidiary silver 
 $117,998,588. The total stock of currency was $3,069,884,640, 
 of which $2,744,483,830 was in circulation, the remainder, 
 $325,400,810, being held in the United States Treasury. The 
 representative money is kept at par with gold either through 
 direct redemption or through limitation of the supply. In view 
 of the measures taken to maintain its equality with gold by the 
 Act of March 14, 1900, we do not think it necessary to recom- 
 mend any further steps in this direction at the present time. 
 
 ONE IMPORTANT Di^FKCT. 
 
 We find, however, that the monetary system is defective in one 
 most important respect, namely, flexibility, and that in conse- 
 quence the country's business interests are at times seriously 
 hampered. This defect is due to restrictions which are unneces- 
 sarily placed by law upon the use of bank credit. Nearly fifty 
 
 3 
 
 1G2898 
 
per cent, of the people of the United States are engaged in 
 agricultural pursuits, and the fruits of their toil are harvested in 
 the autumn. These harv^ests and the marketing of the crops 
 bring to bear upon the banks a two-fold strain/ one for capital, 
 the other for currency. The demand for capital comes from the 
 buyers and shippers of agricultural products and is in the main 
 satisfied by an expansion of bank loans and deposits, most of the 
 payments being made by check and draft. The demand for cur- 
 rency comes principally from the farmers and planters, who must 
 pay their help in cash. In the satisfaction of this demand the 
 banks are unable to make use of their credit, but are obliged to 
 take lawful money from their reserves and send it into the harvest 
 fields. As a result, the money reserves of banks are reduced at 
 the very time when the demand for loans is increasing, and in 
 consequence the rate of interest is advanced. 
 
 THE HARVEST DEMAND FOR CURRENCY. 
 
 This harvest demand for currency and capital is first 
 felt in July by the reserve cities of the southwest, as the 
 winter wheat of that region ripens. At that time the country 
 banks of Oklahoma and Kansas and the banks of the reserve 
 cities in that region, especially those of Kansas City and St. 
 lyouis, are pressed for loans by the buyers of grain, and 
 for currency in small denominations for the payment of 
 harvest hands. Their surplus stock of currency being soon 
 exhausted, these banks draw upon their balances in Chicago, 
 New York, and other eastern cities. Then, as the season pro- 
 gresses and crops in various sections of the country are har- 
 vested, a flow of currency from the east to the south, to the west 
 and to the northwest sets in and does not cease until the cotton, 
 corn and wheat of the country are all marketed and the farmers* 
 work for the season is over. 
 
 No statistics are available showing the total of this period- 
 ical movement of currency. The increase in the demand for 
 loans on account of the crop movement cannot even be conject- 
 ured, but the shipments of currency from the banks of the cities 
 into agricultural regions might easily reach $150,000,000. The 
 amount passing through six Chicago banks last year reached 
 $92,000,000. This currency goes in the form of gold certificates, 
 
 4 
 
silver certificates, United States notes and National bank notes. 
 All these except the bank notes, which form only a small 
 proportion of the whole, are "lawful money," and their ship- 
 ment, therefore, causes a corresponding reduction of bank re- 
 serves. 
 
 CONTRACTION IN THB FALl.. 
 
 Since experience has proved that a dollar in a bank reserve 
 is adequate protection for an indebtedness of four dollars due 
 to bank depositors, it is evident that the withdrawal of 
 $100,000,000 from the banking reserves of the country might 
 lead to a contraction of bank loans and deposits by an amount 
 four times that sum, namely, $400,000,000, such contraction 
 being the result of the efforts of banks to increase their reserves 
 by calling loans. Thus at a time when the legitimate demand 
 for loans is increasing in order that the great agricultural yield 
 of this country may be brought to market, the lending power of 
 our banks is actually curtailed by several hundred million dol- 
 lars. As a result, borrowers of all classes are forced to pay un- 
 usually high rates of interest, many business men are unable to 
 secure customary accommodations from banks, and the prices of 
 many articles of commerce suffer, the buying demand having 
 weakened. 
 
 INFI^ATION IN THE SPRING. 
 
 Unfortunately these evils are not the only ones that result 
 from the defective character of our monetary system. During 
 the winter and spring there is a return flow of lawful money from 
 the country to the cities, and the surplus reserves of the banks in 
 financial centers are increased as rapidly as they had been dimin- 
 ished in the fall. As the city banks pay interest on this money, 
 they cannot suffer it to lie idle in their vaults; hence the rate of 
 interest is lowered, and speculation is thus unduly encouraged. 
 Bankers are aware that the country will again call for this money 
 in the fall and are careful not to lock it up in long-time paper. 
 Most of it, therefore, is put out on call, and so finds its way into 
 the hands of men whose interests are largely speculative. Here 
 we have the secret of our so-called "spring boom" in speculation. 
 It is the product of inflation, just as our autumnal stringency is 
 
 5 
 
the product of contraction. So long as reserve money to the 
 extent of $150,000,000 is being shipped about the country, now 
 lying for a few months in the vaults of banks, now circulating 
 among the farmers and the planters of the west and the south, 
 these alternate periods of excessive speculation and depression 
 are inevitable. 
 
 DUE TO RESTRICTION OF BANK CREDITS. 
 
 This condition of affairs is the product of legislation which the 
 country has outgrown. By the National Bank Act our banks, 
 while permitted to utilize their credit in the form of deposit 
 accounts, thus rendering available many hundred millions of 
 capital, are restrained from any natural or free use of that credit 
 as a common medium of exchange. 
 
 Between a bank note and a bank check there is no essential 
 difference. The depositor, to be sure, is a voluntary creditor 
 of a bank, and the checks written by him do not circulate widely 
 without endorsement, whereas a bank note is an acceptable sub- 
 stitute for money among people who have little or no knowledge 
 of the issuing bank. Nevertheless both the check and the note 
 are representatives of money and both must be redeemed on pre- 
 sentation. They have, however, different fields of usefulness. 
 The home of the bank check is the town and the cit}^ where 
 people keep their funds in banks. The bank note, on the other 
 hand, properly belongs in the country, among people who have 
 no bank accounts, with whom it is quite as effective as money 
 itself. If our banks were permitted during the crop-moving 
 season to increase their issues of bank notes by from $100,000,000 
 to $200,000,000, these notes would go into the harvest fields and 
 do the work which now absorbs legal tender money. Since the 
 banks under such circumstances would not be obliged to pay out 
 lawful money from their reserves, they would be under no com- 
 pulsion to contract their loans as at present. 
 
 NATIONAL BANK NOTES NOT AVAII,ABI.E. 
 
 Unfortunately, the conditions governing the issue of 
 National bank notes are such as to prevent their being availed of 
 to meet the harvest demand for currency. National bank notes 
 can be issued only by banks which have previously deposited 
 
 6 
 
with the Treasurer of the United States government bonds of 
 a par value equal to the face of the notes to be issued. A bank, 
 therefore, before increasing its circulation is obliged to buy 
 government bonds. 
 
 The experience of forty years since the enactment of the 
 National Bank Act has proved that a bank note based upon 
 bonds cannot be relied upon to take care of temporary fluctua- 
 tions in the country's need for currency. In no single year since 
 the passage of the National Bank Act has the volume of bank 
 notes shown more tendency to increase in the fall than in the 
 spring, nor has their volume ever shown any tendency to de- 
 crease when the currency was redundant. Their issue and retire- 
 ment appear to have been regulated entirely by investment con- 
 ditions in the bond market absolutely unrelated to the country's 
 need for currency. 
 
 BANK NOTES ARK NOT MONKY. 
 
 It is proper to call attention to an important distinction 
 between a bank note and other kinds of currency. The silver 
 dollar, the silver certificate, the Treasury note and the United 
 States note are given by law a function which the bank note 
 does not and ought not to possess, for they are rated as lawful 
 money, so that in the reserves of banks they are counted as the 
 equal of gold itself. Any increase in the supply of such money, 
 therefore, would evidently lead to an increase of the lending 
 power of banks, for part of the new currency would certainly 
 find its way into banking reserves. The bank note, however, 
 except in the vaults of state and private banking institutions, 
 cannot be counted as money. Ikying in the vaults of a 
 National bank it is like a promissory note still in the hands of 
 the signer — a piece of dormant or slumbering credit, not consti- 
 tuting a liability of the bank, and without influence upon the - 
 prices of either commodities or securities. Bank notes are not 
 money and should not be given by law any of the prerogatives 
 of money. They are intended to serve merely as a medium of 
 exchange, and the conditions governing their issue, like those 
 now governing the issue of checks, should be such as to call 
 them into existence only when they are needed and to compel 
 
 7 
 
their retirement or redemption when their work is done. 
 
 Since the National bank note is secured by a deposit of 
 government bonds, it seems as good ''money" as the greenback. 
 Why, then, it is often asked, should it not be treated as money 
 and counted as such in bank reserves ? Experience has proved 
 that such a course would be most dangerous. A bank note, 
 no matter what the collateral behind it, is a bank liability, like 
 a certified check, and may at any time necessitate the payment 
 of actual money. To make it legal tender or lawful money 
 would be equivalent to permitting banks to count in their re- 
 serves the sums which are due them from other banks. If such 
 a policy were sanctioned by law, there would be practically no 
 limit to the expansion of bank deposits and loans that would be 
 possible without any increase in reserves of actual money. If Bank 
 A were permitted to count the notes of Bank B as lawful money, 
 and Bank B could do the same with the notes of Bank A, the 
 effect would be the same as if banks were suffered to count their 
 own notes in their reserves. This would lead to the conversion 
 of the bonded debt of this country into demand notes like the 
 greenbacks and would not be less dangerous because the conver- 
 sion would be indirect and disguised, for under such conditions 
 the increase in the volume of bank notes would tend to cause an 
 expulsion of gold, and so endanger the maintenance of the gold 
 standard, quite as effectively as would an increase in the volume 
 of greenbacks. 
 
 UNITEJD STATES BONDS AN IMPORTANT FACTOR. 
 
 The present currency problem, in our opinion, might be 
 satisfactorily solved in several different ways, yet there is one im- 
 portant consideration which should not be left out of account. 
 The National banks are owners of United States bonds of 
 a face value of over $600,000,000, and the market valuation of 
 these bonds is largely based on the fact that they are required as 
 security for bank notes. If any other security were substituted. 
 United States bonds would inevitably decline in price. This 
 situation is one of the first and practically one of the important 
 things that must be considered. Those who plan changes 
 in our currency are not free to outline de novo an ideal sys- 
 
 8 
 
tern, but must alwaj^s keep before them the fact that the 
 Government bond issues, sustained as they are now by artificial 
 conditions, cannot prudently be left to seek a normal level. Such 
 a course would be unwise in itself and would with certainty 
 antagonize almost every person interested in a National bank. 
 
 A CENTRAI, BANK OF ISSU:^. 
 
 In our opinion, the best method of providing an elastic credit 
 currency, the volume of which could never be excessive, would be 
 the creation of a central bank of issue under the control of the 
 Government. This central bank should have branches in the lead- 
 ing cities, and should have dealings only with banks. Although 
 its capital stock might be privately owned or distributed among the 
 banking institutions of the country, it should be under the direct 
 control of a board of governors appointed, at least in part, by the 
 President of the United States, for it should perform some of 
 the functions now imposed upon the United States Treasury, and 
 should at the same time be managed not exclusively for private 
 gain but for the public good as well. This bank should have a 
 large capital, not less than $50,000,000. It should carry a large 
 reserve of gold and should act as custodian of the metallic 
 reserves of the Government and as its agent in redeeming all 
 forms of credit money. It should also be receiving and disburs- 
 ing agent for the government, doing at its branches the work now 
 done at the sub- treasuries. It should hold the five per cent, 
 redemption fund now deposited in the Treasury by the National 
 banks for the current redemption of their bond-secured notes, 
 and should redeem National bank notes both at its central office 
 and at all of its branches. 
 
 ADVANTAGKS OF A CBNTRAI. BANK. 
 
 The operations of central banks in Europe, especially in 
 France, Germany, Austria-Hungary and the Netherlands, make 
 it impossible to doubt that the existence of such a bank in this 
 country would be of incalculable benefit to our financial and 
 business interests. Such a bank in times of stress or emergency 
 would be able by regulation of its note issues to prevent those 
 sudden and great fluctuations in rates of interest which have 
 
 9 
 
in the past proved so disastrous. Furthermore, it would have 
 the power to curb dangerous tendencies to speculation and 
 undue expansion, for by the control of its rate of interest and 
 of its issues of notes it would be able to exert great influence 
 upon the money market and upon public opinion. Such power 
 is not now possessed by any institution in the United States. 
 Under our present system of independent banks, there is no 
 centralization of financial responsibility, so that in times of 
 dangerous over-expansion no united effort can be made to 
 impose a check which will prevent reaction and depression. 
 This is what a large central bank would be in a position to do 
 most effectively. A central note issuing bank would supply an 
 elastic currency varying automatically with the needs of the 
 country. This currency could never be in excess, for notes not 
 needed by the country w^ould be presented for deposit or 
 redemption. 
 
 resume: of advantages. 
 
 The advantages of such a central bank, in brief, would be 
 as follows : 
 
 (i) It would supply the country with an elastic currency 
 responsive to the varying needs of business. 
 
 (2) It would tend to steady the rate of interest at all sea- 
 sons, and to give relief in periods of industrial and financial stress, 
 for its large resources would enable it to meet extraordinary and 
 sudden demands for both capital and currency. 
 
 (3) It would relieve the Federal Treasury of the duties now 
 imposed upon the Division of Issue and Redemption, and, on 
 account of its intimate relations with the money market, would be 
 in a position, as the Treasury is not, to protect itself against a 
 prolonged drain upon its reserves. 
 
 (4) It would do away with the cumbersome sub-treasury 
 system and keep the money of the country always at the dis- 
 posal of trade and commerce, so that the government's collec- 
 tions and disbursements would cause neither contraction nor 
 inflation. 
 
 10 
 
In this connection we beg you to give careful attention to 
 the able letters from distinguished European financiers which are 
 submitted v^^ith this report. These letters clearly set forth the 
 beneficial operations of the great central banking institutions of 
 German}^, France, Austria-Hungary and the Netherlands. The 
 data they supply in the case of Germany and Austria-Hungary 
 show the operation of a credit-currency issued under a special 
 tax to have been strikingly beneficial in maintaining moderate 
 rates of interest during the periods of moving the crops and 
 making the quarterly settlements. 
 
 MODIFICATION OF THE EXISTING SYSTEM. 
 
 If for any reason, political or financial, the establishment 
 of a central bank of issue is not advisable, your Committee would 
 recommend the adoption of some plan whereby additional powers 
 of note-issue shall be extended to National banks. As already 
 has been said, the greatest defect of the present bank note sys- 
 tem is the fact that its volume bears no relation to the demand 
 for currency. No permanent increase of the stock of our credit 
 money is called for. Indeed, any such increase would be 
 attended with risk, for it might cause an expulsion of gold in 
 such large quantities as to provoke lack of confidence in the main- 
 tenance of the gold standard. Your Committee would emphasize 
 this point. Inflation is even more dangerous than contraction, 
 for its perils, being usually masked by a fictitious prosperity, 
 are often unnoted and ignored until great harm has been 
 done. Certainly no measure should be taken to encour- 
 age it. What is needed is not a permanent increase of 
 the currency, but the addition of a variable element issued and 
 redeemed under such conditions that its supply shall exactly 
 correspond with changes in the demand for currency. 
 
 If this variable element is to be issued by existing National 
 banks, it is clear that the motive for its issue must be indepen- 
 dent of those investment considerations regarding bonds which 
 now render the National bank circulation unresponsive to the 
 fluctuating demand for currency. The quantity of such notes 
 which a bank may issue should not bear an unvarying ratio to 
 the amount of its bond-secured circulation. It is proper, in our 
 
 11 
 
opinion, to require a National bank to invest a certain proportion 
 of its capital in government bonds as a prerequisite to the right to 
 issue credit-currency, but the amount of such currency that may 
 be issued should not be based in any fixed proportion upon the 
 amount of bonds held. Merely to permit a bank to increase the 
 proportionate amount of its circulation based upon bonds would 
 not achieve the desired result, for banks would so order their 
 holding of bonds as to get into circulation all that the law per- 
 mitted, and would then be unable to put out additional notes 
 unless they obtained additional bonds. 
 
 NO SUBSTITUTION FOR BOND-SECURED NOTES. 
 
 It should not be possible for banks to substitute this new 
 credit currency for their present bond-secured circulation to such 
 an extent as to lead to extensive sales of government bonds by 
 the banks and to the depression of their market value. Legis- 
 lation leading to such a result would be tantamount to a viola- 
 tion of vested interests, and almost certain to enlist the hostility 
 of banks. Any such result may be avoided by the provision that 
 no bank shall have the right to issue credit currency unless its 
 bond-secured circulation amounts to a definite proportion of its 
 capital, say 50 per cent. The bond-secured circulation of the 
 National banks at the present time equals about 60 per cent, of 
 their total capital. Some banks have issued circulation much in 
 excCvSS of 50 per cent, of their capital, while others have issued 
 only the minimum required by law, which is in no case more 
 than 25 per cent, of capital. If the right to issue credit-currency 
 were extended only to banks whose bond-secured circulation 
 equals 50 per cent, of their capital, while some banks might be 
 under an inducement to sell part of their bonds, others would be 
 under a similar inducement to increase their holdings and no 
 serious disturbance of the bond market would be likely to ensue. 
 
 PROPOSED IvIMIT OF ISSUE. 
 
 Banks should be permitted by law, as at present, to issue 
 bond-secured circulation to the full amount of their capital, and 
 no bank should be under any compulsion to issue the new credit 
 
 12 
 
currency to be provided for, or to assume any responsibilities not 
 imposed by existing law. 
 
 The amount of credit currency which a bank may issue 
 should bear a fixed proportion to its capital stock. Estimating 
 the amount of new currency needed by the country during the 
 crop-moving season at $150,000,000, which is about 20 per cent, 
 of the present capitalization of National banks, it would seem 
 that an adequate supply of new currency would be provided in 
 the fall if banks were permitted to issue, in addition to their 
 bond-secured circulation, notes equal to 25 per cent, of their 
 capital stock. But as some banks might not avail themselves of 
 the privilege, and as others would doubtless succeed in substitu- 
 ting these new notes for a portion of their present bond-secured 
 notes, it is probable that the limit of issue might well be fixed at 
 35 per cent, of a bank's capital 
 
 In order that there shall be no over-issue or inflation the fol- 
 lowing preventive measures are to be recommended : 
 
 ADEQUATE FACII.ITIES FOR REDEMPTION. 
 
 ( I ) That there should be convenient and adequate facilities 
 for the redemption of bank notes is of the first importance. 
 These could be assured by the provision that notes of every 
 National bank should be redeemable at sub-treasuries and other 
 convenient points. The redemption of bank notes should be so 
 easy and inexpensive that none would remain in circulation after 
 the need for them is past. At the present time the only general 
 redemption agency for National bank notes is in Washington. On 
 account of the location of that city, banks west of the Alleghany 
 Mountains send in very few notes of other banks for redemption, 
 but prefer to treat them as counter money, even though they have 
 an excessive supply on hand, rather than incur the expense and 
 loss of interest incident to their shipment to Washington for re- 
 demption . The records of the Redemption Bureau at Washington 
 show that nearly 60 per cent, of the notes presented for redemp- 
 tion come from New York City alone. Of the remaining 40 per 
 cent, about one half come from Philadelphia, Baltimore and 
 other eastern cities. If the volume of bank notes is to vary 
 sensitively and automatically with the need for them, there must 
 
 13 
 
be incessant daily redemption, and this can be had only when the 
 redemption points are so numerous that no bank will be more 
 than 24 hours distant from one. When a properly distributed 
 redemption system is in operation, few banks will voluntarily pay 
 out the notes of other banks ; for it will be to the advantage of 
 each bank to pay out its own notes and send in the notes of other 
 banks for redemption in lawful money, thus increasing its re- 
 serve and multiplying its power to make loans. So important is 
 the prompt redemption of notes that if it were practicable we 
 would favor a law prohibiting National banks from paying out 
 the notes of other banks whenever received from individual 
 depositors. 
 
 A GRADUATED TAX UPON NOTE ISSUES. 
 
 ( 2 ) The second measure for the prevention of excessive issues 
 would impose a restraint of a more direct and obvious character. 
 It consists of a graduated tax imposed upon the issue of notes, 
 the tax rising as the ratio of issues increases. For example, 
 assuming that banks having a bond-secured circulation equal to 
 50 per cent, of their capital are given the privilege of issuing 
 additional notes equal to 35 per cent, of their capital, let the issues 
 up to 5 per cent, of capital be taxed at the rate of 2 per cent, 
 per annum; additional issues up to 10 per cent, of capital, 3 per 
 cent.; additional issues up to 15 per cent, of capital, 4 per cent.; 
 additional issues up to 25 per cent, of capital, 5 per cent. ; ad- 
 ditional issues up to 35 per cent, of capital, 6 per cent. For 
 illustration: If a bank has a capital of $100,000 and has a bond- 
 secured circulation equal to or exceeding 150,000, then let it have 
 the right to issue $35,000 additional notes taxed as follows: 
 
 $ 5,000 taxed 2 per cent. 
 
 5,000 " 3 " " 
 
 5,000 *' 4 " " 
 10,000 '* 5 " " 
 10,000 " 6 " " 
 
 The capital of National banks June 18, 1906, was 
 $826,000,000. Therefore, the maximum issues of bank notes in 
 excess of the bond-secured circulation would be, under present 
 conditions, about as follows : 
 
 14 
 
$ 41^300^000 taxed 2 per cent. 
 
 41,300,000 
 
 " 3 
 
 tf 
 
 (( 
 
 41,300,000 
 
 " 4 
 
 (( 
 
 (( 
 
 82,600,000 
 
 5 
 
 <( 
 
 <t 
 
 82,600,000 
 
 '' 6 
 
 (( 
 
 <( 
 
 $289,100,000 
 
 
 These figures on their face seem unduly large, but that they 
 are not is made clear by the following three considerations : 
 
 1. The notes taxed at 5 and 6 per cent, could not be issued 
 by many banks at a profit except in time of great stringency. In 
 Canada, where banks are authorized to issue notes equal in 
 amount to their capital stock without payment of tax beyond 
 that necessary to cover the expense of issue and redemption, the 
 average profit from note-issues is computed to be only 2}4 per 
 cent. Yet the rate of interest in Canada ranges between 5 and 
 6 per cent. On account of the expense that would necessarily be 
 incurred in the issue and redemption of notes, if redemption were 
 incessant on account of abundant redemption facilities, as provided 
 in the plan recommended by this Committee, it is evident that no 
 bank, if this plan were adopted, could profitably put forth a 
 taxed issue of notes except when the market rate of interest was. 
 above the rate of tax. Inasmuch as the rate of interest in this 
 country, except in a few communities of small bank capitalization, 
 is seldom above 6 per cent., it is evident that the issues taxed at 
 5 and 6 per cent, would be put forth only in emergencies. The 
 maximum increase of bank circulation under a tax of 4 per cent, 
 and less would be only $123,900,000. 
 
 2. Since some banks would doubtless not qualify for the 
 issue of the taxed circulation, the actual issue of the taxed notes, 
 even when interest rates were high, would be materially less 
 than the maximum allowed by law. 
 
 3. The abundant redemption facilities, which banks would 
 freely utilize because of their competition to get into circulation 
 their own notes rather than those of other banks, would make 
 it impossible for any bank to keep outstanding more of its notes 
 than the country had need for. The volume of these taxed 
 
 15 
 
 ( UNiV£R-.'tV I 
 
notes, on account of this competition among banks, would vary- 
 in accordance with the needs of business and could never exceed 
 them. 
 
 It is evident that the privilege of issuing this taxed cir- 
 culation, even though held in reserve and seldom availed of, 
 would tend to steady the money market. The knowledge that 
 banks had these notes in reserve, subject to their instant call, 
 would be a source of confidence in business and banking circles, 
 and would prevent that unreasoning anxiety which is often itself 
 the cause of stringency. In order that these taxed issues may 
 be immediately available when needed, each redemption agency 
 should have in its custody, ready for delivery on demand, all the 
 notes which each bank in its district is authorized to issue. 
 These notes should, of course, not be subject to tax while lying 
 at the redemption agencies. 
 
 A GUARANTY FUND FOR PROTECTION OF THE NOTES. 
 
 The proceeds of this graduated tax should be in the custody 
 of the government and should constitute a guaranty fund for use, 
 if needed, in the redemption of the notes of failed banks. Since 
 the taxes would undoubtedly yield a sum more than adequate for 
 this purpose, the Secretary of the Treasury should be given 
 authority to cover the excess into the general fund of the 
 Treasury and to invest a certain proportion of the fund in govern- 
 ment bonds. 
 
 Banking experience in this and other countries demon- 
 strates that this guaranty fund would prove many times more 
 than adequate. Receipts from the existing tax on circulation 
 (which was one per cent, up to the Act of March 14, 1900, and 
 since then has been in certain cases one-half of one per cent.) 
 were up to June 30, 1905, $96,220,927. The outstanding notes 
 at time of failure of banks whose affairs have been closed were 
 $17,295,748. But upon general claims the banks were able to 
 pay from their assets 70.49 per cent, of liabilities. If the same 
 rate of loss — about 30 per cent. — had been applied to the bank 
 notes, in the absence of bonded security, the amount would have 
 been $5,190,000. From these figures it appears that if the pro- 
 ceeds of the tax had been kept in a fund to protect the notes, 
 
 16 
 
losses would have been covered about eighteen times over, and 
 under the higher taxes proposed by this Committee the excess of 
 the fund above requirements would be much greater. 
 
 Your Committee do not believe it necessary that bank notes 
 should possess a first lien upon the assets of the issuing banks. 
 The government, which is bound to accept National bank notes 
 at par, is in a position to protect itself against possible loss, for it 
 has ample powers of inspection and supervision. 
 
 THE BANKING CIRCULATION HOMOGENEOUS. 
 
 It should be noted that under this plan no additional form 
 of currency would be created, for there would be no reason why 
 banks should issue two kinds of National bank notes. The 
 notes would be alike in form, and would be received in pay- 
 ment of debts to National banks and to the Government, as are 
 National bank notes under the present law. 
 
 METHOD OP REDEMPTION. 
 
 It would be the duty of the Treasury, as at present, to re- 
 deem all the notes of a failed bank in full on presentation from 
 its 5 per cent, redemption fund and, after the exhaustion of that 
 fund, from the general guaranty fund derived from the tax on 
 circulation. For such advances the Treasury would have a first 
 lien, as at present, upon the proceeds of the bonds held to secure 
 circulation, including the premium on such bonds, and would 
 also have a claim upon the assets of the bank, ratably with 
 other creditors, for the entire amount of bank notes outstanding 
 which were not provided for by the bonds or other assets of the 
 bank in the custody of the Treasury. In this way the charge 
 falling upon the guaranty fund would bear a much smaller ratio 
 to the amount of notes outstanding at the time of failure than 
 unsecured claims would bear to the aggregate assets; and the 
 guaranty fund would profit by notes which had been lost or 
 were not presented for redemption. 
 
 CREDIT CURRENCY WOULD MOVE THE CROPS. 
 
 If all the National banks in the country, under such a 
 plan as is here outlined, were given the privilege of issuing credit 
 
 17 
 
currency, the harvesting of the great crops of this country would 
 be accomplished by means of bank notes and not with law- 
 ful money, as at the present time. The lawful money reserves 
 of banks in financial centers would no longer be depleted in the 
 autumn in order that harvest hands in Kansas, Nebraska and 
 Dakota might receive their wages. Practically all payments 
 of sums of $5 and upwards in the agricultural regions would be 
 made with bank notes, a large proportion of which would doubt- 
 less be supplied by the country banks themselves. In December 
 and January, these notes, having done their work, would be de- 
 posited in country banks and would thence be sent either to 
 reserve cities or direct to the nearest redemption agencies. 
 
 ' REPEAI. OP $3,000,000 RESTRICTION. 
 
 Your Committee concur with the recommendation made by 
 the regular Committee on Finance and Currency last spring, 
 that the restrictive provision in the following section of the Na- 
 tional Bank Act should be repealed : 
 
 *'Sec. 9. (As amended by Act of March 14, 1900.) That 
 any National banking association now organized or hereafter 
 organized, desiring to withdraw its circulating notes, upon a 
 deposit of lawful money with the Treasurer of the United 
 States, as provided in Section 4 of the Act of June 20, 1874, 
 or as provided in this Act, is authorized to deposit lawful 
 money and withdraw a proportionate amount of the bonds held 
 as security for its circulating notes in the order of such deposits: 
 Provided, That not more than three millions of dollars of lawful 
 money shall be deposited during anj^ calendar month for this 
 purpose.'' 
 
 The only effect of this restrictive provision is to increase 
 the rigidity of the bond-secured circulation. The repeal of 
 this clause would be positively necessary if banks were to 
 issue notes subject to a graduated tax. Otherwise the issue 
 of highly taxed currency would be attended by too g^eat risk, 
 for the interest rate in any locality might decline soon after 
 such issue, whereas considerable time might elapse before the 
 notes of its banks would be returned for redemption. 
 
 18 
 
CASH BAI.ANCE OF THB FEDERAL TREASURY. 
 
 The laws regulating the operations of the Federal Treasury 
 should be amended. These operations at the present time are a 
 constant menace to business. Excessive revenues take money 
 out of circulation, while deficient revenues are equivalent to in- 
 flation. Both these evils would be avoided, as we have already 
 pointed out, if a central government bank were created. If this 
 be not done, then the Secretary of the Treasury should have 
 authority to deposit in National banks money received from cus- 
 toms duties as well as that from other sources, either on proper 
 securities in addition to those now required by law, or upon the 
 payment of interest. In our opinion, all surplus money of the 
 Treasury above a reasonable working balance should be thus 
 deposited in the banks. 
 
 SCOPE OF THE PROPOSED PI,AN. 
 
 In seeking to give greater elasticity to the currency, it has 
 been thought best to recommend a plan which would accomplish 
 the desired result most simply. A similar result might be obtained 
 by various other methods, several of which having much merit 
 were presented to your Committee. Among plans thus presented 
 were some which involved the principle of co-operation by 
 clearing houses in determining whether additional bank-notes 
 should be issued or not, and even the formation by clearing 
 houses of responsible corporations for the issue of notes; others 
 which involved giving discretion to the Comptroller of the Cur- 
 rency in regard to issues, and others which proposed to give a 
 similar discretion to a commission to be appointed for the purpose. 
 
 While some of these plans had many merits, and perhaps 
 even some advantages in theory over the plan recommended by 
 your Committee, it was felt that no plan would stand the test of 
 discussion in Congress or in the banking community which should 
 not accord equal privileges to all members of the National banking 
 system. The clearing houses are not incorporated under Federal 
 law. They represent only certain cities, and generally include, 
 in addition to National banks, those which are not members of the 
 National banking system. While these objections might be 
 surmountable, your Committee felt that any grant of discretion, 
 
 19 
 
whether to an individual or a committee, especially if it appeared 
 to the public to give control of the volume of circulation to a 
 small group of bankers, — even if such power were exercised in 
 a conscientious, intelligent and far sighted manner, — would lead 
 to suspicions and charges of favoritism and injustice, such as 
 stimulated the attacks upon the Second Bank of the United States 
 and have been repeatedly made against the Secretary of the 
 Treasury for his policy in regard to deposits of public moneys. 
 
 It has been suggested to the Committee that a practical 
 method of putting into operation the principle of a bank note 
 credit currency would be to have Congress recognize this principle 
 by authorizing banks, through a voluntary association of their 
 own, to make such issues within certain limitations and subject 
 to a joint guaranty by the participating banks; the details of such 
 guaranty and the provisions for safety to be devised by the banks 
 themselves subject to the approval of the Comptroller of the 
 Currency. Your Committee see practical difficulty in securing 
 the representative judgment of the bankers to devise the details 
 of such a plan, but we are so clearly convinced of the desirability 
 of the application in some form of the principle of a credit cur- 
 rency that we would heartily endorse this plan if Congress and 
 the banking interests approved it. 
 
 AN AUTOMATIC SYSTEM DESIRABI^K. 
 
 In view of these considerations, your Committee came de- 
 cidedly to the conclusion that any system recommended should 
 be automatic in its operation, in the sense that it should 
 afiEord equality of treatment, under uniform conditions, to all 
 National banks, and should leave the net volume of bank-note 
 circulation to be determined by the interplay of the interest of 
 the banks among themselves, rather than to the decision of any 
 single official or banker or group of officials or bankers. 
 
 EXISTING CONDITIONS MUST BE CONSIDERED. 
 
 It should not be overlooked that in proposing new legislation 
 such a body as the Chamber of Commerce is bound to consider 
 conditions as well as theory. Your Committee did not feel, there- 
 fore, that they were required or expected to build up a theoretical 
 
 20 
 
structnre which might if enacted be a sound substiti 
 existing monetary system of the United States, but rather to 
 address themselves to such evils as are capable of correction 
 by simple legislation. 
 
 GROWTH OF SEJNTIMKNT FOR I^i^GISLATlON. 
 
 We have taken some pains to ascertain the sentiments of 
 representative bankers throughout the country and are of the 
 opinion that a majority of the bankers of the United States 
 appreciate the necessity for a variable and elastic element in the 
 currency and will heartily co-operate with the bankers of New 
 York City in an effort to secure an amendment to the existing 
 law. The subject is one in which the whole country is interested. 
 New York City, because it is the financial center, its banks hold- 
 ing large sums of money belonging to country banks, appears to 
 suffer most from the present rigidity of the currency, for every 
 fall its rnoney markets are suddenly stripped of reserve funds. 
 As a result the rate of interest on demand loans in New York 
 City always fluctuates greatly during this season and often 
 reaches heights which not only amaze foreigners but cause them 
 to doubt our financial stability. When we consider, however, 
 the magnitude of business operations in New York as compared 
 with those of other parts of the country, and take into account 
 the fact that the commercial rate of interest in this city is ad- 
 vanced no more than elsewhere, while the excessive rates on call 
 loans are paid on comparatively small borrowings, we are of 
 opinion that the evils inflicted on New York by the defects of the 
 present currency system are no greater than those endured by other 
 sections. 
 
 NKW YORK CITY SHOUIvD TAKE INITIATIVE. 
 
 Nevertheless we find among bankers of this country a 
 conviction that this is a problem in the solution of which the 
 bankers of New York City should take the initiative. We also 
 find the same opinion prevailing among representative business- 
 men. They realize that the hardship caused by a faulty cur- 
 rency system is borne, not by the banks, but by the public in 
 general; and resolutions have been adopted almost unanimously 
 
 21 
 
by several prominent business organizations favoring such 
 amendmeut of the National banking laws as will give relief. 
 
 There is reason also for believing that no important finan- 
 cial measure will receive favorable consideration in Congress un- 
 less it has the endorsement of representative bankers. Such 
 being the case, we are of opinion that the bankers of New 
 York City, ought to take up this question and reach an agree- 
 ment upon some satisfactor}^ measure. If they do this, hav- 
 ing in mind the welfare and needs of the entire countr}^, as 
 their own best interests would dictate, w^e are hopeful that 
 their recommendations will meet with approval among the 
 bankers in every State of this Union and be enacted into law 
 by Congress without unnecessary delay. 
 
 SUMMARY OF THIS REPORT- 
 
 In order that the members of the Chamber may have before 
 them in brief space the recommendations of this Committee, 
 together with the important considerations upon which thej- are 
 based, w^e present herewith a brief summary of this report. 
 
 We find that our currency is seriously defective in that its 
 volume does not vary with the demand, so that the business of 
 the country is alternately exposed to the evils of a redundant 
 and of a deficient supply. 
 
 When the need for currency increases, as it does ever>^ 
 autumn when the crops are harvested, our banks are obliged to 
 pay out lawful money from their reserves, and in consequence to 
 raise their rates of interest on demand and time loans. These 
 operations are a source of real loss to the commercial and indus- 
 trial interests of the entire country. They work injury to our 
 merchants, to our manufacturers, and to our farmers, — in short, 
 to all classes of producers. 
 
 When, on the other hand, the supply of currency is excessive, 
 as it usually is in the spring, the consequent congestion of banking 
 reserves forces an abnormally low rate of interest and so tends to 
 excite a dangerous speculative spirit in our marketsand exchanges. 
 
 We believe that this oscillation between periods of contraction 
 and inflation is the direct consequence of the artificial and unnec- 
 essary inflexibility of our currency due to restrictions which are 
 
placed by law upon the issue of bank notes. Under the existing 
 law National banks can increase their issue of notes only in pro- 
 portion as they increase their holdings of the United States bonds 
 which are deposited as security ; and they cannot at will regain 
 possession of the bonds by the deposit of lawful money for the re- 
 tirement of their notes. On account of the investment considera- 
 tions regarding bonds which are involved in the issue of 
 National bank notes, we find that this class of currency, which in 
 most other leading countries possesses a useful flexibility, is here 
 i>ssued and retired utterly without regard to the country's vary- 
 ing needs for currency. 
 
 Notwithstanding the inadequacy of the bond-secured circu- 
 lation of our National banks, our deliberations have brought us- 
 to the conclusion that it would be unwise to disturb this circula- 
 tion or to recommend anj'^ substitute for it as it now exists, for 
 such a course would lead to an inequitable depreciation of the 
 United States bonds now outstanding. In our opinion, how- 
 ever, future issues of Government bonds should not be made 
 available as a basis for bank-notes, for the great increase in the 
 bond-secured circulation that has taken place within the last six 
 years furnishes evidence that the existing system of note issue 
 without adequate redemption might become dangerous 
 
 We have had brought before us for consideration two classes 
 of remedies for existing evils:— (i) radical measures involving the 
 creation of corporations with powers and privileges unlike those 
 now possessed by any American institution; (2) measures which 
 would enlarge the privileges of corporations already in existence* 
 We have deemed it best to select from each of these classes the one 
 which we believe to be the best. If the country is ready for a radical 
 addition to our financial system, we believe that the world's 
 experience proves beyond question that a central bank of issue 
 controlled b}^ the Government ought to be established. If, how- 
 ever, the people of the United States shrink from the creation of 
 such an institution, we believe that the wisest alternative is a 
 simple measure enlarging the present note-issue privilege of 
 National banks in such manner that their right of issue shall not 
 vary with their ownership of United States bonds, and under 
 such conditions that the retirement of their notes when not 
 needed shall be certain and automatic. 
 
 23 
 
We, therefore, make the following recommendations: 
 
 I. That legislation be enacted which shall provide the 
 country with a flexible and elastic bank note currency ; and to 
 this end we suggest that either one of the two following plans 
 might wisely be adopted : 
 
 (a) Let there be created a central bank of issue similar 
 to the Bank of Germany or the Bank of France ; such bank 
 to deal exclusively with banks ; its stock to be owned in part 
 by banking institutions and in part by the Government; but in 
 its management representatives of the Government shall be 
 supreme. This central bank shall issue currency, rediscount 
 for other banks, hold public money, and act as agent of the 
 Government in redeeming its paper money and making its 
 disbursements. 
 
 Or {U) Let any National bank whose bond-secured 
 circtilation equals 50 per cent, of its capital have authority 
 to issue additional notes equal in amount to 35 per cent- 
 of its capital. 
 
 Let such additional notes be subject to a graduated tax 
 as follows: The first 5 per cent., taxed at the rate of 2 per 
 cent, per annum ; the second 5 per cent., taxed at the rate 
 of 3 per cent.; the third 5 percent., taxed at the rate of 4 
 per cent.; then an issue equal to 10 per cent, of capital, taxed 
 5 per cent. ; then an issue equal to 10 per cent, of capital, 
 taxed 6 per cent. 
 
 Let the proceeds of this graduated tax constitute a guar- 
 anty fund, in the custody of the Government, for the re- 
 demption of the notes of failed banks. 
 
 To insure the prompt retirement of notes when not 
 needed, let redemption agencies be established at sub-treas- 
 uries and other convenient points. 
 
 Let all the notes of a bank be alike in form, and let it be 
 the duty of the United States Treasury to redeem all the 
 notes of a failed bank, as at present, in full on presentation, 
 and to recoup itself from the assets of the failed bank and 
 from the guaranty fund. 
 
 24 
 
2. That the law restricting the retirement of National bank 
 notes to $3,000,000 per month by the deposit of lawful money ^be 
 repealed. 
 
 3. That future issues of United States bonds be not made 
 available as a basis for the issue of National bank notes. 
 
 4. That the laws regulating the operations of the United 
 States Treasury be amended in such a manner that they shall not, 
 as now, interfere with the money market ; and to this end we 
 suggest a law requiring that all money in the General Fund of 
 the Treasury above a reasonable working balance be deposited 
 in National banks. 
 
 October i, 1906. 
 
 John Ci,A]^i,in, Chairman. 
 Frank A. Vanderi^ip, 
 IsiDOR Straus, 
 dumont c1.arke, 
 Chari^es a. Conant. 
 Joseph French Johnson, Secretary. 
 
 98 
 
APPENDIX 
 
LETTERS RECEIVED FROM EUROPEAN BANKERS. 
 
 From the Governor of the Bank of France. 
 
 Paris, July 21, 1906. 
 
 Mr. John Claflin, Chairman Special Currency Committee, 
 
 Chamber of Commerce of the State of New York. 
 
 Mr. President :.' 
 
 You have done me the honor to write to ask from me 
 information relative to the issue of bank notes in France. I 
 hasten to meet your request in passing successively under review 
 the different questions which you have thought proper to address 
 to me. 
 
 The first' question is in these terms : — "Is the amount of the 
 credit circulation of the Bank of France determined by a fixed 
 law or). by the needs of commerce?" 
 
 These two elements each play a certain part. Until 1848, 
 no absolute limit was imposed by law on the issues of the Bank 
 of France. The decree of March 15, 1848, establishing forced 
 legal tender of bank notes, at the same time fixed the maximum 
 of their issue at 350,000,000 francs. This provision was abro- 
 gated at the same time with forced legal tender by the law of 
 August 6, 1850. 
 
 The law of August 12, 1870, again established forced legal 
 tender and imposed a limit of issue fixed at 1,800,000,000. By 
 a series of successive augmentations, this limit was carried from 
 1,800,000,000 to 5,800,000,000 (Law of February 11, 1906). 
 
 28 
 
But from the fact that these increases were approved by 
 legislative authority every time that the outstanding circulation 
 of notes approached the legal limit, it resulted that in reality the 
 issue has up to the present time followed the demands of com- 
 merce. 
 
 These demands, moreover, cannot be unlimited. In order 
 that they may be considered, it is necessary that the credits 
 which they tend to create shall fall within the classes contem- 
 plated by the statutes of the Bank, — discount of bills maturing 
 within three months, secured by three signatures, or two signa- 
 tures supported by the guaranty of a deposit of securities; ad- 
 vances on securities which are acceptable; advances on bullion 
 and money. The circulation not covered by the cash reserve is 
 then limited in reality by this fact, — that notes cannot be issued 
 to satisfy demands which do not fulfill one or the other of the 
 conditions above enumerated. There is, therefore, a very sub- 
 stantial guaranty, by reason of which when there has been occa- 
 sion to fix the legal limit, it has been possible to leave the circu- 
 lation to adjust itself without restriction to the needs of com- 
 merce. 
 
 To your second question also, — ''Has commerce suffered by 
 the limitation of issues?" — We are able to reply that the limit of 
 issues has always been maintained at a level sufficiently high 
 that commerce has never been exposed by the act of the bank to 
 deficiency of means of payment. 
 
 Without doubt it has happened sometimes that during the 
 period immediately preceding the elevation of the legal maximum, 
 the credit circulation has approached so near the limit that the 
 bank was obliged to restrict its issues and to give the public 
 metallic money in place of notes, but this^^in a proportion too 
 small and during too brief a period for it to result really in dis- 
 turbance of commercial customs. 
 
 The amount of the circulation is generally lowest from July 
 to September, and attains its maximum in the first and last 
 months of the year. This variation arises from the diminished 
 activity of commercial operations during the summer season. If 
 we establish a monthly mean of the circulation from January i , 
 1 90 1, to June 30, 1906, the following figures result : 
 
 39 
 
January 4,438,000 
 
 February 4,386,000 
 
 March 4,346,000 
 
 April 4,374,000 
 
 May 4^335)000 
 
 June 4,255,000 
 
 July 4,214,000 
 
 August 4, 150,000 
 
 September 4, 147,000 
 
 October 4,271,000 
 
 November 4,301,000 
 
 December 4,292,000 
 
 I append elsewhere to the present letter a more detailed table 
 giving for the same period and for each year the monthly average 
 of the circulation of notes. This table will enable you to under- 
 stand the small relative importance of the periodical variations 
 on the subject of which you wish to be informed. 
 
 The limitation of the right of issue by the operation of re- 
 strictive clauses might provoke an abnormal rise in the rate of 
 discount, — that is, a rise not justified by the commercial situa- 
 tion. If, in effect, the circulation was on the point of attaining 
 its legal maximum, and new demands appeared, the Bank would 
 no longer be able to meet them except by means of its metallic 
 resources, and even this means might fail if the figure of the re- 
 serve entered as a co-efficient into the determination of the limit 
 of issue. But outside of this consideration even, the necessity of 
 maintaining its reserves would constrain it to raise the rate of 
 discount with a view of diverting a part of the demands The 
 conditions of credit would thus be rendered more rigorous by the 
 intervention of restrictive legislation. 
 
 But the Bank of France, as has been said in response to the 
 first question, is, on the contrary, placed from this point of view 
 under a very liberal regime, which permits the circulation to 
 expand in proportion to the real needs of credit. Its rate of dis- 
 count is not subjected to the artificial cause of elevation which 
 would result from an automatic limitation of the issue. The 
 power to consider favorably all the demands which are presented 
 in the form of security easily realizable, assures to commerce the 
 most moderate rates which are compatible with the constitution 
 and maintenance of a strong cash reserve. 
 
 30 
 
A second table annexed to the present letter will indicate to 
 you the different rates of discount in force at the Bank of France 
 during the last thirty years. Perhaps the comparison of these 
 figures with the similar figures which are disclosed by the 
 accounts of other banks founded on a different principle will be 
 of a nature to furnish you useful suggestions. 
 
 You have, in conclusion, expressed the desire to know my 
 opinion upon this final question, ' *Has the power to issue notes 
 in conformity with the needs of commerce contributed to in- 
 crease and protect the metallic reserve of the bank?' ' 
 
 I think that here it is necessary to make a distinction. If 
 the limit of issue fixed by the law is independent of the amount 
 of the metallic reserve, it seems that aVestrictive clause might be 
 an obstacle to the increase of this reserve. The bank in effect 
 would not be able to receive bullion indefinitely, since from a 
 certain moment it would be forbidden to issue notes against it. 
 On the other hand, in order to satisfy the needs of commerce, it 
 would be lead, once the limit of issue was attained, to conduct its 
 discounts by means of metallic money and thus to impoverish its 
 metallic reserves. 
 
 But the same consequences would not be produced, in my 
 opinion, if the limit of issue bore a relation to reserve. The bank 
 would always be able to receive bullion in exchange for notes 
 and as soon as the issue touched its maximum, it would forbid 
 either discounts in notes or discounts in metallic money which 
 would modify the legal proportion of the reserve to the cir- 
 culation. 
 
 I hope, Mr. President, that the information which I have 
 the honor to transmit to you will be of a nature to afford you 
 satisfaction, and I shall be happy to take occasion to complete it 
 in conferring with Mr. Charles A. Conant on the questions which 
 interests you. 
 
 Please accept, I beg of you, Mr. President, the expression of 
 my most distinguished sentiments. 
 
 GEORGES PALLAIN. 
 
 31 
 
 OS- 7 
 
 r 
 
From the President of the Imperial Bank of Germany. 
 
 Berlin, July 21, 1906. 
 
 Mr. John Claflin, Chairman Special Currency Committee, 
 
 Chamber of Commerce of the State of New York. 
 
 Dear Sir : 
 
 Inasmuch as we have now had the desired conference as 
 requested in your letter of the 19th of this month with Mr. Charles 
 A. Conant, I now beg to explain in detail the various points 
 touched upon in said conference. 
 
 According to Paragraph 17 of the Banking Law of March 
 14th, 1875, the Reichsbank is obligated at all times to cover the 
 amount of notes in circulation to the extent of at least one- 
 third in current German money, that is, money issued by the 
 Government, or with gold in bars or foreign coin on the basis of 
 the price of Mk. 1392 per Pound 1000 fine, and the balance of the 
 circulation to be covered by discounted bills, the life of which 
 does not exceed three months, and which, as a rule, must have 
 three, or at least two, signatures or obligators whose solvency is 
 beyond doubt. 
 
 The amount necessary to cover the notes in circulation by 
 cash averaged, during the last three years, 1903 to 1905, Mk. 
 932,065,000; Mk. 952,681,000 and Mk. 999,111,000, so that a 
 note-issue on this basis could have been made to the extent of 
 2,796,195.000, 2,858,043,000 and 2,997,333,000 Marks. 
 
 As a matter of fact the issue during this period amounted 
 only to 1,248,718,000, 1,288,549,000 and 1,335,701,000 Marks, 
 from which you will see that the maximum was not even ap- 
 proached. 
 
 According to Paragraph 9 of the Banking Law, banks 
 whose circulation exceeds a percentage of cash means according 
 to the amount definitely fixed for each bank, which is called its 
 contingent circulation, must pay a tax of 5^ per annum to the 
 Government as assessed on such excess circulation. I may men- 
 
tion that the Bank notes of other German banks can be counted 
 as cash means. 
 
 The contingent circulation of the Reichsbank was originally 
 set at Mk. 250,000,000. This has been increased up to the close 
 of the year 1900 through the amount abandoned by other banks, 
 so that on January i, 1 901, the contingent circulation of the 
 Reichsbank was fixed at Mk. 293,400,000, and since then has 
 been increased to Mk. 450,000,000, and has since through ad- 
 ditions increased so that it now stands as Mk. 472,829,000. 
 
 On the average basis the Reichsbank has never taken ad- 
 vantage of its full contingent circulation. During the year 1903 
 although the circulation has exceeded its cash means on an 
 average of about Mk. 306,210,000, 316,486,000 and 316,466,000. 
 
 During stated periods of the years aforesaid an excess of 
 circulation has occasionally occurred. 
 
 In consequence of the development of economic life the con- 
 stant changing needs of commerce has caused as a consequence 
 an excess of uncovered circulation from time to time, and this 
 period is particularly found in the days of the quarter end, and 
 the amounts have at times been very heavy. But on other 
 occasions there has been no necessity at all for an excess 
 circulation. 
 
 The course of other circulation during the years 1903 to 
 1906 can be seen from the enclosed diagram. 
 
 The margin between the maximum amount of uncovered 
 circulation and the minimum caused by the requirements of 
 trade evidences an elasticity for the year 1903 of Mk. 642,947,000 
 for 1904, Mk. 663,840,000 for 1905 and Mk. 959,256,000, and 
 for the period from Jan. i, 1906, to June 30, 1906, of Mk. 
 628,765,000. 
 
 The amount of the 5^ tax paid to the Government was for the 
 years 1903 to 1905, respectively, Mk. 805,267.44, 1,118,373.21 
 and 1,651.003.17. 
 
 The over-issue, however, did not necessarily cause a rise in 
 the officiardiscount rate, inasmuch as more weight was given to 
 the cause and the manner of the money requirements than to the 
 amount that was used, in deciding upon the policy of the bank, 
 
 33 
 
and furthermore, in consideration of an early return to normal 
 conditions the administration of the bank very often, notwith- 
 standing that the over-issue was quite important, suffered the 
 lower discount rate to stand and preferred to sacrifice its own 
 profits in paying the tax out of its own pockets. 
 
 For instance, the bank, as you will see by the enclosed 
 diagram, retained its official discount rate during the entire period 
 from Januar}^ 1903, to October, 1904, at ^i, and at one time 
 even at 3)^^, although the contingent amount w^as exceeded 
 thirteen times. 
 
 From experience in the past, as you will see by the fore- 
 going, the system adopted in connection with the over-issue of 
 notes, has been very successful. As there is no definite boun- 
 dary line for the uncovered note-issue, it has l^een made possible 
 for the Reichsbauk administration to satisfy at all times the 
 changing demands of commerce by arranging its circulation 
 accordingly, and even in times of extraordinary stress it was 
 enabled to place at the disposal of the general commercial com- 
 munity the necessary provision for a circulating medium without 
 unduly increasing the official rate of discount, and in the same 
 manner an unhealthy expansion of the uncovered note issue 
 by means of the penalty incurred through the government tax 
 has been avoided. 
 
 I w^ould further refer you to a monograph entitled ^'The 
 Reichsbank from 1876 to 1900," and particularly to the chapter 
 commencing at page 43. 
 
 And further I would refer to another work published by me 
 entitled the ' ' Imperial Laws Covering Discount and Banks of 
 Issue, Paper Money, Lottery Bonds and State Indebtedness," 
 and particular! 3^ 1 would refer to the introduction on pages 
 I to 43. 
 
 These two books I have handed to Mr. Conant personally. 
 I at the same time handed him tables referring to remarks on 
 pages 294 and 300, etc. 
 
 I am ready to impart any further information if it is desired, 
 and in the meantime, am, 
 
 Yours respectfully, 
 
 A. KOCH. 
 
 34 
 
From the flaoaging Director cf the Deutsche Bank, Berlin. 
 
 Berlin, W., July 26, 1906. 
 
 Mr. John Claflin, Chairman Special Currency Committee, 
 
 Chamber of Commerce of the State of New York. 
 
 Dear sir: 
 
 Mr. Charles A. Conant brought me your esteemed favor of 
 the 19th of June, and I have pleasure in replying to your in- 
 quiries. 
 
 Prior to Germany's unification there reigned great confusion 
 in this country's currency arrangements. The several states 
 that formed the Confederation had five different monetary sys- 
 tems and different coins, legal tender notes issued by many 
 Governments and a large number of issuing banks, government 
 and private. All this was changed after Germany had achieved 
 her unity. Practical business men, such as the late Mr. Bam- 
 berger and Doctor George Siemens, were consulted and assisted 
 Prince Bismarck's Government in preparing and carrying into 
 effect new laws regulating Germany's monetary and banking 
 system. The coinage w^as reformed by the law of 9th July, 1673, 
 and another law of 14th March, 1875, regulated the issue of 
 bank notes. These two laws, with slight modifications, have 
 remained the basis of Germany's currency system. 
 
 You are aware, that Germany has a gold currency, and I 
 may here mention that more gold coin is circulating in this 
 country, comparatively, than in most of all others, because the 
 use of checks is not yet as general with us as it is in 3^our coun- 
 try or in Great Britain. 
 
 Silver coins are circulating only as token money. The old 
 Thalers (a coin equivalent to 3 marks), which had imtil recently 
 full value as legal tender, are being rapidly re-coined into pieces 
 of the Reichsmark system. There is a slight excess in coins of 5 
 marks, which are not liked by the public, although they are 
 smaller than would be a silver dollar equivalent in value to one 
 
 dollar gold. 
 
 35 
 
Secondly, and as a surrogate for coins, there is in circulation 
 a small amount of Government notes, equivalent to your green- 
 backs. But the total amount of these notes, which are circulat- 
 ing in small denominations down to five marks, is limited to 120 
 millions marks (less than 30 millions of dollars), and the total 
 equivalent of these notes is deposited in gold coin in the fortress 
 of Spandau, near Berlin, and can be used in case of war only. 
 
 Thirdly and lastly the money circulation of Germany con- 
 sists of bank notes. These are issued by the Reichsbank and 
 four banks of the minor States of the German Confederation. 
 The number and importance of such minor banks is decreasing 
 constantly; they are following in their discount policy the lead 
 of the Reichsbank, and for all practical purposes and particularly 
 for investigations of the kind you have in view the Reichsbank 
 alone need be examined. 
 
 You are aware that the Bank of England has lent the par 
 value of its entire capital stock to the British Government, and 
 that the Bank is allowed to issue notes not covered by gold up to 
 the amount of such capital stock and up to that amount 
 only. Now, although the Bank of England is admirably 
 managed, this system, owing to its being inelastic, has not 
 withstood severe strain. You are aware that the Bank of 
 England's Act had to be suspended several times since its 
 enactment, or, as the familiar expression says, the Bank has 
 been broken. 
 
 You are aware also, no doubt, that the example of the Bank 
 of England has been followed in Spain, in Argentina and in other 
 countries with poor and even disastrous eiffects. 
 
 The system of issuing bank notes against Government 
 security must be admitted to be faulty, although the sage use of 
 that system in England and in the United States may seem to 
 prove the contrary, but only show that the practice is worth 
 more than theory. 
 
 The German system of bank note regulation, being the 
 latest, could make profit of the experience of other countries and 
 must be admitted to be the best. Indeed it has been followed 
 since its enactment wherever currency reform on a gold basis had 
 to be introduced. 
 
 36 
 
The advantage of our bank note system consists in its 
 elasticity. 
 
 The Reichsbank is a joint stock company, but its managing 
 directors are nominated by the Government. 
 
 The notes issued by the Reichsbank are not a legal tender. 
 
 The Bank is legally bound to redeem its notes in coin oh 
 demand. 
 
 All notes, which any one of the five banks may issue, must 
 be covered by coin and gold in bars, or by bills of exchange hav- 
 ing not more than three months to run, but the restrictions 
 whereunder the Reichsbank may discount bills are very severe, 
 and under no circumstances must the coin and gold held be less 
 than one third of the total circulation. 
 
 Further, it is a law, that the Reichsbank, as well as the 
 other four banks, pay a tax to the Imperial Exchequer as soon 
 as their circulation exceeds the amount of the coin and gold held, 
 plus an arbitrary amount fixed by experience at somewhat over 
 $2 per capita of Germany's population. The exact figure of this 
 arbitrary amount or "Kontingent," as it is called, is for the 
 Reichsbank 472,829,000 marks, for the Bank of Bavaria 32 mil- 
 lions, of Saxony 16,771,000, of Wurtemberg 10 millions, and of 
 Baden 10 millions, making a total of 541,600,000 marks, or say 
 130 millions dollars. 
 
 As soon as the Reichsbank or any one of the other four 
 banks has issued notes to a larger amount than its legal share in 
 the above mentioned 541.6 millions marks, then a tax of five per 
 cent, is levied by the Empire on any excess issue. This tax is 
 payable by forty-eighths. Thus, if the balance-sheet which the 
 several banks are bound to publish weekly, shows an excess in 
 any one week, the tax is 5/48^ on the amount of such excess. 
 
 This stipulation which, when introduced, was quite new and 
 an experiment, has proved a decided practical success. 
 
 The table herewith enclosed will show you that the Reichs- 
 bank, within the 30 years of its existence, has 121 times been 
 obliged to issue more notes uncovered by metal than its ^'Kon- 
 tingent. ' ' You will also see that the "Kontingenf ' has increased 
 from 272 millions in 1876 to 473 millions now, partly by the dis 
 appearance of smaller banks whose "Kontingent" has accrued to 
 
 37 
 
the Reichsbank, partly by increase which it was found useful to 
 make by law owing to the greater volume of business. You will 
 also note from this table, that the excess issue very generally 
 occurs on the last day of September and on the last day of the 
 year, because of the special requirements of business connected 
 with the harvest and with the end of the year, when nearly all 
 joint stock companies close their 3:balance sheets, when interest 
 payment on mortgages are generally^due, etc. When the circula- 
 tion of the banks exceeds the arbitrary *'Kontingent," and 
 according to the importance of the excess issue of bank notes, 
 the money market contracts automatically. It is very rare that 
 the Reichsbank has been obliged to pay the tax for any length 
 of time. A week or a little more is usually sufficient to re-estab- 
 lish the ordinary circulation. It must not be presumed that 
 whenever the Bank has to pay the tax it would raise its rate of 
 discount to the full extent of the tax incurred. Indeed the 
 Reichsbank' s rate of discount within 30 years has been raised to 
 7 per cent, only once — from December 19, 1899, to January nth 
 next following — and it has never gone above that figure. Any- 
 how the system so far has proved a perfect success. The Reichs- 
 bank of course holds very much more coin and gold than the 
 one-third of its circulation prescribed by law; in fact on the 
 average the Bank holds double that amount or more; thus, when- 
 ever a large demand for currency arises, the Bank can easily 
 supply all the notes that are needed; but whilst the bank law 
 allows an elastic expansion of note issue, it has proved to bring 
 about also the necessary contraction, ^nd has been a sufficient 
 check hitherto on excess of speculation. You will note from the 
 table, that during the last few years the total excess of bank 
 note issue has been increasing to an extent that may be taken to 
 mean a warning to speculation. It may be assumed, however, 
 that under the prudent and moderate discount policy followed by 
 the Reichsbank our currency will be kept in good order in future 
 as for the last thirty years. 
 
 In order to furnish you the occasion, if desirable, to study 
 in detail our currency laws and their working, I am sending you 
 a collection of the German laws on Banking and Currency, also 
 a volume "The Reichsbank" published upon the 25th anniver- 
 sary of that institution's existence; further the Reichsbank' s last 
 
annual report; finally a booklet by an employee of the Reichs- 
 bank, giving in abbreviated form a history of the German cur- 
 rency since the enactment of the present laws. 
 
 Should you desire any further information the Deutsche Bank 
 will be pleased to furnish it, thus contributing as far as this may 
 be done from our side, to bring about what has long been felt in 
 all the financial markets of the world, to be a much needed 
 reform of your currency system. 
 
 I remain, dear sir, 
 
 Yours very respectfully, 
 
 ARTHUR QWINNER. 
 
 From the nanaging Director of the Dlsconto-Qeselischaft, Berlin. 
 
 Berlin W. 64, August 2, 1906. 
 Unter den Linden 35. 
 
 Mr. Chas. a. Conant, 
 
 c/o Messrs. John Munroe & Co., 
 No. 7 Rue Scribe, Paris. 
 
 Mr. John Claflin, Chairman of the Special Currency Com- 
 mittee, requested me in his letter of June 9th, which reached me 
 during the latter part of last month, to give him an expression 
 of my views in regard to our bank note system and its workings. 
 Although I cannot on account of the mass of material give an 
 exhaustive discussion of the subject, I will, nevertheless, endea- 
 vor in outline at least to comply with Mr. Claflin's request. 
 
 Mr. Claflin's letter calls for answers to the following 
 questions: 
 
 I St. Does the circulation of notes in Germany vary from 
 one season to another ? 
 
 2nd. Does the issue of uncovered notes have any effect 
 upon interest rates, and has such issue ever prevented a crisis ? 
 
 89 
 
3rd. What advantages does the German system of bank 
 note issue offer ? 
 
 It must first be stated that an issue of uncovered notes in 
 Germany does not occur. According to the laws governing the 
 Reichsbank one-third of the entire issue must be covered by cash ; 
 that is, by lawful German money, notes of the Imperial Govern- 
 ment, gold in bars and foreign coin; the remaining portion of the 
 note issue must be covered by bills which have been discounted. 
 As a matter of fact, the note issue is covered by actual cash in 
 much greater measure' than is required by law. On many occasions 
 a surplus has been held by the bank. The most unfavorable con- 
 dition existed on September 30, 1905, but even then the available 
 funds, consisting of coins and Government notes, constituted 
 45*3^ of the actual amount of notes in circulation. 
 
 In ordinary parlance mention is often made of the uncovered 
 portion of the circulation, but it is generally understood that that 
 portion is meant which is covered by bills of exchange and not 
 by cash. The issue of notes is not limited by law but is governed 
 by the requirements of the money market. An indirect limita- 
 tion, however, does exist in the system of the so-called emer- 
 gency issue. As soon as the Reichsbank has exceeded in its 
 note issue a certain amount (at the present moment 472,829,000 
 M.), this surplus issue is subject to a penalty on the basis of an 
 interest rate of 5^ per annum, which has to be paid to the Gov- 
 ernment. In this way the bank is compelled to exercise caution 
 and to limit its note issue as much as possible during times of 
 particular stress. 
 
 Question i. Both the total note circulation and the 
 uncovered portion of it are lowest during the first months of the 
 year, in which the requirements of business are comparatively 
 small. They are both at their highest during the last quarter of 
 the year, which period is usually characterized by a strong de- 
 mand for money. Both classes of circulation show quite sudden 
 increase at the end of each month and especially at the end of 
 the quarter year, when the settlements call for large payments. 
 For instance, the movement of the total circulation during the 
 year 1905 was between 1,163,854,000 M. on February 23rd, and 
 1,682,646,000 M. on September 30th. The difference between 
 
 40 
 
these two points, as you will see, was 518,792,000 M. Almost 
 regularly at the turn of the quarter the Reichsbank finds it 
 necessary to issue notes that are subject to the tax. This period 
 of over issue, however, is of short duration, for the return flow 
 of money very soon so increases the cash reserve that the tax 
 ceases. 
 
 Question 2. Regarding the reserve for the note issue I must 
 refer to what has already been said. The facility granted the 
 Reichsbank to issue notes against bills of exchange has placed 
 the institution in such a position that it is always able to 
 satisfy any demand for a circulating medium and to prevent an 
 undue enhancement of interest rates such as sometimes occurs in 
 America owing to the lack of currency. During the existence 
 of the Reichsbank since 1875 the official discount rate has ranged 
 between 3^ and 7^. The ofl&cial bank discount rates, taken in 
 five year periods, have averaged as follows : 
 
 1876/80 .... 4.172^ 
 
 1881/85 .... 4-225^ 
 
 1886/90 .... 3.641^ 
 
 1890/95 .... 3.461^ 
 
 1896/1900 . . . 4.420^ 
 
 1901/1905 .... 3.859^ 
 
 The tax above referred to]has had the effect of preventing 
 excessive expansion of note issues, for the tax is higher than the 
 average rate of discount and consequently as a rule entails a loss 
 to the bank, so compelling a limitation of the issue. 
 
 Question 3. In addition to the Reichsbank there are in 
 Germany at the present time four private banks having the priv- 
 ilege of note issue. They are the Bayerische Notenbank in 
 Munchen, the Sachsische Bank in Dresden, the Wurttember- 
 gische Notenbank zu Stuttgart and the Badische Bank zu Mann- 
 heim. The total of the untaxed issue permitted to these 
 banks amounts to 68,771,000 M., while the limit for the Reichs- 
 bank has gradually been increased to 472,829,000 M. 
 
 A feature of considerable importance as far as the position 
 of the Reichsbank is concerned, is the fact that the private banks 
 liave gradually ceased to exert any important influence upon the 
 
 41 
 
domestic money market or upon international affairs affecting the 
 German monetary system, so that the Reichsbank has taken the 
 position de facto of a central bank of issue with power to regu- 
 late the monetary circulation of Germany. The advantages 
 which have in consequence accrued to German commercial 
 interests can be stated in brief as follows: The Reichsbank 
 satisfies any increase in the demand for money out of its own re- 
 sources by enlarging its issue of notes even to the extent of 
 incurring the penalty prescribed by law in the event of an over 
 issue ; while on the other hand by the control of its rate of dis- 
 count it prevents undue expansion of its circulation. Through 
 the regulation of its discount rate it exerts a controlling influence 
 upon domestic business affairs and upon the international move- 
 ments of gold. The Reichsbank guards the German monetary 
 system against outside interference, and encourages or hinders 
 by means of its discount policy the inflow or outflow of gold. 
 The bank maintains under all circumstances an adequate stock 
 of gold, from which at all times foreign demands can be met 
 without in any way affecting the integrity of the monetary 
 system. 
 
 The German bank note system is distinguished beyond all 
 things bj'- the fact that it meets equally all requirements for 
 elasticity and for security. 
 
 I hope that the foregoing will be of advantage to your 
 discussions, and may also have some effect upon the conclusions 
 which you may reach with regard to the improvment of your 
 currency system in order that the increasing requirements of 
 trade and finance in the United States may be met to better ad- 
 vantage than heretofore. I am, 
 
 Yours very respectfully, 
 
 ARTHUR SALOnONSOHN. 
 
 43 
 
From the Governor of the AustrcHungarian Bank. 
 
 ViKNNA, July 22, 1906. 
 
 Gentlemen: 
 
 I beg to acknowledge the receipt of your favor of June 
 igth, and have now to inform you that on the nth of this 
 month I had the pleasure of meeting your delegate, Mr. Chas. 
 A. Conant, and of discussing with him the various points men- 
 tioned in your letter, in which you express a wish to have my 
 opinion particularly in regard to the operation of the German 
 so-called indirect note issue. I will gladly comply with your 
 request, and in this respect would refer you particularly to the 
 exhaustive exposition in chapter 9 of the work handed your 
 delegate issued by Mr. I^eonhardt, General Secretary, called, 
 ''The Administration of the Austrian-Hungarian Bank from 
 1878 to 1885," and would add that the proposition made by the 
 bank in 1887 regarding a change in its by-laws, covering a 
 reform in its note issue in the interest of the general welfare, has 
 stood the test of time. 
 
 As you will see by the following data, during a period of 18 
 years, — 1888- 1905 — or 864 working weeks, the excessive circu- 
 lation over and above that permitted by law, free of duty, oc- 
 curred 55 times iand the amounts vary from 45,654 kronen to 
 89,800,000 kronen and the amount of duties paid to the Gov- 
 ernment ranged from 47,560 kronen to 93,591 per week, or em- 
 braced a total payment to the Government of 1,294,880 kronen. 
 I would further point out two notable periods; that is, of these 55 
 periods where the note issue was exceeded, 23 occurred in the 
 month of October, which in this country is the harvest month 
 and calls forth additional activity both in trade and com- 
 merce, and further that the system of note taxation exerted no 
 decided influence upon the discount policy of the bank inasmuch 
 as the Council of Administration, after careful consideration of all 
 circumstances, had occasion to raise its discount rate repeatedly 
 during times when the limitation of its note issue had not been 
 reached; and also on several occasions when its limitations were 
 reached, it maintained a discount rate lower than the legal 5^ 
 
 48 
 
rate. Thus the cost of the tax was not borne by its clients 
 but by the bank itself. 
 
 I am always at your disposal, and remain, 
 
 Yours respectfully, 
 
 DR. LEON RITTER von BILINSKI. 
 
 From the former Governor of the Netherlands Bank. 
 
 Bad-Nauhkim, July 25, 1906. 
 
 Mr. John Claflin, Chairman Special Currency Committee, 
 
 Chamber of Commerce of the State of New York. 
 
 My Dear Sir : 
 
 Mr. Conant sent me your letter of June 19, in which you 
 ask me to give information regarding the banking system of my 
 country (Holland). Owing to my absence from home I am 
 unable to give you any statistics, but I can easily supply you 
 with some details showing you in what manner we have been able 
 to secure that elasticity which, in my opinion, is one of the 
 principal requisites of a good currency. 
 
 In the years 1863 and 1864 questions of banking policy were 
 much discussed in Holland. The Bank charter was about to 
 expire and there was a strong party advocating ''free banking." 
 I never belonged to that party. My opinion then was, as it is 
 now, that competition generally is an excellent thing, but that 
 there are exceptions to every general maxim, and that at the 
 present time it may be useful to possess at least one credit insti- 
 tution which by its position is not compelled to extend its 
 operations to the utmost limit. This consideration for me was, 
 at that time, the main reason why I strongly combatted the 
 proposal to terminate the monopoly of the Netherlands Bank as 
 bank of issue. I am happy to say that no such proposal has 
 been adopted, and that when in 1889 and in 1904 the Bank 
 
 44 
 
charter had again to be renewed, Jiobody, either in the press or 
 in Parliament, advocated a change of system. 
 
 The fact is, that during all the commercial crises that 
 occurred since 1864, the Bank had proved to be the main support 
 of credit. Not only did never the slightest doubt arise as to the 
 convertibility of the note, but there never arose, also, any doubt 
 regarding the Bank's power -to make any advances that might be 
 demanded. That is the reason why nobody nowadays dreams of 
 parting with a system which gives to the country a feeling of 
 strength and security, and at the same time, by its branches and 
 agencies, places the means of the Bank at the disposal of all, even 
 in the remotest places. 
 
 The rules to which the Bank is submitted are very simple. 
 It is not allowed to do any other business but discounting bills 
 payable in Holland, making advances on securities and merchan- 
 dise, and purchasing bills payable abroad. The amount of 
 money, however, invested in this last branch may not e^sceed, 
 except for a period of two weeks, the amount of its ' 'surplus me- 
 tallic stock." The surplus metallic stock is the amount of gold 
 and silver which the Bank holds in excess of the amount it is 
 required to hold. It is required to hold 40 per cent, of its cash 
 liabilities (notes and deposits). Hence, supposing the cash lia- 
 bilities to be 280 millions of florins (2^ florins = $1) and the 
 stock of gold and silver to 150 millions, the surplus would be 
 38 millions. 
 
 Every week the main figures of the balance sheet are pub- 
 lished, including that of the surplus, to which considerable atten- 
 tion is paid. It is expected — and this expectation has always 
 been realized — that the Bank will always keep, in ordinary times, 
 a large surplus, so as to be able to meet any extraordinary de- 
 mand. We look upon this as one of the unwritten conditions — 
 unwritten because it would be impossible to formulate them cor- 
 rectly — under which the charter has been granted. There are 
 periods — and they last very long sometimes — during which the 
 surplus rises to an enormous sum, but the Bank does not care. 
 It knows quite well that better times for it will return, and that 
 the community is all the safer for not having the demand for 
 money stimulated immediately by very low rates of interest. 
 
 45 
 
There is a circumstance, however, which strongly facilitates 
 to the Bank the adherence to this line of conduct. The Bank's 
 paid up capital is not large at all, only twenty millions of florins, 
 about one-fourteenth part of its cash liabilities. It used to be 
 fifteen millions, but in 1889 it was brought up to the present 
 amount. At that time I was Governor of the Bank, and it was 
 my duty to consider whether the increase from fifteen to twenty 
 were sufiicient. My conclusion was that not only was it sufficient, 
 but that it was not even needed. The reason why a bank wants 
 capital of its own is simply this, that it desires to have some- 
 thing — even a great deal — to fall back upon in case of losses. 
 But fifteen millions is a great deal ; the losses, even in the worst 
 years, have never been so great as to exceed a small part of the 
 bank's profits ; they never affected its capital ; and it seemed to 
 me, when thinking out the subject, that there is really a certain 
 danger in carrying up the bank's capital to a too high amount, 
 because, it is much easier to earn a good dividend on a small 
 capital than on a large one. I just said that in quiet times the 
 bank suffers its surplus-metallic stock to increase (which involves 
 that it suffers its discounts and advances to diminish) very large- 
 ly. It w^ould undoubtedly be less easy for the bank to do so if 
 its capital were considerably greater than it is. 
 
 I hope that this information may be deemed sufficient. 
 You will see that in my country there is no special mechanism, 
 such as taxing the outstanding uncovered notes in excess of a 
 certain amount for securing "elasticity." But the w^hole system 
 is so arranged as to produce this effect. The bank, though a pri- 
 vate institution, is governed on principles of a non-private char- 
 acter. The Governor and the Secretary, being appointed by the 
 Queen, look upon their duties as mostly public ones. They hold 
 that no bank of issue is properly managed unless its conditions 
 be such as to allow of an increased issue of notes, whenever neces- 
 sary, above the usual amount, and they conduct the bank oper- 
 ations in agreement with these principles. 
 
 I should be slow to believe that any mechanism would answer 
 the purpose as well. Mechanisms have always some defect 
 hampering their operation, or they produce consequences not 
 contemplated and harmful. 
 
 46 
 
Now, whether in all this there is anything of practical inter- 
 est for those who wish to improve the banking system of the 
 United States, I do not know. Of course, the same bank system 
 would never do for a very large country, the needs, both tempo- 
 rary and permanent, of its various parts differing so much. 
 Perhaps you might think of one bank for each State ; or of 
 forming between the banks of each State an arrangement in virtue 
 of which their rates of interest for discounts and advances were 
 fixed by a Central Board, to whose decisions each and all of them 
 were bound to submit. All this requires a local knowledge which 
 I do not possess. I could only give you a brief sketch of our 
 own system and an account of the results it has produced. 
 
 With the assurance of my highest regard, 
 
 I am, dear Sir, yours respectfully, 
 
 N. Q. PIERSON. 
 
 47 
 
REICHS BANK 
 
 Reserve of Bank Notes under, and Excess of 
 
 (Amounts in 
 
 YBAR 
 
 1876 
 1877 
 1878 
 1879 
 1880 
 1881 
 1883 
 1883 
 1884 
 1885 
 1886 
 1887 
 1888 
 1889 
 1890 
 1891 
 1892 
 1893 
 1894 
 1895 
 1896 
 1897 
 1898 
 1899 
 1900 
 1901 
 1902 
 1903 
 1904 
 1905 
 
 Arbitrary 
 
 allowance 
 
 ('Kontingent') 
 
 of Notes not 
 
 covered by 
 
 Metal, free of 
 
 tax, at the end 
 
 of every year. 
 
 272.720 
 
 273.875 
 273.875 
 273.875 
 273.875 
 273.875 
 273.875 
 273.875 
 273.875 
 273.875 
 274.834 
 276.085 
 276.085 
 286.585 
 288.025 
 292.117 
 292.117 
 292.117 
 293.400 
 293.400 
 293.400 
 293.400 
 293.400 
 293.400 
 293.400 
 460.000 
 470.000 
 470.000 
 470.000 
 472.829 
 
 Amount of Bank Notes which might have been 
 issued, free of tax (Reserve of Notes) 
 
 Average 
 
 152.704 
 155.088 
 185.222 
 195.358 
 167.639 
 148.443 
 121.817 
 176.123 
 168.786 
 168.640 
 196.583 
 220.649 
 277.110 
 194.200 
 135.431 
 246.010 
 283.444 
 183.302 
 262.761 
 243.237 
 135.209 
 113.026 
 54.691 
 12.271 
 8.689 
 214.600 
 254.400 
 163.800 
 153.500 
 153.700 
 
 Highest 
 
 Date 
 
 June 7tli 
 March 23rd 
 June 7tli 
 March 23rd 
 June 7th 
 March 7th 
 March 23rd 
 March 15th 
 March 15 th 
 June 7th 
 Feb. 23rd 
 June 15 th 
 June 7th 
 March 15 th 
 June 7 th 
 Aug. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 Nov. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 June 15th 
 Feb. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 Feb. 23rd 
 
 Amount 
 
 242.981 
 222.422 
 241.643 
 299.225 
 231.531 
 260.499 
 221.532 
 269.793 
 268.549 
 252.251 
 330.763 
 332.665 
 446.715 
 367.662 
 276.468 
 359.147 
 431.678 
 350.404 
 366.795 
 471.164 
 317.083 
 317.299 
 321.503 
 222.873 
 181.810 
 416.400 
 501.400 
 368.000 
 358.800 
 509.000 
 
 I^owest 
 
 Date 
 
 Jan. 7th 
 Sept. 30th 
 Jan. 7th 
 Dec. 31st 
 Dec. 31st 
 
 Dec. 31st 
 
 Jan. 7th 
 Dec. 31st 
 
 Jan. 7th 
 Dec. 31st 
 
 Jan. 7th 
 
 30.519 
 56.997 
 74.173 
 71.648 
 48.975 
 
 36.180 
 
 11.526 
 66.143 
 
 32.328 
 16.764 
 
 60.286 
 
Circulation over the Arbitrary " Kontingent. 
 Thousand Marks) 
 
 
 Excega of Issue over and above the 
 Arbitrary " Kontingent." 
 
 
 Number 
 of over- 
 issues 
 
 Total 
 Amount 
 of over- 
 issues 
 
 Highest amount of 
 over-issues 
 
 Tax 
 
 
 Date 
 
 Amount 
 
 paid 
 
 
 1 
 
 2 
 
 1 
 
 1 
 1 
 
 3 
 6 
 
 1 
 
 3 
 
 6 
 
 9 
 
 16 
 
 20 
 
 20 
 
 5 
 
 3 
 
 7 
 
 7 
 
 9 
 
 26.092 
 31.409 
 
 32.679 
 
 2.615 
 
 34.161 
 
 226.528 
 325.082 
 
 38.518 
 
 215.080 
 
 446.209 
 
 737.199 
 
 1850.325 
 
 2733.402 
 
 2417.139 
 
 338.577 
 
 459.157 
 
 773.057 
 
 1073.638 
 
 1584.963 
 
 Dec. 31st 
 Sept. 30th 
 
 Dec. 31st 
 Jan. 7th 
 Dec. 31st 
 
 Dec. 31st 
 Oct. 7th 
 
 Sept. 30th 
 
 Dec. 31st 
 Dec. 81st 
 Sept. 30th 
 Dec. 31st 
 Sept. 30th 
 Dec. 31st 
 Sept. 30th 
 Dec. 31st 
 Dec. 31st 
 Sept. 30th 
 Sept. 30th 
 
 26.092 
 19.224 
 
 32.679 
 
 2.615 
 
 34.161 
 
 109.478 
 104.205 
 
 38.518 
 
 148.283 
 134.149 
 205.830 
 282.955 
 371.233 
 355.917 
 108.601 
 231.639 
 274.949 
 305.038 
 450.283 
 
 27 
 33 
 
 34 
 
 3 
 
 36 
 
 236 
 
 339 
 
 40 
 
 224 
 
 465 
 
 768 
 
 1927 
 
 2847 
 
 2518 
 
 353 
 
 478 
 
 805 
 
 1118 
 
 1651 
 
 
 121 
 
 
 
 or$; 
 
 13.902 
 3.310.000 
 
NOTE CIRCULATION AND STOCK OF METALLIC MONEY IN THE 
 
 (IN MARKS) 
 
 
 Amount of 
 
 stock of 
 
 Cash. 
 (Metal, Notes of 
 
 
 Amount of 
 
 Date of over-Issue 
 
 Authorized Issue 
 
 Metal 
 
 other Banks and 
 Treasury Notes.) 
 
 Circulation 
 
 over-issue. 
 
 1901 7, January 
 
 450,000,000 
 
 761,002,000 
 
 793,201,000 
 
 1,309,198,000 
 
 65,995,930 
 
 80, March 
 
 460,000,000 
 
 811,668,000 
 
 845,076,000 
 
 1,321,420,000 
 
 16,347,335 
 
 30, September 
 
 460,000,000 
 
 830,442,000 
 
 861,819,000 
 
 1,430,427,000 
 
 108,601,148 
 
 7, October 
 
 460,000,000 
 
 831,277,000 
 
 865,981,000 
 
 1,365,153,000 
 
 39,176,396 
 
 31, December 
 
 460,000,000 
 
 868,501,000 
 
 897,320,000 
 
 1,465,787,000 
 
 108,456,421 
 
 1902 30, September 
 
 470,000,000 
 
 839,804,000 
 
 874,354,000 
 
 1,495,370,000 
 
 151,015,199 
 
 7, October 
 
 470,000,000 
 
 836,834,000 
 
 869,559,000 
 
 1,416,059,000 
 
 76,503,876 
 
 31, December 
 
 470,000,000 
 
 786,128,000 
 
 814,830,000 
 
 1,516,469,000 
 
 231,638,836 
 
 1903 7, January 
 
 470,000,000 
 
 823,318,000 
 
 854,481,000 
 
 1,397,109,000 
 
 73 638,154 
 
 31, March 
 
 470,000,000 
 
 818,482,000 
 
 854,025,000 
 
 1,449,540,000 
 
 135,514,615 
 
 7, April 
 
 470,000,000 
 
 817,385,000 
 
 853,010,000 
 
 1,350,081,000 
 
 37,068,533 
 
 30, June 
 
 470,000,000 
 
 884,259,000 
 
 919,973,000 
 
 1,434,565,000 
 
 44,587,518 
 
 80, September 
 
 470,000,000 
 
 858,015,000 
 
 891,593,000 
 
 1,515,581,000 
 
 153,987,512 
 
 7, October 
 
 470,000,000 
 
 851,100,000 
 
 885,019,000 
 
 1,429,343,000 
 
 74,331,008 
 
 31, December 
 
 470,000,000 
 
 793,459,000 
 
 820,537,000 
 
 1,565,490,000 
 
 374,949,399 
 
 1904 7, January 
 
 470,000,000 
 
 834,443,000 
 
 868,434,000 
 
 1,438,295,000 
 
 99,861,153 
 
 31, March 
 
 470,000,000 
 
 828,079,000 
 
 860,804,000 
 
 1,496,935,000 
 
 166,136,903 
 
 7, April 
 
 470,000,000 
 
 852,917,000 
 
 899,609 000 
 
 1,385,839,000 
 
 16,332,874 
 
 80, June 
 
 470,000,000 
 
 870,048,000 
 
 902,449,000 
 
 1,477,852,000 
 
 105,400,518 
 
 80, September 
 
 470,000,000 
 
 793,143,000 
 
 824,023,000 
 
 1,599,067,000 
 
 305,038,527 
 
 7, October 
 
 470,000,000 
 
 789,444,000 
 
 833,181,000 
 
 1,482,350,000 
 
 179,169,568 
 
 15, " 
 
 470,000,000 
 
 839,669,000 
 
 897,616,000 
 
 1,395,915,000 
 
 28,298,848 
 
 31, December 
 
 470,000,000 
 
 927,060,000 
 
 956,261,000 
 
 1,599,784,000 
 
 173,519,879 
 
 1905 81, March 
 
 470,000,000 
 
 1,015,884,000 
 
 1,052,488,000 
 
 1,543,505,000 
 
 21,016,649 
 
 30, June 
 
 470,000,000 
 
 950,791,000 
 
 985,875.000 
 
 1,554,802,000 
 
 98,927,495 
 
 30, September 
 
 470,000,000 
 
 732,215,000 
 
 762,361,000 
 
 1,682,646,000 
 
 450,282,987 
 
 7, October 
 
 470,000,000 
 
 755,175,000 
 
 797,785,000 
 
 1,536,363,000 
 
 268,574,916 
 
 14, " 
 
 470,000,000 
 
 787,357,000 
 
 837,735,000 
 
 1,450,251,000 
 
 142,517,347 
 
 33, 
 
 470,000,000 
 
 834,409,000 
 
 892,607,000 
 
 1,388,204,000 
 
 25,593,861 
 
 81, " 
 
 470,000,000 
 
 794,174,000 
 
 825,527,000 
 
 1,442,072,000 
 
 146,547,804 
 
 7, November 
 
 470,000,000 
 
 798,992,000 
 
 839,658,000 
 
 1,385,525,000 
 
 75,864,662 
 
 80, December 
 
 473,829,000 
 
 803,525,000 
 
 831,043,000 
 
 1,656,679,000 
 
 355,637,324 
 
 1906 6, January 
 
 472,829,000 
 
 854,032,000 
 
 892,580,000 
 
 1,515,306,000 
 
 149,897,000 
 
 31, March 
 
 472,829,000 
 
 888,980,000 
 
 922,921,000 
 
 1,629,098,000 
 
 233,348,000 
 
 7, April 
 
 472,829,000 
 
 915,791,000 
 
 958,428,000 
 
 1,477,287,000 
 
 46,030,000 
 
 80, June 
 
 472,829,000 
 
 844,429,000 
 
 892,971,000 
 
 1,647,872,000 
 
 282,072,000 
 
 7, July 
 
 472,829,000 
 
 879,012,000 
 
 939,041,000 
 
 1,501,113,000 
 
 89,242,000 
 
REiCHSBANK ON DAYS WHEN AN OVER-ISSUE OGOURREO. 
 
 
 
 
 Amount of cover as 
 
 
 
 
 
 STOCK OF MiRTAI, 
 
 required by Sec. 9 of 
 
 the Banking Law of 
 
 March 14th, 1875 
 
 
 
 
 Circulation and 
 other maturing 
 
 
 
 
 
 
 To secure 
 
 To secure 
 
 To secure 
 
 To secure 
 
 Rate of 
 Discount 
 
 Date of over-issue 
 
 obligations 
 
 circula- 
 
 other ma- 
 turing 
 obligations 
 
 circulation 
 
 other ma- 
 turing ob- 
 ligations 
 
 
 
 
 
 tion. Per- 
 
 Per- 
 
 
 
 
 
 centage. 
 
 Percentage 
 
 centage 
 
 Per- 
 centage. 
 
 
 
 
 1,814,128,000 
 
 58.1 
 
 41.9 
 
 60.6 
 
 43.7 
 
 5 
 
 7, 
 
 January, 1901 
 
 1,826,530,000 
 
 61.4 
 
 44.4 
 
 63.9 
 
 46.3 
 
 4i 
 
 30, 
 
 March, 
 
 1,953,568,000 
 
 58.1 
 
 42.5 
 
 60.3 
 
 44.1 
 
 4 
 
 30, 
 
 September, 
 
 1,865,886,000 
 
 60.9 
 
 44.6 
 
 63.4 
 
 46.4 
 
 4 
 
 7, 
 
 October, 
 
 2,028,975,000 
 
 59.3 
 
 42.8 
 
 61.2 
 
 44.2 
 
 4 
 
 31, 
 
 December 
 
 3,034,572,000 
 
 56.2 
 
 41.3 
 
 58.5 
 
 43.0 
 
 3 
 
 30, 
 
 September, 1903 
 
 1,923,737,000 
 
 59.1 
 
 43.5 
 
 61.4 
 
 45.3 
 
 4 
 
 7, 
 
 October, 
 
 2,060,433,000 
 
 51.8 
 
 38.2 
 
 53.7 
 
 39.5 
 
 4 
 
 31, 
 
 December, 
 
 1,913,106,000 
 
 58.9 
 
 43.0 
 
 61.2 
 
 44.7 
 
 4 
 
 7, 
 
 January, 1908 
 
 1,984,741,000 
 
 56.5 
 
 41.2 
 
 58.9 
 
 43.0 
 
 n 
 
 31, 
 
 March, 
 
 1,844,625,000 
 
 60.5 
 
 44.3 
 
 68.2 
 
 46.3 
 
 3i 
 
 T, 
 
 April, 
 
 2,000,675,000 
 
 61.6 
 
 44.2 
 
 64.1 
 
 46.0 
 
 4 
 
 30, 
 
 June, 
 
 2,066,179,000 
 
 56.6 
 
 41.5 
 
 58.8 
 
 43.2 
 
 4 
 
 30, 
 
 September 
 
 1,905,894,000 
 
 59.5 
 
 44.7 
 
 61.9 
 
 46.4 
 
 4 
 
 7, 
 
 October, 
 
 2,140,408,000 
 
 50.7 
 
 37.1 
 
 52.4 
 
 38.3 
 
 4 
 
 31, 
 
 December, 
 
 1,949,423,000 
 
 58.0 
 
 42.8 
 
 60.4 
 
 44.6 
 
 4 
 
 7, 
 
 January, 1904 
 
 2,036,574,000 
 
 55.3 
 
 40.7 
 
 57.5 
 
 42.3 
 
 4 
 
 31, 
 
 March, 
 
 1,917,082,000 
 
 61.5 
 
 44.5 
 
 64.9 
 
 46.9 
 
 4 
 
 7, 
 
 April, 
 
 2.017,605,000 
 
 58.9 
 
 43.1 
 
 61.1 
 
 44.7 
 
 4 
 
 30, 
 
 June, 
 
 2,131,775,000 
 
 49.6 
 
 87.2 
 
 51.5 
 
 38.6 
 
 4 
 
 30, 
 
 September, 
 
 1,978,479,000 
 
 53.3 
 
 39.9 
 
 56.2 
 
 42.1 
 
 4 
 
 7, 
 
 October, 
 
 1,895,677,000 
 
 60.2 
 
 44.3 
 
 64.3 
 
 47.3 
 
 5 
 
 15, 
 
 (( 
 
 2,180,081,000 
 
 57.9 
 
 42.5 
 
 59.8 
 
 43.9 
 
 5 
 
 31, 
 
 December 
 
 2,134,506,000 
 
 65.8 
 
 47.6 
 
 68.1 
 
 49.7 
 
 8 
 
 31, 
 
 March, 1905 
 
 2,133,903,000 
 
 61.2 
 
 44.6 
 
 63.4 
 
 46.2 
 
 8 
 
 3o; 
 
 June, 
 
 2,239,021,000 
 
 43.5 
 
 32.7 
 
 45.8 
 
 34.0 
 
 4 
 
 30, 
 
 September, 
 
 2,060,636,000 
 
 49.2 
 
 36.7 
 
 55.5 
 
 38.7 
 
 5 
 
 7, 
 
 October, 
 
 1,967,907,000 
 
 54.3 
 
 40.0 
 
 57.8 
 
 43.6 
 
 5 
 
 14, 
 
 (( 
 
 1,918,945,000 
 
 60.1 
 
 43.5 
 
 64.3 
 
 46.5 
 
 5 
 
 23, 
 
 " 
 
 1,929,565,000 
 
 55.1 
 
 41.2 
 
 57.2 
 
 42.8 
 
 5 
 
 31, 
 
 C( 
 
 1,859,920,000 
 
 57.7 
 
 42.9 
 
 60.6 
 
 45.1 
 
 5i 
 
 7, 
 
 November, 
 
 2,287,486,000 
 
 48.5 
 
 35.1 
 
 50.2 
 
 36.3 
 
 6 
 
 30, 
 
 December, 
 
 2,039,802,000 
 
 56.4 
 
 41.9 
 
 58.9 
 
 43.7 
 
 6 
 
 6, 
 
 January, 1906 
 
 2,218,094,000 
 
 54.6 
 
 40.1 
 
 56.6 
 
 41.6 
 
 5 
 
 31, 
 
 March, 
 
 2,021,801,000 
 
 62.0 
 
 45.3 
 
 64.9 
 
 47.4 
 
 5 
 
 7; 
 
 April, 
 
 2,247,511,000 
 
 51.2 
 
 37.6 
 
 54.2 
 
 39.7 
 
 4i 
 
 30, 
 
 June, 
 
 3,062,812,000 
 
 58.6 
 
 42.6 
 
 62.5 
 
 45.5 
 
 4i 
 
 7, 
 
 July, 
 
SPECIFICATION OF THE AMOUNTS OF UNCOVERED NOTE ISSUE AS WELL AS 
 THE AMOUNTS OF OVERSECURED ISSUE ON BANK STATEMENT DAYS. 
 
 The highest and lowest amount of each year is shown by a finedrawn under the respective amounte 
 
 Shown In Multiples of Mk. 1000. 
 
 The amount of unsecured notes is given in black faced type and the maximum amount 
 
 is underscored. 
 
 
 
 
 
 
 
 
 
 
 DATE 
 
 1901 
 
 1902 
 
 1903 
 
 1904 
 
 1905 
 
 1906 
 
 DATE 
 
 1 
 
 2 
 
 3 
 
 4 
 
 5 
 
 6 
 
 7 
 
 8 
 
 January 
 
 7 
 
 515,997 
 
 426,055 
 
 542.628 
 
 569,861 
 
 438,915 
 
 633,726 
 
 7 
 
 January 
 
 " 
 
 15 
 
 356,015 
 
 260,469 
 
 356.983 
 
 377,263 
 
 285,185 
 
 892,333 
 
 15 
 
 " 
 
 (( 
 
 23 
 
 227,659 
 
 132,862 
 
 242,946 
 
 246,913 
 
 133,071 
 
 260,365 
 
 23 
 
 (( 
 
 << 
 
 31 
 
 264,316 
 
 161,344 
 
 306,038 
 
 297.135 
 
 182,263 
 
 335,488 
 
 31 
 
 (( 
 
 February 
 
 7 
 
 230,146 
 
 95,116 
 
 231,217 
 
 247.539 
 
 126,262 
 
 278,587 
 
 7 
 
 February 
 
 " 
 
 15 
 
 154,579 
 
 23,149 
 
 175,297 
 
 186,248 
 
 85,001 
 
 187,671 
 
 15 
 
 «< 
 
 (( 
 
 23 
 
 28 
 
 100,189 
 129,274 
 
 41.388 
 
 102,006 
 
 111,204 
 
 38,971 
 
 136,186 
 
 23 
 
 28 
 
 (( 
 
 (> 
 
 31,050 
 
 209,213 
 
 209,620 
 
 76,971 
 
 244,063 
 
 <( 
 
 March 
 
 7 
 
 111,889 
 
 19,734 
 
 182,276 
 
 186,095 
 
 71,146 
 
 225,362 
 
 7 
 
 March 
 
 < i 
 
 15 
 
 89,272 
 
 113 
 
 164,670 
 
 140,167 
 
 12,913 
 
 171,918 
 
 15 
 
 (( 
 
 " 
 
 23 
 
 108,303 
 
 15,070 
 
 165,744 
 
 134,696 
 
 8,238 
 
 160,408 
 
 23 
 
 (( 
 
 " 
 
 31 
 
 476,344 
 
 359,062 
 
 595,515 
 
 636,131 
 
 491,017 
 
 706,177 
 
 31 
 
 ii 
 
 April 
 
 7 
 
 418.426 
 
 313 390 
 
 497,071 
 
 486,230 
 
 373,933 
 
 518,859 
 
 7 
 
 AprU 
 
 " 
 
 15 
 
 253,469 
 
 163,967 
 
 368,048 
 
 321,092 
 
 254,798 
 
 396,381 
 
 15 
 
 (( 
 
 ' 
 
 23 
 
 150,744 
 
 80,449 
 
 270,442 
 
 230,346 
 
 181,499 
 
 260,474 
 
 23 
 
 (( 
 
 < < 
 
 30 
 
 225,693 
 
 170,471 
 
 347,538 
 
 369,162 
 
 260,395 
 
 386,414 
 
 30 
 
 (( 
 
 May 
 
 7 
 
 190,640 
 
 140,610 
 
 297,627 
 
 308,743 
 
 236,331 
 
 340,731 
 
 7 
 
 May 
 
 " 
 
 15 
 
 117,749 
 
 81,492 
 
 219,361 
 
 249,039 
 
 136,731 
 
 243,804 
 
 15 
 
 ii 
 
 *' 
 
 23 
 
 60,760 
 
 6,595 
 
 161,925 
 
 164,139 
 
 41,845 
 
 148,270 
 
 23 
 
 ii 
 
 *' 
 
 31 
 
 98,991 
 
 68,702 
 
 251,474 
 
 207,974 
 
 159,875 
 
 266,802 
 
 81 
 
 a 
 
 June 
 
 7 
 
 68,389 
 
 29,737 
 
 189,743 
 
 183,480 
 
 139,170 
 
 236,932 
 
 7 
 
 June 
 
 " 
 
 15 
 23 
 
 48,574 
 
 789 
 2,064 
 
 148,066 
 140,663 
 
 137,961 
 148,653 
 
 80,463 
 113,454 
 
 190,700 
 221,216 
 
 15 
 23 
 
 <* 
 
 (< 
 
 51,a6tt 
 
 (< 
 
 <i 
 
 30 
 
 7 
 
 443,492 
 880,402 
 
 382,175 
 319,758 
 
 514,593 
 415,491 
 
 575,403 
 468,581 
 
 568,937 
 448,190 
 
 754,901 
 
 30 
 
 7 
 
 <( 
 
 July 
 
 562,071 
 
 July 
 
 a 
 
 15 
 
 274,067 
 
 190,927 
 
 278,635 
 
 327,590 
 
 331,595 
 
 436,757 
 
 15 
 
 ii 
 
 t( 
 
 23 
 
 182,004 
 
 107,501 
 
 179,207 
 
 231,259 
 
 333,471 
 
 
 23 
 
 ii 
 
 ii 
 
 31 
 
 235,741 
 
 173,741 
 
 253,660 
 
 312,597 
 
 833,354 
 
 
 31 
 
 ii 
 
 August 
 
 7 
 
 204,450 
 
 145,850 
 
 234.471 
 
 282,125 
 
 303,333 
 
 
 7 
 
 August 
 
 " 
 
 15 
 
 168,203 
 
 110,628 
 
 169,888 
 
 233,171 
 
 351,171 
 
 
 15 
 
 (( 
 
 23 
 
 121,379 
 
 73,875 
 
 123,838 
 
 175,283 
 
 199,031 
 
 
 S3 
 
 <( 
 
 i( 
 
 31 
 
 229,126 
 
 173,648 
 
 226,075 
 
 292,335 
 
 340,888 
 
 
 81 
 
 (( 
 
 September 
 
 7 
 
 215,859 
 
 185,732 
 
 223,906 
 
 289,159 
 
 844,538 
 
 
 7 
 
 Septembeir 
 
 it 
 
 15 
 
 191,655 
 
 181,743 
 
 193,964 
 
 278,891 
 
 353,895 
 
 
 15 
 
 (( 
 
 ii 
 
 23 
 
 193,606 
 
 196,844 
 
 198,000 
 
 309,617 
 
 377,689 
 
 
 23 
 
 (< 
 
 (( 
 
 30 
 
 7 
 
 568,608 
 
 621,016 
 546,500 
 
 628,988 
 544,324 
 
 775.044 
 
 930,385 
 
 
 80 
 
 7 
 
 (( 
 
 October 
 
 499,172 
 
 649,169 
 
 738,578 
 
 October 
 
 '< 
 
 15 
 
 386,911 
 
 415,539 
 
 415,055 
 
 498,299 
 
 613,516 
 
 
 15 
 
 (( 
 
 (( 
 
 23 
 
 285,823 
 
 333,952 
 
 339,751 
 
 396,999 
 
 495,597 
 
 
 23 
 
 (( 
 
 ii 
 
 31 
 
 356,061 
 
 433,846 
 
 460.951 
 
 447,107 
 
 616,545 
 
 
 81 
 
 (< 
 
 November 
 
 7 
 
 311,031 
 
 889,976 
 
 400,626 
 
 385,643 
 
 645,867 
 
 
 7 
 
 November 
 
 (( 
 
 15 
 
 258,493 
 
 335,138 
 
 354,660 
 
 293,404 
 
 451,985 
 
 
 15 
 
 (( 
 
 (( 
 
 23 
 
 196,367 
 
 272,570 
 
 264,830 
 
 183,740 
 
 363,867 
 
 
 23 
 
 (( 
 
 (( 
 
 30 
 
 264,628 
 
 335,193 
 
 344,346 
 
 260,520 
 
 453,603 
 
 
 30 
 
 (( 
 
 December 
 
 7 
 
 230,472 
 
 325,117 
 
 336,456 
 
 239,899 
 
 438,533 
 
 
 7 
 
 December 
 
 ii 
 
 15 
 
 203,206 
 
 304,150 
 
 309,957 
 
 209,800 
 
 415,873 
 
 
 15 
 
 a 
 
 a 
 
 23 
 
 255,150 
 
 370,174 
 
 890,961 
 
 283,504 
 
 469,608 
 
 
 23 
 
 it 
 
 ti 
 
 31 
 
 568,467 . 
 
 701,639 
 
 744,953 
 
 643,533 
 
 835,636 
 
 
 31 
 
 a 
 
 
 
 
 
 Av. for the Year 
 
 
 243,075 
 
 211,443 
 
 306,210 
 
 816,486 
 
 316,466 
 
 
 
 
 Average amount 
 
 
 
 
 
 
 
 
 
 
 showing degree 
 of elasticity . . . 
 
 
 
 
 
 
 
 
 
 
 ... 
 
 525,034 
 
 743,027 
 
 643,947 
 
 663,840 
 
 959,356 
 
 
 
 
 Av. rate of dis't • 
 
 ... 
 
 4,099^ 
 
 3,121^ 
 
 d,8d7% 
 
 4,322^ 
 
 3,817^ 
 
 
 
 
 No.of Bank state- 
 
 
 
 
 
 
 
 
 
 
 ment days on 
 
 
 
 
 
 
 
 
 
 
 which an over- 
 
 
 
 
 
 
 
 
 
 
 issue is shown • • . 
 
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 ~" 
 
 4 
 
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