agricultural States, and its relative advantages to the low-interest community of New York City, as compared with them, is shown by the following statement: If a bank invests all its capital in bonds at par to-day, it can only get 90 per cent of currency on the bonds-a reduction of its loanable capital by 10 per cent-but its currency is still further reduced by the "current redemption" fund of 5 per cent, leaving it only 86.5 per cent of available loanable capital. But if they buy bonds at 125, which is far below the normal price of existing bonds in prosperous times, the available capital is reduced still further out of every dollar of their capi tal in the currency they receive. Thus, for every dollar of capital invested in those bonds the bank has only 68.4 per cent of available capital-its capital being reduced by 31.6 per cent. If all taxes were removed from currency taken by banks and they were allowed currency to the par of their bonds, buying them at their average price during the eight years previous to the panic of 1893, paying 2.5 income on their price-say at 130 on the recently issued 4 per cent thirty-year bond-the loanable capital on currency thus taken out would be reduced to 73.1 per cent available loanable capital, or their capital would be reduced by 26.9 per cent. When currency is issued against assets to the amount of the capital, and 100 per cent can be kept out, the possible loanable funds are doubled. Appendix QQ, page 450, shows that the specie to currency in the Canadian banks in 1896 was 26.4 per cent. In all New England banks (Appendix V V, page 457), in 1856 they had 13 per cent, and in all Boston banks 41 per cent, of specie to currency. The specie to currency and deposits in Canada was only 3.8 per cent. In all New England banks in 1856 it was 8.2 per cent, while in the Boston banks it was 13.63 per cent. No man thoroughly familiar with sound banking will dispute the statement that "specie should be held in proportion to the deposits plus the currency" of banks of loan and discount. By this test the old Suffolk system is shown to have provided more than double the specie in 1856 that is now held under the Canadian system, and was more sound in its specie, in the proportion of 82 to 38. Appendix RR, page 451, ought to dispose of the bugaboo of the dif ficulty of maintaining gold payments through banks, especially when it is known that gold did not go to a premium even during the few days of suspension of specie payments in 1857. In view of the further fact that there were so few failures of banks during 1856, 1857, and 1858, that I have been unable to find any particular mention of them in financial publications of the day, the Suffolk system is vindicated. Undoubtedly I shall soon find some statement of the facts concerning these failures. Appendix SS, page 452, gives the total of the main items of assets and liabilities in all banks of loan and discount in the country that it is necessary to reckon with in finding a solution for our present financial and banking difficulties. Appendix U U, page 453, gives an analysis of each item in each bank in New Hampshire, the only New England State whose complete record I have had time to analyze. This is done to show that the business of each bank is so different that no two banks can safely issue the same per cent of currency to capital. It will be seen that some banks issued an amount of currency equal to 98.7 per cent of their capital, while others could keep out only 29.4 per cent. The same is true of all New England banks. Those issuing the larger amount were in every way managed as prudently as those that issued the smaller amount. The issue of currency to capital in the country banks in Massachusetts is shown on page 458 to have been from 32 to 112 per cent to capital. Appendix W W, page 459, ought to give still further pause to those who do not think our banks can maintain at a parity all kinds of our money. These exhibits show the Bank of England has to-day 70.2 per cent of gold to currency issued. New York in 1856 had 13.9 per cent to its currency, and Boston banks 41.5 per cent. The New York and Boston banks have more than double to-day. The Bank of England has to-day 35.4 per cent of gold to her currency and deposits. In 1856 New York had 15 per cent and Boston 32.4 per cent. But every bank in Great Britain clears through the Bank of England, and all the world as well, and depends upon the Bank of England for gold. The small amount of gold carried by her in safely doing her immense business is an abundant guaranty of our safety. With the gold we now have we should be stronger in gold than England has been at any time since she adopted the gold standard. It has been nearly the uniform testimony before this committee that what the South and West want is plenty of money; that they do not want poor money nor cheap money, but money as plenty and as cheap as it can be and be good money. Bill H. R. 171 gives them such money, and cheaper than silver and as good as gold. With a rational national free banking law, allowing any five reputable citizens in any place in any State or Territory, upon getting together a capital of $20,000, $50,000, or $100,000, respectively, according to population, and by so doing to acquire the right to have the United States Government issue to them an amount of paper money equal to their capital, at the cost of printing it, provided they will keep it at a par with all other money, it is past belief that they will insist on having silver at its cost, instead of paper money for nothing but the cost of printing it, when such paper money is kept at a par with gold. Appendix SS, page 452, shows how many times each year the total currency issued by all the banks in the Suffolk system, comprising the six New England States, averaged to be currently redeemed. APPENDIX A A. [The figures in tables Appendix A A and B B are from Senate Ex. Doc. No. 38, Part 1, Fifty-second Congress, second session, and from those furnished by the Comptroller of the Currency.] |