Chapter CXI: Appendix: C

Assuming that the plan should be adopted within the year 1913, and taking round but approximate figures, the amount of reserves required to put the plan into operation would be as follows:

Individual deposits, commercial $11,000,000,000 Due to banks 1,000,000,000 Band credit currency, notes 1,250,000,000 --------------- _Total demand liabilities_ $13,250,000,000

Central reserves against this amount at 10% $1,325,000,000
Cash reserves on this amount at an average
of 8% 1,060,000,000
Cash reserves against savings held amounting
to $3,000,000,000 at 5% 150,000,000
--------------
_Total reserves required under our plan_ $2,535,000,000

_Amount of circulation in the United States
that may be used as reserves_:

Gold coin in the United States $1,900,000,000 Standard silver dollars 565,000,000 Subsidiary coin 175,000,000 Treasury notes, 1890 2,797,000 United States notes 346,681,000 -------------- $2,989,478,000 Less gold held in the U.S. Treasury as a Reserve Fund 150,000,000 -------------- _Total possible reserves_ $2,839,478,000

Amount of reserves required by our plan $2,535,000,000 -------------- Leaving a net amount of lawful reserves for circulation among the people of $304,478,000 Amount of subsidiary coin $175,000,000 Amount of silver dollars out 75,000,000 Amount of $1 and $2 bills out 225,000,000 ------------ $475,000,000

This amount is probably about equally divided between the banks and the people.

Amount of circulation now outside of the
U.S. Treasury and the banks and, therefore,
in the hands of the people $1,780,000,000

If we deduct the amount of lawful reserves
left for circulation among the people $304,478,000
--------------

_We have the total amount of bank note
circulation_ $1,475,522,000

Amount of circulation provided for 1,250,000,000
--------------

Additional amount of bank credit currency
to be provided $225,522,000

_But this increased amount of bank notes, amounting to $225,522,000, will not take any additional reserves because the deposits which will be converted into these notes are now covered by reserves. It is plain that, thereafter, book credits and note credits will be currently interchangeable._

_Thus every demand for currency will be met automatically and perfectly, every day, everywhere, throughout the United States, day in and day out; month in and month out; year in and year out._

INDEX

Appendix A, United States circulation, 501

Appendix B, amount of money held by banks, 502

Appendix C, reserves required under proposed plan, 503

Acceptance, what is an, 87
desirability of, 90
liability of, same as deposit, 93, 390
reserves against, should be same as against deposits, 96

Acceptance should be allowed only on goods in transit, 96
would develop a general market for commercial paper, 91

Acceptances, 428

Agriculture produced its money, 9

Aldrich, Nelson W, 60, 369

Aldrich, Wilbur, 30

American Reserve Bank, formation of, 389
duties of board of, 415
fund of, 433
how reserve is created, 422
government balance carried with, 434, 435
shall maintain parity of silver and gold, 439

Aldrich Plan and Plot, exposed, 459, 484
cost of currency of, 476
branches and foreign agencies, 487
economic objections to, 462
expansion and inflation of, 469
inconvenience and uselessness of, 475
loss of gold by, 469
800 associations possible, 478
was central bank, 484
possible capital and issue, 485
why public favored at first, 494, 499
would not effect reforms demanded, 498
reasons for its rejection, 500

Aristotle, 29

Bagehot, 202, 226

Bank, what is a, 225
credits of equivalent to gold, 234
failures of, 198
deposit, system of, 228
holding companies in, 237
at Hamburg, 226
number of, in United States, 235, 236
number and resources of, 374
independence of individual, 474
penalty for not carrying reserves, 431
repression in development of, 238

Bank, description of, by MacLeod, 226
by Bagehot, 226
United States, 71
at Venice, 226

Banks, no change in National, 239
increase in business of, 239
various kinds and business of, 375

Banker, is what, 224

Banking is Interstate Commerce, 216
is kind of insurance, 230
bank deposits and bank notes identical in, 231
necessary reforms in, 245
resources of, in 1860, 370
amount of, in 1890, 372
amount of, in 1912, 372
amount of, in world in 1890, 373

Bancroft, George, 165, 166

Bank credit currency, definition of, 67
first lien on assets, 69
additional amount permitted, 424
cost of transmission, how paid, 425
facility of supplying currency, 360
identical with check, 376
increase of, 400
how described and issued, 421
less profitable than deposits, 376
not understood, 378
tax on, how used, 427
strength of, 473

Bankers' Council, formation of, 412

Bank notes, bond-secured, 36
are a first lien, 69
are Government credit, in circulation, 58
bear no relation to business, 58
cost of, as currency, 50
not money, 36
origin of, 57
objections to, as currency, 59
penalty for carrying, as reserves, 428
promise of, to pay money, 36

Bayard, James A., 179

Bill, draft of, 407

Board of Control, compensation of, 413

Boston, country clearing at, 300, 310

Bullion report, 441

California, first use of gold, 14

Canada, bank system of, 79
chart showing movement of currency in, 80

Canada, circulation in 1912, 81
free from panics, 444

Cannon, James G., 291

Capital, what is, 108, 109
active, passive and fixed, 109, 110
active, essential to commerce, 110
conversion of commercial, into fixed, 131, 132
real estate mortgages tie up, 134

Central bank, tax on notes of, 486

Chase, Salmon P., 57, 176

Check, what is a, 86

City bank, National, bank stock holdings of, 488
Boss system established by, 493

Chicago Clearing House examinations, 316, 318

Clearing House, 289
approved practices of, 379, 383
clearings prior to establishment of, 295, 296
country Clearing, established in England, 299
centralizing reserves of, 308
definition of, 290, 291
established in London, 291
first clearing in New York, 298
free zones, 309
functions adopted, 339
for each commercial zone, 419

Clearing House Certificates, issues of, 329, 330

Coins, amount of subsidiary, 43
description of subsidiary, 38
parity of value of, 37
total amount of silver, 43
token, 37
value of, 37

Colonial credit money, 144
depreciation of issues of, 156
effect of issues of, 155
issues by Continental Congress, 157
issue of, in Connecticut, 149
in Massachusetts, 146
in New Hampshire, 151
in New Jersey, 151
in North Carolina, 153
in New York, 153
in Pennsylvania, 152
in Rhode Island, 151
in South Carolina, 153
in Virginia, 152
price of issues fixed, 158
succession of events following issue of, 173

Colwell, Stephen, 290

Congress, will legislate only after discussion, 369

Connecticut, bank commissioners report 1841, 357

Conklin, Roscoe, 180

Coöperative societies, conditions in Germany, 281
conditions in Belgium, 283
extent of business, 279
in United States, not a subject of banking legislation, 285
profits of, 279
main offices described, 281
started in Rochdale, 279
success assured in United States, 286
wholesale houses of, 280

Conant, Charles A. (Scotch currency), 68

Credit, definition of, 114, 124, 125
ample reserves essential to sound, 123
comparative value of, 124
contraction of, by an instrument of, 125
dangers of, 115
expansion as a result of, 121
Germany's abuse of, 124
importance of, 113
our banks should be ready to prove their, 124
per cent, of business done by, 112
production by use of, 119
proper functions of different forms of, 141, 142
use of, in Lancashire, 126
various forms of, 117
Webster on, 111

Crédit Foncier, amortization of mortgages, 266
capital of, 263
can take deposits, 265
formed when, 261
how governed, 262

Currency, definition of, 46, 441
cost of bank credit, 49
definition of bank credit, 67
deposits identical with bank credit, 64, 65
economy of bank credit, 51, 66
consists of, 47
proper system of, 48
right kind of, 55
what it is not, 47
redemption of, 67

Deposits, guarantee of, 393
no difference between currency and, 66
interchangeability of currency into, 64, 65

Depositors, insurance of, 395, 435, 437
cost of insurance of, 395

Depositors, insurance fund, how created, 435
losses of, how paid, 436

Deutsche Bank, 465

Diagrams, zone, subdivisions, 387
Canadian currency chart, 80
Clearing House, 295, 297
course of check, 311-313

Egypt, absorption of gold by, 20

Electricity, importance of, 113

Ellsworth, Oliver, 168

England, Bank of, 206
dissimilarity of, with banks of France and Germany, 443
failure of bank act, 441
resources, when established, 407
not bank of issue, 485

Exchange, what is, 84
Bill of, 87
broad definition of, 96
difference between draft and bill of, 87
is equal to gold in all transactions, 98
Origin, ancient, 94

Farmers, number of, 249

Fessenden, William Pitt, 181

Forgan, James B., 318, 319

Fowler, Charles N., 336, 340, 460

Fowler, W.J., Deputy Comptroller, 395

France, Bank of, founded by Napoleon, 71
land used as basis of money in, 137
Government credit of France used as basis of money, 138
resources of bank, when established, 407
note issue of, 484

Gallatin, Albert, 292

Garfield, James A., 58

Germany, resources of bank, when established, 407
financial situation of bank, weak, 467
failure of bank act, 443

Gold, adopted as standard by United States, 18
by England, 18
amount of, 19
amount in United States in 1860 and 1912, 370
certificate, 28
changing value of, 31
monetary use of, 22
outlook for supply of, 24
production of, 23
United States share of, 22
universal standard of value, 19

Gold, total amount used as reserves, 32
what influences the movement of, 440

Gold reserves, how created, 222

Government, demand liability of, 42

Government issues preceding greenbacks, 174

Hamilton, Alexander, 161, 171

Herrick, Myron T., 249

Hallock, James C., 293, 300

India, absorption of gold by, 20

Indiana, Bank of the State of, 346
State Bank of, 73, 345
statement of bank of, 361

Interest, rate in United States, 249
France, 254
Germany, 249

Iowa, State Bank of, 73, 348
statement of Bank of, 361

Japan, Tried Bond-secured Currency, 59

Jefferson, Thomas, 170

Jevons, Stanley, 203, 291

Kentucky, Bank of, 73, 347

Land Credit Bank, Directors of, 450
dividends of, 454
losses, how borne, 455
put into operation, how, 456
outline of provisions, 268, 269, 270

Landschaften, business of modern, 261
modern, 260
origin of, 252
old, 255
spread of, 258

Law, John, 137

Lee, Richard Henry, 162

Legal tender, what is, 41

Liverpool, Lord, coins of the realm, 39

Loan Certificates, clearing house, 328
amount of, issued, 336
are bank credit currency, 336
denominations of, 329-333
lessons of, 333

London, clearing started in, 291, 302

Los Angeles, Clearing House, 316

Louisiana, bank act of, 343
statement of banks of, 361

Lubbock, Sir John, 299

MacVeagh, Franklin, 240, 405

Madison, James, 164, 165

Maine, Report of Bank Commissioner 1857, 357
and 1865, 358

Marshall, John, 58, 164

Mason, George, 163

Massachusetts, Report of Bank Commissioner, 358

Missouri, Bank of the State of, 73, 351
statement of Bank of, 361

Money, amount held by banks in United States, Appendix B
amount of, in United States, Appendix A
coin and commodity must be of equal value, 44
credit must not be called money, 33
description of, 29
functions of, 30
gold is our, 26
how made, 26
what are the pieces of, 27
"wild cat," "red dog," etc., 348

Morrill, Justin S., 17

Mortgages, amount of, 249
rate of interest on, 249

Mutual Credit Societies, number of, 274
in Massachusetts, 275
resources for short loans, 277

Ohio, Bank of the state of, 73
bank act of, 344
statement of bank of, 361

Paper, accommodation, 128, 131
commercial, 120
difference between commercial and accommodation, 129

Paine, Thomas, 162

Panic of 1907, 471

Pinckney, Charles, 163

Population, shifting of, 32

Price, what is, 104

Prices, causes of higher, 31

Printing, importance of, 112

Promissory note, what is a, 86
note and draft identical, 87

Property, what is, 104
difference between property and wealth, 104

Postal Savings Banks, 384

Raiffeisen, Friedrich Wilhelm, 272

Real estate, unfit as basis for currency, 136

Redemption, in coin essential, 50

Reforms demanded, 494, 495, 496, 497

Reserves, amount of, 200
amount held by national and other banks, Appendix B, 381
amount of central, 222, 381
additional, where obtained, 409
Bagehot, 202
bank notes as, 204
circumstances should control amount of, 200
character of, 201
average, in United States, 208
elasticity of, 208, 219
from what points considered, 199
how increased, 220, 221
Jevons on, 202
legal tender quality unnecessary to, 188
national banks, 207
promises to pay as, 204
present, inefficient, 218
penalty for not maintaining, 423, 431, 432
present method of, useless, 218
are measure of value, therefore must be coin, 205
state or city debts as, 204
silver, not used in Bank of England, 206
should be national, 211
superimposed, 218
State bank, 207
taxation to compel equal, 212
unfair to permit unequal, 209
United States notes not actual, 206
what constitutes proper, 203

Ricardo, 441

Root, L. Carroll, 334

Ruggles, Charles A., 301, 310

Scotland, description of, currency by Conant, 68
currency by White, 68
effect of bank credit in, 67

Schulze, Francis Frederick, 272

Shaw, Leslie M., 487

Shaw, William A., 17

Sherman, John, 183

Sherman, Roger, 150, 166

Silver certificate, a warehouse receipt, 40

Silver dollars, amount of, Appendix A, 36, 43
a government debt, 40
a subsidiary coin, 39
a demand for gold, 38
not money, 38, 40
weight of, 36

Spaulding, E.G., 183

Stevens, Thaddeus, 183

Steam, importance of, 113

Standard of value, 9
changes in ratio of gold and silver as, 17
gold, the natural selection of, as the, 24
qualities of gold as, 17

Sub-Treasury, deposits in, 243

Suffolk Bank system, 73, 353, 354, 355, 361
achievements of, 334, 335
Bank was first clearing house in United States, 337, 338
commissioner's reports on, 357, 358
description of, 75
destroyed by 10 per cent tax, 74

Sumner, Charles, 179

Talbot, Joseph T., 205, 231

Uap, money of, 15

United States, bank clearings of, 373
financial center of world, 404
foreign trade of, 373
important interests of, 409
production of 1912, 373
size of, compared with Europe, 409
total business transactions of, 373

United States Government, nature of, 410
taxing power, only resource, 189, 191
time obligations only should be incurred, 192, 410
unfit to meet demand debts, 189

United States notes or greenbacks, additional cost of war due to, 185
agreement to pay gold, 34
amount of, Appendix A and 35
bonds issued for, 52
constitutionality of, 185-187
cost of, as currency, 50, 56
cost of, since 1879, 53
depreciation of, 184
drive gold out, 206
how converted into gold certificates, 427, 438
issues of, 183
lowest value of, 35
not money, 35
price of, a quotation of government credit, 41
resumption of payment of, 53
suspended payment of, 34
unfit for currency, 55

Walsh, John R., failure of, 314

War, Civil, first loan for, 177

Washington, George, 162, 165

Wealth, what is, 104
difference between property and, 107

Webster, Daniel, 111, 170

White, Horace, 30, 155

Wilson, John W., clearing house examiner, Los Angeles, 316

Zone, credit bureau of, 323
organization of, 338, 411
organization, repetition of National Government, 483
places of, discount limited to, 479
publicity of organization, 476
should not stand alone, 480
state lines do not conform to economic, 419