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November 1, 1907.

WAR SHIP TONNAGE OF THE PRINCIPAL NAVAL POWERS,
SHIPS BUILT & BUILDING.

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Agricultural Appropriation Bill.

SPEECH

OF

HON. MARCUS A. SMITH,

OF ARIZONA,

IN THE HOUSE OF REPRESENTATIVES,

Monday, March 30, 1908.

The House being in Committee of the Whole House on the state of the Union, and having under consideration the bill (H. R. 19158) making apropriations for the Department of Agriculture for the fiscal year ending June 30, 1909

Mr. SMITH of Arizona said:

Mr. SPEAKER: If the amendment I have just offered is adopted it will relieve the situation at the Grand Canyon of Colorado and prevent the further doubling up of separate kinds of executive reservations on the same ground. Take, for instance, one of the military reservations in Arizona which was abandoned and a forest reserve was spread over it. Under such conditions the land became subject to all laws governing for est reserves, among which was the right to locate mining claims, and develop and patent the same. But the President of the United States, by proclamation or Executive order, or what not, held said abandoned military reservation within the forest reservation still under military supervision, so as to prevent any possible settlement on or development of the same. What are alleged to be fine mining grounds within this old military reservation are thus withheld from development by this ridiculous, absurd, and unnecessary "order."

hands, as the bill showed on its face, and yet under the provisions of this law, the President-probably advised thereto by somebody who must have known nothing about the construction of the statute-takes a vast territory of country here, as I measure it about 56 miles long by 26 miles wide, and declares it a national monument and makes it so absolutely sacred that a man would be afraid to cut a switch from that land to encourage the speed of his horse.

You can not make a road in it, you can not take a rock out of it, you can not move a thing in it. Now, there is in contemplation a railroad to be built along the rim of that canyon to let the people see it. Under present conditions you go to one place and look down into that mighty gorge. You ride at a heavy expense behind teams kept by the railroad company 5 or 10 miles and then look down in the same gorge and at the very same objects. The purpose is to build a railroad along that gorge, so that the greatest wonder of God's hand, except the universe itself, may be revealed to the astonished wonder of the beholder. But under this Executive order, made without any authority whatever, the public must be shut off from the enjoyment of the most uplifting, awe-inspiring sight that ever spread itself before the human eye since God said "Let there be light," up to and including the time when the President said "Thou shalt not see."

Every industry west of the Rocky Mountains could be in full blast within that mighty chasm and would never be noticed from its rim.

Mr. MONDELL. May I ask the gentleman, does not the gentleman think there is danger of that Grand Canyon washing away or being carried away unless it is protected in this manner?

Mr. SMITH of Arizona. I observe the humor of the gentleman's question, and thank him for thus calling the attention of the House to the absurdity of this Presidential proclamation. The object of the law under which he presumed to act was to monuments, and certainly could not be tortured into applying to a vast region of country simply because it was wonderful or interesting. No; you can not carry it away, you can not destroy it, and a thousand men working a hundred years could not even deface it. It will not wash away, as the gentleman from Wyoming facetiously observes, for a mighty river for a million years has been hurling its angry torrents against its rock-ribbed sides, and the canyon is still there. All that water can ever do will only increase the wonder of its depth.

But let me cite you a still more glaring instance of the President's peculiar sense of the powers invested in him by the laws of the land. Under the act passed last year or a year or two ago, volume 24, of the public land laws, it was enacted-preserve from destruction or defacement destructible objects, or That the President of the United States is hereby authorized in his discretion to declare by public proclamation historic land marks, historic and prehistoric structures, and other objects of historic or scientific interest that are sit iated upon the public lands, owned or controlled by the Government of the United States, to be national monuments. And the penalty for taking or injuring or touching them is a fine of $500, I believe, or three months' imprisonment. Under that provision the President of the United States by proclamation, dated Washington, the 11th day of January, in the year of our Lord 1908, declared as a national monument, subject to the penalty described, the grand canyon of the Colorado River. The law was designed for the pure purpose of preserving the prehistoric land marks of the country, the cliff dwellers, the Casa Grande ruins, and things of that sort erected by human

This Executive order could have had no purpose behind it except to prevent an independent railroad from being built along the rim. It should by all means be built, and before this session closes I shall introduce a bill for that purpose.

The people of the West have now very few rights or liberties that are not at some point invaded by Executive orders or Bureau edicts or impudent special officers, whose business seems to be to give all the trouble possible to every settler on the public domain. Between the enormously large military reservations, Indian reservations, and forest reservations, there is very little room to move about without a challenge to "halt." Forest reservations are very proper when the reserve has timber on it, but when it is spread all over creation regardless of trees it becomes a nuisance, if not a crime. If, instead of preserving trees and conserving the water supply, it shall include grazing lands, and by renting such to the favored for grazing purposes only, it is an outrage that should be at once stopped. I believe every State and Territory is of right entitled to utilize the resources within its boundaries.

To these four may be added a fifth variety, which assumed great prominence after the silver-purchase act of July, 1890, namely, Treasury notes issued against silver bullion. This bullion, however, has nearly all been coined into silver dollars, and there now remains only $5,152,000 of these notes. In order to obtain the absolute total, subsidiary coins less than $1 must be added, amounting to $144,809,002.

The total stock of money in the United States on the 1st of May, 1908, including the above varieties, subsidiary silver, and Treasury notes, was $3,396,653,082.

Against gold and silver in the Treasury certificates are issued for convenience merely. The amount of gold certificates is approximately $850,000,000 and of silver certificates $463,000,000. 2. A second feature is the very large circulation per capita, which on May 1, 1908, was $35.37, greater by nearly $15 than in the period of maximum inflation in the civil war, and by 1880 and 1881; greater also by approximately $10 than ten years ago, and this notwithstanding the increased use of checks and other substitutes for currency. With the single exception of France, the per capita circulation is larger than in any other of the great commercial countries. There can be no complaint of scarcity in the aggregate amount of money in the country.

The public lands do not of right belong to the people of the whole United States, but they are or should be held by the Gov-almost an equal amount than in the very prosperous years of ernment in trust for the present and future residents of the State or Territory in which such lands lie. I am a little afraid that we are going a little fast in the hysterical ardor to conserve all our resources for the benefit of posterity. Was it not Josh Billings of blessed memory who wanted to know "what posterity had ever done for us?" If we save our coal and iron and lumber for the use of posterity, then posterity, actuated by the lofty example of their fathers, must likewise preserve these resources for their posterity, and time will show at last a nation of fools sitting among the resources essential to its growth and happiness still preserving things for posterity--still "conserving their resources." Old man Arch Edger's most conservative gentleman was kicked down stairs and out of the front door of a hotel by an irate Kentuckian, his friends, amazed, knowing that he was armed, asked him why he did not defend himself. He replied that he only had one load in his pistol and he was saving that till he got in a tight place. I

caution will have become a national characteristic. When that

call that conserving his resources. I think he was conserving

it for posterity.

Mr. Speaker, I observe with a feeling of profound apprehension the rapid strides being taken toward centralization in our Government. The Executive is encroaching on the powers reserved by the Constitution to the other two coordinate branches. Everything now is being done by commissions and bureaus and special functionaries appointed by the President. It is time to call a halt and take some observations of the road over which we have come and make some provident arrangements for a safer journey ahead of us. I see my time has expired. At the next session I hope to be able to give to the House a full history of the various bureaus as they touch and affect the interest, prosperity, and development of the Territories.

A Proper Currency System.

SPEECH

OF

The

3. A third distinctive feature as compared with other advanced nations is the absence of paper money issued by banking institutions, save that secured by Government bonds. Additional emphasis is given to this fact by the manifest preference in this country, barring, perhaps, only the Pacific coast, for amount of paper money is very large, exceeding $1,000,000,000, paper money as against metallic money for daily use. but all of it rests directly or indirectly upon the credit of the Government. The issuance of notes by the Government has been discarded in practically every other progressive nation. required in our monetary system, at least so far as relates to It has been very generally agreed that material changes are the issuance of paper money. In saying this it is not necessary to find fault with the legislative policies of past years. Our their security and the absolute confidence which they command. existing forms of money have a merit unsurpassed anywhere in The United States notes or greenbacks served an excellent The national-bank notes are part of purpose in the civil war.

a policy which furnished stability and uniformity to a banking creating a market for Government bonds. The depreciated silsystem, and conferred almost incalculable benefit in the way of ver currency is the most objectionable, but in view of the very large demand for circulation of coins of small denominations, the outstanding silver and silver certificates are absorbed by the people without serious embarrassment.

Our monetary system, nevertheless, is not abreast with those of other countries, and is fatally lacking because of its rigidity. Issues of currency should be so adjusted as to secure in the greatest possible degree adjustment in volume to the demands of trade. The demand for money, metallic or paper, is, of course, greater in the autumn than in the spring. It increases with the expansion of enterprise or a rise of prices. When,

HON. THEODORE E. BURTON, also, by reason of panic, money is withheld from circulation or

OF OHIO,

IN THE HOUSE OF REPRESENTATIVES

Thursday, May 14, 1908.

hoarded, the need for additional currency is very pressing. This elasticity or provision for necessary expansion and contraction in quantity is wanting here, though at the same time it must be conceded that the natural fluctuations are at a maximum; that is, the contrast between the maximum and minimum amounts

The House having under consideration the bill (H. R. 21871) to required is more noticeable in the United States than anywhere amend the national banking laws

Mr. BURTON of Ohio said:

Mr. SPEAKER: In order to understand pending currency legislation it is necessary to describe the different kinds of money now in use. The monetary system of the United States has several marked distinctive features:

1. The motley character of our money-metallic and paper. The present circulation, May 1, 1908, including that in the Treasury and bank reserves, may be classified under four principal varieties:

(a) United States notes (greenbacks) resting di

else. To secure elasticity, therefore, is a primary object which should always be kept in mind.

It will, I think, be agreed that the following principles and facts should be borne in mind in any proposition for a reform of the currency:

1. Contraction, or decrease in volume, alike with necessary

expansion, should be secured. An inflated currency is always tunities for investment are numerous and profits are gained a source of danger. In any growing country where opporfrom a rise of prices there is a constant tendency to absorb the existing supply of money. The surplus may be utilized for

rectly upon the credit of the Government. $346, 681, 016 speculation or for doubtful enterprises. As a consequence (b) National-bank notes secured by United States bonds and resting indirectly upon the credit of the Government --

(c) Gold having intrinsic value
(d) Silver having partial intrinsic value and
resting for the difference between actual
and face value upon the credit of the
Government -

Total.

697, 645, 698 1, 639, 267, 384

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when an additional supply is required, as inevitably will be at certain seasons and in prosperous years, it is difficult to obtain the requisite amount. To prevent redundancy it will be helpful to furnish motives for the withdrawal of unnecessary bank notes by the removal of restrictions upon their cancellation. The present laws have in mind the maintenance of the value of Government bonds. They also carefully safeguard against 563,097, 982 any considerable decrease in the volume of paper money. The requirement that not more than $9,000,000 of national bank3, 246, 692, OSO note currency can be withdrawn in any one month is based

upon these objects. Such a requirement is not in accord with relieved the banks from any liability for redemption in gold, a perfect currency system.

2. No system should be accepted which does not afford absolutely undoubted security for every bank note in circulation. The people will not and should not tolerate the issuance of bank notes which would be rendered of doubtful value by the failure of any banking institution. Not only is safety essential, but confidence as well. Bank notes must not only be safe, but they must be above suspicion.

3. It should always be borne in mind that paper currency is simply another form of credit, like a promissory note, and its volume should always be made to conform as nearly as possible to the normal demands of trade. No measure contributes more to a proper determination of the amount which should be in circulation than a requirement for the prompt and convenient redemption of notes in gold. It is a practically universal rule in all countries having a sound monetary system that the bank, treasury, or other agency which issues paper money must provide for its redemption.

4. No corporation or individual should be able to derive undue or unfair profit from the issuance of bills. On the other hand, no prejudice should be tolerated against such institution or agency as is best fitted to exercise the privilege. With but very few exceptions the most progressive countries have abandoned the issuance of paper money by the Government, so that this function is exercised by banks, either national or private, but all under careful governmental regulation.

5. The natural conservatism which arises from the customs and habits of the people, and from established methods of transacting business, renders difficult, if not impossible, the immediate acceptance of revolutionary changes in existing forms and issues of money. The people are slow to accept innovations. Business, which should always be cautious and conservative, looks with disfavor upon sudden transitions. Thus it is desirable that new methods should depart from the existing order slowly and that we should bear in mind the impossibility of adopting radical changes, even though theoretically correct. An entire readjustment of the system of currency issues can be safely accomplished only by successive steps. Two general plans have been advocated for a permanent solution of the currency question:

1. Allowing the issuance of paper money by banks against their credit or assets. This proposition involves a fundamental change in the security for note issues, but furnishes a method which would afford the most natural response to the varying demands of business. The circulating notes which a bank can issue should bear proportion to its financial strength and the amount of its resources. Yet oftentimes when the assets of banks are largest the quantity of their outstanding currency is smallest. To meet such a situation it is maintained that the right should be granted to issue currency to meet the demands of depositors and borrowers.

It is objected that this would grant a dangerous privilege to a multitude of banking institutions managed with an infinite variety of intelligence and even of honesty, and that any such plan would entirely lack that element of cooperation which is so essential in any sound money system.

To meet the objection of the want of proper security, it is proposed that the note issues of banks should be protected by a guaranty fund, say, of 5 per cent of the total note issues of all banks, to be collected in the form of a tax; also by the maintenance of reserves and by a requirement for redemption.

The discussion of this subject in recent years has shown a very decided disposition to increase the severity of the requirements advocated.

In the year 1894, the American Bankers' Association, in one of their yearly meetings, unanimously indorsed what is known as the "Baltimore plan." This allowed the withdrawal of the deposit of bonds as security, the issuance of circulating notes to the amount of 50 per cent of the capital, with a tax of only one-half of 1 per cent per annum. Provision was made for an additional circulation of 25 per cent, with a larger tax. Banks issuing circulation were asked to deposit a redemption fund of 5 per cent as under the existing law. A guaranty fund was to be created through a deposit of 2 per cent of the amount of circulation received the first year; thereafter a tax of onehalf of 1 per cent upon the average amount of the outstanding circulation until this fund should equal 5 per cent of the entire circulation outstanding. Notes of insolvent banks were to be redeemed out of the guaranty fund, and in case the latter became exhausted the Government, of course, was given a prior lien upon the assets of the failed banks and could enforce the liability of shareholders.

It will be noticed that this plan provided an annual tax upon circulation of only one-half of 1 per cent, required no reserve,

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made each individual bank liable only for its own failure, except, of course, as it shared in the guaranty fund of 5 per cent. The whole burden of redemption was thrown upon the Treasury. This, too, was at a time when the quantity of gold in the country was less than half what it now is, and when the Treasury Department had been compelled to resort to the issuance of bonds and various other shifts to maintain the gold

reserve.

Notwithstanding the palpably insufficient requirements under this proposed plan, some who strenuously advocated it in 1894 now criticise the Vreeland bill, although it provides a minimum tax of 4 per cent per annum, the maintenance of reserves, a deposit of securities in excess of issues, and the joint and several liability of associated banks, on the ground that the latter measure does not afford sufficient security and would lead to inflation.

Progress has been shown by the bill which, it is understood, is now favored by the bankers of the country, and known as H. R. 15262, introduced by the gentleman from Illinois [Mr. MCKINNEY]. This bill provides for what is to be called "national-bank guaranteed credit notes." Under its provisions a bank with outstanding notes secured by Government bonds to the amount of 50 per cent of its capital stock might in the first instance issue in the form of credit notes an amount equal to 40 per cent of the notes secured by United States bonds, but not exceeding 25 per cent of its capital. Upon these it is proposed there shall be a tax of 24 per cent per annum, or 14 per cent in January and July. A further issue, limited to half as much, is authorized under a tax of 5 per centum per annum, but the total of all notes of every kind must not exceed the amount of the paid-up capital. Reserves are provided of the same amounts and under the same regulations as in the case of deposits. Five per cent of guaranteed credit notes must be deposited in lawful money with the Treasurer whenever credit circulation is issued, which, with the taxes mentioned, is to constitute a guaranty fund to redeem the notes of the failed banks. Cities conveniently located are to be designated for current daily redemption of these notes. This measure, which marks so great an advance upon the so-called "Baltimore plan," yet falls short of the absolute requirement of redemption in gold, and does not provide for any community of liability among the banks taking advantage of its privileges.

It is not believed, or it is certainly very doubtful, whether the people would or should, without ample trial, accept any plan which leaves the all-important obligation of the ultimate redemption of bank notes to single banks, even though they be reenforced by a guaranty fund. Deplorable as the prospect may be, it is not beyond the possibilities that disastrous failures might occur in such numbers as to render inadequate the security provided by such a plan, at least in the days of its early operation.

It has been repeatedly alleged that the guaranty fund provided in this and similar bills would be sufficient beyond peradventure, but the question very naturally arises, if such is the case, Why should not all banks, or at least associations of banks, enjoying the privilege of note issue, join in a guaranty of the notes?

Another bill of a very radical nature is that introduced by the gentleman from New Jersey [Mr. FOWLER], which has many commendable features and makes elaborate preparations for the changed conditions which would be brought about by its adoption. It carries to the extreme the individual action and privileges of the separate banks. It imposes upon the banks the obligation of redeeming their notes in gold. It looks to the virtual abolition of the present independent or subtreasury system and to the retirement of the greenbacks. It directs the retention of a larger share of the reserves of the banks in their own vaults. But the changes advocated are too radical to be seriously considered at this time. As originally introduced it contained many features which have met with very strong opposition, such as the joint guaranty of deposits of all failed banks. 2. Another general plan is the establishment of a central national bank, dealing largely if not exclusively with national banks and with the Government. It is urged that the experi ence of other countries has shown that such an institution is best able to provide for the general benefit. By raising the rate of discount in times of unnatural expansion such a bank could check improvident enterprises. It would be potent in controlling the export and import of gold and in the intelligent direction of the necessary increase and decrease of paper currency. To the argument that it would involve the formation of a great bank under the domination of the Federal Government it can be answered that the National Treasury, especially through its subtreasuries, is now performing the func

tions of a bank without the advantages which would belong to a duly incorporated institution.

In the discussion of this question from the standpoint of theory it must be conceded that the great preponderance of arguments favor such a solution. Yet two banks of the United States have been established and abandoned. Both became the subject of political controversies and were very much hampered in their usefulness by contending theories pertaining to their management and to their relations with the people. It should be said, however, that this is a day of enhanced intercourse and greater realization of the community of interest and the desirability of conducting operations on a large scale. Also there is an increasing disposition to acquiesce in the assumption of larger powers by the Federal Government; so that popular objections which formerly existed against such a plan might not assert themselves.

increased, and, consequently, requirements for currency. Thus under existing regulations there is no means of furnishing an adequate basis for the circulating medium, at least in times of stress. State, county, and municipal bonds come nearest to Government bonds in their essential qualities; hence the available security for circulating notes should be enlarged by including the former in the list of bonds which banks may offer for currency.

The supporters of the Aldrich bill look with disfavor upon any plan for issuing notes upon the credit of banks or against their assets. They regard it as desirable, at least for the time, that the least possible change be made from present methods. There are valid objections to this proposed measure. The national bank is, or should be, essentially a commercial bank, investing its funds in the discounting of paper and supplying the demands of its customers. There are few banks which, under present conditions, could avail themselves of the provisions of this bill. The total amount of the prescribed securities held by all the national banks is estimated at less than $60,000,000. If it should be adopted, any bank in order to issue currency must either carry a certain share of its capital in municipal or other bonds or else procure them by purchase at a time when presumably its cash would be at a minimum and the demands upon its resources at a maximum. The price of the bonds described would, no doubt, be materially increased in value when needed, yet when the emergency had passed and the bank should desire to withdraw its notes the bonds purchased would no doubt have to be sold at a loss.

However reluctantly we may reach the conclusion, it is evident that at this session no permanent solution of the great problems involved can be reached. Popular opinion has not crystallized upon any one plan. There is a very wide divergence of opinion among those regarded as most expert in their understanding of currency questions. It is highly desirable, however, that something should be done at this session. That man would be very bold who would say there was no possibility of a demand for additional currency before another session of Congress. A great crop or any unforeseen contingency might create a necessity for a material increase in volume. We must bear in mind, also, as another factor, the increased caution of financial institutions in lending, as a result of the crisis of last autumn. The overwhelming probability is that with the diminished extent of in-viding a standard for the securities to be accepted, whether dustrial operations, resulting in decreased employment, and in view of the natural timidity after a panic and during a Presidential year in engaging in new enterprises, there will be no serious currency scarcity next autumn. But it is our duty to provide, if we may, for probable or possible exigencies. There is another reason why the pending bill or some other should be adopted, namely, the desirability of trying some of the plans for a changed currency with a view to determining what is workable and what the people will accept. As I have already said, no revolutionary change can be accomplished in a day. This second object I regard as quite as strong a reason for currency legislation as the usual argument that we should provide for a stringency similar to that of last autumn.

available.

It is important to give the essential provisions of the two most prominent bills now pending before Congress. 1. The so-called "Aldrich bill" (S. 3023), which passed the Senate March 27 last. The distinctive feature of this measure is the right to issue circulating notes upon bonds other than those of the United States. It gives to any national banking association having circulating notes secured by the deposit of United States bonds to an amount not less than 50 per cent of its capital stock, and which has a surplus of not less than 20 per cent, leave to make application to the Comptroller of the Currency to issue additional circulating notes to be secured by the deposit of bonds issued by any State, city, county, or other political division, which has been in existence for a period of ten years and has not defaulted in the payment of principal and interest of any funded debt; also whose funded indebtedness does not exceed 10 per cent of the valuation of its taxable property. The bonds of the insular government of Porto Rico, of the Philippine Islands, and of the city of Manila are also Circulation may be taken out to the extent of 90 per cent of the market value, though not in excess of the par value of the bonds; but not to an amount so that the notes secured by the Government, as well as by the various bonds named in the bill, shall exceed the amount of unimpaired capital and surplus of the issuing bank, nor shall the total amount of such circulating notes at any time exceed $500,000,000. These latter notes are to be taxed at the rate of one-half of 1 per cent per month for the first four months, and afterwards three-fourths of 1 per cent per month, the proceeds of the taxes to be paid into the Division of Redemption of the Treasury and credited to the reserve fund held for the redemption of United States notes. Unlike the notes secured by Government bonds, there is no limit on the amount that can be withdrawn, but money deposited for the withdrawal of notes shall be retained in the Treasury as a special deposit. There are other provisions, but those just given refer especially to currency. The arguments for this bill are that since 1863, the date of the passage of the national banking act, bank notes have only been issued upon the security of Government bonds, and it is alleged that this arrangement has given satisfaction. With the decrease of the national debt the larger share of the bonds have been paid off, yet the wealth and population of the country have

There is another objection which has some force. In prounder the bill or otherwise, it would be necessary that the bonds of very many municipalities and other political divisions would have to be rejected. This rejection would have a marked effect upon their sale, and might prevent or seriously impair the credit of cities or other political divisions and hinder them in the accomplishment of necessary improvements. Again, it must be said that, in whatever way the issuance of currency may be managed, whether by a central bank or otherwise, the recent tendency has been almost universal to place less reliance upon bonds and long-time securities and more upon commercial paper. Indeed, it is questionable whether the latter class of assets do not have greater stability of value than the former. In any event there can be a readier realization upon them, and in providing for the redemption of circulation, and its necessary increase or decrease, the most liquid assets are the best.

2. The most sanguine can not expect any permanent solution of the currency question at this session, yet among all the bills introduced that which is best suited to bridge over the present situation is the Vreeland bill. It is not claimed that it is a model measure. Possibly some slight changes in phraseology or in minor details would improve it, but for the purpose of assuring a safeguard against panics, avoiding inflation, providing safety, and blazing the way for future legislation, it is the best obtainable.

Any temporary measure should be entirely safe, acceptable to the people, and workable. Does the Vreeland bill meet these essential requirements?

banks, having an unimpaired capital and surplus of five millions (a) Safety is secured by the requirement that not less than ten severally liable for the circulating notes issued by all of them. or more, shall associate themselves together and be jointly and Moreover, no currency can be issued by any bank unless it shall have deposited with the association securities, including commercial paper, to an amount not less than one-third in excess of the notes issued. These securities are to be approved by the officers of the association and by the Secretary of the Treasury, as of all the banks is obtained for the careful selection of securities. already stated. In view of their common guaranty the interest The notes are a paramount lien on the assets of every member of the association. A reserve in gold or lawful money of 25 per cent in reserve cities and 15 per cent in nonreserve cities must be maintained in accordance with the regulations providing for deposits against all notes issued.

A portion of this reserve, 5 per cent of the notes, must be maintained at the Treasury for a redemption fund. To avoid inflation, a tax at the rate of 4 per cent per annum is imposed for the first two months and an additional 1 per cent monthly thereafter. When the reserve requirements are taken into account, it will appear that for the first two months the tax is 5.33 per cent in central reserve cities and a somewhat less amount in other localities.

This tax belongs to the national revenue. It is to be noted that the Government is the ultimate guarantor of these notes, but it is not believed that circumstances could arise under which

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