Image provided by: University of Nebraska-Lincoln Libraries, Lincoln, NE
About The Conservative (Nebraska City, Neb.) 1898-1902 | View Entire Issue (Jan. 11, 1900)
. &smm ? iyw . . . . . ' e v > ( i . - . , ; r/J ? M& > , s " ' L. - .i.'j KA v : 'Cbc Conservative * nt a rate enough above the normal rate to make up for what the bond invest ment fulls below it. And that com munity cannot expect to have its loans at a rate near the city rate until it re lieves its bank of the necessity of put ting a largo part of its funds in a 2 ( per cent investment. As a matter of fact , the requirement of bond investment is actually prohibitory in those sections where a note currency is really needed , and necessitates the abandonment of the economic saving which those sections might bo getting from the use of notes , if permitted on proper terms. How this occurs , can bo seen by recurring to the illustration last used. A bank going into such a locality could in fact , make its dividends by loans at a considerably lower rate of in terest if it issued no notes at all. It would then bo under no obligations to invest in bonds but could loan its entire assets with the exception of a proper reserve against a few deposits. Its con dition would bo as represented by the following balance sheet : A8SCTS. Loans and discounts Jl ! . " > ,000 Cash Reserve 15,000 $1COOUO MAIIIUTIKS. Capital $100,000 Deposits 00,000 $100,000 It will bo observed that the § 11,000 needed to meet expenses nnd pay a ( ! per cent dividend could bo obtained if its $ Mii,000 of loans were made at 7.0 nor oHiit. As a iimttnr nf fnot. this is naturally just what has happened , and all through the west and south , although the agricultural communities need and are often suffering for the lack of an adequate note currency , such banks as are established find it to their interest to operate as state banks and issue no notes at all or , in the case of national banks , issue only the amount corresponding pending to the bonds which they are re quired by law to buy ; while no banks are or can be established unless tae rate of interest is kept far above the rate at which loans could be profitably made in the east , where the currency in use is mainly that which has been left un restricted deposits. Note Currency Freed From the Present Itehtrletluns. How different the situation if the issue of notes , within reasonable limitations , were no more restricted and no more heavily burdened than the use of deposits - posits ! Then , the discrimination be tween city and country would disappear ; and the rural district which preferred its currency in the form of notes would be at no disadvantage as compared with the commercial community. The situa tion of a country bank would then be represented by the following balance sheet : ASSETS. Loans and discounts $212,500 Cash Ruriorvu 87,500 $250,000 ItTAlllMTlKS. Capital Stock . $100.000 Circulation . 1)0,000 ) Deposits . 00,000 With no special taxation upon circula tion and with no requirement for invest ment in bonds , the country bank would then occupy the same position as the city bank in the typical case hereto fore suggested. The only difference would bo that in this case the liabilities are divided between notes and deposits , while in the case of the city banks they are exclusively deposits. It would then bo in a position to make loans on as favorable terms as the city bank , and the average rate required to make a (5 ( per cent dividend would fall from 9.4 per cent to 5.18 per cent. Summary. The result of this survey may be summed up as follows : 1. Bank notes and bank deposits are merely two forms of bank credit cur rency. 2. The real economic advantages of a credit currency , whether notes or deposits - posits , under a system of free banking , go first , by the force of competion , to the borrowers , and from them to the re mainder of the community interested. 3. Owing to difference in habits and environment bank notes are peculiarly the currency of the country districts , and bank deposits that of the cities and commercial communities. 4. Every restriction which is put up on the issue of notes in excess of those placed upon the use of deposits is a burden upon the note using constitu encies , and thus upon the country as distinguished from Ike city. o. While the commercial centers have been h'/l itnburdeiud in the development of their particular form of currency deposits the notc-usiny communities have been severely hampered ami restrict ed in the use of the form of currency notes suited to their habits and con venience. 6. The result of the bond require ment and circulation tax of our present national banking law is to so burden the country districts as to render it neces sary ( as indicated by typical cases ) for the loans to local borrowers to be made at a rate of interest nearly twice as high as would be required by a similar bank in a city in order to earn the same divi dend upon the capital siock. 7. The requirement of bond invest ment behind the issue of notes makes it necessary that the country bank should withdraw from local borrowers for in vestment in bonds at 2 per cent or 2 per cent large amount of funds , which the bank whose credit takes the form of deposits ( city banks ) is free to loan to local borrowers. This largo investment at a rery low rate of interest calls for a corresponding investment at homo at a very hi jh rate of interest in order to bring the average income to a normal figure. 8. The amendment of the national banking law in two particulars , namely , by repealing entirely the bond deposit requirement nnd the tax upon circula tion , would remove the most serious discriminations which the present law makes against the country districts , and would afford thorn facilities for supply ing themselves economically and effec tively with the form of currency which they prefer nearly commensurate with those already enjoyed by the commer cial communities in the use of the de posit currency. "Corn Tassels : A Book of Corn Rhymes , " by W. R. Duuroy , is now in its second edition. No lover of the prairie land whose finely attuned ears have listened to the "Song , faint , far , and low A marvelous melody" blown by the wind through the corn fields , or whose eyes have followed the springtime tint that creeps over the level land like "a verdant tide , " can fail to find sincere pleasure in this little volume. The poems have found their way into the hearts of many readers who recognize not only the charm of having the familiar and well-loved scenes set before them by one who possesses poetic insight , but also the helpful thought and earnest aim that underlie the flow of rhyme and graceful rhythm. Mr. Dunroy is fortunate in realizing the fulfillment of the desire expressed in his "Foreword. " "KOKKWO1U ) . " "If I could know that by my song Somu toilers burden I made lighter , If seine wan sufferer's bit of sky My singing made a little brighter I'd bo content. "If I could know some broken heart "Were healed a triilo by my singing , Or that seine pilgrim in despair Might through the night hear hope-bulls ring ing , I'd bo content. "To sing , and send my vagrant songs A-wandoring through the world were pleasure , If I but knew one halting line "Were kept by some ono as a treasure. " THE SAWMILL. The demon sawmill said , I lack for food , Wherewith to cram this craving maw of mine , That spite of nature and of law divine Would gorge on all that's grandest in the wood. Then they who madly servo the monster's good. Mid jocund laughter slow a giant pino. As bright-eyed , merry morn with naming sign Awoke to life the slumbering solitude. For immemorial years this fallen ono Had been BO loved by earth and air and sun It seemed with beauty for the ages clad ; And as its massive trunk and members lie Dissevered and a wreck , wo wonder why The demon and its slaves can still be glad : ADELINE KNAW.
