. &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.
