THE UNITED STATES RESERVE BANK THE FUONfDAMENTAL DEFECTS ovTm FEDERAL RESERVE SYSTEM AND TUB NECESSARY REMEDY BY HON. CHARLES N, FOWUBR 6d3S^BmSSSSSS^ iai^!SSf^SSSS^^SS^^^^l^SBS!S^!(^-p'' '9Utt (^allege of J^gttcuUure l^t (((arnell Itntnetattg Strata, JJ. f . Cornell University Library HG 2565.F6 The United States reserve bank; the f unda 3 1924 013 777 770 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013777770 THE UNITED STATES RESERVE BANK THE FUNDAMENTAL DEFECTS OF THE FEDERAL RESERVE SYSTEM EXPOSED AND THE NECESSARY REMEDY BY HON. CHARLES N. FOWLER A. B., Yale University 1876. LL. B., Chicago University 1878. Engaged in business and banking, foreign and domestic, for fifteen years. Member of the Banking and Currency Committee of the House of Representatives fourteen years and Chairman of Committee eight years. Author "Seventeen Talks on the Bank- ing Question " and " The National Issues of Nineteen Sixteen" JANUARY FIRST, 1922 PUBLISHED BY HAMILTON BOOK COMPANY WASHINGTON D.C. PRICE TWO DOLLARS (^^ O cX / THE ESSENTIAL PRINCIPLES AND IMPORTANT FEATURES OF A SIMPLE, SOUND, EFFICIENT (®, ECONOMICAL FINANCIAL (®, BANKING SYSTEM FOR THE UNITED STATES Copyright 1922 By Hamilton Book Company Washington, D. C. CONTENTS Page Foreword 9 Principles and Important Features 16 Supplement 37 Federal Reserve Graph 39 Canadian Currency, Graph 46 Sufifolk System, Graph 59-60 Bank Credit Note, Graph 62 Appendix 67 Price Level Graph 69 Index 85 DEDICATED TO ALEXANDER HAMILTON ^¥. ^ ^ 3 S CO 1 i — t'^'S -- - fint/ ■ ■ s _, Ajnf > ^ij^f> i 1 - ^eiM ■~i * «k "1 ^dv < ' 1 1 'E 2 jeiM «« ^ qoj V upp - - r" k 1 •^ »(7 ■ •v — ■ton "v ■h ^ ^ M « ■izo >, «: ^ - 1 (0 O 01 - ids; =5? '" ^ _ ■Sn^ '4 > * *" O" (X> *l„p ~ ~ -* -f , s 9tJnf^ -t ( •>> S -.11 1 - ioiM >-: * ? a •Jrflr '-^ < ■ij •5 i 1 1 i .6 .5 ■"HI. ■o^ 1 1 «, 1* ^ '. P -"W < ; 1 lOj \ 1 uer ^ P { 330 >— • -J 1 ■M,J z' *^ ■W3 ^ ■* v»? ' Jy •"^i ' /■ 5; V? r* ^ ? ik 'St^v ^o -Ctf >n ^ "1 ^1 /,np J > 9unr m 4 ? 13j *■ |S •uep V -4 la m m N to « R R i; fc s p K f^ g N 10 *0 ■0 "1 10 is § 5 ^ *0 !^ ^ 5t c? Ci i^ § 1? ? tuoi/z/tv y li 5 "0 1 1 1 fe * 1 1 1 s ^ 3 11 ^ * So i 10 ll CD k *0 Canadian banks go to the clearing houses to be redeemed precisely as checks and drafts do, and it is by this daily current redemption through the clearing houses that the readjustment takes place, and it could take place in no other way. Otherwise the notes would become a fixed, sodden mass of circulation precisely as the Federal Reserve Notes have. How did Canada come by this bank credit currency System? A prominent Canadian banker stated in a public address that Canada got it from the United States, following the charter of the Second United States Bank. Second United States Bank The charter for the Second United States Bank was granted in 1816, and was practically indentical with the charter of the first United States bank with the single exception that the capital was increased from $10,000, 000 to $35,000,000. It is interesting, and all important, to note that while the charter of the Second United States Bank pro- vided that the bank could issue an amount of bank credit currency, or bank notes, equal to its capital — $35,000,000 — the highest amount of bank notes ever outstanding at any one time was $23,076,422 or about 60% of the permissive issue. There were 25 branches literally covering the whole union and James Parton, the historian, says, "Its bank notes were as good as gold in every part of the country. From Maine to Georgia, from Georgia to Astoria, a man could travel and pass these notes at every point without discount. Nay, in Sweden, Paris, Rome, Cairo, Calcutta, St. Petersburg, the notes of the Bank of the United States were worth a fraction more or less than their value at home according to the current rate of exchange." The reason was that they were currently redeemed in gold. In 1823, seven years after the charter of the Second United States Bank was granted, the people of Canada, observing its operation, adopted the same principle, and there it has been in operation for almost 100 years. The principle laid down by Hamilton is^simple, but 47 fundamental, and absolutely essential to sound, efficient and economic banking operations — the current redemp- tion of all bank credit in gold. There is no such redemp- tion of the Federal Reserve Notes. The redemption, so called, of the Federal Reserve Notes is precisely and identically the same as that of the National Bank Notes. Economically speaking, there is no redemption of either of them. There is no redemption, payment and liquidation of them as checks and drafts are redeemed, paid and liquidated. Hamilton's Law " Every loan which a bank makes is, in its first shape, a credit given to the borrower on its books, the amount of which it stands ready to pay, either in its own notes or in gold or silver at his option." Following the Hamiltonian principle through to its logical conclusion, in practice, three distinct facts or truths are to be noted, which involve sound economics and are essential to sound banking. First, it is the office or function of the government to establish a standard value; to fix a unit of value; to compel the banks which are quasi-public institutions, to furnish the people that form of bank credit that will best serve their purposes, and to compel the banks to keep all bank credit as good as the standard of value by current redemption in that standard of value. Second, it is the right and privilege of the people, farmers, manufacturers and all producers of wealth, to convert their products, and their credit, also, whenever they have been granted credit by the banks, into that form of bank credit which will best serve their purposes in the processes of production, transportation and the distribution of commercial commodities of whatso- ever kind — from an ounce of radium to a pound of cotton, a bushel of wheat or a ton of iron, or a physician's fee. Third, it is the duty of the banks to give to their customers that form of credit that will best serve their purposes — a draft upon a distant point, a book credit 48 subject to check, or a current credit in the form of its own notes (since this is the cheapest, most economical and best form of currency), and to keep all these var- ious forms of credit — the draft, the book credit, and the note credit — as good as our standard of value by their daily current redemption in that standard of value. A Most Marvelous Development and Most Successful Achievement in the Evolution and Operation of the Hamiltonian Principle Without the Aid or Intervention of any Statute In the early days of New England banking, the circulation or note issues were established by the State Legislature in the case of each individual bank and varied widely, not only from state to state, but also the different charters in the same state. The note issues generally exceeded the deposits and constituted the major part of the medium of exchange. This has always been true of the Bank of France. The Suffolk Banking System In 1819, without any statutory authority for that purpose, the Suffolk Bank was organized at Boston to compel the New England banks to redeem their notes at Boston in gold. The operation of the Suffolk Bank extended and covered all the New England states and was universally acquiesced in over all that territory now included in the First Federal Reserve Bank Dis- trict, and more. / hereby assert that the Suffolk Banking System was the most perfect banking system that has ever existed in the world and that it demonstrated more economic truths, that are of practical value to us today, if we will only take advan- tage of them, than any banking system that has ever existed. In the light of all the banking experience of the world the Suffolk System lacked only three requisites to make it as perfect as is humanly possible. 49 First, It lacked uniform supervision over the entire territory covered by its operations. Second, It lacked a uniform system' of currency, such as our national bank notes are. Each New England bank then designed and printed its own notes, and it has been stated, upon good authority, that some of them were printed by the banks themselves in their own offices. Third, It lacked the establishment of a guarantee fund for the protection of the note holder, although he had almost perfect protection through the daily redemp- tion of the notes through the Suffolk Bank at Boston in gold. Slight Cost of Guarantee Fund Indeed, the protection of the note holder was so nearly perfect, through this daily redemption of the notes in gold, that from 1840 to 1860, a period of 20 years, a tax of only 3^ of 1 per cent upon the whole note issue would have been sufficient to pay the notes of the failed banks, including the panic of 1857, without any reference whatever to their participation in the distribution of the assets of the banks. A guarantee fund of 6%, such as Canada has would have lasted 40 years, or covered their losses for Ifi years. Compared with the National Bank Note System How much better the notes of the 500 banks under the Suffolk Bank System were, inherently and without any reference to the Government Bonds deposited to secure their payment, is demonstrated by the fact that commencing with the National Banking System, in 1864, down to 1901 — a period of 36 years — it woidd have taken a tax of one-fifth of one per cent each year upon all the National Bank Notes outstanding to pay the notes of the failed banks (omitting, of course, the Gov- ernment Bonds deposited to secure them) ; or a Guaran- tee fund of 5%would have lasted only 25 years, imder the National JSank Note System, while under the Suffolk Bank Note System, it would have lasted nearly twice as long or over 40 years. 50 The Actual Never Exceeded 40 Per Cent of the Permissive Issue To demonstrate beyond any peradventure of doubt that the bank credit currency of New England, under the Suffolk System, never exceeded the demands of trade, was never too great, was never too small, but always just equal to its requirements, I want to call attention to the following facts: First, in 1840 the permissive or possible issue was $70,323,000; but the actual issue of notes outstanding was only $16,570,893, or only 23% of the possible issue. Second, in 1850 the permissive or possible note issue was $75,533,000; but the actual note issue out- standing was only $31,799,031, or only 40% of the possible issue. Third, in 1860 the permissive or possible note issue was $131,310,000; but the actual note issue outstanding was only $47,539,877, or only 36% of its possible issue, A Mathematical Demonstration Here is a mathematical demonstration through the actual operation of a complete banking system, (a) Including over 500 individual independent banks. (b) Covering all of the six New England States (con- siderably more territory than is now covered by the First Federal Reserve Bank District). (c) During a period of 4-6 years, which proves beyond all question of a doubt that Bank Credit Currency contracts just as quickly and just as much or completely as it expands. The same fact is illustrated and demonstrated up in Canada every fall, during the crop moving season (see the Canadian Diagram). In normal times, prior to the War, the Bank Credit Currency of France, which averaged something more than $1,000,000,000, often contracted or expanded more than 10%, or more than $100,000,000, in a single week. Indeed at times, this occurred in a single day. By a parity of reasoning if the Federal Reserve Notes were directly related to current business, as Bank Credit Currency always is, the contraction as well as 51 expansion of Federal Reserve Notes, at times, ought, pari passu, to be 10% or from 300 to 350 million a week; but it will be observed and remembered that the Feder- al Reserve Notes are always practically equal to and identical with the total amount of the earning assets of the twelve Federal Reserve Banks, a fact that proves conclusively that they are as utterly unfit for the pur- pose of currency, as the National Bank Notes and the Greenbacks, or United States Notes proved themselves to be ; and a thousand fold more dangerous because of the certainty of a practically unlimited expansion, without any contraction, except through financial disturbances and commercial disasters when the earning assets of the Federal Reserve Banks will necessarily be reduced. Should the Federal Reserve Act remain upon the statute books, it must be conclusively clear, therefore, to every student of economics that we shall have far more frequent commercial disturbances, reactions, panics or crises in the future than we ever have had in the past (until the final complete smashup comes) because of the very nature, character, expansibility and permanency of the Federal Reserve Notes. Of this, there can be no possible doubt. The ques- tion then is, are these disturbances, reactions, panics or crises to be desired.'' Or should we adopt such a financial and banking system as to prevent them so far as humanly possible? With this mathematical demonstration, this un- questioned, unqualified proof before him, let the reader return to the chart which demonstrates the fact that the Federal Reserve Notes are always just equal to and identical with the assets of the twelve Federal Reserve Banks, a fact that must lead to certain and overwhelm- ing disaster as already pointed out. Life of Bank Credit Currency The average life of a bank credit currency is in bold contrast with that of our National Bank Notes or the Federal Reserve Notes. The note of the Scotch Banking System remains out (short distances, good railroad facilities) 15 days. 52 The note of the Canadian Banking System remains out (distances are great, railroad facilities fair) 30 days. The note of the New England Suffolk Banking System remained out (no railroads then) 45 days. The note of the National Banking System remains out (the best of railroad facilities) 730 days, or more than two years, which is about the time the paper itseK lasts, when it must be returned of neces- sity for renewal. It will be found upon investigation that the life of the Federal Reserve Note is also the life of the paper upon which it is printed. The frequent redemptions of the Bank Credit Currency reflect its relation to busi- ness transactions, while the return of the National Bank Notes, and the Federal Reserve Notes as well, reflect little more than the life of the paper upon which both are printed. National Bank Notes and Federal Reserve Notes Are Identical I assert that there is no such thing as an economic redemption either of National Bank Notes, nor of Fed- eral Reserve Notes; but, that they are identical in prin- ciple and character — a combination of government and bank credit — and that, either directly or indirectly, both are the absolute obligations of the government, plus or with bank credit added. They are both government debts guaranteed by banks. All the true credit character or nature of both has been, literally and utterly destroyed, and both have been made the deadly enemies of gold. Both are hybrids; both are nondescripts; and, neither of them is fit to find a place, nor will find a place, in a rightly constituted banking system. Both of them in the same way, and to the same degree, are an ever-increasing, practically permanent sodden mass of credit, by which the peril of our financial and banking system, in a broad economic sense, is now growing weaker by the hour; for from several points of view, we are far weaker today than we have been at any time since the passage of the Federal Reserve Act. 53 And, should it remain on the statute book, we must inevitably continue to grow gradually, but certainly, weaker and weaker until the whole structure of our credit system goes down in overwhelming and indescrib- able disaster. The Suffolk System Recognized Everywhere The Suffolk Banking System was known and rec- ognized all over the United States. The bank notes of the New England banks redeemed through the Suffolk Bank, without any reference whatever to the size of the capital of the bank issuing them, whether $10,000, or $25,000, or $250,000, or $500,000, were at a ^premium at Buffalo, Chicago, Milwaukee and all other western centres, simply and only because they were redeemed through the Suffolk Bank at Boston in gold. Fundamental Principles Do Not Change Economic principles do not change. They are as immutable as the law of gravitation, and the penalties for their violation will always be exacted by nature as cer- tainly, and as relentlessly as any violation of the law of gravitation. Permissive or Possible and Actual Issues of Bank Credit Currency Need any further evidence be adduced to demon- strate the fact that bank credit currency always adjusts itself to the current demands of trade? The assumption that a system of bank credit cur- rency means only expansion and not a corresponding contraction as in the case with National Bank Notes and Federal Reserve Notes is completely refuted by the operation of the Suffolk Bank System, the annual ex- pansion and contraction of Bank Credit Currency in Canada, and by the following table comparing the per- missive and possible with the actual note issues wher- ever Bank Credit Currency has been in use, or is in use today : 54 , Permissive Issue Actual Issue France (1 bank) 1908 $1,160,000,000 $929,000,000 Canada (25 banks) " 94,000,000 83,000,000 Scotland (10 banks) " 148,000,000 40,000,0000 1st U.S.Bank (1 bank) 1811 10,000,000 5,000,000 2ndU.S.Bank (1 bank) 1836 35,000,000 23,000,000 Bank of Indiana (1 bank) 1862 6,600,000 4,900,000 Bank of Iowa (1 bank) 1865 2,096,000 1,400,000 New England Suffolk System (506 banks) 1860 $131,310,000 $47,539,877 From this comparison of the permissible and pos- sible issues of Bank Credit Currency with the actual issues in every instance, every intelligent and fair mind- ed man must conclude that a natural and perfect relation must necessarily exist between a true Bank Credit Cur- rency and the work it is called upon to perform. Please note that it is wholly immaterial whether Bank Credit Currency is issued by one bank as in France, or ten banks as in Scotland, or twenty-five banks as in Canada, or one bank as in Indiana or Iowa or one bank in the whole United States, or by more than five hundred banks covering all the New England States, the result has always been identically the same; and, always must be identically the same, because it is issued and redeemed in accordance with a fundamental principle of economic law. Why Bank Credit Currency Always Con- tracts As Well As Expands and Is Always Just Equal to the Demands of Trade. A Bank Credit Note is a cashier's check. It is the direct obligation of the bank issuing it, without the deposit of government bonds or any other collateral to secure its payment; but like a National Bank Note and also a Canadian Bank Note it should be a first lien upon all the assets of the bank issuing it. Public policy de- mands this. A 5% guarantee fund, such as they have in Canada should be established, to meet the immediate payment of notes of any failed banks. But, with the organization 55 and supervision herein proposed, it is very doubtful whether a single penny of it would ever be needed, as there never has been a bank failure where clearing house bank examinations were in force. // a bank had the right to issue Bank Credit Notes to the amount of its capital, it would be interested in sending home the notes of every other bank for redemption and keep- ing its own notes out or in circulation; for (a) Upon a 6% rate of interest, after paying a tax of 3% upon its bank notes outstanding, a bank would make ^%. (&) By sending the notes of all other banks home a bank would get gold for them or reserve money which would be worth ten times as much to the bank as the notes of the other banks were. Business Based on Selfishness All business is based on selfishness and banking is the very refinement of business. Banking is the quint- essence of trade. Whenever profit, or advantage, which is the equivalent to profit, disappears from human effort, business or trade will disappear. Business will die. Hu- man effort will cease, as so strikingly illustrated, so con- clusively demonstrated, in Russia at this very moment. Why Federal Reserve Notes W^ill Not Con- tract But Always Expand, Except In Dis- turbances, Reactions, Panics, or Crises, Which They Themselves Will Inevitably Breed There is no selfish motive such as there is in the case of checks and drafts, no reason whatever, measured in terms of profit or advantage, why any State Bank (all National Banks are practically, though not theo- retically, in identically the same position) should send home for redemption and payment a Federal Reserve Note or a National Bank Note or a United States Note or Greenback. All three of these obligations — mere promises to pay, debts, just I.O.U.'s — are identical in nature and character. All are Government paper, differ- ing only slightly in form. And, it will be found upon an 56 exhaustive examination that all three are treated pre- cisely alike by all banks — treated as reserves. And this is true, notwithstanding the fact that not one of them would find a place, either as a reserve or as currency, in a rightly constituted financial and banking system. There are $346,000,000 Greenbacks, $730,000,000 National Bank Notes and $3,000,000,000 Federal Reserve Notes or $4,076,000,000 of this Government Paper Money; which, under present conditions is bound to constantly increase, when as a matter of economy, wisdom and prudence, Bank Credit Currency should be gradually substituted for every dollar of it. It is the dual nature or character of this $4,076,000, 000 of Government Paper Money, this double use of it for both reserves and currency, when all reserves should be 100% gold and all currency should be 100% bank credit instead of this mongrel mess of 40% gold and 60% govern- ment bank credit combined; that will, sooner or later, lead to the complete collapse of our financial and banking system; and, at a time of seemingly very great, but in fact, false prosperity. We have just had one of these illusive delusions; and are now head- ed for a still greater one. Number of Banks in the Suffolk System In 1857 there were 510 banks. In 1858 there were 499. In 1860 there were 504 banks. The capital ranged from only a few thousands — several having less than 25 thousand — up to 500 thousand. The Diagram of the Suffolk Bank Note System Analyzed The diagram upon the following page, covering the operations of the Suffolk Banking System for a period of 10 years demonstrates that in a rightly con- stituted banking system, bank book credits and bank note credits are identical in principle, and that the life of each is determined wholly by the function it performs in trade and commerce. Let the reader note the movement or increase and 57 CO CO o -n O V 58 88 X X 57 87 / X 56 86 X N 55 85 sX 54 84 / XT 53 83 / j \ 52 82 /I \ 51 81 / / \ 50 SO / m \ - — 49 79 / 1 48 78 / 1 47 77 / 1 46 76 / 1 45 75 / / 44 74 y I 43 73 y^ £pI 42 72 y/^ 41 71 X & 40 / u 39 69 y c \ 38 68 37 67 36 66 4^/ f / / / / / / \ 35 65 ^/ .^/ / 34 64 <^ Jy / 33 63 jT / ^ / 31 61 / / / / 29 59^ / 28^ 58 ,y 27"^— B-?"' \ ^ y' 26 56 ^N^.-, ,'' 25 55 24 54 X 23 53 S __,.--"' 22 52 'V .--'''' 21 51 Circulation 31,700,000 38,500,000 44,300,000 54,800,000 49,400,000 Deposits 27,200,000 2 1 ,900,000 23,800,000 28,700,000 39,400,000 Total of both 58,900,000 60,400,000 68,100,000 83,500,000 88,800,000 en (0 Suffolk System of New England from J 85 J to O 0) 0} 1 86 1, and demonstrates the perfect interplay of J 3 bank book credits and bank note credits, or •^. £ <« 0) . CD deposits and bank notes, both having been redeem- (» O Q a."- ed daily at the Suffolk Bank in Boston* in'.gold* Q Even Mlhs. Jan. \ 1857 Jan. >< 1858 Jan. 1859 Jan. 1860 Jan. 1861 89 59 88 58 87 57 •^86 56 85 55 84 54 83 53 82 52 81 51 79 49 k 78 48 ^->. 77 47 \ / 76 46 \ / \ / \ / ^~»^ 75 ^45 1 74 ^44 \ / """><"^^ 73 43 \ / -ji"^"'^^ "***■■ 72 ^42 t \ —71—^41 / \ / \ X 69 39 / \ y^ 68 38 / \ * \ y^ 67 37 \ 1 1 66 36 1 t 65 35 \ N 1 64 34 \ \ 1 1 1 1 1 1 1 63 S3 62 32 61 31 \ \ \ 1 1 1 59 29 1 1 58 28 *% 1 1 57 27 ^\ 1 56 26 55 25 54 24 53 23 52 22 51 21 50,000,000 54,900,000 36,200,000 41,700,000 44,700,000 32,200,000 25,100,000 47,600,000 43,300,000 41,200,000 82,200,000 80.000,000 83,800,000 85,000,000 85,900,000 decrease of the deposits and notes during the ten years covered by the diagram upon the preceding page. (a) At the outset there was a difference between the bank notes and bank deposits of only $4,000,000; the notes amounting, on Jan. 1, 1852, to $32,000,000, and the deposits to $28,000,000. (b) During the next year, the deposits fell $7,000, 000, while the notes increased $7,000,000, and on Jan.l, 1853, the difference between the amount of the bank notes and the deposits was $18,000,000. (c) From Jan. 1, 1853 there was a gradual and almost equal increase in both deposits and bank notes; the deposits standing on Jan. 1, 1855, at $28,000000, and the notes at $54,000,000. (d) During the following year, ending with Jan. 1, 1856, the bank notes fell $5,000,000, or to $49,000,000, while the deposits increased from $28,000,000, to $39, 000,000, and the difference between the two was then only $10,000,000. (e) From Jan. 1, 1856 to Jan. 1, 1858, the move- ment of both deposits and notes becomes most interest- ing, because this period covered the paralyzing panic of 1857. The notes constantly increased reaching the highest point they ever attained — $55,000,000, while the deposits fell to $25,000,000, showing that cash was necessary for the liquidation of accounts. Bank book credits were converted into bank note credits to meet the emergency growing out of the panic. (f) From Jan. 1, 1858 to Jan. 1, 1859, occurred a correspondingly interesting episode of the panic. The notes fell from $55,000,000, to $35,000,000, or $20, 000,000, while the deposits rose from $25,000,000, to $47,000,000, or $22,000,000. Bank note credits to the extent of more than $20,000,000, were converted into bank book credits, showing that when cash had done its part of the liquidation, the bank notes became or took the form of bank deposits. (g) It will be noted that the bank note and bank deposit lines again crossed each other a second time in the spring of 1860, the amount of each being then the same, or $43,000,000. And finally, that at the end of ten 60 years the bank note credits and bank book credits were relatively exactly where they were ten years before, or only $4,000,000 apart; the notes now standing at $45,000,000 and the deposits at $41,000,000, (h) The heavy black line which includes both the bank notes and bank deposits combined shows an increase in bank assets of $28,000,000, during the ten years. Let it be noted and remembered that the currency of a country, outside of that coined out of its standard of value or its representative, such as Gold Certificates, should be subjected daily to redemption in that standard of value. Our standard of value is Gold; there- fore the touchstone of all our currency or bank credit is daily redemption in Gold. There is no such redemption and payment of the Federal Reserve Notes any more than there is of the National Bank Notes, or of the Greenbacks — -United States Notes. They are all reserves and are all treated as such. But these, aside from the silver, constitute our currency system. Neither the United States Notes, nor the National Bank Notes, nor the Federal Reserve Notes are ever returned to their makers unless, either the paper is too rotten or too filthy to be used; or, being in excess of their needs, the bank must get rid of them in some way. What a fine Currency System this is! Not a Theory But a Complete, Well-Nigh Perfect, Tried and Approved Banking System Let it be noted and remembered that I am not now discussing a mere theory but a principle proved and justified wherever tried and here more particularly, a complete, nearly perfect, tried and approved Banking System, that covered all of the six New England States, including more territory than the First Federal Reserve Bank District now does, was composed of more than 500 individual, independent banks, and was in success- ful operation from 1819 to 1865, or for a period of 46 61 e2| H CO 3 8 c -♦— m C ■>^ 8 u o Q 13 u o CO Pi 2 J h J3 • a g >. o J2 ^ TS >- y frt a ^ 4> -Si u ^ vC ^ ^-* TJ S o «J b« JQ 3 ■•-• ti Si O +j •M cn z -M 1^ 1 a Cj D s Si J3 ,£! M +-• « ^ U I) ^ § ^ d o a3 T) •VH q 03 <^ <^ ^ >- »-i ^ ni 0) 3 T) (T (u s J3 •4-> Jd o £j vQ ni »li Ct; ^_ ■<-> > — 1 O OJ a u ^ <^ p *Q ^ g O O J«J M-H d fj oJ 3 Ol o Q ._^ ij a R > n vQ w , «H ;h «V4 B ^% .^