CONTENTS

INTRODUCTION

HISTORY OF THE MOVEMENT -

3-18

Origin of Indianapolis Monetary Convention, 3-8. First Meeting of Convention,

8-10. Appointment of Executive Committee, 10-11. Appointment and Organi-

zation of Monetary Commission, 11. "Interrogatories" Sent Out, 11-13. His-

tory of the Commission, 13-14. Second Meeting of Indianapolis Monetary

Convention, 14-18.

PRELIMINARY REPORT

PRELIMINARY REPORT

20-59

Personnel of the Commission, 20. Object and Methods of the Commission, 21-23.

The Facts as to the Currency, 23-28. Defects of the System, 28-29. The Stand-

ard, 30-34. The Silver Currency, 34-37. The Demand Obligations of the Gov-

ernment, 37-45. The Banking System, 45-49. Plan of Currency Reform, 49–58.

Metallic Currency and Demand Obligations, 49-53. Banking System, 53-58.

BILL EMBODYING COMMISSION'S PROPOSALS

60-74

FINAL REPORT

PART I.-METALLIC MONEY

THE FUNCTIONS OF MONEY

77-91

1. Three Functions of Money. 2. Necessity of a Standard. 3. What is Price?

4. Standard Must Have Value. 5. No Unvarying Standard of Value. 6.

Distinction between a Standard and a Medium of Exchange. 7. Expedients to

Save the Use of Coin. 8. Origin of Bank Notes and Deposit Currency. 9.

Government Paper. 10. Quality of the Money Material. 11. Property a Con-

dition of Obtaining Money. 12. Why Money is Needed in Small Transactions.

13. Per Capita Circulation. 14. Doubt as to the Standard Contracts Medium

of Exchange. 15. Existing Media of Exchange in the United States. 16. Kinds

of Money Received by Banks. 17. Kinds of Money Used in Retail Trade.

18. Kinds of Money Used in International Trade.

THE STANDARD -

92-112

19. The Time Element and a Standard for Deferred Payments. 20. What is a

Just Standard? 21. Change of Standard May be Due to Either Side of the Price

Ratio. 22. Industrial Movement Toward Cheaper Cost of Producing Commod-

ities. 23. Owing to Durability, the Value of the Precious Metals Only Slowly

Affected by Changes in their Demand and Supply. 24. Impossibility of Coun-

teracting Economic Changes in Production by Manipulation of Money Side of

Price Ratio. 25. Gold and Silver, Tied Together, Would Not Bear Constant

Relation to Commodities. 26. Gresham's Law. 27. Stability in Value of Silver.

28. Stability in Value of Gold. 29. Increased Demand for Gold has Practically

Absorbed Increased Supply. 30. Standards, the Result of Concurring Habits of

Mankind; the Duty of Governments to Follow, Not Interfere with, Natural

Selections of Standards. 31. Necessity for Adoption of Some Standard by Gov-

ernment. 32. Risk of Changes in Value Inherent in All Time Contracts. 33.

Relative Economic Position of Debtors and Creditors. 34. Silver and Gold
as Standards without a Ratio. 35. The Multiple Standard. 36. Rates of
Interest as Affected by Standards of Deferred Payments. 37. The Silver
Standard in the United States, 1792-1834. 38. The Gold Standard in the United
States, 1834-1861. 39. A Fluctuating Paper Standard, 1862-1878. 40. Legal
Recognition of Gold Standard in 1873. 41. Commission Recommends the Pay-
ment of United States Obligations in Gold.

LAWS OF TOKEN MONEY -

113-130

42. The Principles of Token Money. 43. Reduction in Intrinsic Values;

Coinage on Government Account Only; Limited Legal Tender Quality. 44.

Redemption in Standard Money. 45. Denomination of Token Coins. 46.

Seigniorage. 47. French Five-Franc Pieces. 48. United States Silver Dollars.

49. Gold Redemption of Silver Dollars. 50. Field of Circulation Less than $10

Reserved for Silver Certificates. 51. The Treasury Bound to Redeem Silver.

52. Limitation of Quantity.

Endless Chain." 54. Disposition of

53. The

131-137

55. Legal Tender Defined. 56. Legal Tender Quality Should be Conferred Only

on the Standard. 57. Legal Tender Does Not Confer Value. 58. How Far

Demand Can be Created by Legal Tender Laws. 59. Demand for Money to

Pay Past Debts. 60. Origin of Legal Tender Laws.

THE UNITED STATES SILVER EXPERIMENT

.

138-145

61. The Movement for Silver Coinage, 1876-1878. 62. The Operation of the

Bland-Allison Act of 1878. 63. Difficulty in Forcing Silver into Circulation.

64. The Sherman Silver Purchase Act of 1890. 65. The Maintenance of the

Parity of the Two Metals. 66. Seigniorage Operations Under the Acts of 1878

and of 1890. 67. Silver Experiment Balance Sheet.

THE MOVEMENT OF GOLD

146-158

68. The Fear of a Scarcity of Gold. 69. Domestic Sources of Supply of Gold.

70. Foreign Sources of Supply of Gold. 71. The Flow of Gold Controlled by

Changes in Rate of Interest. 72. How the Foreign Banks Get Gold. 73. How

the American Banks Have Obtained Gold in the Past. 74. How Country Banks

Could Get Gold. 75. Maintenance of Gold Reserve Falls on Financial Centers.

76. Domestic Distribution of Currency. 77. The Gold Movement and Prices.

PART II.- BANKING

THE NATURE OF A BANK

159-171

78. The Safe-keeping of Funds. The Transfer of Funds. 79. Savings-banks

and Loan Companies. 80. Commercial Banks Create Demand Liabilities. 81.

The Bank as a User of Idle Capital. 82. Inability of Banks to Loan “Credit.”

83. Discount the Source of Banking Profits. 84. The Public, not the Bank,

Determines Choice between Deposits and Notes. 85. The Justification of Gov-

ernment Supervision. 86. How the Bank Currency Benefits the Community.

87. Deposits Generally Representative of Loans. 88. Currency Function of

Deposits. 89. Notes and Deposits really Identical.

DEPOSIT CURRENCY

172-179

90. Currency Function of Deposits Recognized by Experts. 91. Why Cur-

rency Function has been Overlooked. 92. Rapid Growth of Deposits. 93.

Elasticity of Deposit Currency. 94. Importance of Note Circulation Diminished

by Growth of Deposits. 95. An Adequate Note Currency Nevertheless Desirable

96. Proportion between Notes and Deposits Settled Naturally.

EXPANSION OF NOTE-ISSUES

180-185

97. Current Notions Concerning Expansion. 98. The Volume of Notes Dependent

on the Needs of the Community. 99. Comparative Degree of Danger of Expan-

sion of Notes and Deposits. 100. The Remedy for Expansion is Presentation of

the Notes. 101. The Real Danger Mistaken Judgment. 102. Origin of Fear of

Over-issue.

PROFIT ON BANK-NOTE ISSUES

186-196

103. Alleged Double Profit of National Bank Note-issues. 104. Effect of Com-

pulsory Bond Deposit on Banking Profits. 105. Comparative Profits on the

Loan of Notes and of Deposits. 106. Unequal Influence of Bond-Deposit

Requirement upon Different Sections. 107. Results of Such Inequalities to the

Community. 108. Comparative Use of Bonds under National and State Systems.

109. Influences Affecting Price of Bonds and Issue of Notes. 110. Premium on

Bonds Decreases the Profit on Notes.

HISTORY OF THE NATIONAL BANKING SYSTEM

197-223

III. Origin of the National Banking System. 112. Mr. Chase's Support of the

Plan. 113. Failure of the Act of 1863. 114. Provisions of the Act of 1864.

115. The Tax on State Bank Issues. 116. The "Apportionment" of Notes.

117. The Act of 1874 and the New Method of Withdrawing Currency. 118.

The Resumption Act and Free Banking. 119. Contraction under the Resumption

Act. 120. Difficulties Arising from the Bond-Deposit Requirement. 121. The

Act of 1882 and the Bond Deposit. 122. Defects of the Early Redemption

System. 123. Introduction of the Present Redemption System. 124. Provisions

Regarding Reserve. 125. Defects of the Reserve Provisions. 126. The Crisis

of 1873 and the Issue of Clearing-House Certificates. 127. Change in the

Reserve Requirements. 128. The Banks and Resumption. 129. Issue of Clear-

ing-House Certificates in 1884. 130. Stringency in 1890. 131. Operation of the

Silver Acts. 132. The Banks and the Crisis of 1893.

CIRCULATION SECURED BY BONDS

224-230

133. National Bonds Unsuitable as a Basis for Circulation. 134. Increase in

Rate of Interest Due to Bond Deposit. 135. Rigidity of Bond-Deposit System.

136. Delays of the System.

CIRCULATION SECURED BY COMMERCIAL ASSETS

231-236

137. Asset-Secured Currency Elastic and Quickly Obtained. 138. Character of

Bank Assets as Security. 139. Value of Assets as Compared with Probable

Note Issue. 140. Relative Unimportance of the Note-Currency.

Secured Systems not always Safe.

GUARANTY FUND

141. Bond-

237-246

142. Possibility of Failures under Free Banking. 143. Reason for Securing the

Note-Holder. 144. Principle of Insurance Underlies Plan for Guaranty Fund.

145. Origin of the New York Guaranty Fund. 146. Change in its Scope. 147.

Losses to the Fund from Notes of Failed Banks. 148. Canadian Safety Fund.

149. Inference from History of Banking Failures in the United States. 150.

Guaranty Fund proposed by the Commission.

INSOLVENCY OF NATIONAL BANKS

247-259

152.

154.

155. Com-

151. General Provisions of National Bank Act Against Mismanagement.

Protection to Note-Holders and Depositors. 153. Statistics of Failures.

Capital and Net Collections from Assets of failed National Banks.

parison of Deficiencies with 80 Per Cent. of the Capital. 156. Estimate of Pos-

sible Additional Collections Under Commission's Plan. 157. Actual Collections

from Shareholders. 158. Estimate of Additional Collections from Shareholders

under the Commission's Plan. 159. Capital and Net Collections of all Closed

Insolvent Banks. 160. Deficiency to Fall on Other Banks. 161. Probable Defi-

ciency in the Case of Eighty-one Banks not yet Closed. 162. Total Probable

Loss would not Exceed One-Seventieth of 1 Per Cent. Per Annum.

WORKING OF COMMISSION'S PLAN

260-276

163. Security to Note-Holder. 164. The Guaranty Fund. 165. The Emergency

Tax. 166. The Redemption Fund. 167. No Exceptional Danger from Fraud.

168. The Security of Banking Assets. 169. Losses to be Borne by Solvent

Banks Small. 170. Importance of Good Management. 171. Position of Depos-

itor Different from that of Note-Holder. 172. Situation of Depositor under

Present and Proposed Systems Compared. 173. Situation of Depositors in

National and State Banks Compared. 174. Principle upon which Depositors

Select their Banks. 175. Differences in Methods of City and Rural Banks. 176.

Effect of Proposed Plan on City and Rural Banks.

INSTANCES OF BANK NOTES BASED ON COMMERCIAL ASSETS

277-308

177. European Systems not Exactly Parallel to our Own. 178. Conditions of

Note-Issue in France. 179. Conditions of Note-Issue in Belgium and the

Netherlands. 180. Conditions of Note-Issue in Scandinavian Countries. 181.

Conditions of Note-Issue in Germany and Austria. 182. Conditions of Note-

Issue in Scotland and Ireland. 183. Conditions of Note-Issue in Canada. 184.

General Characteristics of Early Banking in the United States. 185. Defects in