Section 72. That the said 5 per centum so paid by the national banks to the American Reserve Bank as reserves against their savings deposits shall be invested in United States Government bonds or securities for the exclusive benefit of the savings depositors in the national banks as a savings bank fund, and the full interest earned upon said bonds shall be credited to the savings bank fund in the American Reserve Bank, and no part thereof shall be deducted for any other purpose whatsoever than the protection of savings bank depositors.
Comment:—This trust fund would absorb about $350,000,000 of the present bonds held by the national banks for circulation, as the total savings now approximate seven billion dollars ($7,000,000,000).
Section 73. That any national bank accepting a savings bank account may at any time demand the right to have thirty days' notice of an intention to withdraw the same, and may also reserve the right to pay all savings accounts in two installments—50 per centum thereof in three months, 50 per centum in six months.
Section 74. That from and after the first day of January, nineteen hundred and fourteen, every person, firm, partnership, or corporation using the word banker or bank, and every State bank and trust company in the United States receiving deposits subject to check, or saving accounts in the usual way, or trust funds shall keep and maintain identically the same reserves against these respective funds as is provided for by the provisions of this Act; and any person, firm, partnership, or corporation using the word banker or bank, and every State bank and trust company, except mutual savings banks, that fails to comply with the provisions of this Act shall pay a tax of 10 per centum to the United States Government on the tenth day of January in each year upon all the deposits or trust funds against which the foregoing prescribed reserves have not been kept and maintained.
Section 75. That any person, firm, or corporation using the word banker or bank, and every State bank or trust company that shall, after January first, nineteen hundred and fourteen, hold as a part of its required reserves, as prescribed in section sixty-three, any national bank note, check, draft, or other instrument of credit, shall pay a tax thereon to the United States of 10 per centum per diem on the amount so held; and every person, firm, or corporation using the word banker or bank, and every State bank or trust company accepting deposits or trust funds as described in section sixty-three shall, upon the first day of January in each year, make a sworn statement to the United States Government showing exactly the amount and the character of reserves held during the preceding year against all of its deposits, and upon failure to do so shall pay a fine of one thousand dollars per day until such report is made.
Comment:—These Sections, 74 and 75, provide that every person or corporation in the United States shall not only carry its proper share of reserves, as we have all agreed they should, but the right kind of reserves as well. Quantity and quality must both be made obligatory if we are to have a banking system that amounts to anything.
Section 76. That as soon as the amount of money deposited by the national banks with the American Reserve Bank, as aforesaid, shall reach the sum of five hundred million dollars all the bonds now deposited by national banks to secure Government deposits shall be returned to the respective banks to which they belong; and from and after that date any national bank holding a Government deposit shall pay interest thereon to the Treasurer of the United States at the rate of 2 per centum per annum, and the said interest so received shall be paid into the division of reserve fund in the Treasury, and United States notes of an equal amount shall be retired, canceled, and destroyed and gold certificates issued therefor. The said interest shall be payable as follows: 1 per centum on the tenth days of January and July of each year on the average balance during the preceding six months.
Section 77. That all the profits growing out of the operations of the several commercial zones and the American Reserve Bank combined may be distributed between the United States Government and all the national banks pro rata, according to the amount they have respectively deposited with the American Reserve Bank, whenever in the judgment of the board of the American Reserve Bank it is advisable to do so, having made such provision for a reserve as is deemed necessary: Provided, however, That the distribution of profits shall not exceed 2 per centum per annum until practically all of the United States notes have been converted into gold certificates; and for that purpose all the profits in excess of 2 per centum shall be paid into the reserve fund of the United States Treasury in gold coin.
Section 78. That subject to the disposition made and provided for in this Act of all the various sums of money to be paid to the American Reserve Bank all such sums of money shall be combined and held in one common fund and be known as the American Reserve Bank Fund, and this fund shall guarantee the repayment of all Government deposits made with the American Reserve Bank and the redemption of the national bank notes of any failed bank.
Comment:—In paragraph three, under Section 59, provision was made for a 5 per cent guarantee fund to redeem the bank notes of any bank which has failed. This fund is held by the American Reserve Bank, which under Section 78 will be used to redeem the notes of all failed banks immediately and the amount of the notes so redeemed shall be recouped from the assets of the bank that issued the notes; if, by chance, one should fail after it has become a part of the proposed system, which I, for one, do not believe is possible.