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profitable to sell their bonds and retire their circulation when money is dear and worth high rates of interest.

As evidence of this, the Secretary of the Treasury showed that the New York City banks increased their circulation $5,000,000 during July and August, when money was plenty and low, and actually contracted their circulation by $2,750,000 during the months of October, November, and December, 1905, when the rate of interest reached 100 per cent.

The committee of the New York Chamber of Commerce criticises the Secretary's suggestion of allowing to the national banks of issue an additional circulation, in time of money stringency, of 50 per cent of the bond circulation, subject to a 5 per cent or 6 per cent tax. This plan the committee characterizes as inflation. It would appear, however, that a similar method in the case of the German Reichsbank works, as it were, automatically. Money is issued when a stringency occurs, and, owing to the tax to which it is subjected, retires when normal conditions return. It is obvious that when the current rate is not above 5 per cent there is no longer an incentive for the Reichsbank to continue its circulation subject to a 5 per cent tax.

If in the United States the privilege of a 50 per cent additional circulation subject to a 6 per cent tax had been in force last November and availed of by every national bank of issue throughout the country at the same time-which is not probable-the total increase of currency for the time being from the Atlantic to the Pacific would have been about $240,000,000, or less than 10 per cent of all the moneys probably in circulation in the United States. Of this sum $25,000,000 would have been available in the New York City banks.

Experts must decide whether the above amount is excessive, distributed as it is among so many banks, or whether it is out of all proportion when compared to the 450,000,000 marks ($112,000,000) that the Reichsbank alone had in circulation subject to a 5 per cent tax on September 30, 1905. It has been shown that the Bank of France (January, 1906) could, without any tax, and subject only to the unanimous consent of the three censors, issue 1,000,000,000 francs ($200,000,000), while in London for a number of years the banking department of the Bank of England has held its notes to the extent of 25,000,000 sterling ready to be placed in circulation as the occasions require. The British Government has, besides, established in the past the precedent of temporarily repealing, in case of need, the law of 1844 limiting the issue of paper money.

The excessive money stringencies which are peculiar to the United States, and due to a great extent to our defective system, should be avoidable when we take into consideration our real financial strength and standing. Therefore, in view of the serious inconveniences of our unelastic currency which have been experienced in the past, and which will occur again in the future, it would seem to be the duty of Congress to consider the question seriously, and take such action as is proper and necessary in order to grant to the currency the required elasticity.

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For these various excesses it was charged, by virtue of the 5 per cent tax, the sum of 1,651,000 marks.

In 1904 there was charged to similar excesses, by virtue of the same tax, the sum of 1,118,000 marks.

The United States.--In the United States paper currency is issued by the United States Treasury and also by the national banks.

At the end of November, 1905, the United States Treasury statement was as follows:

$526,020,869 gold certificates against $526,020,869 gold coin.

$475,735,000 silver certificates against $475,735,000 silver dollars. $8,478,000 Treasury notes against $8,478,000 silver dollars of 1890. $346,681,016 United States notes against $150,000,000 gold coin and bullion (reserve fund).

In the general fund there was an additional supply of gold in coin, bullion, and gold certificates amounting to $135,500,000, approximately.

That the number of national banks increased from 3,871 in 1900 to 5,833 in 1905 shows that a nation so prosperous and extended as the United States of America requires constant extension of the banking and financial machinery.

In November, 1905, national-bank notes outstanding were about $485,000,000, against which there had been deposited by the national banks with the Government an equal amount of United States government bonds.

The statement of the United States Treasury shows that

The amount of outstanding bonds on the 30th November, 1905, was.. $895, 159, 000 To secure circulation, national-bank notes, and United States Government deposits, about ..

551, 240, 000

343, 919, 000

Total amount for further circulation............... But of this amount a certain proportion would not be available, being held abroad; also a large number of permanent investments are made by trustees, savings banks, insurance companies, trust companies, and other fiduciary institutions in this country. Besides, of the $343,919,000 of bonds, $117,000,000 are redeemable after July 1, 1907, and $64,000,000 after August 1, 1908. This will reduce the total amount for further bank-note circulation to $162,000,000.

On the 1st of January, 1906, with the gold coin in circulation, which was said to be about $650,000,000, the moneys in the hands of the people of the United States exceeded all previous records, the official statement showing an average of about $31.80 per capita, on an estimated population of 84,000,000. There is at present a law limiting to $3,000,000 per month the amount of lawful money which the banks may deposit for the retirement of their circulation. The committee of finance and currency of the New York Chamber of Commerce apparently wished to recommend the repeal of this limitation. Secretary Shaw, in his published letter of February 7, 1906, addressed to Mr. Schiff, concerning the recommendation, calls attention to the fact that such action would make it possible to retire all our national bank circulation in a very short period.

The Secretary also stated that banks find it profitable to buy Government bonds with which to increase their circulation, when money is cheap and at a very low rate of interest, and consequently find it more

profitable to sell their bonds and retire their circulation when money is dear and worth high rates of interest.

As evidence of this, the Secretary of the Treasury showed that the New York City banks increased their circulation $5,000,000 during July and August, when money was plenty and low, and actually contracted their circulation by $2,750,000 during the months of October, November, and December, 1905, when the rate of interest reached 100 per cent.

The committee of the New York Chamber of Commerce criticises the Secretary's suggestion of allowing to the national banks of issue an additional circulation, in time of money stringency, of 50 per cent of the bond circulation, subject to a 5 per cent or 6 per cent tax. This plan the committee characterizes as inflation. It would appear, however, that a similar method in the case of the German Reichsbank works, as it were, automatically. Money is issued when a stringency occurs, and, owing to the tax to which it is subjected, retires when normal conditions return. It is obvious that when the current rate is not above 5 per cent there is no longer an incentive for the Reichsbank to continue its circulation subject to a 5 per cent tax.

If in the United States the privilege of a 50 per cent additional circulation subject to a 6 per cent tax had been in force last November and availed of by every national bank of issue throughout the country at the same time-which is not probable-the total increase of currency for the time being from the Atlantic to the Pacific would have been about $240,000,000, or less than 10 per cent of all the moneys probably in circulation in the United States. Of this sum $25,000,000 would have been available in the New York City banks.

Experts must decide whether the above amount is excessive, distributed as it is among so many banks, or whether it is out of all proportion when compared to the 450,000,000 marks ($112,000,000) that the Reichsbank alone had in circulation subject to a 5 per cent tax on September 30, 1905. It has been shown that the Bank of France (January, 1906) could, without any tax, and subject only to the unanimous consent of the three censors, issue 1,000,000,000 francs ($200,000,000), while in London for a number of years the banking department of the Bank of England has held its notes to the extent of 25,000,000 sterling ready to be placed in circulation as the occasions require. The British Government has, besides, established in the past the precedent of temporarily repealing, in case of need, the law of 1844 limiting the issue of paper money.

The excessive money stringencies which are peculiar to the United States, and due to a great extent to our defective system, should be avoidable when we take into consideration our real financial strength and standing. Therefore, in view of the serious inconveniences of our unelastic currency which have been experienced in the past, and which will occur again in the future, it would seem to be the duty of Congress to consider the question seriously, and take such action as is proper and necessary in order to grant to the currency the required elasticity.

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1st Session.

No. 278.

INTERSTATE COMMERCE CORPORATIONS OWNING CAPITAL STOCK OF OTHER TRANSPORTATION CORPORATIONS.

LETTER FROM THE CHAIRMAN OF THE INTERSTATE COMMERCE COMMISSION, TRANSMITTING STATEMENTS IN RESPONSE TO A SENATE RESOLUTION OF JANUARY 13, 1908, INQUIRING AS TO WHETHER ANY CORPORATIONS ENGAGED IN INTERSTATE COMMERCE ARE THE OWNERS OF ANY CAPITAL STOCK OF OTHER CORPORATIONS TRANSPORTING PASSENGERS AND FREIGHT,

ETC.

FEBRUARY 14, 1908.-Referred to the Committee on Interstate Commerce and ordered to be printed.

To the Senate:

INTERSTATE COMMERCE COMMISSION,
Washington, February 13, 1908.

The Interstate Commerce Commission, responding to the resolution of the Senate, dated January 13, 1908, directing it "to inform the Senate whether any corporations engaged in interstate commerce are the owners of any of the capital stock of other corporations which are transporting passengers and freight; and if so, * * to transmit a statement showing the extent and details of such ownership, so far as the facts now appear in the office of the Commission, and to state in what cases the corporations whose stocks so owned have been competitors for traffic with the corporations owning their stock," transmits herewith three statements as follows: First. Exhibit A, showing principal railway systems in the United States and the relation of their component parts to the controlling corporation, being Table II of Appendix VI of Digest of Hearings Before Senate Committee on Interstate Commerce, dated June 30, 1904, corrected down to June 30, 1906, and embodying information derived from annual reports from the railways to the Interstate Commerce Commission and from Special Report Series, Circulars 1 and 2, on Intercorporate Relationships.

Second. Exhibit B, showing holdings of railway companies in express companies, holdings of express companies in railway companies, and holdings of express companies in express companies; embodying information obtained in Special Report Series, Circulars 1 and 2, on Intercorporate Relationships.

Third. Exhibit C, containing text of Appendix VI of Digest of Hearings Before Senate Committee on Interstate Commerce, dated December 15, 1905.

Explanatory of these matters, inclosed herewith, will be found a letter from Mr. Henry C. Adams, in charge of statistics and accounts, by whom these statements have been prepared under the direction of the Commission.

Aside from the inquiry which resulted in the Northern Securities case, the investigation of the relations between certain carrier and

coal companies on their lines and the inquiry into the affairs of the Union and Southern Pacific systems, the Commission has made no general or direct investigation of the restraint of competition between carriers resulting from the ownership by one company of the stock of another. Any expression by the Commission, therefore, in response to the resolution, other than that to be found in the reports of the Commission already made public in connection with these three investigations, would be, in the main, an inference based upon the common knowledge and understanding that lines of separate and independent ownership serving the same territory, particularly when carrying between the same points of origin and destination, have been competitors.

While it is believed by the Commission that the accompanying exhibits contain substantially the information called for in the resolution, further details respecting the same will be available in the forthcoming report referred to in the letter of Mr. Adams, but it is not deemed desirable to delay this response until such report can be printed. MARTIN A. KNAPP,

Very respectfully,

Chairman.

INTERSTATE COMMERCE COMMISSION,
DIVISION OF STATISTICS AND ACCOUNTS,

Washington, January 27, 1908.

DEAR SIR: In conformity with verbal instructions, I herewith transmit certain facts bearing upon the intercorporate ownership of railway stock and railway bonds by railway corporations, so classified as to indicate the extent to which and the manner in which such intercorporate ownership tends to the concentration of railway control in the United States. The resolution of the Senate calling for this information directs that it shall be given "so far as the facts now appear in the office of the Commission."

The material on file in the Division of Statistics and Accounts, which meets most perfectly the purpose of the resolution, is in the form of returns to Special Report Series, Circulars Nos. 1 and 2, on Intercorporate Relationships. The immediate purpose of these circulars was to enable this office to eliminate from its compilations the intercorporate holdings of railway securities and by this means to obtain a net figure of the outstanding securities in the hands of the public. This purpose is somewhat different from that called for by the Senate resolution, and the material which these circulars contain could not be put in a form to meet the strict requirements of the resolution within a reasonable time. It may be remarked in passing, however, that this Special Report on Intercorporate Relationships, which will shortly be ready for publication, will contain a large amount of available information bearing upon the subject underlying the Senate resolution.

In order to meet promptly the request of the Senate, it has seemed best to accept as the basis of a special compilation a table covering the intercorporate holdings of stock and bonds to be found in Appendix VI of the Digest of Hearings before the Senate Committee on Interstate Commerce (pp. 635-677), dated December 15, 1905. This table shows for June 30, 1904, the principal railway systems of the

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