the hands of the respective boards of control an amount of national
bank notes for each national bank in its zone equal to the paid-up
capital thereof in addition to the bank notes taken out in accordance
with Section 30.
COMMENT:--You will observe, gentlemen, that by Section 43 a bank is
allowed to fall 75 per cent below its average cash reserve; that
by Section 45 it can buy gold from the Board of Control with its
commercial paper and build up the reserve; also that by Section 47 it
can take out an additional amount of currency to meet any emergency
that may arise. Now, when you appreciate the fact that the Board of
Control is going to make every bank qualify in the outset, as sound
and then is virtually responsible for its condition, with the power to
aid it in case of necessity, it is difficult to even imagine a case
where a bank would fail.
MR. MERCHANT: That is so; every bank ought to be kept in liquid shape
by the Board of Control; then its means of defense, as you have
just pointed out, are unlimited. Of course it would then have all
its present resources by way of rediscounting paper with its city
correspondent; and on top of that the provisions of your bill. You
could not possibly bust a bank.