The National Citizens' League has presented the following principles which it holds should underlie a bill reforming our banking and currency system. It is indisputable that the great majority of business men, economists and bankers interested in this vital question endorse the fundamental principles as here set forth:

Reform of our banking and currency system is needed:

To prevent the recurrence of money panics.

To provide for seasonal and special demands for currency and credit.

To insure more uniform and steady interest rates throughout the country.

To divorce commercial from investment banking.

To strengthen our international credit. To establish higher standards of banking. "The chief function of a sound banking system is to provide credit for commerce, not for investment or speculation. So long as we fail to provide in this country a National market for commercial discounts and fail to substitute business loans for speculative loans as our secondary banking reserves, we must continue to pay the penalty in higher rates for commercial credit (and therefore higher costs of production); in disastrous speculative orgies; and in periodic collapses of our credit machinery.

"We can nationalize our market for commercial discounts by giving to the quasipublic institution holding the reserves the duty of rediscounting for banks, at published rates of discount, the same to all banks in all sections of the country, high-grade, short-time commercial paper issued for agricultural, industrial and commercial purposes. Commercial paper has now an inferior position as an American bank investment, because it is not liquid. The bank buying it must hold it to maturity. Give to the banks a National market in which high-grade short-time commercial paper can always be sold at a reasonable rate of discount, and commercial paper will at once become in this country, as it is abroad, the prime bank investment.

"In providing a broad market for the commercial paper, we can also adopt another device for the extension of credit which has proved signally successful in foreign

banking practice. This is the bank acceptance. European business houses, especially those engaged in foreign trade, are accustomed to buying bank credit in the form of bills drawn on and accepted by banks. Our National banking law prohibits such acceptances by banks. The legalization of such acceptances would not only provide in this country a broader market for bank investments, but would enable our productive industries to borrow at lower rates. Bankers' bills in Europe command the lowest rates of any form of bank paper.

"In nationalizing our market for commercial paper we ought also to standardize this paper so that throughout the country its character will be as readily recognized as the long-time investment securities for which we have created such a broad market through the stock exchanges. Our practice has been to make promissory notes, largely based on the credit of the borrower, rather than bills of exchange based directly on goods moving in trade. Modern banking practice tends to substitute bills of exchange for promissory notes."

"The National Citizens' League believes that these reforms in our banking and currency system can be best brought about by the formation of a co-operative association of all classes of commercial banks, with restricted powers, managed by a board of bankers, Federal officials and other citizens. The association should not be a moneymaking institution, and all earnings beyond a fixed rate should go to the National Treasury."

This association should:

Hold the final banking reserves. Act as fiscal agent of the Government. Rediscount standardized commercial paper for banks at published rates of discounts uniform over the country.

Issue circulating notes secured by gold and commercial paper.

Deal in gold and foreign exchange.
Establish foreign agencies.

The Guaranty Trust Company is being organized with a capital of $2,000,000 at Fort Worth, Texas, by Allen R. Sheffer. formerly secretary of the American Trust Company of Houston.

How the German farmers have welded their fifteen thousand and odd rural cooperative banks into a national organization that places behind the German agriculturist of today a financial power of stupendous size is shown by the investigation which is being conducted by Ambassador Leishman, at Berlin, in connection with President Taft's effort to establish co-operative credit in the United States for the benefit of the American farmer.

The average rural co-operative bank in Germany has a membership of less than a hundred people. It is conducted almost as a family affair and every member is personally acquainted with all the other members. Naturally, any organization of such limited scope would prove individually an insignificant factor in the financial world. It quickly dawned upon the German farmers, after the co-operative bank idea had taken substantial root in that country, that if their organizations were to secure a commanding position in the banking world they must concentrate their strength through union. Consequently, the leaders of the movement undertook to combine the various rural banks in each province:

A central co-operative bank was established in each province, modeled simply as an enlarged edition of the local banks. The members belonging to the central banks were the local banks. They subscribed to stock in the central banks to form the capital. Their surplus funds were deposited with the central banks. Some money is secured also from loans from outside banks and some from loans advanced by the two general central banks which are a part of the co-operative bank organization and are to the provincial central banks what those banks are to the local banks or the local banks are to their members, the farmers.

The chief function of these central banks is to equalize the credit needs of the local banks. The great prosperity at

tending the local banks gives them, as a whole, money enough to finance the farmers with all the loans which they require. However, this prosperity is not equally divided. One bank finds itself with a large surplus at one time and another bank is in need of a loan to meet the calls made upon it by its members. The surplus of the one bank is deposited with the central bank of that province and is, in turn, loaned by the central bank to the other local bank requiring additional funds. Surplus funds not required by the local banks for loans are invested either with the general central banks or in securities. The central banks lend. money to the local banks in two ways: upon current account and for fixed periods. Loans on current account, however, form the great majority of the busi

ness.

A step higher than these provincial banks are the general central banks. These banks extend their operations over the entire Empire. There are two of these banks-the Central Agricultural Loan Bank of Germany at Berlin and the National Bank for Co-operative Societies at Darmstadt. These banks grant loans to the central co-operative banks and receive their deposits, acting as "equalizers," just as the provincial banks do to the local banks.

In 1909 these provincial and general central banks did a total business of $1,557,293,580. This gives an idea of the size of the co-operative credit business of Germany and of its importance to the German farmer.

Financial co-operation was not the only need felt among the many co-operative societies. It was a great movement, a new theory which, though immensely successful in its original form, required development and direction as it extended over the Empire and was fitted to the differing conditions of various communities. Also the co-operative idea in Germany was not confined entirely to finan

cial co-operation. There were distributive co-operative societies, dairying cooperative societies, and other kinds. The working classes of Germany found an idea which would aid them in buying, in selling, and in banking. The members in this nation-wide movement felt the need of co-operation among themselves. As a result, provicial organizations were formed to propagate the co-operative idea, to educate the people in the movement, and to act as a general defense association for the entire membership of the co-operative movement. These provincial organizations were in turn combined in national organizations. At first there were two national federations (as they were termed) and these two maintained a separate existence for some years. They even worked at cross purposes in many instances. But the natural similarity of their motives finally lead to a consolidation, and today there is but the one national federation-the National Federation of Darmstadt. In 1889 a law was passed adding to the duties of this national federation the task of inspecting the work of the affiliated societies. national federation has thus come to assume a close relation to all of the affiliated societies. Its enormous membership, embracing over 23,000 co-operative societies, gives an idea of its influence and importance.

Trust Company Growth in Australia

The

Recent reports rendered by the various trustee companies of Australia show marked expansion in business. The Trustees, Executors and Agency Company, Ltd. of Melbourne, the oldest and largest trust company of its kind in Australasia, administers estates which exceed in value £24,000,000. The sixty-ninth half yearly report of the directors, rendered June 30, 1912, shows excellent results.

The Trustees, Executors and Agency Company occupies its own building. R. Murray Smith, C. M. G., vice-president of the Bank of Victoria, Ltd., is chairman of the board of directors, and James Borrowman is general manager. This company was established in 1878, and on June 30, 1912, held £9.457.494 to the credit of estates, trusts and clients. The company has established a splendid record of rendering progress and promptitude in rendering estates and the advantages of trust funds entrusted to its care.

Management of Trust Estates

In a handsomely printed booklet issued by the Union Trust Company of Springfield, Mass., it is clearly demonstrated that at some time or another everyone is confronted with the necessity of availing themselves of the services rendered by trust companies. The author of this booklet states that the tendency all over the country is to place estates, trusts and duties of a fiduciary nature in charge of a competent responsible trust company. This is indicated, for example, by an increase in the trust funds held by the trust department of the Union Trust Company, in two years, from $1,398,971 to $2,568,700.

The booklet also directs attention to the practice among the foremost men of wealth and jurists of the country in appointing trust companies to handle and settle their estates. The reasons why

men of large or small means should make their wills without delaying are forcibly presented.

"Collective" Experience, Ability and

Honesty in Trust Company Service

The Wachovia Bank and Trust Company of Winston-Salem, N. C., issues from time to time instructive trust company literature, which contains valuable suggestions and brings out features of advantage in trust company work, which are often overlooked. In a folder, recently distributed by this company, there appears the following on "trust company experience:"

"Experience is one of the greatest elements of value in the service of a trust company. The individual trustee may not be called upon to handle more than one estate in his lifetime, but it is the constant business of this company to discharge such duties and responsibilities.

"We invariably retain expert legal talent. This counsel is available to every estate or interest we handle, large or small.

"Necessarily, likewise, we have in our organization men especially expert in the various branches of trust administration, and it is not the experience of one man, but of many. There is such a thing as 'collective' experience, ability and honesty. We have it and we consider it one of our best assets and one of the strongest bids we can make for your business."