"Neither can they by legislation compel the corporation to discharge its obligations in respect to the subsidy bonds otherwise than according to the terms of the contract already made in that connection." Chief Justice Wait stated further: "That this power has a limit, no one can doubt. All agree that it cannot be used to take away property already acquired under the operation of the charter, or to deprive the corporation of the fruits actually reduced to possession of contracts lawfully made; * * * "" "Giving full effect to the principles which have thus been authoritatively stated, we think it safe to say, that whatever rules Congress might have prescribed in the original charter for the government of the corporation in the administration of its affairs, it retained the power to establish by amendment. In so doing it cannot undo what has already been done, and it cannot unmake contracts that have already been made, but it may provide for what shall be done in the future, and may direct what preparation shall be made for the due performance of contracts already entered into. It might originally have prohibited the borrowing of money on mortgage, or it might have said that no bonded debt should be created without ample provision by sinking fund to meet it at maturity. Not having done so at first, it cannot now by direct legislation vacate mortgages already made under the powers originally granted, nor release debts already contracted * * The principle that one who is under contract to pay in a certain way may not elect, without agreement by the one who is to receive, to pay in any other way than is expressed and provided in the contract has been supported by the courts. In Julliard v. Greenman (110 U.S. 421, 4 S.St. 122) the court held that the principle is as set forth by Daniel on Negotiable Instruments, vol. 2, page 1405: "The party bound to make the payment has no right to do so in any other medium than that expressed in the face of the instrument-that is, he must make payment in money." It is clear from the foregoing that the home owners and the holders of mortgages may not be compelled to exchange mortgages for bonds, as provided in the Home Owners' Loan Act. LETTER FROM HENRY WOODHOUSE TO NEW YORK TIMES REGARDING CURRENCY EMERGENCY To the Editor of the New York Times: APRIL 11, 1933. Your editorial entitled "More Currency ", in the Times of April 11, emphasizes a phenomena which is one of the most difficult problems facing the nations. Sudden demands for currency have descended upon nations very much like tornadoes, sweeping them with disastrous effect. But when the panic subsided it was found that the demand for currency had really been so small that it did not appear possible that the panic could have taken place. I happened to be at the United States Treasury this morning, and one of the officials who had read the Times' editorial said: "When we read in cold type the figures of the smallness of the demand for new currency it certainly does not seem true that a month ago the banks of the Nation were all closed, and we dared not open them in fear that they would require more currency than we could supply." That led to a discussion of whether the public had hoarded currency. We have put the public on trial a number of times since the banking holiday, but lack of final statistics had made it advisable to suspend judgment. The statistics are now sufficient to meet the requirements for a fair trial. Then, let us try the American public on the charge of having hoarded currency. Counsel for the defense can demolish the charge by submitting evidence that 1. There were upwards of 19,000 banks and about 2,000 other financial institutions in the United States operating before the "holiday." 2. They had deposits aggregating upwards of $45,000,000,000, belonging to 30,000,000 depositors. 3. Among those depositors there were about 2,000,000 business establishments, large and small. 4. Had the 30,000,000 depositors only withdrawn the reasonable sum of $200 per capita, they would have required $6,000,000,000. The sum of $200 per capita would hardly have been evidence of hoarding. 5. Had the 2,000,000 business establishments withdrawn only $2,000 each, it would have required $4,000,000,000. 6. Had the foregoing reasonable withdrawals been made, it would have required $10,000,000,000 in currency over and above the usual amount in circulation, which does not figure in the bank deposits, as given above. 7. Had that $10,000,000,000 of additional currency been withdrawn, the ratio of currency to bank deposits would still have been much lower than the French ratio, and the ratio of many other countries, where checks are not used as extensively as in the United States in place of the currency in daily transactions. 8. Had the said $10,000,000,000 of additional currency been withdrawn, it would have exceeded the estimated capacity of the Federal Reserve System, which has been variously stated to be up to $5,000,000,000 for sudden demands and twice that much if sufficient notice is given. 9. But the American public and the business establishments did not even withdraw $50 per capita for the 28,000,000 depositors and $500 for each business establishment. 10. Collectively the 28,000,000 individual depositors and 2,000,000 business establishments did not withdraw $2,000,000,000 in currency above the January average, which was $5,645,000,000 in circulation. 11. The average currency in circulation in February, 1932, had been $5,605,000,000. That was within a hundred million dollars or so of the average currency in circulation in the year 1932. The highest circulation in 1932 had been $5,798,000,000 in July. The lowest had been $5,497,000,000 in April 1932. After examining all the evidence the jury would find the American public not guilty of the charge of hoarding currency. That being the case, what did happen to the Nation that necessitated closing all the banks? What kind of tornado was it that struck the State of Michigan first, resulting in the moratorium being declared on February 14, then swept over the Nation, in all directions, closing banks as it went, until the national holiday was declared, on March 6th, which completed the epidemical job, leaving not a place that might be called a "financial establishment" open for business? When that happened I was told that I had prophecied that in my letter to the New York Times for October 7, 1931, entitled "Credit and Currency." In that letter I pointed out that "England's crisis revealed that all its credit could not save it from disaster when calls for gold currency came faster than it could convert its vast assets-a lesson that should be heeded by this country." If that is found to be the answer, it will be well to consider how another "holiday" may be prevented. HENRY WOODHOUSE, Chairman of National Advisory Council. HOW MANY BANKS DO THE UNITED STATES NEED? (By Henry Woodhouse) An important question that has escaped consideration heretofore, but should be considered in connection with legislation that provides for new banks or bank regulations and financial safety of the Nation is: How many banks do the United States need for the normal flow of industry, and to meet the social and economic requirements? With 48 States, 3,072 counties, and 16,698 municipalities, the question must be considered geographically as well as from the financial standpoint. It is a well-established principle that banking facilities should meet the convenience of depositors wherever they may be. Else they will require and will use more currency, will hold checks and other promises to pay longer, and will retard the flow of credit and currency. In preparing the "Guide to the Emergency and Bank Conservation Act and Regulation," I reviewed prior expressions on the subject, but failed to find 172878-33-7 any comprehensive study. We must, therefore, turn to the statistics themselves to find the extent of the banking facilities of the recent past. The following table affords the basis for a study: 1 All banks in the United States; includes national banks, State commercial banks and trust companies, mutual and stock savings banks, and all private banks under State supervision. |