Besides the disadvantages mentioned above, the national bank note system has this objection - that it failed to provide for an emergency circulation. This defect was seriously realized in the panic of 1907, and in 1908 the Aldrich-Vreeland Act was passed in order to provide a temporary arrangement for needed emergency

Table Showing the Relative Volumes, Rates of Growth, and Elasticity of the National Bank Notes and the Deposits of National Banks (In Millions)

Call

Individual Deposits

National Bank Notes Outstanding

Call

Individual Deposits

National Bank Notes Outstanding

1903

1912

2/6

$3,159.5

$335.2

2/20

$ 5,630.6

$ 704.2

4/9

3,168.3

358.1

4/18

5,712.1

707.0

6/9

3,201.0

359.3

6/14

5,825.5

703.7

9/9

3,156.3

375.0

9/4

5,891.7

713.8

11/17

3,176.8

376.2

11/26

5,944.6

721.5

1904

1913

1/22

3,300.6

381.0

2/4

5,985.4

717.5

3/28

3,254.5

385.9

4/4

5,968.8

719.0

6/9

3,312.4

399.6

6/4

5,953.5

722.1

9/6

3,458.2

411.2

8/9

5,761.3

724.5

11/10

3,707.7

419.1

10/21

6,051.6

727.0

1905

1914

1/11

3,612.5

424.3

1/13

6,072.0

725.3

3/14

3,777.5

431.0

3/4

6,111.3

720.6

5/29

3,783.7

445.5

6/30

6,268.6

722.5

8/25

3,820.7

469.0

9/12

6,139.0

918.2

11/9

3,989.5

485.5

10/31

6,078.8

1,018.1

12/31

6,346.3

848.8

1906

1/29

4,088.4

498.2

1915

4/6

3,978.5

505.5

1/4

6,348.8

746.5

6/18

4,055.6

510.9

5/1

6,661.5

727.7

9/4

4,199.3

518.0

6/23

6,611.2

722.7

11/12

4,289.8

537.0

9/2

6,762.1

718.4

11/10

7,386.1

713.4

1907

12/31

7,641.2

713.3

1/26

4,II5.6

545.5

3/22

4,269.5

543.3

1916

5/20

4,322.9

547.9

3/7

7,716.3

695.8

8/22

4,3I9.0

551.9

5/1

8,135.9

682.2

12/3

4,176.7

601.8

6/30

8,142.9

676.1

9/12

8,4455

674.1

1908

11/17

9,139.1

665.2

2/14

4,105.8

627.6

12/27

9,003.0

666.4

5/14

4,312.7

614.I

77/15

4.374.6

6l3.7

1917

9/23

4,548.1

613.7

3/5

9,273.8

661.1

11/27

4.720.3

599.3

5/1

9,696.4

656.1

6/20

9,521.6

660.4

1909

9/11

9.975.3

665.6

2/5

4.6997

615.3

11/20

10,338.8

669.7

4/28

4,826.1

636.4

11/31

10,734.6

674.3

6/30

4,898.6

631.3

9/1

5,009.9

658.0

1918

11/16

5,120.4

668.4

3/4

10,454.8

672.2

5/10

10,437.4

680.4 681.6

1910

6/29

10,181.7

1/3I

5,190.8

667.5

8/31

10,493.2

674.2

3/29

5.227.9

669.2

11/1

11,013.3

675.5

6/30

5,287.2

675.6

12/31

11,934.4

676.8

9/1

5,145.7

674.8

11/10

5,304.8

680.4

1919

3/4

11,211.0

673.9

1911

5/12

11,832.7

676.9

1/7

5,113.2

684.1

6/30

11.891.1

677.2

3/7

5,304.6

680.7

9/12

12,672.5

681.6

6/7

5,478.0

681.7

9/1

5,490.0

697.0

12/5

5,536.0

702.6

circulation until a new banking system could be devised. The nature of this act and the use made of it in 1914-1915 have been already described.

A final disadvantage of the national bank note system arose from the fact that difficulty was always experienced in getting a uniform development of the national banks as among the states and, therefore, in satisfying the needs of the various sections of the country for bank notes. The Act of 1865 apportioned the notes on the basis of population, banking capital, and resources and business of the states. In 1870 the same provisions were made for the apportionment of the increase of $54,000,000 circulation. This act went further, however, and provided for the reduction of bank notes of banks in those states which had a circulation in excess of their due proportion according to the new census, the reduction beginning with the larger banks in such states. The total reduction was limited to $25,000,000, and the circulation thus withdrawn was to be apportioned among banks in those states which had less than their due proportion. Of this reapportioned circulation the banks in the older sections of the country got more than those in the newer sections in the South and West, although the need in the newer sections was probably greater, since these sections were agricultural, more sparsely settled - and therefore less fitted for deposit currency - and had fewer banks. The newer sections, moreover, did not take full advantage of their opportunity to get additional circulation as provided by the Act of 1870.

This whole scheme of equalization was set aside by the Act of 1875, which allowed banks to issue notes to any amount, subject to the general provision governing the purchase and deposit of bonds. The result has been that national banks, because of limitations on capitalization, loans on real estate, etc., have been less able to extend into and adapt themselves to new and agricultural country than have state banks, and therefore these areas have been made dependent upon deposit currency. This disadvantage, however, was somewhat alleviated by the Act of 1900, and now a goodly fraction of the national bank notes are issued by country banks.