New-York tribune., 1903-07-15
A NEW FINANCIAL PLAN.
SENATOR'S CONSIDER 1T.
Ald1ch Opposed, bat allison Is
Friendly to Suggested Bill.
[rRoM rHE TRIBUNE RrREAu. ]

IFRoM THE TRIBUNE BUREAU.l
Washington, July 14-For the purpose Of Civ
ing a proper basis for discussion. the details OF
of the plans of monetary reform considered
by Senator Aldrich and his Republican col
leagues on the Senate Finance Committee at
their recent conference at Hot Springs, Va,
may be stated with authoritative precision. It
may also be said that the plan came to the
committee well recommended, and. although
Senator Aldrich has declared against it as not
an available expedient at this time, he admits
that if it could be established and maintained
without change there would be no objection
to it. Senator Allison, of the committee. is de-
cidedly more friendly toward the plan than his
associates. Representative Cannon. the Speaker
to be, is against the plan, and has set his
face as hard against it as the fntlike counte
nance he has turned toward the Aldrich bill of
last session.
1t will readily be seen. then, that, although
the expedient has substantial expert back
ing, its chances are not too bright bv reason
of the lack Of support OF Senator Aldrich,
chairman of the Senate Finance Committee. and
the decided opposition of Mr.. Cannon. who has
asserted himself positively against any form
of legislative relief to the finances OF the coun-
try.
The plan seems Il simple one 1t is proposed
to authorize the issuance of additional cur
rency" by national banks. up to % per cent of
the amount of their capital on this the govern
ment would place tax Of say, per cent per
annun. Because of this tax, banks would only
call for the additional currency in times of
greatest stringency. That is. interest on loans
would have to be higher than . per cent to in
duce bank to go 10 the expense of issuing ad-
dtional currency. The instant interest rates
dropped below per cent. this currency would
retire automatically.
will thus he seer. thar the sucresS or failure
of the plan depends upon the fixing of the tax.
Those who advocate the plan, and have made
this a point of special study. say that D per
cent should be the rate. When interest is high
er than that, the country needs more circulation.
When it is less than . per cent. contraction of
the circulation would be beneficial
The maximum amount of additional currency
that would be made available under the plan
would be $200O00,000, that is % per
cent OF the aggregate capitalization of the ma
tionaf banks of the country. This sum. it is be-
lieved, would meet any emergency that might
arise under any financial contingency. Banks
avaiIng themselves of this additional circula-
tion would not be required to put up any addi-
tional security for the The security for
these notes, which is considered ample, would
be, first the bank itself; second the fund
created in the Treasury of the United States by
the accumulation of the per cent tax. Experts
say this in itself would be more than ample as
a n insurance FCinst the failure of any national
bank having this additional currency in circula-
ton. The government would be assuming no
risk, for the tax would be more than enough TO
support its guarantee.
In order that there might be no delay in meet
ing any hurried demand for currency, the Treas
ury would have the notes printed and ready FOR
delivery. Likewise. in order that there might
nlt be delay in the retirement of the currency
provision would be made that bank desiring to
retire the same instantly would not be re-
quired TO retire the precise notes. but could de-
posit other currency with the Treasurv ana
have the tax stopped. This would as efeCtuaIly
contract the currency as though the ldentlc2l
notes were retired, ami they came in they
would he exchanged for the money deposited
and the notes destroyed. Should bank appIy
for additional currency in times OF low interest,"
rates it would naturally be taken to indicate
that that particular bank was IN trouble ana
the Secretary of the Treasury could at once dl-
re t an examination OF it's affairs by the Coh-
senator Aldrich's opposition to this plan is
understood to lie in the fear that when IL hao
been put in operation the next natural moVS
would ba to reduce the amount of the tax, an0
consequently the incentive to retire the auol,
tional circulation when it was not neeoed "oulo
Mr. Cannon's opposition to the plan is under
stood 70 be his belief that the country is not IN
need of financial legislation of any kind he
takes the ground that the West ana the coutH
are not in need of relief, either now or at the
crop moving period. Those VINO observe inter .,,
est rates however, predict that the coming ran
will be no different from the past ana that "hel
the Western and Southern banks nave drawn
their balances from the Eastern money centres
there will still be a demand for money thaL VIII
send the interest rate soaring When the west
and the South have used the limit OF their sup
ply ii will be the East that will be called on 70
furnish the balance, and the East W-ll demand
the usual runous interest. II is polntec OUT lldt
perhaps Mr.. Cannon's constituents viii see thal
the Eastern financial institutions are the ones
which invariably make money out or such nlah-
cial suueeZes that the Western an southern
farmer is the one who pays for the squeeze, ana
| that the demand will be so insistenI for sane
measure of relief that the Illinois statesman
| NAV be brought to revise his declarations OF
! opposition In any event, the demands OF the
country are believed to be such that the subject
! deserves the earnest consideration of the people
/ and the legislators.