The Savannah morning news. (Savannah, Ga.) 1900-current, 1903-02-14
ALDRlCH'S BILL
HELPS FINANCES.
The Existing Law Is Largely RE
sPOnsible For Currency Famines
and the New Bill Will Mean
More Appeals From
WALL

who are interested in providing for
such emergencies as may arise in the
financial affairs of the government.
has drafted a bill which he hopes to
have enacted into law before the pres
ent session closes. There is to be a
race between what is known as the
Fowler asset banking bill. in the
House. and the Aldrich emergency bill
in the Senate. The chances seem to be
in favor of the Aldrich bill, as impor-
tant financial legislation is usually
shaped after the senatorial pattern.
The Fowler bill has been published be-
fore.
The Aldrich bill provides that the
Secretary of the Treasury shall be
empowered to deposit. at one and one
half per cent. interest, the revenue
of the government as he may see fit
with the various national banking as
sociations that are qualified to act as
repositories of public money, accept
ing as security for the safe keeping of
the money thus deposited, state, mum
icipal and railroad bonds.
The municipal bonds accepted must
be those of city which has been in
existence for a period of twenty-five
years, which for ten years past has
not defaulted in the payment of any
debt contracted by it, which has more
than $4,000 inha bitants, and whose net
Indebtedness does not exceed 10 per
cent. of the valuation of its taxable
property. The railroad bonds must be
the first mortgage bonds of railroad
,a-Hi Maid diTidpndS
of not less than four per cent. per an
mum upon their entire capital stock
for a period of not less than ten
years previous TO the deposit of the
bonds.
The bill gives the Secretary the pow
er to withdraw public money from any
bank, at any time, and to require any
bank TO increase the quantity of the
securities deposited by it as collateral
or TO alter their character.
One of the chief features of this bill
is contained in the provision that the
Secretary may deposit public money
received from all sources" Under the
present system the money realized from
internal revenue collections may be
placed in the national banks, up to the
limit of the banks to give security
therefor. but the receipts from customs
must be deposited in the treasury
by financiers who have given close
study to the situation that the con-
gestion of money in the treasury, due to
this provision in the existing law, is
largely responsible for currency fam
ines.
Another important provision of the
Aldrich bill is contained in the follow
ing section, which is an amendment of
Section 3 of the banking act of June,
1874:
The Secretary of the Treasury may.
in his discretion, retain. in the general
fund of the treasury. national bank
notes received in the ordinary course
of business. or presented for redemp-
ton, and pay out such of them as may
be for circulation for any of the obli
cations of the government. excepting
only the principal and interest of the
public debt.
This provision, it is explained, places
national bank notes in the treasury, on
a footing with greenbacks. Instead of
having to forward these to the banks of
issue, for redemption. as is now re-
qured. the Secretary is authorized to
pay them out in the ordinary course of
business. About 16.000.000 of these
notes are now on hand. and in case of
dearth of currency the disbursement of
these would. it is claimed, contribute
toward relief. 1t is claimed that the
exclusion of bank notes from the cate
CORY of lawful money is fanciful,
since these rest on the credit of the
government as clearly as do the legal
tenders.
No More Appeals.
Sena tor Aldrich believes that if the
Secretary of the Treasury is given the
power specified by his bill, We will
hear nothing of those frequent appeals
for the government to come to the
relief of Wall street" There will be
no tempta ton for the Secretary of the
Treasury because he will have no. such
power, to take steps of doubtful wis
dom, if not doubtful legality, to stave
off what~ he may conceive to be a
financial crisis.
A high official of the Treasury De-
partment. in explaining the scope of
this Aldrich bill, points out that one
of the most important provisions. is
that providing an interest charge of
not less than IL per cent, which banks
must pay for government money on
deposit with them. There is now de-
posted with the banks upwards of
S142. 900 600 of government money, up
or which nothing is realized for the
government, nor can be realized un-
der the existing law. While the gov
eminent has to pay interest upon all
its bonded indebtedness, ii has been
paid no interest upon money placed
with the banks and which, from the
standpoint of government interest
alone should be applied to paying off
the debt, thus saving the interest on
that portion The Aldrich bill fixes a
minimum rate which banks must pay
the government for the use of money
deposited with them, but it is thought
not improbable that this rate would at
times reach 2 per cent.
From the standpoint of the govern
ment there has, speaking in a strictly
business sense, been little warrant or
justification in placing its funds in the
government repositories, when no in
terest was received thereon. 1t is the
idea of the treasury officials that with
these deposits bearing interest, and
with the authority to deposit custom
receipts with the banks, the govern
ment will be more fully justified in
maintaining large bank balances when
the condition of the money market re-
qures such balances. The necessity,
or rather the practice, OF the govern
ment going into the market and max
ing large purchases of government
bonds each year, in order to furnish
currency to the country, would be done
away with.
The high cost and growing scarcity
of government bonds, upon which alone
the national bank circulation is based,
make some change in the present sys-
tenn necessary. There are some emil
nent financiers who hold there should
be a complete making over of our sys-
tenn, but it is manifestly Impossible
n ,,udartaxa suob a scheme at this