Los Angeles herald., 1908-01-09
HOUSE PLANS
BETTER LA WIS
FOR BANKERS
CURRENCY TO BE BASED UPON
GENERAL ASSETS
ALL PRESENT NOTES MAY BE
RETIRED
Chairman Fowler Of Committee WIN
Introduce Bill Which Is to
Be Used for Working
Basis

BY Associated Press
WASHINGTON, Jan. s.-The sub-com-
unittee of the house committee on oanAl,s
ana currency to which was intrustea the
framing OF a bill to increase the eias.le-
ity of the currency reported a conelus SION
today and will report fully 10 the ~
committed a bill drawn IN the main W
cshsirman Fowler OF the committed.
The Bill will be introduced by Mr. tow-
lar and referred 20 his committee. Where
it will form the working basis LOT tne
framing of a bill Of possibly the sane
scope and tenor.
The bill provides for the complete re
tirement Of all present outstanding "a
tianal bank bond secured currency ana
s,,tborfzes in lieu thereof a currency
baesd upon general assets of the banks
to he worked out in this way: The comp
troller Of the currency VIII deslshu'e
throughout the country certain reoeHp-
ton cities. so that there shall pc r.
denption city within at least twenty-iouI
hours reach of each national bahA- Ihs
national bank will indicate TO the comp
troller of the currency to what feueinp-
ton city they wish to be joined
To Organize Districts
The comptroller W.. then select a time
and place within each redemption us
trict for the organization OF that district
Each national bank in that district re-
eardless of its capital stocks, will be en-
titled to one vote. Representatives OF ing
hanks viii meet at time and place des-
ignated and elect a board OF managers 10
consist of seven members. Inc SEVEN
VIII elect a chairman. who VIII pecohis
4 aaputy comptroller of the currency ana
sasume control OF his redemption dis
trist except that he shall not have charge
~ the enforcement of the criminal stat
utes.
zach national bank is authorized to pre-
sent TO the secretary of the treasury ma
tioaal bank notes and lawful moneys IN
lieu of other national bank bonds secured
bv outstanding notes. Then if the bank 5
application therefor is Endorsed by me
board OF managers of the redemption dis-
trict TO which it belongs, the bank VIII
receive guaranteed credit not to exceed
the amount OF its capital stock. Iheif
notes will be subject to a tax OF per
cent per annum.
Each bank will be required to deposit
as guarantee fund with the treasurer
of the United States per cent OF It's
average deposits for the preceding twelve
months and per cent of the credit notes
which IL takes out. The revenue thus OBJ
tanned is to create and support national
guaranty fund of $4,000 for the guaranty
OF both the deposits and the outstanding
banknotes of every national bank.
Invest In Bonds
Eighty per cent of this fund is to be
invested in United States bonds drawing
2 Der cent interest while the remaining
% per cent is TO be deposited in banks
of the various redemption cities for the
purpose of redeeming the guaranteed
credit notes of she banks OF the various
redemption districts.
When the national guaranty fund
reaches SIS 900, 600, which would be almost
simultaneously with the birth of the new
Law. the government Is required TO return
TO the banks the United States bonds
which the government now holds as Sc
curity for federal deposits, the object
being to enable the banks TO get control
of the bonds. so that the government may
invest the 50 per cent OF the guaranty
fund in per cent bonds and regain con-
troll In buying those bonds the banks
holding them shall be paid their original
purchase price. providing their exact pur-
chase price can be proven.
II Is Mr.. Fowlers idea, as embodied in
the bill, to have the new credit notes
printed on a green background, In differ
entatien from the yellow background of
the gold notes and white background OF
the silver certificates.
Mr.. Fowler, chairman of the committee
on banking and currency, today made the
following statement regarding the finan-
cial situation;
I'VE are today with regard to our finan-
cial and currency practices where we
ware in 1896 with regard to the standard
of values, and to decide now to make all
kinds OF bonds the basis of currency
would be just as serious and fatal a mis-
take as to have adopted silver then as our
standard OF value.
Time Is Ripe, Says Fowler
THE time is ripe, the circumstances
are suspicious, and careful investiga-
ton OF all the facts and conditions JUS
tifies the conclusion that congress can
and should legislate so as to bring about
these results:
.'rirst-A uniform banking system.
"Second-Uniform bank reserves consist
ing of gold issue or it's equivalent.
'Third--A simple and scientific monetary
system consisting of only three forms of
currency: Gold for our bank reserves,
bank credit notes redeemable ia gold for
the large bills. and silver for the smaller
bills and subsidiary coins.
"Fourth--A currency automatically adj
iueting itself TO the days of trade; never
too great. never too small, but always
Just adequate to our requirements.
"Fifth-Equal and absolute protection to
all depositors In national banks by plae-
ing Ia the United -.ates treasury a guar
anty fund which by January, 1909. ought
to approximate s700.oo0,o00.
''sixth--The establishment of certain
rules and regulations whereby the hnan-
cial operations of the treasury shall be
so conducted that the government will
cease to be a disturbing factor in our
trade and commerce
At the conclusion Of the reading. which
consumed two hours and fifteen minutes,
the bin was laid aside.