The Montgomery advertiser., 1908-02-21
Senator Johnston s Speech
 on Aidrich Currency Bill.


 have heard of man who favored law but were opposed to It's enforce to' favor the law but ia opposed to its reasons why banks should be required tS tSs ipysst ps,s 1 iR % the bonds msnticRed ,, in for some logical and apt statuatory expression of the argument do not ind 2 single line or sentence of finish
 I shall sttempt to show that if the Senator is eorect In his premises, there should be some conclusion en-
 The Senator says these securities; the bonds mentioned in the Act, would form 8 part of the banks best assets and would constftute from every bank ment;" that upon demand for ad- dltiona1 notes the bank could obtain for every s10o.ooo, invested in bonds, ask 5 if it would De hardship. upon the banks to requtfe them. If they de- sired to avail themselves of the privi-
 o tsd sx S aass tg Of nsea se curities as part Of their assets.
 My amendment does not go SO far as that. II puts 10 hardships upon any bank. because they are at liberty to keep the ten. per cent of their deposits either wholly in money. or part in money and not more than half in these bonds.
 The Senator proceeds to say eths Congress in my judgment. might properly in the wise exercise of it's. supervisory control over the invesrment of National Banks. require these in- assets in these bonds without refer ence to their use as security for pos sible note issues on United States de- be in the interest alike of the public and of stockholders" The Senator seems to think this would be d wise and prudent thing to do. as 1t would be profession. to both the public and The next position taken by the sena- tor is stfIl forward He says there Is no rule of sound banking more in- tfcn of which is productive of more disastrous results, than that which re- qufres a bank to hold . portion of its assets in; first class copyerttbie securf- ties. payihg a reasonable income, and readily Convertible into money. anu that neatly all the destructive bank failures in our own and other coun- tries can be traced directly to viola
 Further on growing more and more earnest and convincing, he says "ehe National Banks of the country hold reserves and specie and legal tender per cent of their demand obligations" and that ''commcn prudence requires that this should be ssupplemented by class securities." The evidence, he says, Is, overwhelming that prudent bank rnanagers everywhere invest a considerable portion Of their assets in securities of the class designated in the
 Argmmemt Summarized.
 Now, conceding the argument of the Senator to be sound on this question. 1t may be summarized hrfeflyl thus:l
 q lro Nsa A ht would form a part 'ofsthe tbanks' best assets. and from every banking stand point would constitute . judicious i'm vestment.ss
 2. That it would be no hardship on the banks to require them to fhoid to limited extent these bonds as a part of their assets,
 g.. That Congress fin the wise exer- else of It's supervisory, control over the investment of National Banks, might properly require them to invest Q por- ton of their Assets in these bonds security for possible note issues or to cover United States deposits
 {. That this requirement would be in the interest of the public and Of
 5. That the failure to Invest por-a tlon of their assets in such securities violates an inexorable rule. the viola ton a., of which IS most disastrous in It's nearly ali the destructive bank failures in our own and other countries.
 6. That common prudence requires plemented by q substantial invested re- serve in first class securities, such Ss those named in the bill.
 .. That the evidence is Overwhelm- ing that prudent bank managers every where Invest considerable portion of their assets in securities of the class designated insthe btll.
 Now 1t seems to me. Mir. President, that the Congress has the super sissfr over over investments of Ma ff3r4} Anlks, which seems not oc pe ag.estic .d; if prudent bank managers ayl, -e always do this: if the fail ,sSe 70 sa this causes nearly all the ttEa.tras bank failures tn- our own .,l ps countries; if this requirement.
 onsc n the interest Of the public
 stoci 0lders alike; if these bonds
 7aid t7 I part of the banks best l -, and 1t would be no hardship on Che banks to require this of them; if all this cornicopia of good. wise and gress to the banks with benefit to the public and security to the baulks. why is no provision found in the bill to carry them Into effect?
 amehdment am agreeing with the distinguished Senator in much that he says as to the prudence and wisdom of this investment. and yet the amend ment I propose does not so as far as his argument legitimately carries the Senator. He wake up to the river. says that 1t is much safer for hsmeelf and the public to be on the other side, that the passage is free from obstruc- tion or danger has been often made and always with safety, that 1t Is perilous to remain on the bank he oc- cupied. and yet he refuses to step Into the stream and wade across to security and repose. My amendment requires National Banks, all National Banks, where reserve or not. to keep in their vaults. two-thirds of their reserves either in specie or legal tender. or one half of that two-thtrds in money and the other half in the very bonds that the Senator says will constitute the best assets of the bank. It is the first step in a program go heartily com.