The Birmingham age-herald., 1908-01-20
Guaranteed Credit Notes Arc
 Basis for Bankers Plan
DAILY REDEMPTION CITIES
American Bankers Association Make Out Scheme for Financial Relief, and Unite in Conforming
 Aldrich Bill.

Aldrich Bill.
 Chicago, January 19-(Special.) .)-An as- set currency bill will be the result of the labor of the members of the currency commission of the American Bankers as- sociation that are gathered here The subcommittee named for that purpose were yesterday at work upon state ment to the public that will set forth the features of the measure they pro- pose and it was given out today
 The main features for the proposed as- set currency bill are taken from the pre- vious recommendations of the association and the old Fowler bill They are:
 National banks having surplus funds equalling fourth of their capital stock and which have been in business for a. year may issue currency known as guar anteed credit notes.
 These notes shall not exceed 40 per cent of the national bank notes any in- stitution may have outstanding. There shall be levied upon the average number of such notes in circulation a tax of 11a per cent. semi-annually, payable in Jan uary and July.
 In addition to the notes paying the 3 per cent annual tax banks shall be per- mitted to take out credit notes to the extent of 12h per cent of their capitals, but shall be taxed 21s per cent semi annually-5 per cent a year-for so do- ing.
 All taxes from the credit notes shall be used for guarantee fund to redeem notes of failed national banks and must be paid in gold.
 The guarantee fund will be started with a deposit of ' per cent of the amount of notes taken out to be returned as the fund accumulates. The total of all notes issued by any bank including the credit notes shall not exceed it's paid up cap- ital stock.
 Redemption Cities. Conveniently located cities shall become cities of daily redemption, where the credit notes are to be taken up and all such notes should be under the comp troller of the currency.
 The statement of the bankers besides condemning the Aldrich bill, will de- clare against the new Fowler bill, their objections being specifically to the pro- vision that the government shall guar antee the deposits of national banks. Ap- parently not one of the men who are in- terested is willing to submit to scrutiny that would enable the government to make such a guarantee.
 The details of the bill and the state ment that is to be made public were drafted yesterday by a subcommittee composed Of Joseph T. Taipert. vice pres ident of the Commercial National bank; Sol Wexler the New Orleans banker, and Myron T. Herrick, former governor of Ohio, and a Cleveland banker. The work of the subcommittee, how ever. was merely to formulate the ideas of the full membership of the currency commission which were threshed out and agreed upon at the long forenoon ses- sion.
 The commission is not to undertake the task of drafting bill The report will get to Congress through various senators and representatives and to experts will be left the drawing up of the measure.
 Objections Urged.
 Six principal objections are urged against the Aldrich bill. The first asserts
 
 tenn of note issues which has been enjoyed since the foundation of the United States monetary system" and the proposed law is called Ia step backwards to the condi- ton which gave rise to the wild cat cur rency before the civil war
 Tt may be the entering wedge to the ac- ceptance of undesirable bonds as security for note issues, says the commission. ..'There are recent examples in the laws of New York state legalizing such bonds for savings banks"
 In the second place it is urged that the bill would cripple the lending power or banks by largely decreasing the bank re- serves in lawful money in order that notes might be issued.
 If the bonds behind these notes were borrowed instead of purchased 1t would have the effect of increasing the labili- ties of the banks" adds the report, (which is wrong in principle
 In the third place, it is said that the bill would tend to create fictitious bond market and thus lead municipalities to enlarge their obligations.
 The fourth objection is that the tech- nical requirements which the bill provides must be observed before notes can be is sued would entail 'such delays as to make the notes available only after the emer- gency had passed"
 The fifth objection has to do with the taxing provisions of the Aldrich bili These sections, it is declared. would re- suit in the banks suffering net loss of per cent on the notes issued whether they were taken out against purchased or borrowed bonds.
 The sixth objection asserts that the cost of taking out the notes would be paid ultimately by the needy borrower who would be burdened by increased interest charges at time of year, usually in the autumn, when he can i'll afford them.
 Situation Summed Up.
 After some general criticism of the Fow- Ter bill. the commission sums mp the situa- ton as follows:
 "Let us not be unmindful of the fact that in response to the demands of the people, unsound and radical legislation has had its precedents in our monetary history. After the panic of 1873. Congress passed bill increasing greenbacks by $44 00O, 900, propect which was wisely ve- toed by President Grant. After the panic of 1893, Congress approved measure pro- viding for the coinage of $55. 900 in sil- yer which was vetoed by President Cleve- land. In these two instances. we have had examples of nasty measures following financial panics. and in the two bills herein discussed we have what appears tc
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