The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1908-03-03
ALDRICH BILL FACES
DEFEAT IN SENATE
Continued from Page one.


tain the value of the railroad securities,
and that there was no appropriation for
employing such force.
''Then the responsibility for the derelic-
ton is not with those who framed the bill.
but with Congress. which has not given
an appropriation for force to make the
Valuations suggested MIR. Aldrlch.
THAT is so replied Mr. Smith
Continuing. Mr. Smith said the govern
ment, by accepting railroad securities
for currency purposes. might be put to
the necessity Of foreclosing upon the rail
roads and OF operating the property. and
thus the first step IN the direction OF
government ownership would be taken
Used as Advertisement.
He read from a circular advertising a
certain line OF railroad securities for sale.
and inviting attention 10 the fact that
the value Of the securities would be in
creased by the fact that they would be
available as basis for government note
issues. Il believe that the whole pur-
pose Of this feature OF the bill is te
create a new market for railroad bonds. %
he declared. There is not a railroad in
my State OF Michigan that has paid {
per cent dividends on its stock in the last
five years. To declare that only such
roads as have not passed a dividend OF 1
per cent within FIVE years shall be &C
cepted as security for circulation Is 20
publicly characterize those other securi-
ties as worthless"
Mr.. Aldrich followed Mr.. Smith with
a statement that he would not attempt
at this time 10 explain the railroad bond
feature, as IL had been passed over at
his suggestion. and there We're several
amendments Yet 10 be presented
He Went on 20 say that the frst-mort-
gage bonds embraced within the bill were
accepted as hrst-class security by saw
ings banks and by the best banks OF the
country. He Gisclaimed any intention on
the part OF the Finance Committee 10
enhance the value OF any particular class
of securities We did not inquire into
the effect Of this bin upon any railroad
CT the owners OF its Stock he de-
elared.
Mr.. Smith Interrupted 10 say that the
purpose Of the bin was apparent on its
face. II Is 60 enhance the value Of these
railroad securities. The panic is past,
money IS being withdrawn without Great
ing alarm. and the bank reserves are in
good condition. 50 the only reason al
this time FOR passing this bin is 10 slim
ulate the value OF these securities.
How Government Is Secured.
we are not passing this bill because
there is a panic at present. but 10 be
ready when the emergency comes. re-
piled Mr.. Aldrieh
Mr.. Beverage. Of Indiana, inquired as
10 the safety OF the securities. Mr.. AID
rich insisted that the government was
secured. II had first the railroad securi-
ties II the bank failed 10 redeem the
notes, then the Secretary could sell the
bonds In the open market then proceed
against the bank, with a prior lien upon
its assets. with the shareholders of the
bank personally liable 10 100 per cent of
their stock. Does the Senator now doubt
tie safety Of the security" asked Mr..
Aldrich.
Mr. Smith insisted that the government
might find itself involved in litigation
as a mortgage under conditions such
as those which surrounded the Mercantile
National Bank.
BeveridGe with smith.
Mr.. Beverage insisted that the govern
ment might Ind itself Joined as a party
in litigation over railroad securities, held
as a basis 81 circulation, in case OF the
failure OF the bank or railroad. Mr.. Al
drich admitted that such was the case.
rs it not true that such thing mint
occur now under the present practice of
accepting railroad bonds as security for
national bank deposits?" inquired Mr..
Bailey.
1T is true. and the Secretary has not
the authority. as given under this bill. 10
sell the bonds in the open market" re-
piled Mr.. Aldrich.
VIII the Senator from Rhode Island
and his colleague from Michigan. Mr..
Smith, not Join me in putting an end 10
this action of the Secretary in accepting
this class of railroad securities for bank
deposits. which I hold is Unlawful?" said
Mr.. Beveridgc.
Undoubtedly Congress should settle
the matter now whether railroad securi-
ties shall be accepted by the govern
ment." replied Mr. Aldrich