Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-01-20
ALDRICH BILL
is NOT SOUND,
SAY BANKERS
COMMITTEE FINDS GOOD IN
FOWLER MEASURE
SIX OBJECTIONS URGED TO SEN.
AToR's PLAN
First Asserts That Safe System of
Note Issues Would Be Over
thrown by the New
Project
By Associated Press.

By Associated Press.
CHICAGO, Jan. 19.-The resolutions
committee of the currency committee
of the American Bankers association
tonight issued a full report of yester-
days meeting of the committee, at
which the various plans now before
congress were discussed. The report
summarizes the commissions objection
to the Aldrich bill and the present
Fowler bill, and then presents bill
in thirteen sections which the COM
mission, with the backing of tho assoc
citation, will recommend to congress.
The Aldrich bill is declared to be
"impracticable, unwise and financially
unsound. The Fowler bill, according
to the report, introduces schemes so
far-reaching in their scope and touch-
ing so many collateral interests not
germane to the real solution of our
currency difficulties that we believe
it's passage would unsettle, rather than
improve, financial conditions"
Objections Urged
Six principal objections arc urged
against the Aldrich bill. The first as
serts the measure would overthrow d
safe system of note Issues which has
been enjoyed since the foundation of
the United States" and the proposed
law is called step backward to the
conditions which saw rise to the Wild
cat currency before the Civil War"
ut may be the entering wedge to the
acceptance of undesirable bonds as Sc
curity for note issues" says the COM
mission. There are recent examples
in the laws of New York state legaiiz-
ing such bonds for savings banks.
In the second place. 1t is urged that
the bill would cripple the lending power
of banks in that it would take from the
bank reserves 100000 in lawful money
in order that notes for $4,000 might be
issued.
''If the bonds behind these notes were
borrowed instead of purchased, II
would have the effect OF increasing the
liabilities of the banks" adds the re-
port, (which is wrong in principle"
In the third place 1t is said the bill
would tend to create a fictitious bond
market and thus lead municipalities to
enlarge their obligations.
The fourth objection is that the tech
meal requirements which the bill pro-
vides must be observed before notes
con be issued, would entail such delays
as to make the notes available only
after the emergency had passed"
The fifth objection has to do with the
taxing provisions of the Aldrich bill.
These sections, it is declared, would
result in the banks suffering a net
loss of per cent ON the notes issued,
whether they were taken out against
purchased or borrowed bonds.
Cost Too Great
The sixth objection asserts that the
cost of taking out the notes would be
paid ultimately by the needy borrow
ers, who would be burdened by in
increased interest charges at a time of
the year, usually in the autumn, when
he can i'll afford them.
The solution proposed by the commits
sion differs from the first Fowler bill,
which was based upon principles APP
proved by the convention of the Ameri-
can Bankers association at Atlantic
City on September %, 1907, in that the
holder of credit note, instead or be-
ing a general creditor, shall have a
prior lien on the assets of the issuing
bank"
The security provided by pladginE
the whole of the assets of a bank IN
stead of only a portion of them would
afford more desirable protection to the
note holder. 1t is also said that the
adoption of the plan would insure "ar
ample supply of currency to the pub
lie, relief from disturbed commercial
conditions, such as these through
which we recently passed, and, finally
the retirement of the notes when they
have fulfilled their purpose"
The bill favored by the commission
provides: "Any national banking asso'
citation which has been in business fol
ono year and has surplus fund equa
to 20 per cent of its capital may take
out for issue and circulation nationa
bank notes without a deposit of United
| States bonds, as now provided by law
Said notes shall be known as 'nationa
bank guaranteed credit notes Sale
notes shall be issued in form and de-
nomination and under such rules ant
regulations as the comptroller of the
currency shall fix.
Equal to 30 Per Cent
1.-THE amount of said notes so taker
out by any national banking associa'
ton may be equal to 40 per cent o.
it's national bank notes at any tiTnt
| outstanding, which are secured by thu
deposit OF government bonds, but shall
not exceed in amount % per cent o.
its capital; provided, however, that 4
| at any time in the, future the preSen
proportion of the total outstanding un
matured United States bonds to tn,
total capitalization of all national bank
ing associations in active operation
shall diminish, thea the authorized is
sue of national bank guaranteed credi
notes shall be increased to a CORE
spondingly greater percentage OF tn
bond-Eecured notes"
Such notes are to be taxed ia .e
cent annually.
Any national banking association
which has taken out guaranteed note
in accordance with the provisions o
section / of this act may take out ;
further amount OF national mank guar
anteed credit notes equal to 1874 pc
cent of its capital, but 1t shall pay
tax of 2h per cent semi-annually.
The total amount of national banl
notes issued by any national banking
institution, including national banl
guaranteed credit notes, shall not ex
| coed the amount of its paid up capital
!