The Washington herald., 1908-02-01
RAPS ALDRICH BILL
Mr.. Hamilton Picks Flaws in
Currency Measure.
CALLS IT IMPRACTICABLE
House Committee on Ranking and
Currency Laws Hears Illinois
Both the Fowler and AIdrIch Bills.
Declares Latter IL "Unwlse."

The Aldrich financial bin was vigorous
~ assailed yesterday before the House
Committee on Banking and Currency by
John l., Hamilton. of Illinois, former
president of the American Bankers As
ISOLATION The hearing was the most I'M
portant one which the committee has had
since 1t began consideration OF the ques-
tion Of money at this session.
Chairman Fowler was not present, and
Representative Prince. of Illinois, presided.
Mr. Hamilton disapproved of both the
Aldrich bin and the Fowler bill, but gave
his Endorsement To the measure recently
introduced by Representative Mckinney
OF Illinois. which is In substance the sort
OF legislation which the Bankers Assoc
citation. at its recent meeting. recon-
mended
Mr.. Hamilton believed that the scheme
embraced In the Aldrich bill Of issuing
additional bank notes, based upon Sc
curity other than United States bonds, to
be ''impracticable. nwlse. and financially
unsound,"
Mr.. Hamilton stood by the statement of
the bankers currency commission. that
the Aldrlch bill Is "a departure from a
safe system Of note issues. which has
been enjoyed since the foundation Of the
national system of banking.
Calls Ii step backward.
He maintained that it was a step back
ward to the conditions which gave rise
TO the issuing of wildcat currency be-
fore the civil war. This sort Of currency
was based upon bonds OF similar descrip-
tion. II might be the entering wedge 10
the acceptance Of undesirable bonds as
security for note issues.
He maintained that the bill would not
aid the business public i'm obtaining loans
from banks In time of stress. In its
practical oDeration il would cripple the
lending power Of the banks Inasmuch
as Il is not good banking policy To hold
any considerable amount of securities in
the assets Of commercial banks, the bank
wishing to take out a new circulation
would be obliged to purchase the new se-
curities or 10 morrow them
The direct means of obtaining securi-
ties not generally held in the assets Of
the hanks would be found only 10y taking
from their cash reserve $0o.0d3 in lawful
money IN order to issue SO Nlu.
la practical operation. therefore, it
would seriously impair the ability of
banks to meet the demands of the bor-
rowing public
The bin would tend To induce counties
and municipalities 10 enlarge their ubiEa-
lions because fictitious bond market
would be created. IL would ser a premium
upon the increase or local Indebtedness
which would be highly detrimental
It should be no part of government
legislation 90 aid in marketing securities
The necessity Of asceTtaiuing definite in
formation as 20 the population of cities.
debt limits. valuation of taxable property
defaults dividends ANA railway capital
and all other technical requirements.
would entail such delay as to make the
notes available only after the emergency
had passed A crisis is short. sharp. and
decisive. and the AldTich bin is a remedy
offered 10 man after recovery or death
The provision of the Aldrich bin 20 tax
such additional notes g per cent would
make their cost prohibitive.
Has some Good Features.
Mr. Hamilton admitted that the Fowler
bin contained certain meritorious fea-
lures. but it introduced schemes so far
reaching in their scope and touching so
many collateral interests not germane
10 the real solution Of our currency diff
culties, that ne believed its passage would
unsettle rather than improve financial
conditions Mr. Hamilton took up and
explained ut some length the provisions
of the McKinney-Ho Hopkins bill, to which
he gave his approval
MT PujO, OF the committee, eldeavOred
10 show by questioning Mr Hamilton
that inasmuch as the total amount of
clearing house certificates issued during
the recent panic was about $l54000,000 the
national banks themselves could have
prevented the trouble and supplied the
currency needed by taking out the $500
100000 of additional boRd-secured notes
to which they were entitled
Mr.. Hamilton said IN reply that the
great difficulty which the banks had in
this connection was in getting the bonds
10 put up for this additional currency
rather than the fact it was not an es-
pecially profitable transaction.