The Montgomery advertiser., 1908-05-17


 Tsis fa1 |, was !, ,bseauss conditions were ripe mentioned incident something else soon would have happened to prove
 in the attempt to find a legislative remedy for existing conditions two pills have been brought forward in congress, the so-called Aldrich bill but not the House and the Fowler bill reported by the House Committee and Banking and Currency. The Aldrich 6iii is ss eruhs fhnailg paaehsd up and amended cy circulation to our present bond se- cured notes. It has been urged as a necessary emergency measure which Sna sasfy te o 9f tSs peop that something shall be done. The on- ly feature 1t ever contained which to revival of business the use of railroad bonds was soon abandoned due to the universal criticism 1t receiv- ed. The bill as 1t finally passed the adjustment of the reserve relations of all the national banks of the country and very vague uncertainty and ill., most necessary relations between the board of directors of a bank and the. loans and discounts. This bill in it's final shape has met with such storm of disapproyal that it may now be, considered to have been abandoned and has lost all chance of serious con sideration. The Fowler bill based on more true and scientific principles in regard to the issue of credit notes. recognizes the true principle of credit notes or notes based on the assets of bank mhich need not necessarily be and preferably should not be. The Fowler bill, however, contains so many other provisions radically changing our system has not met with . tavor strnn ssst sssh and certainly has no chance Of Deing passed at this session.
 There is now an effort being made 10 unite on bill on a different prlncf- pie, that is the issue of emergency notes based on certificates issued by local clearing houses showing the de- posit with such clearing houses or the bills receivable owned by constituent recognition of the central bank idea that is Congress proposes to have the Treasury Department practically issue notes in re-discount of paper, operat- ing through the machinery of clear ing house associations auth ordzed by the Federal government This IS more complicated and intricate way Of handling 1t than by direct means of Government bank, but 1t twill in effect produce something like the same re- suit, and is, perhaps as near an ap- proach to central bank of discount this reason I look forward to the Vree- land bill with great hopes. If the de- tai1s are worked out with care l be- lieve it will add enough to our system crises and with the improvements and amendments which time may show to be wise. it should be very great ad- dition and improvement.
 In times of stress and disturbance there are two things on which bank CT should be able, absolutely, to de- pend. In the first place he wants to available to him and are real reserves. At any ordinary time bank which has been carefully conducted need have no fear if it's reserves are surely and this If the banker knows that in case he Is called on for further liquidation his good bills receivable can be surely and quickly turned into cash. no sol. vent bank need have any fear of call upon 1t by It's depositors. And what Is a quality of more importance the bank CT can meet the demand of all his de- positors with good bank notes based on serve or calling his loans at time when his customers cannot respond and when to ask them to do so only adds to the financial disturbance. 3' I believe the Vreeland bill provides means for insuring these two. great safeguards for the national bank. It provides that the national government shah authorize the organization of clearing house associations. which will be incorporated under the Federal law. Any national bank which Is a member of this clearing house can deposit with 1t bills receivable or other assets which course ct TSS of business. ness If these % are ap- proved by the officers of the clearing house. certificates showing these de- posits are. to be. issued, and these may be deposited with the government as security for national bank notes which are to be guaranteed by the govern ment and will thus be immediately available for cash transactions. It should not be difficult to work out a system under which first the banks in the reserve cities could se- cure in times sso.d of emergency gnr to supply their bank sdepositors with money for their reserves. Further than this. any bank which should need more money than is had on deposit its bills receivable for an additional supply of funds for the payment of it's depos1tors. This in effect supplies is virtually a central bank of redis- count and issue of credit notes. It | would supply when needed notes to be used for current cash transactions, | able everywhere without making nec- | essary the use of reserve money, avoid Ing the calling of loans and reduction of credits just at the time when banks | ought to be able to continue to grant credit where needed and deserved. On this account I am heartily in fla vor of this bill and believe the banks | should unite in an effort to support l it and to see that the details are work ed out in such a practical way as will | enable them to meet such crises as We have passed through without sus- pension and without panic. I believe | the State bank Is just as much inter- ested in this as the national bank. for