The Mena weekly star., 1908-01-09
THE N[N FINANCIAL BILL
Senator Aldrich Introduces the Anx- jously Looked-For Measure in
 the Senate.
ADDITIONAL CIRCULATION PROVIDED FOR
Banks May Use Bonds Other Than Those Issued by Government as &c., curity for Currency lssue-Comp- troIler Given Discretion Regarding Time and Amount to Be Issued.

troIler Given Discretion Regarding
 Time and Amount to Be Issued.
 Washington, Jan. 8.-The financial bill which has for some time been in preparation by leading republican members of the senate committee on finance, was Tuesday printed and giv- on to the public.
 Tho bill provides for an additional issue of bank circulation which shall at no time exceed $250,000,000 on bonds other than those issued by the government, including state and mu nicipal bonds in approved cases. The comptroller of the currency Is given discretion in the issuance of the pro. posed currency and is authorized to decide as to the time and amount to be awarded to any banking institution. It Is provided that the increased cir culation shall in no case exceed 75 per cent of the value of the bonds deposited.
 The measure provides for an emer- gency currency issue, subject to tax of 6 per cent. The object of this tax Is to retire the emergency cur rency whenever it has served the pur- pose for which 1t was issued. The tax Is placed purposely high so the cur rency proposed will be purely an emergency one, and not be used for permanent imitation of the circulating medium. With a view to making cer- tain that the volume of currency in the country will not be unduly per 900 is placed on the amount which can be outstanding at any one time. With view to expanding the retire. ment of the circulation whenever It's purpose has been served, there Is pro vision increasing the amount that can be retired over and above the present limits of the Aldrich act, which pro vides that not in excess of $9,00o000 can be retired in any one month. This increase applies to the emergency cur rency.
 Of far-sweeping importance and rev. olutionary in character Is the proposal of the bill that state, county, munich
  cepted as security for the circulation. The railroad bonds will only be ac. cepted where they are first mortgage securities. In making this provision for accepting outside securities, the national congress follows the savings banks laws of Massachusetts and New York. which have long been con sidered the most conservative of their kind in the country. It is also pro- posed as a further safeguard to the national credit to assure the absolute security of the proposed emergency currency. that the bonds so accepted shall not be received for more than 75 per cent of their par value.
 The bill. while a short one, con tains from eight to ten sections and carefully goes over every possible phase of the proposed emergency cur rency which may yet develop. In mak- Ing the securities, other than govern ment bonds. available as the basis for circulation. the congress will in a large measure approve and confirm the action of the treasury department, under the last two administrations, in accepting these securities as the basis for government deposits. This practice was started in the adminis- tration of Leslie M. Shaw and was de- nounced by the leaders in congress of the democratic party as unlawful. The secretary and his successor, Mir. Cortelyou, have always been able to defend the action, and no attempt was ever made to receive the securities as the basis for circulation; because of the specific provisions of the law that only government bonds shall be so used. Now. in making these other se- curities available for circulation, 1t is safe to say there will be no further criticism for the action of the treasury department in receiving them as the basis for deposits.
 The passage of the bill is expected to materially improve the present sit uation, not only in that 1t will give assurance to the banks of the country that they can get plenty of circulat- ing medium whenever necessary, but 1t will increase the value of the bonds of the character mentioned as ac- ceptable as a basis for circulation. It is admitted that such use of the bonds not only eases up the banks and widens the scope of their sphere of possible activity, but also widens the market for these bonds and gives them stability and value. which they have not possessed up to this time. The opinion of many who have studied the question is that the bill in no way weakens the stability of the circulat- ing medium of the country.
 Change in Land Office.