New-York tribune., 1908-01-20
BANKERS ADOPT A BILL
FOR CURRENCY REFORM,
National Association Rejects Aldrsch
and FO1CLer Measures.

Bankers Association issued tonight full re-
port of yesterdays meeting of the commission.
which the various asset currency plans now
before Congress disclosed and rejected
The report summarizes the commissions obJec-
tions to the Aldrich and Fowler bills and then
presents measure in thirteen sections which
the commission. with the backing Of the as
socation, will recommend TO Congress
The Aldrich bill is declared to be 'impracti-
cable unwise and financially unsound- The
present Fowler BILL according TO the report
introduces schemes far reaching in thsir
scope and touching so many collateral interests
not germane to the real solution OF our cur
rency difficulties that we believe its passage
would unsettIe rather than improve fnanciai
conditions"
Six principal objections are urged against ths
AIdrich bill The first asserts that the measure
would overthrow "a safe system OF note ISSUES
which has been enjoyed since the foundation Oh
the United States system and the proposed law
is called "step backward to the conditions
which gave rise TO the wildcat currency before
the Civil War
..It NAV be the entering wedge for the accept
ance of undesirable bonds as security ror notS
issues" says the commission There are re-
cent examples in the laws of New YORK StaIe
1egalfzing such bonds for savings banks
Il +he second DIace il is urged that the Al
drich bill would cripple the lending power Oh
hanks. in that it would take from the oahk re-
serves 100000 in lawful money in order tnal
notes for $4,000 might be issued II the oohos
behind these notes were borrowed instead OA
,rrcbasad il would have the effect Of increas-
ing the liabilities of the banks, adds the re-
port which is wrong in principle
CREATE FICTITIOUS BOND MARKET
In the third place il says that the Aldr1ch Din
would tend to create a fictitious bond Market
and thus lead municipalities to enlarge their oo-
legations
The fourth objection is that the technical re-
ouirements of the bill that must be observed De-
fore notes can be issued would entail "sucn de-
laws as to make the notes avaiiaolc oiiiS eA'0-
the emergency has passed
The fifth objection has to do with the taxing
provisions of the Aldrch bill These sections. IL
- z.,o5 would result in the banks suffering
. nat loss of . per cent the notes issued.
whether they were taken out against purchaser
or borrowed bonds.
The sixth objection asserts that the coSl u
taking out the notes would be paid ultlrately
hv the needy borrower. who would De ouroeheu
hv increased interest charges at time OF year
usually in the autumn-vhen ne can III al
ford them.
| Fowler bill the commission sums UP the sltu1-
| ton as follows:
Ia. NC ,ot he unrnindf1l Of the fact that in re-
| snonse TO the demands of the people unsound and
| radical legislation has had its preeeoen's preee x- ~
monetary history After the panic OF 100 -, oc 60
| ressad hill increasing greenbacks py SFt'V'''s'
| 1rotec+ which was wisely vetoed BY Presl"ent
/ Grant After the panic Of 1888 congress ~ ~, -
| a measure providing fo' the coinage Oh S'C S.IT5
] stvs- which was vetoed by President CleVelaLu
The solution proposed by the commission uii
Co... +ror, the first Flower bill, which was oaseo
on rrinciples approved by the convention OF th7
i American Bankers Association at Atlantc Ci'S
on September 23 1907. in that the holder Oh
| credit note instead of being a general creol'OI'
shall have prior lien on the assets OF the lssu-
ing hank The security provided oy PleoSlhS eh7
whole of the assets of bank, instead OF only q
portion of them. would a1ord more oeS 'i7
protection to the note holder
II is also said that the adoption OF the plan
would insure IAN ample supply CT currency 10
the public: relief from the disturbed CONNER
ciaI conditions such those through Whlcn We
recently passed. and finally the certain retire
ment of the notes when they have fulfilled ther
purpose"
TEXT OF PROPOSED BILL
The bill proposed by the commission is as fol-
lows:
| Be il enacted. by the Senate and House OF Repre-
sentatfves Of the United States OF America. in Con-
| gress assembled. That from and after the passass
of this act any national banking association which
| fund eoual TO 20 per centum of its capital may
| take out for issue and circulation national bank
| notes without a deposit Of United States bonds as
| now provided by law. Said notes shall be known
| as national bank guaranteed credit notes SAID
| notes shall be issued in such form and denomlna-
tions and under such rules and regulations as the
/ Controller of the Currency shall fix The amount
of said notes so taken by any national banking
| association may be equal TO 20 per centun OF the
amount of its national bank notes any time out
standing which are secured by the deposit of gov
| ernmeut bonds but shall not exceed in amount .
per centum of its capital; provided however that
if at any in the future the present proportion
! of the total outstanding unmatured United States
| bonds 10 the total captahzations of all nationsi
banking associations in active operation shall d.
u,inish then the authorized issue OF national bank
/ guaranteed credit notes shall be increased TO a
correspondingly greater percentage of the bond Sc
| cured notes.
| taking out national bank guaranteed credit rOtes
in accordance with the foregoing section shall pay
| 70 the Treasurer Of the United in the
months of January and July of IL per centurn
upon the average amount Of such notes in ei-cula-
ton during the preceding half year
| Sec g. That any national Banking association
which has taken out national bank guaranteed
credit notes in accordance with the provisions OF
Section of this act may take out further amount
of national bank guaranteed credit notes equal 70
1919 per Of its capital but IL shall Pay 10 the
| Treasurer Of the United States in the months oS
| January and July tax of 2is per centun upon the
| average amount of such notes in circulation during
| the preceding half year
! Sec That the total amount OF banknotes
issued by any national banking association. inciud
/ ing national bank guaranteed credit notes taken
accordance with the provisions OF this act.
shall not exceed the amount of its paid-up capital
/ Sec. ). That any national banking association
IsftU nd dOin bIIs in A