Omaha daily bee., 1908-04-05
KNOCK ON THE ALDRICH BILL
Full Text Of Protest Made by the
Chicago Bankers.
OMAHA MEN MORE INTERESTED
Receive Copies of Resolutions Con"
demning the Measure and Enter
Into Further Discussion
of Subject.

Ol the nhAiOndi UhAlfNs VI ShhSo.bf ~ "AhNa'
the Aldrleh bill" passed by the senate,
Is severely condemned. There has been
much discussion of the Aldrich and Fowler
bills by Omaha bankers and the receipt
of the resolutions Of Chicago bankers has
opened the subject for more discussion.
Both the Real Estate exchange and the
Commercial club Of Omaha spent hours
discussing the bills and the Commercial
club listened to J. II. Bush, president OF
the New York Merchants association, who
analyzed the bills in detail.
The resolutions adopted by the Chicago
bankers are as follows:
Whereas, The Aldrich bill as It has
passed the senate contains provisions,
adopted in the last hours of its considera-
tlon by that body which are revolutionary
in their effect upon national banks, ana
seriously curtail their ability to extend
Recommendations to the business public, 1t
appears to us not only proper for bankers
to call attention to the facts, but their DUTY
to do so, and, ,- A..
legal reserve requirments of the national
banking act which have stood Tor Iorty
years, so that nearly s2O0,OOUOO OF iawtui
money, or about one-sixth of the lawful
money holdings of the national banks, must
be withdrawn from loanable use and locked
up in vaults or invested in certain speelIleu
bonds; therefore, be ii resolved;
l. That the transfer of this money from
the Uauid reserves of the banks, where It
is available for loans, to an idle tund,
which the banks are forbidden under any
circumstances to encroach upon, will seri-
ously impair the working capital OF the
country. 1t is not merely q transfer or
money from reserve cities to other local. local.
ties, but definite withdrawal OF money
from use as a basis jof bank crenits. me
total lawful money holdings OF all the ma
tional banks on December 8, 1907, ACCORDING
to the statements of that date to the comp
troler of the currency, was SlO45,IH0,OlS on
the basis of which the banks had outstana-
ing loans of $4,5S5, ,337,09i. If the aValiaDle
cash in their vaults at that time had p%eSn %
reduced as proposed by the Aldrich Dill
the banks would have been Obliged 70 con
tract their loans by approximately $lV0V-
100000. We submit that such reduction
in the loaning power of the banks concerns
the business community quite as much as
Il does the banks 1t means restricted ac-
commodations to the business men, ns1eI
interest rates upon commercial loans, ana
permanent burden upon the country IN tne
form of returns upon idle capital tne syS-
tenn of reserves In this country pelhs az
ready more costly than that of any other
3 That the true method of dealing with
commercial crises which come once IN Yen
or twenty years, and of meeting all unusual
demands upon the banks, is by proVldihg
means for readily increasing the supply OF
currency when It is needed rather thah py
locking up continuously and permanently
an unnecessary proportion of the country
banking capital l.,
g. That the substitution Of bonds IN
the vaults of country banks FOR balances
in the reserve and central reserve cities
will not promote safety. The apilily "
draw exchange on the principal cltles SO, Oh
the country is an available resource even
in time of panic. 1t supplies the common
means of payment between communities
and during the recent panic as muSh 1utI;uing dIl
these balances as in maintaining casn re-
serves. On the other hand, as there ls no
essential difference between them ana
other /profit-earning bank investments,
bonds cannot be Properiy p Goun'eS 70 tn nse az them
in an emergency as a basis for circulat-
ing notes under the Aldrich BILL it can
not be done without impairing the legal
least afford such impairment, for bank
notes very properly are not counted in
legal reserves An Investment IN bonds n1
ing and reduces the power Of the banks
to make commercial loans.
bihtph Is oans mo esnS offcers ri tn
there is serious objection to such prohibi-
tion against directors and companies in
have repeatedly defined the word "securi-
ties" as used in section IL of the Aldrtch
bill to include promissory notes and bills
$50; Bank of Commerce against Hart, 81
Nebraska, 202; Jennings against Davis,
inst. 2s Maryland, 2Ss; s Winwsrd si against inst
sehePe g New foF& S SsaEner suPp ss9 asnnss and
practically prohibit a bank from doing
business with any company of which any
OF its directors were officers or directors.
The effect would be to deprive the banks
OF the very men in each community who
by ability, experience and knowledge of
credits and business conditions are best
qualified to serve in this advisory capac-
ity. Bank directors are not salaried Off
GERS; they are. principally engaged in
other lines of business, and they cannot
afford to sacrifice the right to borrow
money IN order to serve on bank boards.
The banks will not be strengthened by
limiting the selection of their directors to
men who have no active business connec-
tons. This section should also be so
aHn stoc,t az 70 permit national bank to
owns the building In which the bank Is
situated. II Is desirable for a bank to
cities where the erection of a creditable
otfice building involves a heavy outlay,
there I m should be no objection to allowing
others, or TO allowing the bank to con.
trol such allied corporation.
D. That these restrictions will affect
the institutions of the national bankinS
system unfavorably in their Competition
WITH state banks and trust Companies
In the character of business thew are al |
lowed 70 do, and in most or the states |
re sre rfeguirembents ECU upon them as to reserves
banks are now obliged to conform. Reg
ulatlons, which make IL Impossible for |
IN competition with banks orgapize5 a IN. IN.
der state laws, will inevitably weaken The |
hdtlonal system in membership and pres-
Llse' an END which may be presumed the |
hauonal congress does not Intend
o. Ihat as the Aldrich bill rs avowedIv
= measure for temporary use only. Ia |
Driuse over until comprehensive and final |
system is determined upon, no change In |
lne eXlstlng system which will seriously |
lslurb present conditions should be in |
GUIDED IN its provisions. The Regulations
on the national banking system as to the |
LeserVes against deposits have stood since |
ne system was established the business
oI sne banks is adjusted to them, and the
;Ieults OF the country are adjusted to |
y mem. Al the date OF the last statement
DI the national banks, February Ia 1875
heir net surplus reserves amounted to |
Ibs,NIfbl. This margin, which Is the basis
)f business recovery and expansion. would
De more than wiped out by the proposed
legislation, and II the banks must prepare
% 90 business under the proposed reRula-
ions after January /, 1909 there can be no
expansion OF loans meantime, even for |
,rop-moving purposes next fall but further
LIQUIDATION will be required and seriols
may ensue. We respectfulIv |
lnge that temporary measure should NOT
contain harmful Innovations which in a |
inal treatment of the subject, NAV prove
@ De unnecessary, and unless they can he
'liminated II Will be better to have no
egislation until the whole subject can be
eterred 10 commission for inquiry and
ep0rt, which We believe would be the |
most practical disposition OF II.
Resolved, Further, That a COPY OF these
esolutions be forwarded to the presidsnt |
I ne United States, the vice president