The semi-weekly messenger., 1908-02-21
ALDRiCH MEASURE
Criticised and Condemned by
PlenIGsat FiHalcioIS
FOWLER BILL ADVOCATED
At Hearing by Committee On
Banking aRd Currency

Former Secretary of Treasury Gage
Had No Sympathy for Aldrich Bal
Was Not Remedy for Evils
Regarded the Fowler Bill as n
Comprehensive Measure.
Washington, February 1s--The
bill were defended today by former
Secretary of the Treasury Lyman j.
Gage, Chas. A. Conant, of New York
and Professor Joseph French Johnson
of the New York University.
Secretary Gage was the first speak
er. He said we had reached the most
important period in the financial his
tory of the country for the past for
ty or fifty years and that the solu-
ton of the problem depended large
ly upon the men making up the bank
ing and currency committee.
1t was early impressed upon him
said Mr.. Gage, that credit curreR-
cy issued on proper assets, received
and exchanged, containing only the
amounts of credit, was an effective,
useful and economic agency In the
industrial exchanges of the people
and was the best system of banking.
Mr.. Gage said he thought the finan-'
cia1 system ought to be revised from
the very beginning. He regarded the
Fowler bill as comprehensive meas
ure which in contrast to the one Of
fered in the senate has reached the
fundamentals.
Continuing, Mr.. Gage said:
81 have no sympathy at all with
the AIdrich bill I do not think it
is curative of our evils. At best it
is patch or panacea that may
once in ten years be availed of when
the country is in a condition of In
tense panic or when many of the evils
from the panic are developing and it
may not be effective then. In the
meantime, If adopetd, it will proba
bly, put us to sleep. 1t is a gentle
narcotic that woos us into false re-
pose from which we will suffer many
a nightmare and from which we will
awake at last in trouble and real
agony"
AS a banker, he said he would ask
to come under the provisions of the
Fowler bill and would look with
dread and apprehension If the Aid
rich bill should become a law.
Mr.. Conant declared that one of
the essential causes of the recent
panic was that the credit system had
become top heavy as ersult of great
issues of securities and the expansion
of state banking without adequate
reserves. He criticised the banks, es-
pecially the trust companies. for de-
posits payable on demand in loans
on securities in too large proper
ton. He declared that the reserves
held against such loans were made
quate and that even such reserves as
were held were impaired in value by
the fact they were constitutd to
considerable extent of national bank.
notes instead of gold.
Even the national banks had no
cohesion or method of acting to-
gether except through the clearing
house, which did not act except in
grave emergencies. It was among
the great merits of the Fowler bill
that it brought about cooperation
and mutual scrutiny among the ma
tional banks and also tended to
bring the local banks into the ma
tional system, where they would be
subjected to the supervision and the
reserve requirements of the national
banking law. This would be accom-
plished by the provision for the guar
anty of deposits which imposed upon
the local banks of each district ten
per cent. of the loss incurred by the
failure of any bank within the dis
trict. To avoid such losses banks
would undoubtedly avail themselves
of the authority of mutual inSpec-
ton provided by the bill.
The creation of a guaranty fund,
provision for local redemption Gen.
ters and the reciprocal liability of
banks for each other, Mr.. Conant
said would tend toward Qn-
ity and strength in the national
system, but such measures should be
SO framed as to leave room at the
proper time to superimpose nation
al bank upon the existing local fnsti-
tutions. A central bank, with power
to control the discount rate and check
reckless speculation, would crown
the work which would be SO well
begun by the measure of Mr.. Faw-
Ter
Professor johnson found much to
criticise In the present francial sys-
tenn of the country. He condemned
the Aldrich bill as being bad in many
particulars and supported the Fowler
bill. Some of the benefits which
would arise under Ii, he said, In that
the treasury's connection with the
money market will be brought to an
end: it will bring the banks OF the
country together: IL will give us bet
and gold movements than we have
e