The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1909-10-08
CENTRAL BANK FOR
BANKERS PROPOSED
OUTLINE OF PROPOSED ORGANI-
ZATION MADE KNOWN.
Central Bank Designated to Be Govern
ment Fiscal Agent With Some
Federal Directors.

Washington, Oct. 6.-Although the
plan has not yet been worked out in
al of its details, it is now possible to
give an autline of the general scheme
of the proposed Central bank of the
United States, the establishment of
which will be recommended by the
monetary commission to congress-
1t is to be essentially a bankers
bank, or agency to do business with
other banks. 1t is not to receive de-
posits from the public, nor to do any
general banking business. It's main
function will be to act as the fiscal
agent of the government and through
it's large note-is&Ging eapacity-limited
beyond a certain point by taxation-to
come to the aid of other banks in
times of emergency.
Organized with capital of 100000
900 the stock is to be apportioned
among the several national banks. and
perhaps among state banks also, on the
basis of their capital, with a provision
prohibiting any individual bank from
acquiring voting rights in excess of its
quota. These stockholders are to elect
board of directors by territorial dis
tricts. In this way, it is certain, say
advocates of the measure, that every
section of the country would have a
representative of its own choosing on
the board. There is also to be another
board, composed of government direc-
tors, of which the leading officers of
the treasury are to be the members,
designated by the president and the
comptroller of the currency.
This is to afford to joint private and
government control which it is alleged
has contributed so largely to the sue
cessful operation of the Bank of
France and the Bank of Germany. The
active officers of the bank are to be
selected for life, or good behavior, by
joint action of these two boards. The
professed purpose of this provision is
to eliminate politics so far as possible
and to afford safeguard to prevent
any syndicate OF clique from obtaining
undue control.
The two boards are to cooperate in
the management of the bank, jointly
deciding questions of policy.
The Central bank is to issue its own
notes, which are to be secured by a
large gold reserve and by gilt-edged
commercial credit or paper represent
ing actual transaction in business be-
tween solvent concerns.
No loans are to be made, or dis
counts accepted OH bonds or stocks,
real estate mortgages, or any specula-
tive security. The operations of the
bank are to be confined strictly to the
commercial field, handling paper based
on staple commodities, in this way to
make good live bills receivable as col
lateral, or re-dscounts Endorsed by the
stakeholder banks.
President Taft already has indicated
his friendliness to the Central bank
idea. 1t also has the support of the
chairmen of the banking and financial
committees of the house and senate
and has been Endorsed by many of the
bankers of the country.
But the general public is skeptical.
The opinion has been expressed that
it would mean the consolidation of the
financial powers, and that Wall street
would soon be in control of the cur
rency of the country despite any or
all safeguards that congress might
throw about the operations of such an
institution.