The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1909-11-10
PRAISES SYSTEM
USED IN EUROPE
Senator Aldrich, in Discussing
Financial Problem, Makes
Comparisons.
SAYS RESERVE PLAN IS
THE STRIKING FEATURE
Believes That United States
Might Profit by Adopting
Foreign Methods.

KANSAS CITY, Mo-, Nov. 9.-Reit.
Grating his declaration that neither he
nor the monetary commission Of which
he is head had any pet scheme of
financial reform, Senator Aldrich to-
night in this city dwelt at some length
upon some of the advantages of the
European banking systems over the
systems In the United States. He spoke
after dinner given by the clearing.
house association at the Baltimore ho-
tel Senator William Warner of Mis-
souri, introduced the Rhode Island SEN
ator.
Mr.. Aldrich found in the reserve sys-
TEN the most striking characteristic Of
European banks, he said. He said that
central banks OF England, France and
Germany-and the Reichband-hold all
the resources of all the banks OF their
respective countries He pointed out
that there is no legal requirement max
ing IL necessary for foreign banks to
keep IN their vaults so large a per
centage Of deposits as is necessary in
the United States, and said that the
subordinate banks regard money in the
central institution just as available for
their reserve purposes as If it were
IN their own vaults. He added that
foreign banks do not hold as "till
money sum greater than 3 or 4
per cent of their liabilities while in
the United States the average is 10
per cent. The London banks, however,
have either in their own vaults or in
the Bank OF England, II or Is per cent
of their deposits In addition, these
banks loan large sums TO discount
houses subject 10 call ou short no.
tlce which they regard as another source
Of reserve,
AS TO Secondary Banks.
Another item OF still greater import
ance, he said, is commercial paper held
BY secondary banks, This paper is
receivable at the Bank of England and
il is considered by bankers by far the
most important portion of their re.
serves.
What IS true in England is largely
true IN France aud Germany. In fhis
way the banks amass a credit at tho
central bank which is in itself a re-
serve and they thus are enabled 10
loan from four TO ten times the amount
tiops.
=, Mr.. Aldrich dwclt upon the fact that
European laws make no requirement
either as to tho amount of reserve
of their publicity. The perccptacc is
left TO the wisdom of bankers. He
Nhji budb lut NTtUlt IS0nQaiSu, the
greatest private banking institution in
the world. kept practically no money
IN ITS vaults, depending entirely upon
the Bank of France in case of large
demands upon it.. But, on the other
hand, reserves Of the central bank
amount TO about 70 per cent of its liza
bllltIes, not only rendering IL exccp.
IonalIy strong, but making 1t a bul.
Wark for other French banks.
Means of Protection.
Asking himself how the great cen
tral banks protected themselves in
tunes of stress, Mr.. Aldrich replied:
they did the other day. For what;
To attract gold from other countries
which has the effect of building M
their reserves. This process is ALWAYS
successful, In 1907 the Bank Of Eng
land advanced the rate TO 71a per
cent aud, that stop brought gold from
twenty two countries, I asked Mr..
Campbell, then governor of the hank.
what he would have doue If he had
not secured the gold He replied, 'We
would have. put Tho rate up 10 10 per
cent and that would have brought gold
out OF the earth
Extension of Credits.
''What else do they do1 They Or
tended credits literally to every ono
VINO rs solvent and who has a night 10
borrow Instead Of shutting their
doors and stopping The extension of
credits. and refusing TO give credits
to their customers, they do these two
things: They protect their own re-
serves, and they extend credit liber.
ally TO every one who deserves IL and
who wants IL
'Tbat is tho whole secret of The
netbod by which these great banks
AXE care Of and regulate affairs of
hose great countries IN case of prob
lble trouble -
Contrasting this system with the
'igid methods OF the U. S., Senator
Aldricb said:
81 think this statement will afford
sufficient suggestion TO you TO show
hat we certainly ought to consider
'ery carefully the question whether
'u banking system in thaJ respect
hould not he reconstructed
~ have no doubt myself, that tho
pinion which is everywhere expressed
II Europe, that our system is barbur.
uS rs correct IL certainly is against
he experience of modern banking cv-
rywhere else.
1t was evident to all that Senator
Aldrich found in the European reserve
ystem features which he believes su-
erior to ours, lie spoke especially
+ the confidence ongendered by the
or bD1