Evening journal., 1909-10-05
PLAN FOR THE
FEDERAL BANK
Outline Of the General
Scheme For the Govern
ment Institution
STOCK TO BE DIVIDED
AMONG NATIONAL BANKS

By United Press Leased Special wire
WASHINGTON, oct. 5-Althoueh
the plan has not yet been worked out
In all Of its details, it is now possible
TO give an outline OF the general
scheme of the proposed central bank Of
the United States, the establishment
Of which viii be recommended by tho
monetary commission to Congress-
IL is 70 be essentially bankers bank
or agency. TO do business with and
for other banks. IL is not to receive
deposits. It's main function viii be
to act as the fiscal agent OF tho gov
crnment and, through its large note
issuing capacity-limited beyond a
certain point by taxation-to come TO
tho aid of other banks in times OF
emergency.
Organizing with q capital OF say
/ SiO0.000,000. the stock is 70 be appor-
] toned among the several national
banks and perhaps 10 state banks also.
on the basis OF their capital with
a provision prohibiting any individual
bank TO acquire voting rights IN excess
Of its quota.
These stockholders arc TO elect a
board Of directors by territorial dis
tricts. In this way, it is claimed by
advocates OF the measure every Sec
tion of the country would have a rep
resentative Of it's own choosing on tho
board.
There Is also 90 be another board.
composed OF government directors, of
which the leading officials of tho treas
ury are TO be the members. designated
by the President, the secretary OF tho
treasury and the comptroller OF Tho
currency. This is designed TO afford
the joint private and government con-
. troll which. II is alleged. has con-
tributed 80 largely to the successful
operation OF the Bank Of France and
I the Bank Of Germany.
, viii Eliminate Politics.
Il The active officers OF the bank are
20 be selected for life. or good be
havior. by Joint action of these tw'
boards. The professed purpose of thi
provision is to eliminate politics SO 10
- as possible and 20 afford a safegual
U 20 prevent any syndicate of chG'
from obtaining undue control. r
l.. two boards are to cooperate in I
~ management Of the bank joint - ;
~ ing questions oe poics5.-- --atcs'g- c. 49,
NJ All government moneys aro 10
into this bank and Il Is 10 make 60,
IA ernnlent disbursements n Is to ha,
branches In each city where there
~ now a sub treasury. replacing them
and ia such other cities as necessor.
10 give adequate service 20 al part;
Of the country.
T. The central bank is TO issue rs )wn
r notes. which as the present United states
y bond-sccured national bank circulation is
retired. are gradually to supplant them.
centrars notes are TO be secured BY a
I large gold reserve and by gilt-edged COM
] merclal credit, or paper representing ac-
tual transactions In business between con-
Germs. II is argued that this viii ensure
elasticity because the notes to be issued
by the bank In times Of stringency would
automatically contract and be retired
ri from circulation when the transaction
is creating the credit had been completed
d and the credit paid
No Loans to be Made.
No loans are to be made OF discount
accepted. on bonds or stocks, real estat
mortgages or any speculative security
The operations Of the bank are to p
4 confined strictly to the commercial fclc
handling paper based on staple com
modities on their way to market good
live bills receivable as collateral. or re-
of discounts endorsed by the stock holde
NJ, banks.
n Taft is Friendly.
" President Taft already has indicaiel
ct his friendliness 10 the central bank idea
no II has the support OF the chairnen Of Tho
banking and financial committees OF th'
House and Senate, and has been endorse,
n By many Of the bankers OF the country
- But the general public Is admittedly
n. skeptical The fear has been freely ex-
j. pressed that the central bank would mean
o. a concentration Of the money power and
that wall street would soon be IA control
Of Of the currency Of the country. despite
m any or all safeguards that Congress
ir might throw about the operations OF sucl
ir an institution.
* Much of the opposition TO the ccntra
bank arises from memory Of the disaster
which befell the old Bank OF the Unite
States" conceived by Alexander lamiito