The Salt Lake herald-Republican. [volume] (Salt Lake City, Utah) 1909-1918, 1909-11-10
Aldrich Attends Dinner Given
by Clearing House Associa-
ton and Then Makes Speech
Upon the Currency Question
HAS NO PET SCHEME OF
REFORM TO PROPOSE
Nevertheless the Rhode Island
Statesman Tells Audience of
the Experience of the None
tay Commission in Europe
FOREIGN METHOD is SAFE

Kansas City, Nov. 9.-Reiterating his
declaration that neither he nor the
monetary commission of which he is
head had any pet scheme of financial
reform, Senator Aldrich tonight in this
city dwelt at some length upon some
of the advantages of the European
banking systems over the system in
the United States. He spoke after
dinner given by the Clearing House
. association at the Baltimore hotel.
Senator William Warner of Missouri
introduced the Rhode Island senator.
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-the Bank of England
| and the Bank of France and the
Reichbsnk-hold all the resources of
| all the banks of their respective coun-
| tries. He pointed out that there Is no
| legal requirement making it necessary
/ for foreign banks to keep in their
vaults so large a percentage of depos-
| its as Is necessary in the United states
| and said that the subordinate banks
regard money in the General institu-
/ tiOn just as available for their reserve
! purposes as if it were in their own
/ vaults.
Reserve In Foreign Banks.
He added that foreign banks do not
/ hold as till money" a sum greater
than 8 or 4 per cent of their liabili-
| ties, 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 Eng
land Il or Is per cent of their de-
pOsits. In addition, these banks loan
| large sums to discount houses subject
/ to call on short notice, which they re-
gard as another source of reserve.
Another item of still greater impor-
| lance, he said, Is commercial paper
held by secondary banks. This paper
| is receivable at the Bank of England
and it is considered by bankers far
the most important portion of theiI
/ reserves.
What is true in England is largely
! true in France and Germany. In this
! way the banks amass credit at the
| central bank, which is in itself a re-
serve, and they thus are enabled tC
loan from four to ten times the
amount that they could loan under 9th.
er conditions.
European Laws.
Mr.. Aldrich dwelt upon the fact tina
European laws make no requirement
or their publicity. The percentage i.
left to the wisdom Of bankers H,
said that the Credit Lyonnaise, th'
greatest private banking institution il
! inc WI ANB fAVHN DA dtlitd1iI no nlDHtl
in its vaults, depending entirely upol
the Bank of France in case Of Iarg,
demands upon it. But, on the othe
hand, reserves of the central banl
amount to about 75 per cent of its liza
bilities, not only rendering ii excep
tionally strong, but making it a bul
Wark for other French banks
Asking himself how the great centrs
banks protected themselves in times o
stress, Mr.. Aldrich replied:
They advance discount rates. as the
, did the other day. For what? To at
tract gold from other countries. whic
has the effect of building up their re
serves This process is always success
full. In 1907 the Bank of England ad
, vanced the rate to ~ per cent, and tina
! step brought gold from twenty-five coun
tries ] asked MIR. Campbell, then gov
ernOr of the bank, what he would hav
done if he had not secured the gold H
replied, We would have put the rate u
= Continued on Page 2.