The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1911-11-03
MONETARY
LEGISLATION
Continued from pesc nine.)

other investment securities" This in
depreciation will exclude brokers
notes for carrying stocks. Banks un-
der this provision, it is said, will be
encouraged to carry their auxiliary
reserves in commercial paper. instant
ly convertible into cash, instead of in
call loans on the stock market
Savings in National Banks.
National banks will have the right
to establish savings departments and
to lend not more than 40 per cent of
such deposits upon productive real es-
tate, in loans not exceeding 50 per cent
Of the value of the property. The ma
tional bank act now prohibits such
loans, but there is a constant demand
for them, especially in the West
Savings deposits in any of the banks
in the association shall be subject to
30 days notice before withdrawal and
shall be covered by a reserve of 40
per cent of that required for demand
deposits in the same locality.
For the reserves of the association,
it is proposed that so per cent Of its
demand liabilities, including deposits
and note issue, shall be covered by
gold or other lawful money, with a
provision that whenever the reserve
falls below so per cent the. association
is bound to pay to the government a
special tax which increases in rate in
proportion to the deficiency. The oper-
alton of this in such instances is eX-
pected to stimulate an increase in the
rate of discount and to bring in gold
until the reserves again become
normal
Another new provision specifies that
any local association may assume and
exercise the powers and functions of a
clearing house. In this respect some
existing clearing houses are expected
to become local associations. All local
associations will be required to appoint
examiners, which is a development OF
the movement for local clearing house
examiners, now being promoted
throughout the country.
One criticism of the first plan was
that there was no way to remove a
bank from an association. 1t has been
provided that a local association may
suspend a bank which fails to main
tain its reserves or comply with Other
requirements of the law. 1t is also
provided that the note issue of the
association shall at all times be GOV
cred by at least One-third in gold OF
other lawful money. Any notes, how
ever, issued in excess of $900,0OO,OOO
must either be covered by lawful
money in full or pay a special tax at
the rate of l II per cent a year. Any
notes issued in excess of $1,2OO,OOO not
covered by lawful money will pay a
tax of per cent.
Mr.. Aldrich, in transmitting the
plan to the commission, said that the
system of reserves and taxes provided
is expected ito insure the maintenance
of adequate reserves by the association,
and otherwise to provide such effec,
| tive regulation of discounts and note
issues as would enable the organiza
/ ton to respond promptly at all times
/ to normal or unusual demands fol-
credit or currency without danger Of
undue expansion or imitation.
The features outlined are the only
substantial changes in the plan as i
was submitted tentatively to the com
lission last January by Mr.. Aldrich
although detailed qualifications are in
troduced at many other points.
Dawes Attacks Plan.
CHICAGO, Oct. 19-Former Comp
troller of the Treasury Dawes oppose,
the provision for governmental repre-
sentation on the board of directors o
the proposed Central Reserve Associa
ton today before the subcommittee o
the National Monetary Commission
created by congress IN l9O( TO deVls
a new currency system. He also crit
icised the plan of authorizing tn
President of. the United States to az
point the governor of the propose
bankers bank. Mr.. Dawes said:
81 am opposed to governmental rel
resentation in the management of tn
proposed institution because of the OF
portunity it would give a national aC
ministration to inject politics into tn
affairs of the bank. If we should hav
another Andrew Jackson President {
the United States the danger of pol
tics in connection with the manage
ment of the institution would be grea
"By the establishment of this ban
you create the greatest power in tn
country. 1t will control credit, fl
rates of interest and be a tremendou
-, .i N, q L