New-York tribune., 1911-01-19
SENATOR ALDRTCH'S PLAY.

Senator Aldrich does not call the in
Stitution he proposes III his plan ot
monetary reform central bank. appar-
emily out Of regard for the prejudice
that exists against central banks. but
il really is one, though differing in or
ganiZatiOn from the central banks OF
Europe and somewhat limited III IT'S
powers The kind OF organization pro-
posed. representing q sort of federation
Of banks. and the limitation Of It's pow
ers are calculated TO obviate the OBJ
jpctions which the banks of the country
would naturally raise - the establish
ment of an institution which would over
shadow them TO the degree that ore
modelled upon the central banks of Eu-
rope would Mr.. Aldrich In planning the
organization suggested has. moreover,
borne in mind the necessity Of keeping
il from falling into the hands OF the
great financial interests or Ct the poll
ticians. II is plain that the Senators 5
sole object in drawing mp this proposal
las heen the good of the country. His
scheme is I'm the interest Of no group or
section. II accordingly deserves the full
est aud fairest consideration upon IT'S
merits. for il is The most ambitious and
cOmprehpnsive suggestion looking tow
ard the reform of the nations currency
and banking system that has yet been
seriously advanced by any one in pubic
life ID this country.
The suggestion is detailed with re-
Specf ia the organization of the institu-
zion. but as 10 the methods by which
il would accomplish the ends Mr.
AIdrich proposes il is Il mere sketch.
For example. his letter says that the IN
Stifution would regulate the discount
rate Of the country without explaining
exactly how. and as il would I"ck some
of the powers on which European cen
iral banks rely 10 regulate the rate OF
discount. and would operate under con-
ditionS making the regulation OF that
rate more difficult than Il is in Europe,
il is not perfectly obvious how that I'M
porant function would be performed.
We mention this not III criticism but
merely TO illustrate how impossible II Is,
without knowing more fully what Mr..
AIdrich has in mind, TO pronounce an
opinion as 10 the practicabllity or the
plan as whole or In its details.
The treatment Of the note issuing
function seems to W. in accordance with
the best banking opinion e the day. IL
/. moi proposed that the Reserve AsSocia-
tinn os Mr.. AIdrich calls his limited
central bank. should have the virtually
unlimited power 10 expand It's circula-
tinu possessed hy tie Bank of France.
for example, power when is proper
under the conditions prevailing III thdt
country. but one which would tend tow
ard imitation in country where the de-
nosit system has been so expanded as III
the United states The Reserve AsSocla-
tion vould at first issue 4 circulation
subicct TO such Il tax that 1t would he
called forth only i'm emergencies; thatls
tn gay. it's circula, ion would he thus
restricted until in the course OF tlme
tlIc present national bank notes were
gradually reti"rd when they would 5e
raulaced las they wers retired) 10y notes
Of the association taxed only at the rate
AT which national bank notes ar" taxed.
The final result would he that the asso-
citation would at ordinary times Iiav"
circulation equal 10 the outstanding clt-
c,,lotiou oC the national banks. when
might he expandc in emergencies. lhe
.ossociation's notes. however. would 20
n,scd ou the credit principle, and when
trn last national bank note was retlred
fla. rouuuy would get entirely away
FROM h0ud secured currency.