Omaha daily bee., 1911-01-18
ALDRICH PLAN FOR BANK LAW
Scheme Of Senator Does Not Contem.
plate Central Bank.
CREATES A RESERVE ASSOCIATION
All National Banks 90 own stock In
DiscountinR InstitutiOn--It ALSO
Provides for National savings
nnd Trust Companies.

WASHANGIONt Jan. ft.-SeilaAoi ANeiHVh
w. Aldrich's long awaited plan for the
revision " the national banking legfsIS
ton" as he calls H. was made public to-
day. II does not contemplate the establish
ment OF a central bank. :, is so FAR from
what most people have expected Mr. Al
drlch to propose that 10 those who have
not been in his confidence II may come as
a surprise.
The plan was submitted today 70 the ma
tional monetary commission at a meeting
called for the purpose, but Senator Aldrtch
was not present. His communication was
presented by the vice chairman, Repre-
sentative Vreeland OF New York.
Far from recommending the institution q
a central bank, Mr.. Aldrch expressly dis
claims belief in il as calculated to meet
the needs OF the situation. What Mr.. Al
drich does propose is the establishment Of q
reserve association Of America" repre-
sentlng what might be called a federation
Of local associations formed by national
banks. He says In his letter to the com
mission that he believes this association
would not be subject to the domination or
influence OF any political or financial
group.
So well known is the scheme that II Is
the plan, but these seem TO be the essen
tails.
Local Organizations.
Al the bottom are local organizations Of
representatives Of banks formed by not
less than ten banks each, each bank hold
ing stock IN the association in proportion
to It's capital.
Directors elected by these to the board Of
branch" associations, one branch for each
Of fifteen financial districts into which
the United States would be divided. Each
branch" board would include a certain
proportion of men not bankers, but repre-
sentng Industrial, agricultural, commercial
and other interests
The 'branches'' in turn would elect to
the reserve association proper directors,
iorty-flve i'm ALL among whom also must
be a proportion of men representing inter-
-ests other than banks There would be
six ex-offlcio members Of this board,
namely, the secretary OF the treasury, the
secretary OF commerce and labor. the
comptroller Of the currency and the COVER
nor and two deputy governors Of the as
ISOLATION.
The governor and deputy governors Of
the association would be appointed by the
president of the United States and be re-
movable by him for cause.
Fiscal Agent OF Governor.
The association would be the principal
fiscal agent and depository OF the govern
ment would fix from time to time the ratio
\of exchange or discount, and eventually
its notes would replace those of the ma
tiohal banks. Prime commercial paper
passing up from the banks through the
local associations and branches as well as
bonds OF the government could be used
as a basis OF currency issue.
The plan also contemplates two new
classes OF national banks departments
Of banks, TO receive savings and make
loans upon real estate and also to be In
effect national trust companies.
National banks would be permitted Il
form branches only in their own immediate
communities, and they also could be organ
lied for business in foreign countries,
The system Of mutual support which the
associations members would meet currency
emergencies h detailed at length.
In a letter TO Mr.. Vreeland dated yes
terday and read at today's meeting. Sena
tor Aldrich expresses disappointment thai
his illness had compelled him TO foreg'
his expectation OF comforting with thu
members OF the commission. He tenders
his plan as tentative" and as the subjeC
for discussion and criticism
Il OF course, do not expect" he says
The immediate approval Of the commits
sion or that any formal action viii b,
taken upon il. The plan suggested Is
personal one and / fully believe will an
swer the requirements of the changed con
ditions. II will certainly furnish to tn
commercial organizations of the countT!
who are now considering this subject
basis for criticism and discussion"
MIR. Aldrich prefaces his plan with an in
PRODUCTION, In course of which he says
has been his aim ito suggest changes II
the national banking act which will MAX
IL responsive to the demands of mOder
business" The study which the commits
sion has given TO this has, I believe, LEI
irressubly to the conclusion that OF
present banking system which wa
adopted nearly half century ago an
has remained practically unchanged no
only falls completely under stress and 4
#, the presence of unusual demands upon It
resources, but has been found inadequat
and unresponsive, even under the ordinar
conditions Of business
In the light OF our experience It
obvious that one OF the principal needs
to find some method for the unitioation G
our present banking institutions into on
comprehensive system. In other countrie
we have found that reserves are concer
trated and used freely In any directio
where needed. Under our faulty systeI
reserves are so scattered as to be VI
available in the time OF trouble. either Il
purposes OF assistance OF defense.
would Create Discount Market.
III We can so amend tine present natlonj
banking act as TO permit the formation
an association Of all the banks OF N
country TO meet these needs. We shall ha,
gone a long way toward solving the pro-
lem which Is before us, n, then. m a,
dltion We provide a more scientific has
Tor bank note circulation. so that a
volume OF circulation viii he responsive
he needs OF business We shall. l believ
have met the two main requirements OF
satisfactory solution. In addition, II '
can aid IN creating a discount market
this country similar 10 the discount ma
kets in Europe, so that the most nqu
portion OF our bank funds win not Of nee
sity be forced to such q large degree as
y present into the making OF call loans up,
eNghanua collateral will 1