The Birmingham age-herald., 1911-10-20
Submits Recommendations to National Monetary
 Commission
BASIC PRINCIPLES
 ARE UNCHANGED
Important Phases Which We're Un- settled Then Are Treated in Recommendation Sent to
 Commission Today


 Washington. october 1g-Former Sem ator Nelson N. Aldrich of Rhode Island )aptiay subssff1tda 10 the national monetary
 ocmlBAsson of which he is ehairmaps 4
 revision of his plan for monetary legis-
 lstion. The commission may use it as
 tie basis of its recommendations to Con-
 fress.
 T The basic principles of the revised plan are substantially the same as those em-
 todied in AIr. Aldrich's first proposal sent 10 the commission January last, which
 he said he expected would serve as hasis for national discussion.
 Important phases which were unsettled then, and those which have since been evolved are treated in the recommenda- ton sent to the commission today. Most of the questions are rehandled with great detail as the result of discussions and
 conferences which have been going on since The plan was first suggested.
 Briefly the plan still provides for the organization of the National Reserve as sociation with a capita of approximately SSt000o,0lo. in which the United States government and the banks owning shares in the association shall be the only de- rcstors. The plan of dividing the Gnited states at first into b financial districts remains unchanged.
 l In each district the anks shall form lceal associations of their own, which in turn will be represented in the branches and finally in the central organization through a system of election of directors. which. it Is said, will make it impos- s:ble for any section or set of bankers tc control the whole
 TO provide for the S7s0oOO,o 600 of per cent government bonds now owned by tie national banks and used as the basis
 of note circulation, which are to be ab-
 sorbed by the reserve association, the fol- lowing plan is proposed:
 Upon the application of the reserve as-
 socation tine secretary of the treasury shall exchange the ? per cent bonds
 which the association will buy from
 banks at par and accrued interest, for a
 new issue of 3 per cent securities. pay
 able 50 years after the date of issue.
 The reserve association will pay to the
 government ] special franchise tax of 11z per cent q year on the amount o1 sush tonds The governments actual interest
 charge on the ? per cent Is not actually 1,s per cent since the banks pay back a l half of per cent as tax when the bonds are used the basis of note crculatio This will ilnburse the government for the xtra interest it will be called upon to pay as result of exchanging the 2s for IS.
 Provide for Debt One effect of the exchange will be to enable the government to provide perma- nently for large portion of the interest caring public debt al net interest charge of 14a Der cent. This arrangement 1 proposes a solution of what many flnan- cers declared the greatest obstacle to the plan. It disposes permanently of the 1 bend secured currency without loss to 1 the government and without imposing uron the reserve associa ton the owner ship of the 730,0O0,Oo0 ? per cent bonds.
 The association will agree to hold the l per cent bonds for 50 years. but the secretary of the treasury after five wears will have the option of permitting the association to sell the securities at a rate not greater than s50000.0Oo year. The government may reserve the right to re- deem any of the bonds before maturity to buy any of them at par for the trus- l tees of the postoffice savings system or otherwise.
 Provisions for the election of direc- 1 tors have been changed in the revised plan with the idea of minfying the possi- | blity of control by any section or group. l There will still be 45 directors as in the i original plan, six members ex-officio. viz: l the governor of the association, his two l deputies. the secretary of the treasury l the secretary of commerce and labor, and the comptroller of the currency Each of the b financial districts of the coun- 1 try will elect one director; 12 others will | be elected by the shareholders, and these l 27 will elect to the board F additional members who shall not be officers of banks, but may be directors in them who shall fairly represent the industrial agri- cultural commercial, and other interests of the country
 The completed plan provides that of tine l 24 directors in the latter groups not more than three may be elected from any one district As at previous instances it is thought this will result the only way l in limiting the state of New York. the banking capital of the country will be diversified and there will be four direc- tors among the S9 elected. In the or ganization of the executive committee of nine members upon which it is said much of the active management of the association would fall only one of the five elected members dhe other four being the governor of the association, his two dep uties and tn ecomptroller of the cur rency ex-officiol may be chosen from | any one district.
 To Reserve Authority l The whole board of directors may re- l serve to itself any authority it desires l and is not bound to vest the executive l committee with full control. 1 The original plan provided that the l governor of the association he reappointed 1 by the President of the United States l from list of names submitted by the board of directors and that the Presl- dent should also have power to recall tho governor. The revised plan reserves the right of removal to two thirds vote of the board An important change is tho admittance to membership of state banks and trust companies which con form to required standard. A state bank or trust company to be eligible must conform to the same stand ard as national banks regarding the re- lation of its capital to the population of the community it serves regarding the reserves to be held against deposits: and must conform to certain standard re- sardine examinations and reports Requirements for reserve to be held gainst deposits are made tlfe same For national banks. state banks and trukt companies. but the present reserve requirements of national banks are modified to the extent of requiring no reserves against time deposits except for the 20 days preceding their ma turity. This provision. which resem- bles those in the trus, company laws of some states, is expected to make it more profitable for national banks to hold time deposits in competition with