The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1911-04-05
DISCUSSING THE ALDRICH PLAN

II
National Bank of New York pam
phlet giving a systematic analysis of
the Aldrich currency plan, and a fore
cast of the manner in which it will work
in practice, This analysis is, on the
whole, favorable. 1t is based upon the
idea that the Reserve Association pro-
rided for in the Adrich plan would,
in effect. be Central National Bank
doing virtually all the Government s
business that is now transacted by the
National Banks 1t will be, TO all in
tents and purposes, bank of banks,
says this analysis. That is, it will be
the very thing that its title pretends
that it is not.
Inasmuch as the Monetary Commits
sion which will in the first place pass
upon the plan is in session in Washing
ton this week, t, begin series of hear
ings on the currency. the discussion and
analysis are timely,
| The general features OF the Aldrich
currency rlan have been presented to
the country, hav, been commented upon
| IN these columns, and have been re-
ceived with caution by the banking
community generally. But the currency
committee of the American Bankers
Association has approved the plan, and
there is coming to be among bankers
very general idea that the currency
defects may be remedied through this
measure There are, however, some
points in it that are difficult to get over,
this without saying anything about the
general distrust of a Central National
Bank and of the disposition of the peo
| pie to oppose any centralized control of
the currency of the country, aside from
| the control which must necessarily be
exercised by Congress. The people dis
trust the sort of monopoly which this
Aldrich system would create, and we
consider the plan as an improvement
upon our National banking system as
| it is.
There is also another very serious OBJ
lection to the Aldrich currency plan
The reserve association provided in it
| Il
would gradually take over all the cur
rency issues. This would take over
necessarily the two per cent bonds held
| by the banks to the amount of some
S700, 900 900, upon which the National
Bank currency issues are made. The
present currency issuing banks would re.
deem and cancel their notes as fast
as presented Then the two per cent
bonds would be for sale to the associa-
tion, and the bond-secured circulation
would disappear, the notes of the re-
serve association which would take its
place being secured one-third in gold
and two-thirds in government bonds and
banking paper. The Government two
per cent bonds upon which the cur
rency is now based would therefore cut
but small figure in the new issues of the
reserve association, and if that asso-
cirtion took over the bonds as well as
the currency privileges that has here
toforc attached to them, what would
this association pay the banks for those
bonds? A good many of the banks
which hold these bonds paid premium
upon them, at times this premium be-
ing pretty high. To throw these bonds
upon the market, however, would neces.
sariIy forfeit that premium and infict n
heavy loss upon the banks thus forced
to sell. The reserve association would
perhaps be the chief market for these
bonds, especially as the government is
about to issue Panama canal bonds,
which eventually would probably be
put upon the market to the amount of
some s400, 100000, as the plan is to
make the Panama canal proposition q
clean cut, straightforward bond account,
the proceeds from these bonds going to
reimburse the treasury for its outlay
from time to time in building the canal,
II 1t is evident that the two per cent
bonds, when thrown upon the market,
will suffer in competition with these
three uer cents so that the holders of