New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-05-02
ALOR|CH PLAN FAVORED
Will Be Recommended for Adop.
ton by American Bankers.
VIEWS OF JAMES B. F0RGAN
Chicago Financier's Speech at
Associations Annual Con.
vention in Nashville.

Nashville. Tenn. May THE Aldrlch
plan for currency reform Will be recon-
msnded by the currency commission Of the
American Bankers Association to its ex-
ecutive council tomorrow. This informa-
ton Was given out to-day. following vari-
| Gus sectional meetings Of the executive
| council. The executive council is expected
TO give its Endorsement
The feature OF the sessions to-day was a
| speech by James r. Forsan. the Chicago
banker. in part as follows.
Students. from the standpoint Of political
economy. and bankers. from the standpoint
| Of practical experience. have long been
agreed upon the defects OF our national
The responsibility placed upon each bank
Of maintaining and defending its own fixed
portion OF reserve money not only MAKES
practically Impossible but on the first
suggestion OF financial trouble throws the
tanks into a state of complete demoraliza
lion. each one striving, in competition with
Al the rest, for the reserve money deemed
necessary for it's individual survival.
As remedy for tho defect Of our present
system compelling every bank TO retain
possession Of its own proper proportion
rich's plan suggests the massing OF the
cash reserves Of ell the banks IN the Ma
uonal Reserve Association. With al
ample prlyiles. Of issuns lis own notes
the plan would. in my opinion. afford full
protection Of the reserves so massed A.
already stated, there will be no inter
ference with that part ~ the legal reserves
Of the banks represented by balances az
their credit with their legal reserve
agents. Only that part Of their legal re-
serves which they now carry in their own
vaults is to be deposited with the National
4 IN
posted. will still count as part Of their
legal reserves. This requirement IL s per
cent or the deposits Of banks outside ~
reserve and central reserve cities. 12iz per
cent NJ the deposits of banks I'm reserve
cities and * per cent If the deposits OF
banks IN central reserve cities. This re-
seTve aggregates sonething more than
s"DONoNo The banks. ~ course. would
rot deposit with the association all OF
their legal reserve money but would re-
tain az much as might be deemed necss-
cary for the legal tender requirements OF
their deposltors.
Note Issuing Privilege.
This brings US 10 tho consideration Of
the note Issuing privilege Of the National
Reserve Association, which is the remedy
proposed for tho third defect Of our present
| system. II il suggested that the national
ranks turn over 10 the association their
government bonds and along with them the
| note issuing privileges, which the banks
VII no lOlEeI fDJoN.
! In connection with the government bonds
! II ~ proposed that the policy Of the United
/ states viii hereafter he Ito retire as rap.
! idly as possible, consistent with the public
| substitute therefor notes of IN. National
| Reserve Association" which will be GOV.
| cred partly 10y an adequate lawful money
| reserve and partly BY bonds Of the United
| States. or oankable commercial paper or
/ both. For period Of one year the National
Reserve Association must offer 10 purchase
~ par and accrued interest the . per con,
bonds now held by the national banks aps
! m takins them over will acquire the priv
! leee OF Issuing circulating notes There 4,
/ 10 be no further issue. beyond the amount
| now outstanding, of banknotes by any ma.
| tloral bank. National banks may, II the,
| choose. maintain their present note issue
/ but whenever a bank retires the whole o'
I any part 81 it's existing issue il will PER
| marently surren ley its right 70 reissue The
| notes so retired
ultimately surrender their government
bonds and With them their present note is.
| suing privilege. which VIII he enioved eN.
clusively thereafter by the National Re
serve Association. Before the government
issued these bonds II had provided for them
! hv the passage Of the national bank act
an artificial and privileged market among
| the national banks, and when any bank
now desires 10 dispose Of them the sans
| market is available TO Il. At the present
time each of the 7.25o national banks ha.
in the other 7.2le banks probable purchasers
! Of its government bonds. because they al
have the privilege Of issuing notes against
them Concentrate. however. in one insti.
| tuition all the per cent government bonds
and the exclusive right OF issuing note,
! against them. and there remains outside oi
! IL no privileged market for them and No
| market AT all other than q strictly invest
! ment one. No outside purchaser Of gov.
eminent bonds would have any occasion =
buy them except for simple investment.
Membership in Local Associations.
prohlap, is rou. 70 tbt