The San Juan islander. [volume] (Friday Harbor, Wash.) 1898-1914, 1911-01-27
ALDR|CH BANKING
PLAN SUBMITTED
DOES NOT, AS ANTICIPATED, IA
voR ANY CENTRAL
BANK.
Would Have Reserve Federation Issue
Notes to Replace Those OF National
Banks-Two New Classes Of Banks
Contemplated.

Washington, Jan. Ex-senator Mel
| son w. Aldrich's long awaited "plan
for the revision of the national bank
j ing legislation" as he calls it, does not
contemplate the establishment of a
central bank. 1t is SO far from what
most people have expected Mr.. AL
drich to propose that it may come as
a surprise. t'
j The plan was submitted to the ma
tional monetary commission at meet
ing called for the purpose, but Senator
Aldrich was not present.
Far from recommending the institu
ton of central bank, Mr.. Aldrich ex
pressly disclaims belief in it, as calcu
lated to meet the needs of the situa
ton.
For Reserve Association.
What Mr.. Aldrich proposes is the
establishment of the Reserve Associa.
| ton of America, representing what
might be called federation of local
associations formed by national banks
He says in his letter to the commission
| that he believes this association would
not be subject to the domination or in
fluence of any political or financial
group.
/ So well known is the scheme that it
is difficult to state briefly the provis.
ions of the plan, but these seem to
be the essentials:
At bottom, local organizations OF
Representatives of banks, formed by
not less than ten banks each, each
bank holding 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 representing in
dustrial, agricultural, commercial and
other interests.
Branches to Name Directors.
The branches" in turn would elect
to the reserve association proper direc.
tors, forty-five in all, among whom
also, must be proportion of men rep
resenting interests other than banks
There would be six officio members OF
this board, namely, the secretary of the
treasury, the secretary of commerce
and labor, the comptroller of the cur
rency, and the governor and two dep.
uty governors of the association. The
governor and deputy governors of the
association would be appointed by the
President of the United States and be
removable by him for cause.
The association would be the prin
cipal financial agent and depository OF
the government, would fix from time
to time the rate of exchange or dis
fireplace those of the national banks
Prime commercial paper, passing UP
from the banks through the local assO
Citations and branches, as well as bonds
LOT the government, could be used as a
basis for currency issue.
/ TWO New Classes Of Banks.
The plan contemplates two new
classes of national banks or depart,
ments of banks, to receive savings and
make loans upon real estate, and also
to be in effect national trust com
panies. National banks would be per-
mitted to form branches to operate
only in their own immediate communi'
ties, and they also could be organized
for business in foreign countries. The
system of mutual support, by which
the associations members would meet
currency emergencies, is detailed at
length.
| Mr.. Aldrich prefaces his plan with
la statement in the course of which
i he says it has been his aim Ito suggest
changes in the national banking act
4 which will make it responsive to the
demands of modern business.
i Present System Inadequate.
'"The study which the commission
i has given to this, I believe, has led
irresistibly to the conclusion that our
present banking system, which was
adopted nearly half century ago not
only fails completely under stress and
4 in the presence of unusual demands
! upon its resources, but has been found
inadequate and unresponsive even un.
under the ordinary conditions of bust
ness.
| I'm the light Of our experience, it il
obvious that one Of the principal needs
is to find some method for the unfit.
cation of our present banking institu.
tons into one of comprehensive sys.
tenn. In other countries we have found
that reserves are concentrated and
used freely in any direction where
needed. Under our faulty system re
serves are so scattered as to be un.
available in time of trouble, either fol
purposes of assistance or defense"
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