The Birmingham age-herald., 1911-10-20
SENATOR ALDRICH REYISES
 PLAN FOR MONETARY PROTECTION
CONTINUED FROM FACE D


 trust companies Banks of all classes will have the full use of the deposits without reserve restrictions until 30 days from maturity when standard re- serves will be required.
 A provision that the association shall discount for any member notes and bills of exchange arising out of con- mercial transactions is further devel- .oped 1n the line of preventing the granting of loans upon securities.
 The notes and bills eligible for dis count by the association are restricted to such notes -and-~bills of exchange as are issued or drawn Tor agrieul- tural, industrial or commercial pur- poses and not for carrying stocks, bonds or other market investment se- curities.
 Exclude Brokers Notes
 This interpreta ton will exclude brok- ers' notes for carrying stocks. Banks under this2 provision. it is said. will be encouraged to carry their auxiliary reserves ins commercial paper instantly convertible into cash instead of cal! loans on the money market.
 National banks will have the right to establish savings, departments and to lend not more than 40 per cent of such deposits upon productive real es- tate in loans not exceeding 50 percent of the value of the property. The na,- tional bank act now prohibits such loans. but there is a constant demand for them, especially in the west. Saw ings deposits in any of the banks in s the association shall be subject to 30 days notice before withdrawal and shall be covered by a reserve of 40 per cent of that required for demand {. deposits in the same locality.
 For the reserves of the association 1t is proposed that 50 per cent of it's demand liabilities, including deposits and note issue, shall be covered by gold or other lawful money with pro- vision that whenever the reserve falls below 50 per cent the association is bound to pay to the government spe- a3 cial tax which increases in rate in pro- portion to the deficiency.
 ai The operation of this in such in stances is expected to stimulate an in ..crease in the rate of discount and 10 bring in gold until the reserves again it become normal
 Another new provision specifies that n any association may assume and ex- e=ercise the powers and functions of a q clearing house. In this respect exist ing clearing houses are expected to be- come community associations. All com tt munity associations will be required .o appoint examiners which is a develop
 ment of the movement for community clearing house examiners associa tionS now being promoted throughout the United States.
 One criticism of the first plan was that there was no way to remove a bank from an association. A bank (which fails to maintain its reserves or comply with other requirements Is eliminated. Other requirements are that liabilities must be one-third in gold or other legal money. Any potes issued in excess of S9OOO00,000 must j, either be covered by lawful money n full or pay special tax otherwise Amy notes issued in excess of $1,200,- 000,000 not covered by lawful money s-4Nviil pay a tax of per cent
 /. MT. Aldrich in transmitting the plan to the commission said the system of : reserves and taxes provided is ex- :. pected to insure the maintenance of adequate reserves by the association : and to provide such effective regulation ] of discount and note issues as would : enable the organization to responl !. promptly at all times to norma, or ln- : usual demands for credit or currency : without danger of undue expansion or ' inhation." M h. ' Features outlined are the onlv sub. 7 stantinl changes in. the plan as it was ' submitted tentatively to the commits : sion January last by MT Aldrich al. : though detailed qualifications are in. : troduced at many other points. ' -.---. y 7s5@e
 i. Chicago, October 19.-ForfllersG Comm s,troller of the Treasury Charles q; <. Dawes opposed the provision for gov T ernmental representation on the board ; of directors of the proposed Central {. Reserve association today before the \ subcommittee of the national mon- ' etary commission. He also criticised ' the plan of authorizing the President : of the United States to appoint the governor of the proposed centralized :. bank.
 ! T am opposed to governmental rep !. rcsentation In the management of the . proposed institution because of the op- portunity it would, afford q national ad- ministraton to inject politics into the < affairs of the bank" said MT. Dawes. Eff we should have another Andrew w1ackson president of the, United. States