The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1911-10-20
.AIORICH SUBMITS PLAN
FOR CURRENCY REFORM
Scheme Provides That State
Banks Shall BE Admitted To
Reserve Association.

WASHINGTON, Oct 20-Former
Senator Nelson w. Aldrich. OF Rhode
Island, has submitted To the national
monetary commission, of which he is
chairman, revision OF his plan for
monetary legislation. The commits
sion may use IL as the basis for its
recommendations TO congress.
The basic principles OF the revised
plan are substantially the same as
those embodied in Mr.. Aldrich's first
proposal sent 10 the commission last
January. which he said he expected
would serve as basis for national
discussion. Important phases which
were then unsettled and those which
have since been evolved are treated
in the recommendations sent 10 the
commission yesterday 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 Re
serve association, with capital of APP
proximately 5000. 100000. in which the
United States government and the
banks owning shares in the assocla-
ton shall be thesonly depositors. The
plan OF dividing the United States at
! first into 10 financial districts remains
unchanged. In each district the banks
shall form local associations of their
own, which in turn will be represented
in the branches and finally In the cen
trail organization through system OF
election OF directors, which. IL is said,
will make IL impossible for any sec
ton or set of bankers TO control the
whole
Would Use Two Per Cent Bonds.
To provide for the 5000. 600 OF
two per cent bonds now owned by the
national banks and used as the basis
of note circulation, which are 10 be
absorbed by the reserve association.
the following plan is proposed
on the application OF the reserve
association the secretary of the treas
ury shall exchange the two per cent
bonds which the association Will buy
from the banks at par and accrued
interest. for a new issue of three per
cent securities. payable 90 years after
the date OF issue.
The reserve association will pay TO
! tax OF ID per cent a year on the
amount OF such bonds. AS the gov
| ernment's actual interest charge on
! the two per cents Is not actually l IL
per cent, since the banks pay back
| half of one per cent as tax when
the bonds are used as the basis OF
note circulation, this Will reimburse
| the government for the extra interest
| ii will be called on TO pay as a re-
| suit OF exchanging the rs for 3's.
One effect OF the exchange will be
to enable the government TO provide
| permanently for large portion oil
| the interest bearing public debt at a
! net interest charge OF IL per cent.
! This arrangement proposes solution
.of what many financiers declared the
| greatest obstacle 10 the plan IL dis
| poses permanently OF the bond Sc
cured currency without loss TO the
I government and without imposing on
the reserve association the ownership
OF the s730, 900. 900 two per cent bonds.
May Redeem Bonds.
The association will agree 10 hold
the 3 per cents for 90 years, but the
secretary of the treasury. after nve
years, will have the option of per-
hitting the association TO sell the Sc
/ curites az a rate not greater tnan
I $50. 600 900 a year The government
NAV reserve the right TO redeem any
OF the bonds before maturity. TO buy
any OF them at par for the trustees
| OF the postal savings system, or other
| wise
! Provisions for the election OF direc-
tors have been changed In the revised
plan with the idea of minimizing the
possibility OF control by any section
or group.
One important change is the admis
sion to membership OF state banks
and trust companies which conform 70
a required standard. A state bank OF
trust company to be eligible must con
form 10 the same standard as national
banks regarding the relation OF It's
capital TO the population OF the com
munity II serves regarding the re-
serves 10 be held against deposits
| and must conform TO a certain stand
ard regarding examinations and re
ports.
Requirements for reserves to be
held against deposits are made the
same for national banks, state banks
and trust companies, but the present
reserve requirements of national
hanks are modified TO the extent OF
recurring no reserves against time de
posits except for ,thes30 days proceed
ling their maturity This provision,
Il