The Bridgeport evening farmer., 1911-01-19
,LDRICH.s RANKING SCHEME

Senator Aldrich has presented to inc National Monetary Commission his plan for the revision of nationa! banking legislation. It is his per sonal plan and has not yet received the approval of the commission. lie does not provide for a great central hank. but does recommend the crea- ton of what may prove to be its equivalent. the Reserve Association of America.
 This association is. under>the Al drich plan. to be constructed in the following manner: There are to be 15 districts. with a branch of the Reserve Association in each: banks will be formed into Local Associations. with not less than 10 in each and with combined capital and surplus of not less than s5.OG0,0 900; each bank sub- Sc-ibing to the stock of the central Reserve Association shall become member of some Local Association; these associations will elect directors for Branch associations in each of the 15 districts. but these directors to include a certain proportion of men representing industrial and commer- cial interests: these Branches elect 45 directors for the central Reserve As sociation. the board also including the Secretaries of Treasury and Commerce and Labor. Currency Comptroller and the Governor and two Deputy Cover rors of the association: the President is to appoint the Governor and Dep uty Governors of the association: the association will be the principal fiscal agent and depository of the govern men. will fix rate of discount, will eventually replace national bank notes with its own notes. and will use prime commercial paper. passing to it through the Local Associations and Branches as a basis for cR>ency issue national banks. or one of the two contemplated classes of them. will be allowed to operate as savings banks. to make loans on real estate, to exercise the functions of trust com rsnies and to establish branches in foreign countries; the central Reserve Association is to be chartered for 50 years and to have an authorized cap itsl of $500. 900 000: it and its branches are to be exempt from State and local taxation except upon real estate; its capital stock is to be held exclusively by national banks and is non-transfer- able. and each bank of $25.0O0 or more capital. may subscribe for stock of the central Reserve Association to an amount equal to not less than 20 per cent. of it's capital. of which sum one half must be paid in cash and the h a Srrh fn dix-i- dends of per cent are to be paid by the central Reserve Association, excess earnings to go, one-half to the surplus. one-fourth to the government and one-fourth to the stockholders. until the surplus amounts to 20 per cent. of the pafd-in capital. but when dividends to stockholders reach per cent. excess earnings vii be evenly divided between the surplus and the government. and when the per cent. dividend is reached and the surplus amounts to % per cent. of paid-in ca apital all excess earnings go to the government: the minimum dividend, 1 per cent. is cumulative.
 Senator AlGrich proposes the above summarized plan for discussion and criticism The plan, as reported. is :ess definite than is desirable upon some points.
 For instance. on the question of credits: It refers to prime commer- cial paper passing to the central body through the Local Associations snd BrancheS-does this mean that the central body is to have t;le fis al decis- s5n upon all extensions of .s-edit? Is -he central body to fix the rate of discount for all the banks of the country?
 The notes of the central body are eventually 10 replace all national bank gIases-does this mean that it is sto | foId the power of currency expansion q nd contraction?
 There are other dim points in the aleasure as reported. but those above referred to are perhaps the most in1- sartant. If national banks are to be 1 deprived of the powers of note issu- ance. fixing of discount rates. and | decision upon credit extensions. they l -viIl become virtual nonentities in the | Financial world.