The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1911-11-22

wv Su0SStOo W k1to
capital stock Of the National Reserve
association in the same manner and
upon the same conditions as national
. banks. such subscribing banks I be.
come members ct the local association.
and TO have the same rights and rrivi.
!eses therein as Il national banks.
have been adopted By Senator Aldrich
in his revised plan.
~ this view shall finally prevail.
the status Of national hanks being left
unchanged and full rights Of mem
oershtp accorded state institutions, 1t
would seem as II Senator Aldrich's re-
vised plan. with slight notifications.
snouid be acceptable TO state banks
dtsccunting commercial paper. To the
extent that the laws Of the several
states creating them would permit,
every adNantage. privilege and 1acili-
ty AFFORDED national banks may be en-
loved by state banks of discount. II
the revised plan adequately provides
TO national banks. ] ran see no reason
whS II ought not to be satisfactory to
state banks Of the character I have re.
ferred to.
If I am correct, but few questions
remain to be discussed.
"First-.ousht the privileges Of
memoershtp : be extended to state
= IVA lS00 kudu $SCsVUV CADls
tai? ! can see no objection to giving
right Of membership to such as
have been subject to proper examina.
ton. supervision and control by state
authorities. It would certainly not on
y tend to popularize the plan and be
helpful in securing its adoption but
lessen the possibility Of large financial
serve association.
"Second-What facilities for redis-
count, in addition to those provided in
the plan should be given state institu.
tons which do not discount CONNER
cial paper: Savings banks and trust
companies restricting their invest
ments to savings bank standard for the
most part have no paper arising out Of
omnerctal transactions. even as de-
fined In the revised plan. The only
facilities afforded them would be the
right to discount their direct OBLIGATION
1t such times, and At such times only,
as the secretary Of the treasury, the
governor and the executive committee
OF h reserve association should un.
Of public interests required such ac-
commodation to be given.
~ seriously doubt whether any plan
which penalizes savings banks and
trust companies for adherence to
standards supported by sound reason
and long experience will prove accept
able In the end to the public. II it is
posed plan that state Institutions
should become members of the reserve
association. the plan must be libeal-
lied so as to give such of these insti-
tuttons as voluntarily or under legal
compulsion adhere to savings bank
standards in the matter OF investments
and loans the right to use their prime
secured loans for rediscount.
"rhird-ln view Of the fact that
members Of the local association will
be required to guarantee the obliga-
tons of di%scounting members, 1t is I'M
portant that membership be restrict
ed to solvent. ably and honestly man
aged institutions. 1t is far easier to
exclude than to suspend the undesira-
either by b state banking department
or by the comptroller of currency,
ought not to entitie a bank to mem.
bership as a matter Of right. Every
applicant should be required to pre.
sent credentials from the department
supervising. it, certifying to its con-
dition on the date hf the last exam.
ant Is in good standing with. it's de-
"Fourth-ousht the privileges of
membership to be extended to mutual
savings banks? There are 635 mutual
savings banks in the country with de-
posts aggregating $500. 000, 900. near.
~ Twenty-Five per cent Of the total de-
posts of the entire country. Upon
what theory are they to be excluded?
Is it because they neither need nor
desire the protection. which 1t is as
sumed membership in the National
Reserve association would afford, or.
has the decision to exclude them been
found the most convenient way, in
view of h fact that they would only
discount. to escape. from the hue and
cry against Wall street?
1T cooperation Of mutual say.
ings banks is essential, the plan must
be modified to meet the conditions un-
der which they operate and are pow
erless to change. Whether secured
loans are less liquid than obligations
Is not the only question. The accept
able plan must deal with conditions
as they exist and afford the banks of
all classes the maximum Of opportuni-
~ consistent with sound banking to
convert their into cas-
Il gave at the outset some of the
advantages that would accrue to ma
adopted. A summary Of the disad-
vantages state institutions accepting
membership in the reserve associa-
ton would labor under until state
laws are amended may be of interest:
Il. State banks could not accept
paper drawn on themselves.
q. In many states they could not
establish branches.
"3. They could not w stock in
banks doing business in foreign coun-
tries.
-. In most jurisdictions they
would be compelled to maintain great
er reserves against their demand de-
posts than is required by the law Of
the state where they 8 located.
not be required to keep any reserve
for time deposits not payable within
thirty days, state banks in most juis.
dtctions would be compelled to do so.
49,. While national banks would
only be required to keep a reserve for
savings deposits equal to forty per cent
Of that required for demand deposits.
per cent and in non-reserve cities Elk
per cent. state banks in many states
would be compelled to maintain a hf-
teen per cent reserve against savings
liabilities.
serve association could not be count
! ed as reserve. .'
IS. Notes Of the reserve associa-
ton held by state banks could not be
counted as reserve.
"s. State banks must agree to SUBJ
init to such examinations and I make
such reports as may be required by
federal law or by The local association.
while the disadvantages at the out
set would be many and b~urdensome, I
am confident the legislatures in the
several states al be relied upon to
promptly enact legislation correcting
these inequalities"