The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1911-01-17
ALDRICH'S PLAN.
Scheme for Revision of National
Bank Legislation
LIS Submitted to the National
Monetary Commission.
1T DOES NOT INCLUDE
The Establishment of a Big Gen.
trail Bank.
But the Reserve Association of
America Instead.
1T DOES NOT INCLUDE

Washington, Jan. 17.-Senator Nell
son w. Aldrich's long awaited "plan
Tor the revision of the national bank
ing legislation" as he calls 1t, was
nlade pubic today 1t does not con-
template the establishment of a cen
tral bank. 1t is so far from what most
people have expected Mr.. Aldrich to
propose that to those who have not
been in his confidence it may come as
a surprise.
The plan was submitted to the na-
t1onal monetary commission at meet
ing called for the purpose. but Sena-
tor Aldrich was not present. His COM
munication was presented by the vice
chairman. Representative Vreeland of
New York
Far from recommending the insti-
tuition of a central bank, Mr.. Aldrich
expressly disclaims belief in it as cal
culated to meet the needs of the stu
alton.
What Mr.. Aldrich does propose is
the establishment of the Reserve AS
sociation of America" representing
local associations formed by national
banks. He says in his letter to the
commission that he believes this asso-
citation would not be subject to the
domination or influence of any political
or financial group.
The Plan i'm Detail.
So little known is the scheme that
it is difficult to state briefly the pro-
visions of the plan, but these seem to
be the essentials:
At bottom, local organizations of rep
lresentative banks, formed by not less
than 10 banks each, each bank holding
stock in the association in proportion
to its capital
Directors elected by these to the
board of "branch" associations, one
branch for each of Is financial districts
into which the United States would be
divided. Each branch" board would
include a certain proportion of men not
| bankers but representing industrial, ag-
| ricultural, commercial and other inter-
ests.
The branches in turn would elect to
the reserve association proper directors,
40 in all, among whom also must be
proportion of men representing inter-
ests other than banks. There would be
| six ex-of1cio members Of this board.
namely, the secretary of the treasury.
| the secretary of commerce and labor.
the comptroller of the currency, and
| the governor and two deputy governors
/ of the association.
The governor and deputy governor 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 principal
fiscal agent and depository of the gov
ernment, would fix from time to time
| the rate of exchange or discount, and
eventually it's notes would replace those
cial paper, passing up from the banks
through the local associations and
| branches, as well as bonds of the gov
ernment, could be used as a basis for
| currency issue.
New Glasses of Banks.
The plan { o 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 companies.
| National banks would be permitted to
| form branches only in their own irnme-
diate communities and they also could
| be organized fo-- business in foreign
| countries.
The system of mutual support by
which the associations members would
meet currency emergencies is detailed
at length.
In a letter to Mr.. vreeland, and read
at today's meeting, Senator Aldrich ex-
presses disappointment that his illness
had compelled him to forego his ex-
pectatioa of comforting with the mem
bers of the commission. He tenders his
plan as tentative and as the subject
for discussion and criticism.
i tI of course, do not expect" he says,
s.the immediate approval of the COM
mission or that any formal action will
be taken upon it. The plan suggested
is a personal one that 1 fully believe
will answer the requirements of the
changed conditions. 1t will certainly
furnish to the commercial organiza-
tions of the country, who are now con-
sidering this subject, basis for cr1ti-
Il cism and discussion"
Mr.. Aldrich prefaces his plan with
an introduction, in the course OF
) which he says it has been his aim ito
suggest changes in the national bank
ing act which will make 1t responsive
to the demands of modern business
The study which the commission has
given to this has, I believe, led ire
sistibly to the conclusion that our
present banking system. which was
adopted nearly half a century ago and
has remained practically unchanged.
not only fails completely under stress
and in the presence of unusual de-
mands upon it's resources, but has been
found Inadequate and unresponsive
even under the ordinary conditions OF
aI believe that the conclusions
which l present herewith meet those
: conditions and that the organlzzsa,ti!on L,
which it is proposed to create viii IN
sure the benefits which we seek with
: out running any risk of creating a
financial institution which can be con-
trolled by ambitious monetary inter
: ests or dominated by political infiu-
ences.'
ri Agent of the Government.
The senator proceeds then to the
description of his proposed Reserve
/ Association of America"
81 1t is proposed to charter the Reserve
. Association of America, which VIII be
. the principal financial agent of the
government of the United States The
r authorized capital of the reserve asso-
f | citation shall be approximately $500. .000,-
n 600. The length of its charter shall be
: 80 years The head office of the asso-
: ciation shall be in Washington, d. c.
n The country shall be divided into Is
:, districts. and a branch of the reserve
/, association shall be located l. each dis