Evening star., 1911-01-17
MAKES 1T FISCAL AGENT
OF FEDERAL GOVERNMENT
National Banks to Own Capital
Stock of $500, 100000.
MAIN OFFICES IN CAPITAL
tn Notes Would Replace Bank
Note Circulation-Govern
and Banks It's Only
Depositors.

Senator Nelson W. AIdrichs long
awaited plan for the revision of the
national banking legislation, as he
himself calls it. was made public
today. 1t does not contemplate the
establishment of a central bank. 1t
is so far from what most people have
expected Mr.. Aldrich to propose that
to those who have not been in his con-
fidence ii may come as a notable sur
prise.
The plan was submitted today to
the national monetary commission at
a meeting called for the purpose, but
senator Aldrich was not present.
There was a suggestion almost of the
tragic in the fact that when the hour
came for the PRONUNCIATION of what
Senator Aldrich is known to regard as
The crowning constructive effort of his
life he was hundreds of miles away,
speeding to the southland on a COM
rulsory search for health. His COM
munication was presented to the COM
mission by the vice chairman, Repre-
sentative Vreeland of New York.
Opposed to Central Bank.
Far from recommending the institu-
tion Of q central bank, Mr.. Aldrich ex-
pressly disclaims belief In 1t as calcu-
lated to meet the needs of the situa-
tion. He uses the term but once, when.
in his letter Of transmittal, he says:
while we have found much that is
admirable In the operation of the va
,rtous government banks of Europe,
Aoue Of them is applicable to our
needs here. The good results which
fhey obtain can. / believe. be reached
without the creation of such a central
hank. / feel that the plan which Is
DSoDosed reaches those results with
may we1 be brought against. such an
dnstieution.' &s--.s--s-.'s-s. .-.-.-
what Mr. Aidrich does propose is
khD establishment OF the Reserve As
soeiation Of America" representing
local associations formed by national
banks Those In the confidence OF Mr..
.Aldrlch drew particular attention 10
khe pains which they said he had taken
10 provide against control OF the asso-
ciation by anybody. On this point, in
his letter to the commission, he says
himself that he believes the associa,
tion, organised as he proposes, could
not be controlled by ambitious none
tary interests or dominated by politi-
al influence"
So well knit is the scheme proposed
that II is dificult TO state briefly the
provisions of the plan; but these seem
" OS LAG cSoSsA:
Local Banks to Organize.
At bottom, local organizations of rep
rcsentatives Of banks. formed by not less
than ten 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 fifteen financial districts INTO
which the United States would be d.
vide6. Each branch" board would IN
cluie a certain proportion Of men not
hankers. but representing Industrial. agrt-
cultural, commercial and other interests
The 'bi anches'' in turn would elect to
tie reserve association proper. directors,
forty-five in all, among whom must also
be o proportion of men representing IN
tercsts other than banks. There would
also be six ex-offlcio members or this
toard. namely, the Secretary Of the Treas
ury, the secretary of Commerce and Ia
Dor, the controller of the currency ana
the governor and the two deputy gov
ernors of the association.
The governor and deputy governors 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 even
tually its notes would replace those OF
the national banks. Prime commercial
paper, passing up from the banks through
well as bonds OF the government. could
he used AZ . basis for currency issue.
New National Bank Glasses.
The plan contemplates also two new
classes of national banks, or departments
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 immediate
communities. and they could also be or
ganized for business in foreign countries
The system OF mutual support by which
the associations members would NEE,
currency emergencies Is detailed al
length.
In a letter to Mr.. vreeland. dated yes
terday and read at today's meeting, Sem
ator Aldrich expresses disappointment
that his illness compelled him to forego
Ills expectation of comforting. with the
members Of the commission. He tenders
his plan as tentative" and as the SUBJ
ject for discussion and criticism. Il, OF
course. do not expect. he says. 1.-The i'm
mediate approval OF the commission OIL
that any formal action will be taken upon
it, The plan suggested is a personal one
that / fully believe will answer the re-
quirements OF the changed conditions. I,
will certainly furnish to the commercial
organizations OF the country, who are
now considering this subject. basis fol
criticism and discussion"
Mr.. Aldrich prefaces his plan with ar
Introduction lin the course of which h.
says II has been his aim Ito sugges
changes In the national banking &C
which will make IL responsive to the de
mands of modern business. The stud,
which the commission has given to thi
subject has, / believe. led irresistibIy I,
the conclusion that our present bankin,
system. which was adopted nearly half
century ago and has remained practicall,
unchanged not only fails completely un
der stress and In the presence Of unusua
demands upon its resources, but has beel
found inadequate and unresponsive eve
under the ordinary conditions Of bust
ness.
Gave It Years of Study.
THE suggestions submitted herewith,
Senator AIdrich goes on to say. ARE tn
lContinued on Thirteenth Page)