Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1911-01-19
Senator Aldrich's Banking Plan.

| senator AluTlCH 5 BANKING ran.
The surprising thing about the
long awaited plan of Senator Aldrich
legislation is that it contains no sug-
geston of central bank Indeed he
hardly mentions the idea. The plan
shows that it is far from what most
people have expected Mr.. Aldrich
would propose. 1t is to be regretted
| that the senator could not himself
have been present when the work was
submitted to the national monetary
commission. 1t has been said that he
regarded this plan as the browning
constructive effort of his life. but he
was too i'll to present it in. person.
After reviewing the work of the
commission and giving the operation
of the various government banks of
Europe, Senator Aldrich declares that
none of them is applicable to our
needs. and says: THE good results
which they obtain | believe can be
reached without the creation of such
a central bank. | feel that the plan
proposed reaches those results with
out being open to the objections which
may well be brought against such an
institution.
What Mr.. Aldrich does propose is
the establishment of the Reserve AS
ISOLATION of America" representing
what might be called federation of
local associations. formed by national
banks. Those in his confidence call
attention to the pains which they
claim he has taken to provide against
control of the association by anybody.
On this point. in his letter to the COM
mission. he says himself that he be-
lieves the association. organized as he
proposes, could not be controlled by
ambitious monetary interests or
dominated by political influence
Senator Aldrich's plan. it seems, is
for bank of issue, proposing a grad
ual taking over by reserve associa-
ton of notc-issuing powers of the
present national banks. which plan in
wolves, as well. the purchase of gov
eminent bonds by the latter institu-
tions. For the scientific student OF
banking, perhaps. the most striking
feature of the plan will be found in it's
proposal for developing in this coun-
try system of rc-discount of COM
mercial paper and acceptances. This
is believed, by careful observers, the
most important point of superiority in
European banking systems over our
own. By this plan, means would be
provided by which funds would flow
conveniently from one section of the
country to another as required for
commercial uses, and it would also in
sure the reduction Of Wall Streets
supplies of capital for speculative pur-
lposes.
Briefly the provisions OF this scheme
are about as follows:
Local organizations of banks formed bv
not less than ten banks each, each bank
holding stock in the association in pro-
portion to its capital.
Il Directors elected by these to the board
o1 Branch associations. one branch
1or each of 10 financial districts INFO
T which the United States would be divid-
ed Each Branch board would include
certain proportion of men not bankers
but Iepresenting Industrial. agricultural
commercial and other interests.
The "branches'' in turn would elect to
the reserve association proper directors
10 In an. among whom must also be a
proportion of men representing interests
othef tnah banks. There would be also
namely, the secretary of the treasury
the secretary of commerce and labor the
comptroller of the currency. and the gov
ernor and two deputy governors of the
| association.
The governor and deputy governors a,
the association would be appointed by the
| President of the United States and be
come removable by him for cause. The
association would be the principal fisca
agent and depository of the Government
| would fix from. time to time the rate O
exchange or discount, and eventually IT.
notes would replace those of nationa
banks. Prime commercial paper, passin,
| up from the banks through the local as
sociations and branches, as well as bond
of the government could be used as
basis for currency issue.
| The plan contempates also two new
| classes of national banks, or depart
| mentS of banks, to receive savings ant
make loans upon real estate and also t.
be in effect national trust companies
, National banks would be permitted +
form, branches only in their own mme
date communities, and they could ais
be organized for business in foreigl
countries.
Il The system of mutual support by whfcl
the associations members would NEE
currency emergencies Is detailed a
length.