The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1911-11-22
The Aldrich Currency Plan
SOME OF THE ADDRESSES DELIVERED BEFORE THE AMERICAN
BANKERS ASSOCIATION IN SESSION AT NEW ORLEANS
STRoSG.S

The following address va. delivered
By Benjamin strong. Jr.. vice presi-
dent Of the Bankers Trust company
Of New York:
The purposes to be accomplished
! by monetary legislation are stated by
Senator .Aldrich in his letter Of jan
nary Is to be the '~unif1catton Of our
banking Institutions into n COM
| ~prehensive system the establishment
Of a scientific basis for bank-note
circulation and the creation Of a dis
count market similar to the discount
markets in Europe The keystone Of
the proposed plan is the assembling of
a large part Of the scattered bank re-
serves into the custody OF the Reserve
association, thus making them active
~ useful.
LAS the reservoir Of the country's
reserves. the association must be able
! TO so control its note and deposit la
hiliries tina, It's reserve will at all
times be adequate to permit extern
sinns of credit. both ordinary and ex-
-raordinary. AT the same time it
must be able 10 exert a SUFFICIENT in
fiuence upon the exchange and money
, markets To contract its credit extern
| sions and increase its reserves when
! necessary and without harmful in.
fuence upon business.
Having no precedent in banking
history for the radical readjustment
of the relations and methods OF a
class Of institutions controlling such
country, that is contemplated in the
National Reserve association. it was
essesttal hat its limitations and pow
ers be reasonably safe, clearly defined
and liberal enough to insure h ac-
complishment Of the objects for which
it is created. The proposed methods
of taxation govern every possible
form Of expansion and the limitation
OF the distribution Of profits to share
holders and to surplus. should cause
the management to seek a record for
conservation rather than for money
making. AS it is intended that the
Reserve association shall maintain the
! surplus reserve of the whole country.
such provisions are most important.
"Credi, systems are influenced In
their operations by two considerations
profit and safety. In this plan the
ability to make profits is subordinated
wisely a limit has been placed both
upon the amount Of dividends to be
paid to the subscribers and the
amount Of profits to be added to sur
plus. BY limiting the amount OF div
idends and surplus. incentive to large
profits is removed. and no pressure
of opinion either from the public or
shareholders should induce the man
agement Of the institution TO allow
undue imitation or extend its opera
tons for profit beyond the point OF
conservative action.
Under our present system COM
prised Of $4,000 individual units with
gu cohesion) there is a greater diver
gence Of interest rates in various Sec
tions Of the country than can be ac-
counted for by the difference in strict
ly local conditions. Credit operations
between the banks are now effected
tionships. instead Of through a broad
market for commercial paper and
bank acceptances. This partly ac-
count. for the high rates that have
ruled in certain sections Of the coun-
try remote from financial centers, for
our system is 20 rigid and the pro-
visions Of our present banking Law go
inadequate that it is now repugnant
to the ountry banker to show an ac>
count Of borrowed money IN his state
ment. The association plan, carry
c%eptances and encouraging the redis.
counting of certain classes Of paper,
will cure such objections to the en-
ployment of the credit Of country
banks for the purpose Of making pro.
vision for the needs Of their. custom
ers. The Introduction Of a system by
which bank acceptances and short
time commercial paper may be freely
moved from one part Of the country
to another should. in time, exert an
influence upon money rates largely
favorable to Interior institutions.
"1t Is plain to be seen, without
further discussion, that the provisions
Of the association as to taxes. earn
ings, dividends and the probable ef-
feet Of the proposed organization up
on interest rates in this country are
not only Of the utmost importance,
but that they have been given due
consideration by those who prepared
the plan and that they are aimed to
encourage and conserve the business
interests of the people Of the United
ct.tcs"-