The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-02-16

be put into action by the establish
mcnt OF district discount associations,
! similar in general way to those
created by the monetary commission
bill.
1 wish to emphasize the fact that
we should make adequate provision
in any banking reform legislation, for
financing our foreign trade. Our short
cominEs In that direction are tax
upon the business of the country. I
explained to the Glass committee that
when my firm buys goods In Japan it
pays for them with bill drawn on
London. Such bill will sell better
than bill drawn on Chicago The
committee seemed Interested in this.
and the members questioned me in de-
tail about 1t. One reason for 1t is
that England. having trade in all parts
of the world, has organized her splen-
did banking system, to take care Of
just such drafts. And every merchant
In the world knows that when YOU
convertible there into gold, whatever
the amount.
Differs From Aldrich Plan.
we should have a common agency
similar. in some respects only, to the
National Reserve Association When
say In some respects. I mean that
there might be this essential differ
encc. which, from democratic point
, of view tand 1 do not speak Of this
In political sense, but rather in a
broader sense OF the world, is quite
fundamental difference
In the Monetary Commission bill the
district associations were. through the
managers. the agents and servants of
the National Reserve Association In
modified plan the cooperative asso-
citation would be the agent and SER
want OF the district association, con-
trolling each for the common good of
the whole country. that control, how
ever. TO be exercised by the common
consent OF all the district associations.
( 1t would also differ from the National
/ Reserve Association in that it would
/ have no capital stock
IT this form of machinery were
adopted, ! believe it to be essential
/ that there should be five. or at the
most only seven. district associa tions,
each having as many conveniently To-
Gated sub agencies as necessity would
dictate. I say five, or at the most ONLY
seven. because they should all be
strong enough to command the re-
spect and confidence. not only OF one
another. but of large foreign central
banks
Disraeli once said that people were
ruled by their imagination rather than
by their reason. Whether this is true
or not, in a panic we know that people
are ruled by their imagination, and
each association should be so large
and strong that no flight of the imag-
ination could conceive of it's getting
into trouble.
How Many National Banks.
If you had fifteen or twenty associa-
| TONS some of them, in all probable
ity, would not have a capital stock paid
up of over 100000 Such associa-
lions would not be as large as many
national banks already in existence
and would not occupy the position nee
essary for n sound system.
They should have authorized capital
stock equal to, say, 10 per cent of tho
capital of the subscribing banks, half
of which should be paid in.
They should take a large proportion,
say. so per cent. of the dead cash re-
serves Of the banks and hold them for
common use. The subscribing banks
should also be obliged so to deposit
these reserves. Banks only should be
stockholders.
They should do business with banks
, only, their main function being to dis
count mercantile notes and commercial
paper having not over sixty days to
run. They should not be allowed to
discount paper made for carrying
stocks or bonds or mortgages, and they
should be free from any connection
with investment banking.
They should be the fiscal agents OF
the government
Discounts and acceptances allowed to