Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-06-22
BANKERS outline
IDEAS ON MONEY
Indorse Plan Devised by Com
mission of Which AIdriCh
Was Chairman.
REPLY TO SO QUESTIONS
OF SENATE Subcommittee
State Belief That Central Banking
Institution Should Be Established
Under Government Control.

| NEW YORK, June 21-Methods
which should be pursued in reforming
the currency system of the country,
according to the views of the American
Bankers Association, were outlined to-
day in a detailed statement issued by
| the currency commission of that Or
| ganizatiOn.
The statement, which answers thirty
three questions formulated by a sub
committee of the committee On bank
| ing and currency of the United States
Senate, was prepared by the commits
| sion, which recently convened at At
lantic City, n. j.
! rency plan devised by the National
| monetary commission of which Senator
| AIdrich of Rhode Island was chairman.
| 1t made no reference to the bill re-
| Gently prepared at Washington with
the cooperation of President Wilson.
| Its recommendations, in fact, were
| framed before the publication of the
administration bill. The commission
urges that whatever system is adopted
be kept out of politics.
The commission made no attempt to
formulate complete currency system.
It's recommendation being guided by the
questions put to 1T by the SubcOmmit
tee of the Senate. 1t did state it's be-
lief. however. that a central banking
institution should be established. under
governmental control. No reference
was made as to methods to be employ
ed in the regulation Of such an insti-.
tuition or the appointment or election
of its managing heads
As to a Central Bank.
Tn eynraSSinr itc ;doos as to +bo nc
tablishment of central bank. the
commission. while not declaring for
the creation of an institution similar
to the great central banks of the prin-
cipal European countries. points out
that experience Of commercial nations
is that results can be better accom-
plished by the creation of privately
owned central organization dominated
and controlled by the government. as.
for instance, the imperial bank of
Germany or the Bank of France. 1t
serves to take the matter out Of poll
tics"
''The great danger" the statement con-
tinues, lis that If borrowers go direct
to the Treasury politics will become an
all-important and dominating influence"
In answer to 3 the direct question
whether there should be a central re-
serve association with branches. or a
number of reserve associations, with or
piled:
I'm our opinion one central reserve
association with branches would best
serve our present necessities. Failing
that. small number of regional reserve
associations, also with branches, might be
organized to serve the purpose. The
smaller the number of regional reserve
associations, however. the more effective
the reserve control. If there are to be a
number Of regional reserve associations,
they should be under some kind of con-
troll in which both the government and
the various associations should have rep
resentation."
Bond-Secured Currency.
The commission does not favor contin4
uance of bond-secured currency, the OBJ
lection being that the volume of cur
rency is thus arbitrarily limited.
''One unfortunate consequence of this
artificial condition. the statement con-
tinues. lis that the nations bonds, which
should be widely held by citizens as
their choicest investments. are held al
most exclusively by banks for circula-
ton or government deposits.
The bankers do not commit themselves
to any definite statement whether there
should be any change in the present re-
quirement of law that % per cent Of de-
posits shall be held as reserve. The ad-
OI SuCn d CndHSe, III tnelT OpiH-
ion. would depend upon the manner in
which the reserves are to be controlled
and protected.
One of the most important recon-
mendations of the commission is made in
reply to the question: Should an elastic
| currency be authorized by law?'
I'VE believe that such a currency
should be authorized by law" The answer
adds: THE amount to be controlled by
the gold reserve requirements against it.
-
than 80 per cent, a recognized mini
mum. special tax might be levied
upon any deficiency Of the reserve below
the stipulated amount of it. this tax to
be increased as the deficiency increases.
Such provision would in our opinnon pre-
vent overexpansion of the currency"
Central Reserve Association.
| Such currency should be issued by q
! sion believes. rather than by a member of
| regional reserve or the United States
| Treasury. These notes should be made
hrst lien, not Of the government. but
of holders of the notes upon the assets
Oh the association which issues them.
| Replying 20 the question whether all
currency should be based upon gold, the
| commission says:
| neSe4Ne money should preferably be
/ gold, but the proportion of greenbacks
and silver now included in our so-called
iawiui money. If not increased. Is of di-
| mlnlshing Importance, and IL continued
as englble for reserve will not cause
| embarrassment. The percentage of re-
serve money against deposits. whether I'm
| the form of deposits subject to check or
In the form of circulating notes, should
De left TO the discretion of the manage
ment OF the central or regional reserve
association. but If a restriction is i'm
posed II should be in the form of a tax
upon the deficiency in reserve when be-
low 30 per cent"
The Endorsement of the national none
| tary commissions currency plan was In
response TO request for an opinion ar
to the merits of this plan, and what modi.
| hcations II any, should be made.
The commission replied: We are famil.
| lar with the recommendations of the ma
| tonal monetary commission made tc
Congress in January, 1912, and are on
record as having indorsed and recon
mended that measure"
Progressive COmmifteemon nu;%s