The Washington herald., 1918-04-15

his original idea of 1900, 100000, but II
was a concession which enabled the
bill to become law. and that alone
was sufficient to Justify the action.
| Such is the true story of the AID
rich-Vreeland act. 1t never has been
related before, outside the limited cir
Gle who know the inside history Of oc-
currences at Washington. There only
remains to be told the story Of the
final touches which the bill received,
several years later, when war had
broken forth in Europe, and its awful
effects seemed certain to be felt in
America To protect our people
against the panic which must have
caused acute suffering among them,
there existed only the Aldrich-Vree-
land act, The Federal reserve act
represented a more mature plan. but
50 intricate a device as 1t provided
could never be put in working order
before months had elapsed. The one
thing for Congress to do was to take
the Aldrich-Vreeland act and make
any changes required to bring 1t up to
date. The most necessary amendment
was that the bill should set no arbi-
trary limit upon the possible amount
Of emergency currency that could be
issued. Responsible as he had been
for the act from the first, Mr.. Glover
felt keenly the need of making the
act satisfy this need. Congress.
somehow. had not seen that a limit of
$500 100000 might make the whole emer-
gency currency plan a failure. When
panic threatens the most es-
sential move Is to satisfy the
people that there will be no dearth
4
they can have money without stint,
and that mere knowledge actual
ly leds them no longer to desire
the money at all. What they actually
need, but do not know 1t, Is simply
confidence. and to raise the limit upon
the emergency currency was the one
thing necessary OF accomplishment
Scarcely two hours remained, before
Congress would take up the matter OF
amendments to the Aldrich-Vreeland
act, when Mr.. Glover determined to
go in person to Mr. Underwood, then
leader of the House of Representa-
tives. and ask him to offer this
amendment, most essential Of all but
overlooked by all.
Fortunately, there was no one with
Mr.. Underwood. and it was possible
to convince so clear and welI-informed
mind as his, in almost no time at
all. that this moment of worldwide
calamity must be met by currency
provisions of adequate size. 1t was
no time for halfway measures. Mr..
iUnderwood's first thought had been
that so enormous an increase would
have the effect of alarming people in
stead of reassuring them, but he was
quite disarmed when, Mr.. Glover sug-
gested that the bill need never actual
ly mention any amount whatever. 1t
| would simply be necessary to allow
national banks to take out as much
emergency circulation as was equal to
their capital and surplus, for the COM
bined capital and surplus Of the ma
tional banks Of the country at that
time was almost exactly s., 800 00O, 900
That happy thought, reinforced by
information as to the awful state of
affairs in New York at that moment,
which came 10 Mr.. Underwood from
another source. won Mr.. Underwood's S
complete support.
The consent of the President to so
| sweeping an amendment was natu-
rally necessary. but that was gained
over the telephone, the shrewd leader
Of the House accepting Mr.. Glover's
suggestion that no mention would best
be made Of the fact that the real pro-
poser OF the amendment was that
banker whose name does not awaken
much enthusiasm in the vicinity of
the Treasury Department and the
White House, 1t only remained nee
essary to gain the approval of Repre-
sentative Glass and Senator Owen,
for they were chairmen of the House
and Senate committees which had
prepared the Federal reserve act,
and these changes in the Aldrich-
Vreeland act were being passed as
final portions Of that law. Both
agreed when Mr.. Glover explained his
amendment to them.
Before that day closed, the bill had
passed both House and Senate as
amended, the final figure being lbs
per cent Of the capital and surplus of
the banks. The mere passage of so
generous currency plan had the very
effect which its author had predicted.
The redemption of the emergency
currency began very soon after the
actual issue began. When put to the
test, Mr.. Glover's plan was found to
be adequate in both phases: 1t pro-
vided on the instant all of the cur
4
wise withdrew from circulation this
same currency just as promptly as the
need passed away.
What have told above Is an inter-
esting piece Of inside history. Until Mr..
Glover went to Representative Un-
derwood no suggestion had been made
that the limit upon emergency cur
rency be raised. Almost every one
now realizes that without this amend
ment. the emergency currency could
easily have failed to fill that breach
In our currency supply which yawned
so widely in 1914 and must have
brought ruin upon thousands of peo-
pie II an effective protection had snot
been at hand. Until this suggestion
for the increase Of amount was made,
the attention had been turned merely
to plan for giving the large cities
OF the country more OF the emergency
currency than the original Aldrich-
Vreeland act would have given them.
No one now believes that that change
would have been enough to save the
day.
Today the Federal reserve act is
matter of daily Importance to every
national bank. 1t dominates their ac-
tivities so frequently and Is shaping
the character Of banking in this coun-
try so broadly that bankers can easily
forget how necessary have been some
of the banking laws, now outgrown, in
+, the days when the Federal reserve
act was still unborn. To the student
Of financial history, however. many of
these earlier laws will always be
known as entitled to much credit for
actual service rendered our country
and its people. Makeshift, IL you
please. curious also in some Of its
provisions. the Aldrich-vreeland act
will never again be ridicnled hv INV