The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-05-18
ALDRICH VENTS
WRATH ON BILL
FATHER SOUGHT
Senator Was the First to
Draft Plans For
Central Bank.
BY VINCENT LYONS.
Times Financial Editor


The scathing indictment of the
administrations proposed banking
bill by Winthrop w Aldrich. chair
man of the Chase National Bank of
New York. was endowed with sig
nificance by those who recalled that
it was the bank executives father,
Senator Nelson w. Aldrich. who
first drafted plans for a central
bank in this country.
At least such an authority as
Frank Vanderlip, former assistant
secretary of the Treasury, in a
recent series of magazine articles,
gave credit to the elder Aldrich for
providing the pattern by which the
present Federal Reserve system was
created.
Mr.. Vanderlip graphically re-
counted the series of events that
led up to the creation of the reserve
system in his memoirs. He recalled
that in 1910, when he was president
of the National City Bank, the
banking world was attempting to
devise a mechanism that would cor
rect the weaknesses of the existing
system as shown by the financial
panic three years before.
Calls Secret Conference
Senator Aldrich. who was then
Congress specialist in banking leg
islation. called a secret conference
of bankers to be held at Jekyl
Island, off the coast of Georgia.
The invited few were Mr.. Wander
lip. Paul Warburg. Benjamin Strong
and A. Piatt Andrew Jr., then an
Assistant Secretary of the Treasury.
Since it would have been fatal
to Senator Aldrich's plan to nave it
known that he was calling on any
body from Wall Street to help him
in preparing his report and bill,
precautions we're taken.
Finally" Mr. Vanderlip wrote.
I'VE had whipped into shape Dill
that we felt, pridefully, should be
presented to Congress. We returned
to the North as secretly as we had
gone to the South. 1t was agreed
that Senator Aldrich would present
the bill we had drafted to the
Senate. 1t became known 20 the
country as the Aldrich Plan.
Senator Aldrich became ill-too
i'll to write an appropriate docu-
ment to accompany his plan. Ben
Strong and 1 went on to Washing
ton and together we prepared that
report. If what we had done then
had been made known publicly, the
effort would have been denounced
as a piece of Wall Street chicanery,
which it certainly was not.
Retires From Senate
1.-THE bill we drafted did not get
through Congress. Mr.. Aldrich re-
tired from the Senate. and then
Democratic majority came down to
Washington along with Woodrow
Wilson, who had defeated President
Taft. The platform on which he
was elected contained a statement
expressing the opposition of the
Democratic party to the Aldrich
plan, or a central bank.
Nov, although the Aldrich Fed
eral Reserve plan was defeated when
it bore the name of Aldrich. never
theless its essential points were all
contained in the plan that was
finally accepted. 1t provided an or
ganizatio to hold the reserves of all
member banks and arranged that
they would always be ready to re-
lieve a member bank under pressure
by rediscounting loans that it held.
The law as enacted provided for
II banks instead of the one which
the Aldrich plan would have created
but the intent of the law was to CO.
ordinate the II through the Federal
Reserve Board in Washington, so
that in effect they would operate
as a central bank.
There can be no question about
it. Aldrich undoubtedly laid the es-
sential, fundamental lines which
finally took the form of the Fed
eral Reserve law"