Show JANY ANY TINKERS APPEAR WITH I PROJECTS Administration Struggling With Plans to Reform the Fi Fl Financial Financial System of Country CENTRAL BANK SCHEME FINDS SOME SUPPORTERS ASSET CURRENCY URGED BY CHAIRMAN FOWLER AND NA NATIONAL NATIONAL NATIONAL OF BANKERS Washington Nov Noy 24 Details of many nany new now projects pr for improving the currency tara are being submitted to the tho president and Secretary S Cortelyou and andare andare andare are receiving such mIch attention as the oth other other er Cr exigencies for tor the financial situation permit Secretary Cortelyou is a good listener and usually digests quickly the essential parts of the various plans which are submitted to him Measures relating to the currency which are be being beIng beIng ing discussed among bankers and In Incoming Incoming Incoming coming members of or congress may may be roughly grouped under four heads a central bank of issue a central organ organization organization organIzation of the existing national banks the issue of additional circulation various classes of bonds other than tJan t an United States bonds and the is rue of circulation upon general assets r WIth the security of a guaranty fund Central Bank Idea The project of ot a central bank based upon the general outlines of ot the Bank of France or the Imperial Bank of Germany has ha apparently been attract attracting attracting attractIng ing more attention of late than any previous time timo In recent years Senator Hansbrough of 0 North Dakota who is isa Isa Isa a member of the finance committee has announced that he will Avill introduce a II bill for such an institution Mr vice president of the Whitney Central National bank of New Orleans is openly in favor of a cental cent bank bariL and says that the New Orleans press taught by b the strain of ot the cotton sit situation tation is generally with him Those who tho favor a central bank hank point to the tho recent crisis as the best evidence of the aid which it could have afforded had it been in operation Their view is that the national banks would have been able to rediscount their pa paper paper paper per at such an institution and obtain its notes to any amount necessary to relieve nUeve the strain It is considered somewhat significant in some quarters quarter that Mr AIr Ir Ridgely the comptroller or of orthe f the currency has Just declared for a central bank of Issue after having in previous reports recommended only a age general ge eral credit currency for the exist existing existing existIng ing banks The utterances of Mr are arc not however considered I to commit the thc administration since I Treasurer Treat has a different plan which he is advocating whenever he is Invited to deliver a public address on the subject r Difference e of Opinion It is so long since a central bank ex cx existed isted ar or r was even seriously discussed In the United States that there Is much difference of opinion as a to the details of the organization Those T ose who advocate advocate advocate cate it generally insist however that the secretary of the and the comptroller of the currency should be members of the board of di directors directors directors rectors and that the president should appoint or approve the selection of the head of the bank The provisions ol of the German bank charter in regard to circulation finds a good deal of favor that after a certain fixed limit of clr cir additional issues which are Q not covered dollar for dollar by gold should be taxed at the rate of 5 per percent percent percent cent Others however prefer the greater freedom of ot the French system s stem where the volume of note Issues is practically under the control of the bank and where the accumulation of a large Jarge reserve permits the bank to se serenely serenely serenely maintain a rate of discount much lower than that of ot the Bank of England or the Bank of at Germany while other countries are in the throes of industrial convulsion Combination of Banks The project of combination among th national banks through their clear clearIng clearing Ing lag house committees or otherwise to guarantee a special circulation in case of emergency is embodied in several plans which have haye been submitted t to the these secretary se retrY of ot the treasury While these plans are declared by experts to have some degree of merit it Is ig feared that they are too complicated to receive serious attention In congress So far Continued on Page 2 MANY THINKERS APPEAR WITH NEW PROJECTS Continued from Page 1 as the tho plans require voluntary action by the banks the plan might work So far as they compel compe action by law Jaw lawit lawit it Is felt by some that such a policy polley would be drastic if not unconstitutional al aJ in compelling the banks to make a ause ause ause use of their assets which they might not desirer desire to maker make Asset Currency Most of the plans presented at pre previous previous sessions of oC congress have dealt with the question of Increasing the elasticity of the circulation issued by national banks by permitting issues on other security than United States bonds There is a radical difference of opinion however between the two schools of thought as to the nature of these additional issues Tho The plan pro proposed proposed proposed posed by Representative Fowler chairman of the house committee on banking provides for issues upon the general credit of the bank with provi provision provision sion for fora a guaranty lund fund raised by tax taxation taxatIon atlon on circulation This guaranty fund Is to t be employed when necessary necessary necessary sary to redeem the notes of oC failed tailed banks bank It is The contention of Mr Fowler and others who wh favor this plan that a tax of about of one per cent annually upon the circulation would meet all losses but In order to insure absolute safety safet they the propose that the tax shall shaH be very er much larger than this Bankers Favor Fowler Plan Tho Thu principle of the Fowler bill Is In harmony with two to other measures which attracted considerable attention a year eor ago the bill of the special com corn committee pf Qt the New York chamber of or commerce which was endorsed unan unanimously unanImously by the tho chamber in 1905 1906 and the plan of tho the special committee of ot the American Bankers association which was endorsed almost unanimously at atthe atthe the tho annual convention of the association association association tion at Atlantic City in ir September last Jast The Tho plan of the chamber of oC commerce commer e committee proposed Issue on the gen general general general eral credit of the banks to the amount of 5 per cent of capital under each of or orthe the rates of taxation two three and four per cent and to the amount of 10 per cent of capital at each of the rates of 5 and 6 per cent This permitted total Issues to the amount of 35 per percent percent percent cent of capital or about but it was contended that no more than half of this taxed up to the rate of 4 per cent could be kept In circulation under ordinary conditions The plan of the bankers association provided for tor Issues to the amount of 25 per cent of Qt f capital under a tax of ot 2 per cent nd per cent cen of capital under a tax of ofa 5 a per cent The bankers plan there therefore therefore therefore fore permitted larger issues upon an average rate than the chamber of commerce plan Both these propos proposals proposals als ale are declared by their advocates to tobe tobe tobe be very ery conservative Both plans re require require require quire a certain certin percentage of ot bonds to tobe tobe tobe be held by a national bank in order to obtain the additional circulation the object of this provision being to pre prevent prevent prevent vent any decline In the market value of bonds by the development of a preference preference preference for tor the tho new form torm of oC circulation circulation circulation tion Practically all the bonds fonds now pledged by the banks to secure circulation circulation circulation lation would be taken care of under either cither of these plans New Types of Bonds The plan of further issues upon new types of bonds which are not now ac acceptable acceptable acceptable under the law Jaw finds support among those who vho believe that bank banknotes banknotes banknotes notes should not be issued except upon specific security which Is out of ot the tho custody of the bank The usual meas measure measure measure ure ot of this kind provides for additional issues upon state and municipal bonds acceptable to the secretary of the treasury and in tn some cases upon rail railroad railroad railroad road bonds which comply with the pro provisions provisions provisions visions of the tile New York and Massa Massachusetts Massachusetts laws for tor savings bank Invest Investments Investments investments ments While the tho advocates of this plan regard It as affording more com coni complete pleto security than the Chamber of ot Commerce or the bankers plan it Is declared by its critics that a single failure by the smallest bank in the country which happened to escape the scrutiny of the secretary of the treas treasury treasury treasury ury by which a poor class of bonds was deposited and the bank failed with urn lim limited assets would cast discredit upon o 4 to 0 I the the entire system It would then be become become beCome come necessary as in n the days ays before the civil war to examine every eye y bank banknote banknote note received In order to wake make sure that It did not come from a bank which had failed tailed with defective securities for its notes This difficulty would be ob oh obviated obviated by the creation of a guaranty fund as under the th plans of the cham chamber chamber chamber ber of commerce and the bankers as association association association but supporters of the latter Jatter plans declare that it would be a super superlative superlative superlative provision to adopt both bo h forms of ot security and that the guaranty fund affords the tho th most complete protection against scattered losses One of the tho questions which Is likely to arouse serious discussion Is whether a cash reserve shall be required against the proposed notes A reserve of oC the same amount as that required against deposits Is provided by the th bankers plan and is considered important by Its supporters in order to keep the issues of notes linked to the gold and prevent indefinite expansion and excessive gold exports Ie |