Show MONETARY COMMISSION MAY US USE ALDRIC PLAN IN RECOMMENDATIONS TO CONGRESS W WASHINGTON l. Oct OCI JO o oI I farmer Sen- Sen ip Aldrich o of ot nho Rhode e Island ed to the national monetary com com- of which leh h he is chairman a. a j. j re- re fisio ot cot his 1 p plan Cor for In monetary legisla tion t The commission ma may use ue it a ap all a 8 bai a 0 o oC it Its r recommendations to lo congress e. e The basic principles of the revised plan pan are substantially the same arne as those thole embodied em em- bodied In lo Mr Aldrich's fIrst proposal sent L to the commission last Januar he be hehe hehe h he said 1 he expected would serve as a a. basis buls for tor national discussion Briefly the plan IlI F provides for the tho organization o of or the the- l' l National Reserve association as as- Jon wI with capital of approximately In n which the United States gOvernment no ima the tho banks owning shares in the association shall be bo the only depositors t f The be b ln of ot dividing dividing- the United States Slates into fifteen financial districts remains un un- un changed In each cach district the tho banks bank shall form local associations o of ot their thIr own which In hI turn will nih III be represented In the tho Drenches and finally final In tn tie the central or orJa organization or- or Ja through a system of ot election of directors which it Is III said will make Jt Impossible for any section or 01 s sot set t of bankers to control the whole N New w Bond Plan f i To ro provide for tor the of ot 2 per t.- t. ent government hoods hOLUB now flow o owned ned by bv the 4 J R bank and used as All the basis of oft t hole hote proposed J circulation the l fo following I plan i is 18 the a application p of I the he reserve receive asIatI as- as l IatI lation n. n the secretary sec of the treasury hahl exchange the 2 per pei cent nl bonds which the association at will buy from th the h to toh panics panics- anks at par and accrued rl Interest for a tew Issue of 2 t pct rout cent securities p payable pay pay- y- y able eble The lel In reserve fifty E Y years association v vM will M p pay to to- the I ItY tY a It special franchise tax of 51 JI p pr r cent pe pet per yes o on th the amount of I i 1 11 J bon lH As the O ac- ac interest harle harge cm on the 2 JI per r cents t r. r 3 t R l nou i I 1 It r ni I r o nt sine o the I I I banks pay ba back k a half of 1 I p per r cent aca as ao asa a a. tax when h n the bonds are re used as s the II bl basis of note circulation this will m re reimburse TC- TC the government for COl the extra tra re t it It is will be celled called upon to pay payas payas payas as a a. result of ot exchanging the for or hs 38 The exchange will enable the I government gov gow- to provide permanently Tor br a large p portion of ot the Interest besting beating public debt at a a. pet Interest t charge of ot l 1 11 per c cent nt This arrangement proposes a solution of what hat mal many financiers declared de do- dei i dared the great greatest eFt obstacle to the plan i It disposes permanently of ot the bond se- se currency without loss 1018 to the government gov gov- and without Imposing upon th the reserve e association slI the ownership of the 2 Z per cent bonds The association will agree to d the S 3 3 per pr cents cent f for l' l fifty earR but tho the see oe- retal of the treasury after aftel five years will 1 ha ha e e tha tho option of permitting the I to 10 o sell the sE securities les at a ara arate ra rate t of not ot greater tha than n a year The government may reserve 1 the Uie right to redeem an any of ot the bonds before maturity ma ma- to to any am of them at Rt par for forthe forthe forthe the trustees of the postal savings Ings system 65 t tin tem m o or otherwise Election of Directors Director Provisions Pro for th the th election of dl directors director hR nave have been bren changed In the revised plan with the id id ida icks a of minimizing the possibility poi poi- of control b bv by an any or group roup There still wilt will Ill be be- fi e directors director as In the original plan FIX Ix members e cx- x- x officio viz iz the governor Ito of ot the eased eased- atlon Ws his two d deputies the secretary of or orthe the treasury the secretary of Commerce and labor and the comptroller of the currency Ea Each h of the fifteen cn financial dIstricts of the country will elect one hector director twelve others will 11 bo be elected by the these twenty seven en e will 11 elect to the board beard twelve additional addition addition- al at m members who shall not be officers of ot banks but may mav be he directors In them then and Who shall fa fairly represent the tUe Industrial Indus trial agricultural tura I and other ober Interests of the Ihl country The completed plin p Tro pi o oxides that of the twenty four directors In tho two to lat latter let lat ter tr groups group not more lilore than lhnn three a may mav be be- elected from an any one district As All an Instance the effect Of this provision would be to limit the l' l state tate of New ew York which nas oa about one-fifth one of oC the hanking capital It a I of oC the country and which Is the thes s sat at of the great gleat financial Interests to four tour directors among the thirty nine who are arp ejected Tn In ih th organization or of of the executive committee committee- of ot iiii nine only on one of the th five elected members r th the other f four ur urb b beti being t the hI governor IO of the al' al association ola lion his two tl deputies and the comptroller of toe currency II C ex may ay h he le chosen chusi from any one dl district The Tho whole board hoard of directors may reserve c to Itself f an any authority It d de and i Is h. not bound houn to vest est the executive committee with full control The Tue original plan provided prodded the president should hould have power pow to remove the th o I governor The revised rE plan pIn reserves II III the right ht of removal to a two-thirds two vote I of ot the board An Au Important Change One On important chan change e i is the tho the admission to membership of ot state tate banks and trust companies that conform to certain stand stand- ards Requirements for reserves to be held against d deposits arc are made the same for national banks state banks and trust companies but the present reserve re requirements re- re of national banks are modi- modi fled to the tue extent of requiring no re reserves re- re serves ell against time deposits ex except for forthe the 1115 hI thirty days pre preceding their maturity I This provision which resembles those In Inthe inthe the trust company laws of some corpe states Is expected to make it morn more p for tor national banks to hold time deposits In competition with trust companies A pro vision that the association la shall discount for an any member n tes and bills of exchange allying arising out of ot commercial I line transactions r of ith preventing p Is tI further tn the granting developed of In liens the theline theline upon securities Th The notes and bills eligible for discount h by the asso association aI are restricted td to such FilCh notes notE's and bills of as an are Issued Issued Is Ie Is sued or drawn for agricultural l. l Industrial or commercial lal purposes and not for carrying stocks bonds or other othel investment invest Invest- giant ment If securities This Interpretation will exclude brokers brokers' notes notes' for carrying stocks Banks flanks under this provision pro it t Is said will b be encouraged encouraged aged d to carry r their I auxiliary r reserve In commercial I paper p Instead sf of in call loans loana on the stock market Savings Banks N National 1 bI banks s will Ill have the right to establish savings departments and to lend not more than 40 per cent ent of ot such de dejL deposIts deposits de- de The Tho posits jL t n national upon j I any bank k productive act now prohibits r real estate s such i loans but there Is constant demand for or 1 them in n the west For the reserves s I t tit Of f tb the the- association It II is proposed that 60 50 per cent of Its demand liabilities Including deposits and note is issues Is- Is sues shall shaH be covered b by gold or other lawful money with a provision that whenever whenever whenever when when- ever the reserve reser tails falls below 50 per c pt t the association is Is' Is bound bO to pay the government government government gov gov- a special tax which Increases in rate In proportion to the deficiency This plan In such instances is III expected expect d to stimulate an Increase In the rate of discount discount dis dis- count and to bring In gold until the re reserves reserves reserves re- re serves again become normal Another new new- provision specifics that an any local association ma may assume RIS and exercise the powers and functions of the ct clearing house One criticism 0 of the first plan was that there was wits no way to remove a bank from froman an association It a has been provided that thata a local association mav nav suspend a bank which falls fails to maintain Its reserves reservE'S or orom comply om ply with other requirements of ot the law Jaw aw It Is also provided pro that the note nota Issue I of ot the association shall at all ail times be beg by at least tIlted third t In gold or g el rt dve other other- lawful 1 nuney Any notes s however Issued In excess s of oC must either be covered cO by lawful money In full fullor fullor fullor or pa pay a a. special tax taxat at the tate rate of ot IS a per par cent a a. year ear Any notes Issued in excess S of ot 1200 not covered by lawful money will pay a tax of 5 per cent |