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THE JEFFERSONIAN Vol. 111. No. 4. ‘Bankers Trame Currency Bill Tor Congress Chicago, January 19. —The resolution com mittee of the currency commission of the American Bankers’ Association tonight issued a full report of yesterday’s meeting of the commission, at which the various asset cur rency plans now before congress were dis cussed and rejected. The report, which is a lengthy document, summarizes the commis sion’s objections to the Aldrich bill and the present Fowler bill, and then presents a bill in thirteen sections "which the commission, with the backing of the association, will rec ommend to congress. The Aldrich bill is de clared to be 11 impracticable, unwise and fi nancially unsound.” The Fowler bill, accord ing to the report, (1 introduces schemes so far reaching in their scope and touching so many -collateral interests not germane to the real solution of our currency difficulties, that we believe its passage would unsettle rather than improve financial conditions.” Objections to Aldrich Bill. Six principal objections are urged against the Aldrich bill. The first asserts that the measure would overthrow; I ‘a safe system of note issues which has been enjoyed since the foundation of the United States monetary system,” and the proposed law is called a ‘ 1 step backwards to the conditions which gave rise to the ‘wild-cat’ currency before the Civil War. “It may be the entering wedge to the ac ceptance of undesirable bonds as security for note issues,” says the commission. “There are recent examples in the laws of New York state legalizing such bonds for savings banks. ’ ’ In the second place, it is urged that the bill would cripple the lending power of banks by largely decreasing the banks’ reserves in lawful money in order that notes might be issued. If the bonds behind these notes were bor rowed instead of purchased, it would have the effect of increasing the liabilities of the banks,” adds the report, “which is wrong in principle. ’ ’ In the third place, it is said that the bill would tend to create a fictitious bond market and thus lead municipalities to enlarge their obligations. The fourth objection is that the technical requirements which the bill provides must be observed before notes can be issued would entail “such delays as to make the notes available only after the emergency had passed. ’ ’ The fifth objection has. to do with the tax ing provisions of the Aldrich bill. These sec tions, it is declared, would result in the bank’s suffering of net loss of 2 per cent on the A Weekly Paper Edited by THOS. E. WATSON and J. D. WATSON. Atlanta, Ga., Thursday, January 23, 1908. notes issued, whether they were taken out aj •snoji •ujluj 5 Oyj -owed bonds. £Qi3ticg"[ uu f er t s that the cost of taking out tne notes would be paid ultimately by the needy borrower who would be bur dened by increased interest charges at a time of year, usually in the autumn, when he can ill afford them. Situation Summed Up. After some general criticism of the Fowler bill, the commission sums up the situation as follows: 11 Let us not be unmindful of the fact that in response to the demands of the people, un sound and radical legislation has had its precedents in our monetary history. After the panic of 1873, congress passed a bill in creasing greenbacks by $44,000,000, a project which was wisely vetoed by President Grant. After the panic of 1893, congress approved a measure providing for the coinage of $55,- 000,000 in silver, which was vetoed by Presi dent Cleveland. In these two instances we have had examples of hasty measures follow ing financial panics, and in the two bills here in discussed we have what appears to us to be similarly unwise measures following the recent crisis.” The solution proposed by the commission differs from the first Fowler bill, which was based upon principles approved by the con vention of the American Bankers’ Association at Atlantic City, September 23, 1907, in that the holder of a credit note, “instead of be ing a general credit, shall be a prior lien on the assets of the issuing bank.” 'The se curity provided by pledging the whole- of the assets of a bank instead of only a portion of them would afford more protection to the note holder. It is also said that the addition of the plan would insure “an ample supply of currency to the public; relief from the dis turbed commercial conditions, suclUas those through which we recently passed; and finally the certain retirement of the notes when they have fulfilled their purpose.” Bill Proposed by Commission. The bill proposed by the commission is as follows: “Be it enacted by the Senate and House of Representatives of the United States of America, in congress assembled, that from and after the passage of this act, any national banking association which has been in busi ness for one year, and has a surplus fund equal to 20 percentum of its capital, may take out for issue and circulation national bank notes without a deposit of United States bonds as now provided by law. Said notes shall be known as ‘national bank guaranteed credit notes.’ Said notes shall be issued in such form and denominations and under such rules and regulations as the comptroller of the currency shall fix. The amount of paid notes so taken out by any , national banking association may equal to 40 percentum of the amount of its national bank notes at any time outstanding, which are secured by the deposit of government bonds, but shall not exceed in amount 25 percentum of its capital, provided, however, that if at any time in the future, the present proportion of the total outstanding unmatured United States bonds of the total capitalization of all national bank ing associations in active operation shall di minish, then the authorized issue of national bank guaranteed credit notes shall be increas ed to a correspondingly greater percentage of the bond received notes. “Sec. 2. That every national banking as sociation taking out national bank guaranteed credit notes in accordance with the foregoing section, shall pay to the treasurer of the United States in the months of January and July, a tax of 1 1-4 percentum upon the aver age amount of such notes in circulation dur ing the preceding half year. “Sec. 3. That any national banking asso ciation- which has taken out national bank guaranteed credit notes in accordance with the provisions of section 1, of this act, may take out a further amount of national bank guaranteed credit notes equal to 12 1-2 per eentum of its capital, but it shall pay to the treasurer of the United States in the months of January and July a tax of 2 1-2 percentum upon the average amount of such notes in cir culation during the preceding half year. Total Amount of Notes. “Sec. 4. That the total amount of bank notes issued by any national banking asso ciation, including bank guaranteed credit notes taken out in accordance with the provisions of this act, shall not exceed the amount of its paid-up capital. “See. 5. That any national banking asso ciation situated and doing business in any central reserve city, or a reserve city, shall at all times have on hand in lawful money of the United States an amount equal to at least 25 percentum of its national bank guar anteed credit notes in circulation; and every other national banking association shall at all times have on hand in lawful money of the United States an amount equal to at least 15 percentum of its guaranteed credit notes in circulation; provided, hovrever, that any na tional banking association situated and doing business in a reserve city may keep one-half of its lawful money reserve on deposit in a national bank in a central reserve city, or in (Continued on Page Five.) Price Five Cents.