tnf rT'r7
The Commoner
VOLUME 11, NUMBBH 4
i .
The Guaranty
State Bank,
Muskogee, Oklahoma,
oflforfl to their cutomors nntl readers ofthtopnpor
throughout tlio country oxccptlonnl facllltlM for
hnndllnc nccountN by innll. Tho Depositors Quar
nnty Fund of tlioKtato ol' Oklahoma liumroi absolute
wifoty of all funds deposited with us. Wo holiovo
In tho Integrity ntid coiiflorvntlsm of our officers,
tmlyounro not compelled to rolyonthK Wlint
protection do you set from your home bank? Wrlto
for booklet, to-day. Interest paid on Tlmo Doposlts
and Savings Account;.
M. Q. HASKELL. Vlco President.
M. O. SKLLS. Cashier.
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PATENTS
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An Associated Press dispatch
says: Former Senator Nelson W.
Aldrich, of Rhode Island, submitted
to the national monetary commis
sion, of which he is chairman, a re
vision of his plan for monetary legis
lation. The commission may use
it as the basis for its recommenda
tions to congress. Tho basic prin
ciples of the revised plan are sub
stantially the same as those em
bodied in Mr. Aldrich's first proposal
sent to the commission last January,
which he said he expected would
serve as a basis 'for national dis
cussion. Important phases which
were then unsettled and those which
have since been evolved are treated
in the recommendations now sent to
the commissions. Most of the ques
tions are handled with great detail
as the result of discussions and con
ferences which have been going since
the plan was first suggested.
Briefly the plan still provides for
the organization of the national re
serve association, with a' capital ap
proximated at $300,000,000, of
which the United States government
and the banks owning shares in the
association shall be the only deposi
tors. The plan of dividing the United
States at first into fifteen financial
districts remains unchanged. In
each district the banks shall form
local associations of their own, which
In turn will be represented in the
branches and finally in the central
organization through a system of
directors, which, it is said, will make
it impossible for any section or set
of bankers to control the whole.
To provide lor the $730,000,000
of 2 per cent government bonds now
owned by the national banks, and
used as tho basis of note circulation,
which are to be absorbed by the re
serve association, the following plan
is proposed:
Upon the application of the re
serve association the secretary of the
treasury shall exchange the 2 per
cent bonds, which the association
shall buy from the banks at par and
accrued Interest for a new issue of
3 per cent securities, payable fifty
years after the date of issue.
The reserve association will pay
to the government a special fran
chise tax of 1 per cent per year
on the amount of such bonds, as the
government's actual interest charge
on the 2 per cents is now actually
1 per cent. Since the banks pay
back a half of 1 per cent as a tax
when the bonds are used as the basis
of note circulation, this will .re
imburse the government for the extra
interest it will be called upon to pay
as a result of exchanging the two
for threes.
One effect of the exchange will be
to enable the government to provide
permanently for a largo portion of
the interest bearing public debt at a
net interest of 1 per cent. This
arrangement proposes a solution of
what many financiers declared the
greatest obstacle to the plan. It dis
poses permanently of the bond se
cured currency without loss to the
government and without Imposing
upon the reserve association the
ownership of the $730,000,000 two
per cent bonds. The association will
agree to hold the 3 per cents for fifty
years, but the secretary of the treas
ury, after fifty years, will have the
option of permitting the association
to sell the -securities at a rate not
greater than $50,000,000 a year.
The government may reserve the
right to redeem any of the bonds be
fore maturity, to buy any of them
at par for the trustees of tho postal
savings system or otherwise.
Provisions for the election of
directors have been changed in the
revised plan with the idea cf mini
mizing the possibility of control by
any section or group. There still
will be forty-five directors as in the
original plan, six members ex-officials,
viz., tho governor of the as
sociation, his two deputies, the sec
retary of the treasury, the secretary
of commerce and labor and the
comptroller of the currency. Each
of tho fifteen financial districts of
this country will elect one director;
twelve others will be elected by the
share-holders, and these twenty
seven will elect to the board twelve
additional members, who shall not be
officers of banks, but may be direc
tors in them, and who shall fairly
represent the industrial, agricul
tural, commercial and other interests
of the country.
The completed plan provides that
of the twenty-four directors . in the
latter groups, not more than three
may be elected from any one district.
As an instance, the effect of this
provision would be to limit the state
of New York, which has about one
fifth of the banking capital of the
country, and which is the seat of
the great financial Interests, to four
directors among the thirty-nine who
are elected.
In the. organization of the execu
tive committee of nine members,
upon which it has been said much of
the active management of the as
sociation would fall, only one of the
five elected members, the other four
being the governor of the associa
tion, his two deputies and the comp
troller of tho currency, ex-officials,
may be chosen from any one district.
The whole board of directors may
reserve to itself any authority it
desires, and is not bound to vest the
executive committee with full con
trol. The original plan provided that
the governor of the association
should be appointed by the presi
dent of the United tSates from a list
of names submitted by the board of
directors, and the president should
also have power to remove the gover
nor. The revised plan reserves the
right of removal to a two-thirds vote
of the board.
One Important change is made in
the admission to membership of
state banks and trust companies
which conform to a required stand
ard. A state bank or trust company
to be eligible must conform to the
same standard as national banks re
garding the relation of its capital to
the population of the community it
serves, or regarding the reserves to
be held against deposits, and must
uuujLurw w u curiam scanaard re
garding examinations and reports.
Requirements for reserves to be
hold against deposits are made the
same for national banks, state banks
and trust companies, but the present
reserve requirements of national
banks are modified to the extent of
requiring no reserves against time
deposits, except for thirty days pre
ceding their maturity. This pro
vision, which resembles those In the
trust company laws of some states, is
expected to make it more profitable
for national banks to hold time de
posits in competition with trust com
panies. Banks of all classes will
have the full flse of time deposits
without reserve restrictions until
thirty days from maturing time,
when standard reserves will be re
quired. A provision that tho association
shall discount for any member noteB
and bills of exchange arising out of
commercial transactions is further
developed in tho line of preventing
the granting of loans on securities.
The notes and bills eligible for dis
count by the association are re
stricted to such notes and bills of
exchange as are "Issued or drawn
for agricultural, industrial or com
mercial purposes and not for carry
ing stocks, bonds or other invest
ment securities." This interpretation
will include bankers' notes for carry
ing stocks. Banks, under this pro
vision, it Is said, will be encouraged
to carry their auxiliary reserves in
commercial paper, instantly convert
ible into cash instead of in call loans
on the stock market.
National banks will have tho right
to establish savings departments and
to lend not more than 4 per cent of
such deposits upon any protected real
estate loans not exceeding 50 per
cent of the value of the property.
The national bank act how prohibits
such loans, but there is a constant
demand for them, especially in tho
west. Savings deposits in any of the
banks in the association shall be sub
ject to thirty days' notice before
withdrawal and shall be covered by a
reserve of 40 per cent ot that re
quired for demand deposits in the
same locality.
For the reserves of the associa
tion it is proposed that 50 per. cent
of its demand liabilities, Including
deposits and note issues, shall be
covered by gold or other lawful
money, with a provision that when
ever the reserve falls below 50 per
cent the association is bound to pay
to the government a special tax
which increases in rate in proportion
to the deficiency. The operation of
this plan in such instances is ex
pected to stimulate an Increase in
the rate of discount and to bring in
gold until the reserves again become
normal.
Another new provision specifies that
any local - association may assume
and exercise the powers and func
tions of a clearing house. In this
respect some existing clearing houses
(Continued on Page 14.)
r
One Mother
"
Says
"There's only one trouble
with
' $
Post
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"When I get a package or
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at once have tremendous
appetites
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Require no Cooking
Serve wijh sugar and cream
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table.
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Sold by Grocers.
Post urn Cereal Company, Limited
Battle Creek, Mien., O. S. A. -
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