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VOLUME 13, NUMBER 25
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The Commoner.
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THE QOMMONER, Lincoln, Neb.
gional resorvo banks on terms that will bo fair
and just.
"Tho business Interests, I think, will welcome
this bill as a blessing. It gives them through
their banks a promise of relief in any time of
stringency, and it gives this promise without
putting in tho hands of tho banks a power that
might bo used against tho public. Tho bill is a
faithful fulfillment of the promise made in the
Baltimoro platform.
"I feel sure that tho democrats of tho senate
and houso will rally to the support' of the bill,
and I am sanguine enough to believe that it will
receive a cordial support from republicans as
well."
GOVERNMENT CONTROL
Tho financiers complain that tho president's
currency bill puts in Uio hands of tho govern
ment complete control of treasury note issue.
This is as it should ho.
Control could not with safety ho deposited in
other hands.
Government oflicinls not for tho people and
net before tho eyes of tho country.
Financiers net for themselves and in secret.
The country is fortunate in having a president
who takes tho people's side on this great ques
tion. Strength to his arm.
CONSULS UNDER CIVIL SERVICE
The president has had under consideration tho
matter of appointments to tho consular service
and has authorized the secretary of state to
mako the following statement:
"Tho civil servlco was, by an executive order
issued Juno 27, 190G, extended to tho consular
servlco and tho president is entirely in sym
pathy with tho purpose which tho order was in
tended to subserve. He believes that consular
appointments should be made upon examination
and that promotions Bhould bo made upon merit
If vacancies occur they will bo filled from within
the sorvice, where this can bo done without in
jury to the service. If a vacancy occurs in ono
of the higher positions and ho does not at tho
time find within the service a person entirely
qualified to fill such position, ho will feel at
liberty to exercise the right vested in him to
suspend tho executive order in respect to that
particular appointment, but such an appoint
ment will bo an exception to tho rulo and will
bo made only when he is convinced that tho
good of tho service clearly requires such an
exception."
Democratic Currency Bill
Following is an Associated Press dispatch:
Washington, June 19. Tho administration cur
rency bill was mado public tonight by JRepre
sentativo Glass, chairman of tho houso com
mittee on banking and currency. It will bo
introduced in the houso and senate after Presi
dent Wilson has delivered in person his address
to congress on Monday.
An outline of the measure prepared by Mr.
Glass states that it will be gone over in detail
for alterations, and set out that its purpose is
to accomplish three principal objects provision
for rediscounting commercial paper of specified
types; a basis for elastic notes properly safe
guarded; machinery for doing foreign banking
business. The measure essentially provides for
twelve or more federal reserve banks, which
will rediscount paper, deal in government se
curities, exchange and conduct government
fiscal operations. National banks and such state
banks and trust companies as conform to stand
ards would bo stockholders of the reserve banks.
The government would hold no stock.
Tho government would control the federal
reserve banks entirely through a federal reserve
board of seven members in which the banks '
would have no representation.
The board would be composed of the secre
tary of the treasury, secretary of agriculture,
the comptroller of the currency as members ex
offlcio. Four other members would be chosen
by the president and confirmed by the senate.
Tho national bank note circulation would re
main undisturbed, and no proposal is made in
the bill for retiring approximately $700,000,000
2 per cent bonds upon which that note issue now
rests.
An amendment or separate bill to refund
these bonds into 3 per cent bonds may be in
troduced later.
In addition to the $700,000,000 existing na
tional bank notes not more than $500,000,000
in what are known as federal reserve treasury
notes .might bo issued at tho discretion of the
federal reserve board, solely for the purpose of
making advances to the federal reserve banks,
which would do no business with tho public, but
deal only with their member banks and receive
deposits only from the United States. While
the notes on their faces would purport to be the
obligations of the United States, they would be
required to be secured by a gold reserve of
33 1-3 per cent provided by the federal reserve
bank, and would bo redeemable in gold on de
mand of the treasury department at tho city of
Washington or any federal bank.
Stringent provisions are made against count
ing any of these notes as a part of bank re
serves and the system is guarded against infla
tion by lodging power with the federal reserve
board to exact an interest charge upon treasury
notes in order to insure their prompt redemp
tion. The notes are .not made legal tender, but
would be receivable by the government and
every bank of the system at par without ex
change. 'No change would be made in the protection
of other existing notes.
Tho federal reserve board would require one
federal reserve bank to rediscount the paper of
another and would establish a rate on discount
not necessaTily uniform for all reserve banks
but mado with a view to accommodating the
commerce of the country and promoting a stable
price level. For recasting tho present bank re
serve system, the bill proposes to transfer the
reserves from national banks in the present re
serve and central reserve cities to federal re
servo banks, carrying the process of transfer
over thirty-eight months to ayoid shock to mar
ket conditions.
The bill proposes, according to Mr. Glass'
statement, "the ultimate establishment of a re
servo system In which country banks wiirhavo
5 Qr.eAnt of re80rvJ I. o- 15 per cent of total
of liabilities, such 15 per cent to be held 5 per
cent in the banks' vaults, 5 per cent with the
national reserve bank and 5 per cent either at
homo or with tho reserve bank, while reserve
and central reserve city banks have reserves of
20 per cent of demand liabilltes of which 10
por cent will bo at home, 5 per cent with the
reserve bank of tho district and 5 per cent
either at home or with the reserve bank."
Tho statement says:
"The presumed effect of this plan will be to
end tho placing of reserves with central reserve
city banks for use in stock market operations
to keep reserves in somo measure at home and
to requiro speculators to get the funds thoy'need
in their operations either by directly hnrr
ing them from persons who hold them ami TI
to lend the cash for that purpose or 0RInt
borrowing from the banks in the places 111
the operations are to be carried on.
"In the belief that the present system is ami
quated and unsatisfactory, that the masBine X
funds in New York and other financial centers
of which so much has been said in recent years
is largely due to tho present reserve require
ments of national banks and that in order to
get the real benefit from tho system of redis
count which has been proposed as a remedy for
many existing evils it is necessary to base such
system upon an actual control of reserves pro.
vision has been made forecasting the present
bank reservo system.
"The bill is based on the belief that no one
Bhould participate in tho control of tho system
unless he is financially interested himself, or
chosen by those who are, except insofar as the
government stops in and asserts tho authority
of tho whole community.
"With this in mind, the system has been de
vised so as to provide for the continuation of
existing national banks, with their organization,
powers and functions unchanged.
"In addition there is established a system of
federal reserve banks, which are incorporated
institutions holding federal charters and in all
respects managed like national banks, except
as to the election of directors.
"There are twelve of these federal reserve
banks, each managed by a board of nine direc
tors, three of whom will be expert hankers,
selected by the banks. There will be members
elected in the same way, but required to repre
sent the commercial, industrial or agricultural
interests of the district and subject to removal
by the federal reserve board in case they do not
fairly represent these interests. The remaining
three directors are to bo chosen by tho federal
reservo board.
"The, object of the bill is to effect a moderate
division and classification of banking business
along indicated lines, the net result, presumably
being summed np as follows:
"National reservo banks will be strictly
limited to rediscounting actual commercial and
industrial transactions evidenced by very short
term paper and on rare occasions, under care
fully prescribed conditions, to financial opera
tions protected by collateral. They will also be
able to engage in foreign exchange operations,
sales of government securities, etc.
"National banks will be subjected to precisely
the same restrictions as at present, with a re
laxation in favor of a moderate amount of real
estate loans by country banks under carefully
guaranteed conditions." ,
The terms of office of the four members oi
the federal reserve board appointed by the presi
dent are to be eight years, with the provision
that those first appointed will serve two, four,
six and eight years, respectively. The salary
each member, excepting tho cabinet members,
will be $10,000 a year, and the comptroller oj
the currency would receive $5,000 in addiuou
to the $5,000 salary he now receives.
"The chief points in the new federal reserve
banks are described as follows: ,.,v
"The number is to be twelve, with possiDiy
an increase later as provided. . .hA
"The ownership is to be in the hands of iw
stockholding banks of the twelve dIstIC;.;n2
which the reserve banks are situated. NU"JJ
banks are compelled to be members ana bw
banks and trust companies are permitted u
members. f n
"The capitalization is to be 20 per cent
the capital of the stockholding banks, one-u
paid in and one-half subject to call. kg
"The business of these federal reserve uau
is to be as follows: x . . , qtoCfr
"Re discounting of papor presented W Bl
holding banks under specified conditions, v
vided such papers grow out of actual afe .
tural, commercial or industrial transactions
does not run more than a specified nuniu
days. nnrities,
"Buying and selling government BeC"" Ign
gold and silver bullion, and foreign coin, i
exchange and open market bills oi t
turity-" x a tnday t0
Administration officials started toa7oVer
smooth out differences among demo cm B r0
the proposal to act upon the currency w
during the present session. m Ambers
President Wilson asked democratic nw
o'f the house committee on banking "u
i.
iw"' it wr e