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SENATOR ALDRICH DEFENDS HIS NEW CURRENCY BILLMeasure Provides for Issuance of $500,000,000 in Notes, Guaranteed by State Municipal or Railroad Bonds
WASHINGTON, Feb. 10.—The reply of Senator Aldrich of Rhode Island to critics of his banking and currency bill, introduced by him as a measure to provide relief in time of financial stress, by allowing the national banks to issue emergency currency on certain approved securities and guaranteed by government, was made today. It excited widespread interest because the bill is supposed to have the best opportunity of passing of the number of bills offered this session. Many financial critics declare the bill affords no substantial relief. Aldrich reviewed the situation in an able style. He said:
"It was not a currency panic, in the true sense of the word for the United States currency, in character, is beyond question.
"The amount of money in circulation at that time in the hands of the people outside the banks and treasury was $19.36 per capita, much larger than was held by the people of any other country in the world except France, where conditions are entirely different.
"Under ordinary conditions the volume of our currency could be fairly criticised as excessive, certainly adequate to meet normal demands. But there is no provision for emergency which occurs more or less frequently in every country, and which we now see must be provided for.
"It is impossible to estimate the losses inflicted by the suspension of payment by banks in the recent disturbance, it was financial embarrassment on every hand. Thousands were thrown out of employment and wages of employes reduced. Of five expedients adopted to meet the emergency, the use of clearing house certificates was unquestionably the most effective."
"This was the eighth time their employment have been beneficial at times preventing serious disaster, but resulted this time in such a disarrangement of exchanges as to make doubtful whether the disadvantages are not greater than the benefit. The great losses the people of this country suffered through a partial break-down of our credit system should lead congress to seriously consider whether it is possible that legislation will prevent a recurrence.
Central Bank of Issue.
"If the panic should be repeated, the methods of relief used in 1907 would not be available. The treasury will not be in a condition to come to the relief. It is impossible to increase national bank notes on United States bonds. No one can anticipate what the financial conditions may be by autumn and there is urgent need of a revision of the monetary system or some establishment of a central bank of issue."
"I personally think the United States in time will adopt the latter system but in the immediate future it is out of the question. Therefore the entire finance committee agreed to the demand for an issue of emergency notes."
"The minority favored United States notes. The majority felt this will establish a dangerous precedent. The approval of their issue even for temporary purposes would lead ultimately to the demand for a continuance or enlargement whenever a reasonable pretext could be found."
"It is believed, since national bank notes, with their convertability guar-"
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SENATOR ALDRICH DEFENDS (Continued from Page One.)
guaranteed by the government, will have the confidence of the American people they will prudently use this former currency, as Germany, England and Austro-Hungary follow this plan in a general way. The committee felt Germany's precedent the safest to follow. Their Imperial bank is directly under control of the government and has the authority to issue one hundred and nineteen million dollars of notes not covered by specie. A further issue is authorized.
banks are entitled to ninety per cent in notes; on railroads 75 percent. At any time within 48 hours, the entire $500,000,000 can be put into the channels of trade to allay public excitement.
"The bill simply gives banks the right to accomplish by legal methods that which they felt necessary in the recent crisis to accomplish by illegal methods."
Aldrich grew sarcastic in referring to the objection of the effect of the bill on bank earnings. He said he must confess the committee did not try to devise a plan to increase them.
"In the recent panic there was a general suspension in cash payment by banks," he said, "this in violation of every banking law. But bank managers should realize the extraordinary forbearance of the people would not be repeated."
"Our collections for the past three months are too definite to listen with patience to a discussion by officers of banks of large cities whether the remedies proposed by congress result in large additions to their dividends."
equal to the amount of specie held and still further amount, subject to a tax of five per cent a year. Against the last named, specie must be held to one-third of the amount; gold bills of exchange against the remaining two-thirds.
The Bill.
"The bill reported by the committee provides for the possible issue, in emergencies, of $500,000,000 in notes to be identical in character to National bank notes secured by state bonds. The banks are required to deposit with the United States treasury, municipal, state or first class railroad bonds. On state or municipal bonds,











































































































































































































































































