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START Collectionle Papers e /50r7 e Aldrich Series/Volume Shelf/Accession Norill L5 11. 73 Aldrich, Nelson Wilmarth, 1841-1915. Papers, 1777-1930. 58 ft. (ca. 42,500 items) U.S. Representative and Senator from Rhode Island, financier, and philanthropist. Correspondence, diaries and notebooks, material relating to tariff rates and legislation (1880-1915) and the National Monetary Commission (1907-12), financial papers, speech file, and printed matter, chiefly relating to Aldrich's career as U.S. Senator (1881-1911). Papers also include a group of biographer's research materials containing correspondence and notes of Nathaniel W. (Continued on next card) Aldrich, Nelson Wilmarth, 1841-1915. (Card 2) Stephenson and Jeannette P. Nichols, and some diaries and engagement books kept by Aldrich's wife, Abby Chapman Aldrich. Correspondents include Joshua M. Addeman, Edward B. Aldrich, William B. Allison, Abram Piatt Andrew, Henry B. Anthony, George E. Barnard, Jr., Robert W. Bonynge, Jonathan Bourne, Jr., Charles R. Brayton, Theodore E. Burton, Adin B. Capron, Jonathan Chace, William E. Chandler, LePnron B. Colt, Samuel P. Colt, Charles A. Conant, George B. Cortelyou, Henry P. Davison, Elisha Dyer, Jr., Henry W. (Continued on next card) Aldrich, Nelson Wilmarth, 1841-1915. (Card 3) Gardner, Eugene Hale, John E. Kendrick, Philander C. Knox, Charles Warren Lippitt, Henry Cabot Lodge, Stephen B. Luce, Orville H. Platt, Aram J. Pothier, Theodore Roosevelt, John P. Sanborn, William Howard Taft, Henry M. Teller, Edward B. Vreeland, Paul M. Warburg, George Peabody Wetmore, William Whitman, and Nathan M. Wright. Finding aid and index in the Library. Information on literary rights available in the Library. Gift of the Aldrich family, 1944; John D. (Continued on next card) Aldrich, Nelson Wilmarth, 1841-1915. (Card )4) Rockefeller, Jr., 1955-56; and the Seminary of Our Lady of Providence (Rhode Island), 1970. Formerly NUCMC Ms 6o-464 1972 MICROFILMED LIBRARY OF CONGRESS PHOTODUPLICATION SERVICE EEL 56 CONININER 131) ICONT. 811 Collection Title Nelson W. Aldrich Series/Volume Shelf/Accession No. LC 77-38 (1/70) NELSON =ICH Monetary Corifitszt;za MISCELLANY 2-1 C The central banks fix from time to time the rate of diecount which governs their transactions. This bank rate undex. usual trade conditions is higher than the market rate. It is not thought desirable that the central banks should fix their rate of discount at a point which would enable them in ordinary times to enter into competition with the banks of discount and deposit for commercial business. be -VrrThrm -14.as The—teiterent-y—crf—et-i-1---meel-ern—lePri ,,,,,,,,,,,,, porea-s—telenging to banks of issue. of the great European banks are throughout the financial world. t thef,1kuci.,t.i alas and- The changes in the bank rates „. ,e..1-1-ewOd with the keenest interest The mon-ey reports of these institutions showing their stock of gold and the r4ductio of their gold holdings to their note issues and other liabilities are looked upon as furnishing a reliable index of existing business and banking conditions. 2-2 An advance in the bank rate has been found to be the most effective agency to check tendencies to over-expansion of credit. In times of stress the joint stock banks usually co- operate with the central banks in making the bank rate effective. At times, however, the central banks have been oblided to borrow money in the street or take other means to make the market rate J. conform to the bank rate. 18 governments and are bound by an obligation which, if not ex- pressed is nevertheless recognized, to sustain at all times the public credit. I think that it may be said that these banks, without exception, by the wisdom of their management and the character and extent of their resources, have commanded univer- eal confidence in their stability and solvency as the conserva- tors of public and private interests. It is the wise policy of these central banks to keep their assets, aside from their gold v' r -C 'rh-tAA 4 A. Nreserves and government securieies, in short time commercial paN. L ) a l -A-T 41 7, ,-- Xi. =sir. ti „ tizt Ii ‘ ' ‘ '‘ 'C. la &:. t € ".' -1 i ,72 -` *- ‘,(( 44-3 ...,, Z1401‘1, 1/5.1°444 of a recognize V , , A Vndard. tc- a44 i-e>. 'llitecibeftogethcr form a sat ifTac outi,c '4 N4 7'0,47 tory basis for rt milt note tva " issues. ' "C'el. 72. .Nda • 14 i i ,, / ( a/4Lc 0Y . Lk.c._ I 0-7 ,,,..-t a 4 L Credit balances of-e444a_lapake in the central bank a-re-. /14. - si agettliniodatedoimaitia-fdls part cf theiT cash reserves, and the442 cf-c The features of these foreign systems which have perhaps the greatest interest for us , aside from those that relate to the orLanization and functions of the central banks are;- (1), The methods by which panics are prevented or by which their disastrous effects are averted in those countries. (2). Those that fix either by law or custom a standard form and character of commercial bills of exchange or acceptances which are available for discount or rediscount at central banks and the banks of discount and deposit. (3). Those that fix the terms and conditions of note issue. I . 1 , ie L The effective methods by which panics are avoided and i‘ by which wiirets* srar44411-8 excitementy,4x-e allayed and public confi- dence restored in times when serious trouble is threatened are At such times the central banks as the respons- well understood. ible custodians of the gold reserves of the country are relied 40-t-trpupon to strengthen 1-A..e.s4 reserves E;nd replenish them whenever necessary. The central banks control the movements of gold, ai4e1.- secure the ad.equacy of their reserves. (1). By an advance ) 'e s in the benk rate. Vs., 1, 4,V • La_tha—taao—ef serious trouble this 44w advance must be rapid zAta, substantial in chari,cter. (2) By their holdings of foreign bills of frequent maturity. (3). By borrowing gold from or accepting assistance from cther central banks. At times , oth7. means arc taken for encouraging Gold imports and discouraring gold exports but the main reliances 3 7 7777of the banks r.e upon the methods I have sugcested and those methods have been found effective in all eanes. 4 PetThe jdlrit stock banks whose cooperation is necessary in this scheme of relief replenish their own reserves,whenever doz._ 1.4 y in such emergencies by rediscounting commercial paper at the central banks. With adequate gold reserves maintained, the central banks and joint stock banks establish confidence in business circles by discounting freely all legitimate offerings of paper upon t,he credit or securities which are accepted in ordinary times. rate i T4Lrapid advance in the bank timeo of trouble is at once a restraint on speculative t4~ Eg_c ventures and a warning to .6011—L44-1-Aees representa ives that they should exercise the greatest care es to the nature of their new engagements. • LI 5 . simultaneous strenEtheninc of reserves and the ranting of liberal extension of credit to all deserving bor- rowers have not failed for fifty years to produce the desired result of establishing confidence and avoiding the disastrous results of acute financial crises. -tic q de7-71-12-4 c"-r- A c"-t-- Lkk% e & __ 4, ,c, ( , ,-t -,e bae} 4 , L, ,....., k,sL 1 1,,,., ,._..... 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PL 1 4rk cfr C-L.e4L , / ZL-/ je2 4 0 te-‘ 2 o , eZ ,j er Al: C"e- CIL1C gle-7./4 0 XL: te--- ke2- A , eft_i) Gt-t caere--4 2to , •••10111•11••••••••-•-••• / 1' , ---fr , aaec 7 i-yi --- eC l* attr'i r t ceCtitt# c41,24.77. • .?‘ , / /LAftAki c_lit ct-ka e>t_t_A 3 try-T.414" . 140 41.1 / / 1 C.t.4k6 A:I.• Ctttt-,P1\-4114J 07.4-Li -2 , gni 71 >11 e-tA (41-1 "4 , 414 4 4_ eik4" /r„ 91t4s. /6: \rt. 4 c 7 (217 t-iArWat t_‘....c) ) ( c -c420 -e dLe‘,t)6 4 4 7 / , ti-/e9c ZY-¢.. ) 1 1 e ll" -A-1 Cry at- g ev—st-Pf.,- Ad, cti 4.1-4 Vtt-A4‘111tk fx, et v 7v 01-‘ e 9 ir -71•1 0 401.AA. # X eA, L%. Cat C 41C 741..se, \ l C14 1 ( 7 A er r- LA-,e ( Cu , . 1° L.-1.4- c" //ao 47 4 - CAA, 4e / A 142 * i.-4tirr.r!"*T atvZ• CX-7 64-•* .-74- p, iNals.4. Pt. -4,d f • 44. J • .1 h rt. Ar-ek.A.A.AL ekr- 10-4.-04 7-1 tZc C Al sr- 4, Gryce-t,r% Statutes at large, v.13 pp. 106-109 ... which notes shall express upon their face that they are secured by United States bonds, deposited with the treasurer of the United States by the written or engraved signatures of the treasurer and register, and by the imprint of the seal of the treasury; and shall also express upon their face the promise of the association receiving the same to pay on demand , attested by the signatures of the president or vice-president and cashier. ... That the bonds transferred to and deposited with the treasurer of the United States, as hereinbefore provided, by any banking association for the security of its circulating notes, shall be held exclusively for that purpose... ... Whenever the market or cash value of any bonds deposited with the treasurer of the United States, as aforesaid, shall be reduced below the amount of the circulation issued for the same, the comptroller of the currency is hereby authorized to demand and receive the amount of such depreciation in other United States bonds at cash value, or in money, from the association receiving said bills, to be deposited with the treasurer of the United States as long as such depreciation continues. ... Every association in the cities hereinafter named shall, at all times, have on hand, in lawful money of the United States, an amount equal to at least twenty-five per centum of the aggregate amount of its notes in circulation, and of its deposits. From Mr. Benton's Speech, in Senate,Jan.13, 1642 (Cong. Globe, v.10, p.65) The report which . accompanies this plan is profuse in /1 its recommendatfons, and in protestations of its safety and excellence,all the phrases of the bank parlor are here rehearsed, and set out to the best advantage, to delight and captivate us. Safe and solidi.specie basis- sound and uniform currency- better than gold- convertible at the will of the holder- always good.such are the holyday phrases which accompany the plan, and recommend it to our favor. Why, sir, does the writer of the report not know that this is the very jargon of banking? that it is the cant of Change Alley, Cheapside, Threadneedle, and Wall street ? Does he not know that it is the slang upon which every Bank charter is obtained. - that it is the old worn out , used up, dead and gone, slang -z upon which every red dog, wild cat, owl creek, coon box, and Cairo, swindling shop which has disgraced our country, obtained their charters ? and that all these paid specie till they stopped ? Statutes at large, v.13, p.106--sec. 23 And be it further enacted, That after any such association shall have caused its promise to pay such notes on demand to be signed by the president or vice-president and cashier thereof, in such manner as to make them obligatory promissory notes, payable on demand, at its place of business, such association is hereby authorized to issue and circulate the same as money; and the same shall be received at par in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except for duties on imports; and also for all salaries and other debts and demands owing by the United States to individuals, corporations, and associations with- in the United States, except interest on the public (4,:bt, and in redemption of the national currency. ...Each association organized in any of the cities named in the foregoing section shall select, subject to the approval of the comptroller of the currency, an association in the city of New York, at which it will redeem its circulating notes at par.... That nothing in this section shall relieve any association from its liability to redeem its circulating notes at its own counter, at par, in lawful money,on Gemand. . a , L. (.7)1\ CL-C; t '4' V-, The banking systems of tI4ese countries consist of joint stock at banks of discount and depo 't, which do very much the larger part of the commercial bu ness of their respective countries, and of a central bank in efch country with adequate capital and resources and importiint duties and functions. Each country has also a variety of other financial institutions created for special purposes and with special functions. These include, among others, savings banks of several kinds, cooperative banks, and agricultural mortgage banks. The central organization is, from a national standpoint, the most important element in each of these systems. The assignment of duties and recognised functions to these central banks, whether prescribed by statute or exacted by public opinion, has resulted from a process of evolution covering generations of practical experience. It has not been found possible to secure an effective credit organization in any country without this important factor. For my present purposes of comparison a mere outline of the characteristics and methods of these central institutions is sufficient. ekAA__ tr)-\ „dio6 (L. el Jet, - 1 -,et--er— ;t k.P/a t -P-•*4 • C 44 - t k "— ' fetae`e r 41.A...A cry i) irY r -t L tt/t k 47A a-7 posed to change the national banking law, and there is no relief from the rigidity of reserves except through the power of sus- pension improvidently given to the Federal Reserve Board. The national banks now hold somethqg over 12% of their net deposits in actual cash. cash holdings to about 6%. The bill reduces the requirements for It is vcr evident that if 6% is to ) 1 be accepted by the banks as an adequat ci basis for their trans.. ti V\\ actions, a large expansion of credit will ensue. If, on the other hand, the 12 1/2% basis is to be' maintained it is apparent It that, with the withdrawals and restric ed use of sums new profit- ably employed, a considerable contraction would take place. is much easier to take individual case It for the purpose of com- parison of conditions now and after the\ law goes fully into ef- 1 fect, than to work out a statement of r sults based upon hypo-. If Athe sActes can be kept in circulation indefinitely , as I believe they can and will be under ordinary circumstances, then there is no reason why the loans should ever be paid or the currency re- tired. It is apparent o4 the organization of the central bank .4 etttAfIrm 4-4 ),1 a iNit cri),14. Cr-le t.) 0-1— GLA..._ ec=s? I citt."(Cf41.14"_e_ --- C Ighot A , , t& -2.• ts.. -4#.4 ) c / t2tA 1f t (4..A._ L.• =1A.Z 4 C 6\ 97 - 41.• W Obift, ,emta-bitv-iirS7Z,4" bailimor° The Treasury, lind ar aziatizig, /4. 1— • --tA'41„1,7; 14MIMMIWalW4lo redeem 0'*" / national bank notes aa-tbe agent.of the banks, a& the Geweernment takes as security fo, any failure of the banks to res pond, United ,States bonds equal in amount to the total amount of notes issued c. • vision, Vie amqunt -.0 7 .0U n ilignimag uce a nder governmental super/ / '"-... notes issued can never exceed the 14fit of / United/States bo ds deposited. / I The Gove nment, Ustaing ossession/f the bonds, Imia a 7gh t to sell them at Ili ic or private st4e to recoup itself Or advan/ / , / / 7 cep made for redemptio purposes f n In addition, the )tior requires / / / A i )4 the banks deposit in the TiAasury a redemptio l n itund of 5% of I 1 -.1 ---f I / outstanding notes. It wapi assumed when the aci was pas , , and t, in all subsequet legislatio that the bonds of the nited : / States could/be sold eit er at privat e or public sate at a/Price n above par r, and up to w itthin the last few weeks. this la- undoubiedly true autil o The Governmeilt also/ as the 11 hol4r of nationAl bank notes, wou ld have a paiamouny lien upon all the assets of the bank for further security. I have also been reminde the use of emergency currenc that the act of 1908 providingfor under certain circumstances, au- lfnite6 mate, tutt WASHINGTON, D. C. crck, LK_ " k44, er +(A 04- (IA k,( it,LA.t, ci 44 6 .411r 0-`k ' 4 ): ( ` tA/\...42, tr-w-t-Y 444 ck \k Ftrvw_e„., .v 12 A e..J2. /- Wilson---2. radically. pp. i and 6. It (the constitution) absolutely forbade the States to issue bills of credit, did not give the federal government itself power to do so, and was meant practically to prohibit the use of any currency which was not at least based directly upon gold and silver. p. 46. Only a great commanding bank, everywhere known, whose notes really and always represented gold could supply paper worth its face value in all places or keep exchanges from chaos. Such an agency of adjustment and control the Bank of the United States had proved itself to be. j It had not only served its purpose as a fiscal agent of the government to the satisfaction of the Treasury, but had also steadied and facilitated every legitimate business transaction and rid the money market of its worst dangers. But many of the men to whom General Jackson was accustomed to listen believed, or affected to believe, that it had done much more: that its power was used to serve a party and to keep men who were no friends of the people or of popular rights in a position to manage and corrupt the whole politics of the nation. p. 47. General Jackson had said that the Bank of the United States did not give the country a stable currency. The country had an opportunity to see for itself what service it had rendered when Senator Woodbury, in the Senate. Congressional Globe, Jan. 6, 1842. No doubt the exchange value of irredeemable bank paper, contrasted with specie, was large---particularly on such a currency as Wild Cat money. But there was no excessive exchange on specie or bank paper truly representing spikcie. The only real exchange that existed was the cost of transmitting specie. The great fal- lacy consisted in supposing the paper money of suspended banks of the same value as specie. Specie could be transported from New Orleans to New York for less thah two per cent, and the cost of transmission was the only true basis for ascer taining the rate of exchanges. -But L7 was a greet panic the whole of the specie would be taken, and nothing left to redeem the ten millions outstanding. This Exchequer Institution would then be as complete a rag w paper bank as any ever established on Owl Creek, or elsewhere. There was no fancy in this; it was all fact: it would have been the effect reiterated half a dozen times with in the last half dozen years, if this plan had been in exist ence as a Government institution? p.98. Senator Walk r, in the Senate, Jan. 11, 1842 . He would not vote for any Bank, or Government circulation, that was not based, dollar for dollar, on specie. p.116. Contest for Sound Money, Hepburn. Page 415. A general review of the monetary history of the entire period of our national existence shows that each generation had t learn for itself and at its own expense the evils of unsound money. The costly experiences of the preceding generation were generally forgotten, and legislators, following rather than lead- ( ing the people, failed to correct the evils except After long and disastrous delays. So intolerable were the conditions at times that only the unlimited recuperative powers of our rapidly // developing and expanding country prevented the overthrow of that (, standard of value and honor which is recognized by the world as highest and best. The problem of f„irilis ,.1 1 a sound and stable medium for a country of such large area, of such diverse interests, developing at an unprecedented rate, presents unusual difficulties, and no precedent is furnished by any other country with kindred conditions and analagous experience. Principles remain the same, however, and the obstacles could have been overcome and all questions properly solved had not political ambitions and party advantage exercised such a controlling influence. The questions confronting us today are in msny respects the same that have existed throughout our history, nemely,the establishment of 4 coinage and currency system which will assure stability as to metallic money, security and flexibility to paper currency, etc. Benton---4. And, finally, because it is right in itself that we should take up the old continentals before we begin to make new ones. For these, and other reasons, I am bold to declare that if we must have a Congress paper-money, I prefer the paper of the Congress of 1776 to that of 1842. Sir, the Senate must pardon me. speak irreverently of official matters; It is not my custom to but there are some things too light for argument---too grave for ridicule---and which it is difficult to treat in a becoming manner. This cabinet plan of a Federal Exchequer if one of those subjects; and to its strange and novel character, part tragic and part farcical, must be attributed my more than usually defective mode of speaking. I plead the subject itself for the imperfection of my mode of treating it. Cushings Report---2. said board of exchequer and each of its several agencies at all times so to limit the amount of certificates so issued that gold and silver on hand shall be equal to the amount thereof outstanding. p.408. _ts f cf 2-t_< Z-e -z-,_--1 L7 c -e-4- .0._,.."_ -e-4,r-m--/C- .r-)-,_- l L_ 7 /4--t- .i4 e 7f . . "-c_fet_,--",e 44 /,0 11;,, " .0, 411.W...41.140..".....4.011.1.40.4.0101...."....."1111.41111r1.41/11041.11.111.b....411001001.1/11.0040,ft.. 2L - U tkk WI ) rt/- tlAtAl IZ" t(A, )1,4 CrI ittA" fr;(4 4,aAA' aF4 f d4irtA/ kvL 141)1 A42 A ftr."4.1 tck... A104100°L.ty (").--4,4, - r- Ca-41 /-) IUUI t er7 ftlf ( 4;; • A • Too tdt n 2-1' tVIA,A I f #:‘ ; 7. • C Lifik..for* 4 - c.-...........A.... t 41 1,1 " • N.g.• _ e 4, k." . ,- • 70 / 6 c e ., ...--7.--- 1 „....1 P.. . r ' , t (:4.,------i R4/ 4 (1.0. / c ck. Am # Y' ( I 14va ei , , „, t /' 1 igt 4i , / — , Ck•-• t- Hi: k... A, iii 44 4.4,4 44.4444 . #, 4 / " ''..s$,..C.--- • -1. '% e- I - 4.41t. Ce l 4 . rr i.441714,-- •/4' 4111' . dee..• ! „ 046..0 4 44 t t ,74 4-c-- I. rN) 2 . account of the_ua.1.4.4114,1Atwit declarations of a party platform. The bill can be made strong and efficacious by a few important changes which I venture to suggest. 4iteve-san-be-me-seasuve- Assum4ner-as-4-4114mk-we-mu8t, I venture to assume that any plan for banking reform in the United States in order to be successful must include provisions for an organization or association which shall embrace the whole country , with a capital and resources that will contain universal confidence, a certain portion of its capital might be assigned to branches in districts for dis- count purposes. It is immaterial by what name this organization should be called. It should be under the joint control of the government and its shareholders. Its management should bb given to men with expert knowledge and with a tenure of service which would make them independent of political or local banking influences. Y-9 It might borrow an amount which would be equal or greater than the amount of its deposits in the reserve bank ,if it should be desirable to increase its loaning power. It must be evident, however, that if all the banks should borrow from the reserve bank of any district to its full capacity, the reserves of the national banks would be invested in commercial paper and not available for use for reserve purposes at any time. It might happen and probably would happen that the bank which should not avail itself of the opportunity would find itself in this condition;(1); This bank could not withdraw its deposits for any h-6 The most important difference in the two plans proposed is found in their treatment of note issues. The Commission plan authorizes the National Reserve Association to issue its own notes, which must be always convertible into lawful money on de- mand, convertibility and safety being secured by a reserve of not less than 50 of its total liabilities, by limitations, and by a system of taxation, removing practically any possibility of fail- ure or suspension. The Reserve Association is required to pur- chase the bonds of national banks and to relieve the Government from its responsibility for the redemption of ourstanding bank notes. All the efficient safeguards which the experiences of other commercial nations have found to be necessary to insure prompt redemption and ultimate security are provided by the terms of the Commission plan. The bill authorizes the issue of United rc c • Extracts from A History of the American People, by Woodrow Wilson. Volume IV. Mr. Jefferson, indeed, expressed the greatest alarm "at the prospect of seeing General Jackson President." "He is," he said, "one of the most unfit men I know of for the place. He has had very little raspect for laws or constitutions, and is, in fact,an able military chief. His passions are terrible. He has been much tried since I knew him, but he is a dangerous man." And had Mr. Jefferson lived to witness the result, he would hardly have altered his judgment. He had stood, for all he was so full of democratic doctrine, for sonservative ways of political growth. General Jackson stood, it turned out, for personal government, party proscriptions, and the self-willed choices of personal power. p• 5• Everywhere it was proclaimed that the people had come into possession of the government; that the domination of profession- al statesmen and politicians had been thrown off; that the rank and file were victors, and that to the victors belonged "the spoils of the enemy". That was unquestionable GeneralJackson's creed. undlrstood him could play upon him. Men who He had allowed ill-informedn men who believed it, and designing men who pretended to believe it, to persuade him that the government had not only been monopolized but also captured by the politicians and statesmen who had hitherto controlled it; and he meant to purify it very Wilson-.''3. its check was withdrawn. It was no sooner discredited than the old inflation of bank issues came again, with wider range and ply play of force than ever. The "pet banks", as they were prompt- ly dubbed, to which the deposits of the government had been transferred, were selected upon party principles,---were one and all "Democratic" banks in the South and West, whose directors were of the President's party. There number was fixed by no law or principle, and began from the outset to be added to from time to time, as this, that, or the other influence of interest or persuasion obtained the patronage of the government for banks not at first favored with a place on the list. pp. 57 and 58. The imperious old man must have looked back with not a little satisfaction upon the long series of personal triumphs he had won, against trained statesmen and old parties intrenched against him. He moved straight and openly upon every object he desired, and his very directness seemed to add dignity and scope to the government over which he presided. He had created a party and put subtle revolution into affairs by sheer force of individual quality, and left his great place and office before either he or the men who loved and followea him were aware what mischief he had unwittingly done,---how the whole framework of settled politics had been shaken and loosened at every joint by his wilful su.• premacy. pp. 61 and 62. In defense of the grants of power by Congress to the Federal Reserve Board, it is asserted that similar powers are conferred p uplin the secretary of the treasury and the comptroller of thecur- rency by existing law, and that the organization of the Interstate Commerce Commission and its power are analogous to those conferred by the bill on the Federal Board. The powers given to the secre- tary of the treasury and the comptroller of the cutrency are with reference to the operations of the Treasury itself, or in connec- tion with the issue of national bank notes or the provisions of national banking law. It is not only the unquestioned right but the duty of Congress to supervise the issue and fix the condition under which national bank notes can be used as currency. It has properly adopted legislation to insure the safe and wise business management of banking institutions of its own creation, but in all these cases, Concress has by law established the rules and imposed c-2 the conditions, and h o left their enforcement to executive ht 4,4 -n €L2 AAA. •-kt ot-4- ! cti„. officials. In the case of the power given the secretary of the treasury to decide whether the public interest demanded an issue of national bank notes in emergencies cited as a precedent for the grants th the central board, all the conditions under which national bank notes could be issued in emergencies were clearly defined by Congress itself, and the secretary of the treasury was to ascertain whether the public interests at the time required tie the issue. I am not sure wLether the friends of tie measure 21ean to assert that the power of Congress c,ver the business of banking is co-extensive with the plenary power of Congress over interstELte commerce. The Interstate Commerce Commision have been given power, by progressive le6is1isn, to decide upon the ressonable- ness of rates, to declare what an t-he-i-r- opinion is a reasonable c-3 rate in any particular case, to establish metho ds of accounting, to determine the character of reports, to make investigations to ascertain the value of railroad properties and other similar powers, but ther—hare not as yet, in any case, been given actual management of railroad properties nor, beval grant ed any of the leci81 t ive powers conferred.Q.ft.theboar=4,44a*-44,3,1i: exercised at their discretJon. The Interstcte Commerce Coanission is v9of differently constituted from the propo sed Board,-it has no ex-officio members, the appointments are made for seven years, and neither in composition nor its authorized functions, does it furnish any precedent for the creation of the Feder al Reserve Board. The Federal R'eserTe Banks, by section 4, are given all the powers and privileges of national banks, ex- cept so far as the same might be limited by the provisions of the bill uade*—eorie444zatlaa. Shareholders in national banks, by the provisions of existing law, are liable for debts and obligations •I 7o 7V of the banks to an amount equal to the amount of their stock,. It is uncertain whether the authors of the bill intended that this additional liability should apply to shareholders in the Federal Reserve banks. As it stands there is no exemption provided and it seems ae-4hrugh the subscribing banks • establish a ha bility equal to 40% of their capital stock by becoming share- holders in the Federal Reserve Banks. eig*, • (..11111111•111Mir • •-• CkAAAA-Li 9>)2 t Crr ••," 'YIALL kcit-0 (?- 1 '1 c7 4.," iA44 , g #4 . 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Ifit;• i , T ,I J 1 -... 1%.,• eli, 't •',. r [ 2] tr ;31" !al Quo ,C t ion - Even the Filipinos, whom our rot-stuffed chumus have beer led. to think are unfit for self government, if they were situated as eith2r 01;188 of the chumps above mentioned, would tney not have the little sere necessary to get ar POcling of the truth that cheaper money--not hiLner prtces--1.9, the cause of its tak.ing for the purchase of necessities (ninety per cent of which are much more plentiful .,or capita than they ever were before, -1/1(1 therelOre much cheaper than formorly) fully Of course, to neither tittY per cmrt more money than formerly? of chumpm--ror to anybody else—do old, fixed, roney obitations call for more dcilars thar formerly. So thP, chumps—and others—whe are getting no more money than formerly, are losing rothing in ayin these obligatiors; while chumos—and others--who aro rece'ving 7:ore mcrey than formerly, are really getting u prosperity"--as far as these payBut bow about the victims who are obliged to 7:.oments are concerned. cept the cheap money, dollar for dollar, in payment of obligations contracted prior to the course of crazy inflation? 9th--Would it not be well for the inflaters—Republicars especially --to look up and read William PcKinley's financial speech about the fleecing effect cf cheapeninF-T the money by inflation? That speech was written twelve year: ago, just prior to the presidential election, and was ,ublished in all the Republican and. Democrat-republican papers of the country. It wag written for the MgW71Cia1 iAlrp080 (so McKinley claimed) of lhowinF7 hew Inflation—whether brought about by free silver coinage or otherwise—would. fiece the pensioners, the holdors of lifeirsurarom .dolicins, and the savir71-bark depositors; and the wage earners too, whose wages would rot be raised to make Up for the cheapness of the dollars they would recAsjve under inflation. After she0.iing crocodile trA ovPr 'inlat would happen to the poor pensiorerl, and tc other cre(jcitcrs, if the dollars should get cheapened under a Bryar-administratIon—after all their tears and pitiful pleas, the opponertA of Inflation. themselvs, commenced to inflate tb:o money soon atter the eLection of McXinley; and they have kept on inflating it ever since. Thlis, knowingly and irte/Alonally, they have been doing claiminq would what they themselv-prior to McKini%), ,3 be one of the most nefarious thirs a great and glorious nation could ibly do; and, they have been doing it With no more sign of compunction, and with no p;reater manifestatior of sympathy for their victims of cheap money, than 1.14. shown by the rattlesrOr" for the victims of its venomous fangs. 10th--Al it naturally follows that the uurdhaA1no; power of the dollar (:.epreciates to correspond with the degree or amount of inflation, so it also folicws that—whiln it does not require any more of the depreciated dollars to pay old dobts—it requires a greater number for How, then, are the monthe purchase anr, the handling of merchandise. 97/ :trinr:encies to be remedied, or be warded off, by issuing the proposed elastic currency? Is it not evident that such financiering will further inflate and depreciate the already over-inflated and dereciatr)d money? and to such an extent that all the money will have Ao cheapened In purchasing power WA to require Alch a greater number cf the cheaper dollars to purchase and handle any given anount of merchandise, that the money stringencies will occur just the AaLie as before? lith—What cecent country on the face of the earth—especiaily in time of peace--has been guilty of upsetting the purchasing pCWOT of its money; first inflating it by the issue of millions of rag money, then contracting it bY withdrawing the same from clreulation?--by the former , coure over-ercouragin7 and stimulatire; Importations, the manufacturing cf goods, the ra1317-47 of crops, spc)culation and gambling, and causing a merciless fleecing of all who have fixed AIMS due them in dollars; by the latter course blocking the whoels of business, and fleecing those who have fixed sums to Li:v in dollars? LCcrtinued on pa.(70 3) OA -4-411 Y1 Tr . ,—, 0- J at , s t(-:z „..t.„ 14 - cr."a-•• , 0, VI 4 6t,A-0 t it:1(AAA. -A A12 L.J Mca, 477 ,Ce„, 6 •••' (11-AA.-C4j-P.1 tb‘r• rej I t.• • \ /3%.5.."4%"."41.4tIVIZI4rir c rY\ .1 4 t k rtA-4.4 ,A3 r f 1 CV' • 0 L.A.A , ' i(6N- 4- 1 t,.,‘ brt\-4A.t.4 eX t-i 4_,Ss 06; more. The House committee assiEned the amount of paper which would be available for rediscount as the bill now stands at tout t6,noo,000. As the rightto fix the character of lcans available for rediscount is given to the Central Reserve Board, 1 this amount is liable to be iricrensed largely in any event, whether the amount available is 6,000,000 or 16,000,000,when we consider that we have at ipresent tut 3,000,000 of currency of (-ill kinds, T think it is pafe to describe the power Eiver to I look forward to the time, as the result of our labors, 'hen bills drawn upon Chicago or New York and accepted by your leadinG banks or merchants, shall have equal value and currency in the markets of tut: world with stcrlinG bills drawn upon London. /3v.t+LA-1-4-Ceixd.t1 ,e 41 , i s , Ct.•k .6:4111pr /tick- thba X"cl- cfv•-4( A La-2 ati,.e , I % 44,01 ea,414, ‘), z-(0-4-e-7 i crt, tA iket, /1 1/ 2 ivettf / C. 0 4.4;•In .40." „ re; 1 ' 7 c , € ex444 1 oir vu074.4f.= 4 1.0‘4.47 - c-2 removal by the Board without notice, and reports to it. His salary is fixed by the Federal deserve Board but paid by the Federal Reserve bank. The branch offices of the Federal Reserve banks are authorized and fixed and under the management of am agent of the Federal Reserve Board. The number of branch offices in the United States under the bill, if all the national banks should become members, might be four hundred. The districts in which Federal Reserve banks are 'to be located are determined and may be changed and rearranged alnd new districts created by the Federal Reserve Board. The Board is authorized, throOgh its agent, to classify the banks in each district for voting purpo ses. c-7 the conduct of business of such savings departments. It may make and publish, at its discretion, lists of securities, papers, bonds, and other forms of investments, which the savings depart- ments of national banks are permitted to buy, and it need not be uniform throughout the United States and shall be adapted to the business conditions of different sections of the country. It has the power to authorize national banks to establish branches in foreign countries, and to fix the terms and con- ditions under which the business of such branches shall be transacted. The Board may, in its discretion, reject any ap- plication for the establishment of such branches. It is authorized to make regulations with re- It is authorized to exempt the savings de- partment of national banks from any and every restriction upon classes and kinds of business laid down in the national banking act. It may, within one year, prepare and publi sh rules for banks to deposit in the Treasury of the United States a sum equal to them. of the Federal Reserve notes which may be issued to It is authorized to make and promulgate the transfer of notes at par among the Federal Reserve banks, and may, at ijts discretion, exercise the powers of a clearing house for such banks, or may designate a Federal Reserve bank to exercise these functions. It may also require each such bank to exercise the functions of a clearing house for its shareholdLng members. c-4 or State banks who are shareholders in the Federal Reserve bank, and the reserve requirements of the Federal Reserve banks, ex- cepting reserve requirements which are made with reference to Federal Reserve notes. It is authorized to tax Federal Reserve banks, national banks, and State banks,who are members, upon the amounts by which the reserve requirements of the act may be per- mitted to fall below the specified level. It is given the power to add to the number of cities clas- sified as reserve or central reserve cities under existing law, to reclassify reserve or central reserve cities, and to des- ignate the banks therein situated as country banks at its dis- cretion. In other words, it may require one bank in the city of New York to hold twelve or fifteen per cent reserves and another twenty or twent.-five per cent, or it may suspend the c-5 whole or a portion of the reserves required from any of these. It is authorized to suspend the officials of Reserve banks and to require the removal of said officials if incompetent, etc. It may suspend, for cause relating to violation of any of the provisions of the bill, the operations of any Federal Reserve bank and appoint a receiver therefor. It is authorized to de- termine each week, or as much oftener as required, the rate of discount to be charged Is by each Felderal Reserve bank for each class of paper as fixed by the Boar, and there is no requirement for any uniformity of rates, eithexl as between districts or for the same class of paper. It is authorized to apportion the Government notes among the Federal banks, and to fix the rate of interes Mich shall be paid by the banks to the United States. It Say, at its discretion, require any of the Federal Reserve 3. The desire to promote selfish intercsts is quite as active and controlling in corporations as in individual s and when we consider that a Federal Reserve Bank crcti borro w money from the Federel Reserve Board , paying 1/2 of]. per cent per annum for it, and can loan 2/3 of the amount for say from four to six per cent , this fact , rather khan the public interest, 11 is quite likely to control their' applicatio ns for loans. The AdA,...z_ • ye is Jr* commercial p / krr-ck 4•U 01PN Xa,c , - 6-Jer %-tsir'414eng." ett ltfre tftie. - - Tli44 laper---fs deposited 759 4 . and of the regional bank that if the Board in control of the former should believethat there'was a lecitimate de- mand for more money that their ac,ent, the management of the Federal Reserve banks would see to it that the necessary appli- cations were made. It is further claimed that even if applica4 tions should be made and there were 6 disposition on the part of the Central Bank to Erant them thatthere would be a practical limitation, crowing out of the fee % that the amount of the corn- mercial paper that a Federal Rese rtte bank might have was necessarily limited. was To this it can be answered, that there is no li!(iitation in the bill; of the amount of commercial paper which a Federal Reserve bank !E12/ rediscount. The loans and discounts of all the 1.)&nks in the United States amount in roun d numbers to t15,000,000. The securities held by banks which could , be used as a bureau for authoriz ing paper are about 5,00 0,000 9 , , sentiment in both parties was strong enough to Lee04 to the pas- sage of thr act increasing the limit of United States notes frown 4.40.14ons, and the veto of this measure by General 47-444a , 7 Grant was an effective check to the first 2ost-bel1um attempt et - A inflation the increased use of Government money. While the opponents of resumption and the friends of further inflation and of the free coinage of silver included members of both political parties, they were not strong enough in the early stages to induce either of the great parties to openly espouse their cause in national platforms. It-it -true -that the- demo- cratic platform of 1868 contained a clause advocating the payment of Government bolids in United States notes. The democratic plat- form of 1872 was _emphatic in its pronouncement for quote 10 ,p •4., If;71`11-it The failure to secure ther support of either of the great A A parties to their peculiar views orlutt,ary QUeationa led to the formation,successively, of the greenback mod—people's populist part*A.:), 0 • et,k. 0 • it 1 , • ' A a e-t--C ' • , , t_ u-1•_‘,/,'..; iri_,,,,. i i er.4 L4 )A. - / k (t. , u t.-• 7 „(.., A 6: / -1 N. c7 • v- ii.itt-a-, Z 17 C5' 42 * 2 /_7 1 4 (.7 4' y6r,( e 0 4- A /1 f Avc=t .96 geo V 4---eXdf-c 4 AtP7Ar7,te'edit dA"AZ Q-5.°" 2 4 t;L--b* ite 464)--7L-L ZAZ.X7 c, wat C•t-t.4.1C 7 t4A4, Je . g% Alt 4L4_ 4tDA, drg4j4 e e 2 01 2 4 1 -j4 t A 9 4 -7 AITA. 17-1..v eltie oc'erc-e fe—p- es— 1-74.7.0-7. C. >N‘...-4 0. X-4 . of -11i 74--it> r I. rt, c..k.....(1,..4.4 . A r. e e 1 I1 cA 4.„, Ter bm, I (t.--,--,_ 6--5 v-10 -, - , ti L( ..,..%, ot.A. • ei- - 411- o itt, I C- CC /4; C a-M% Pt.„ 14 " ‘ C OA.,1 r 1 4/4 et, cix C 4 1111111111111(M 0' LL e_ r 1.-1=c_arzt. 6(7--e„ 7 -7 t ' &7- , ty)v16L.- 4t-t-4 A -.41‹ p -49- ILF 4./ 4e4 -1 ' "1 " p - ofies 0 - -- - --,4* 7 e- e mee ,brf a2a,z_t_ eire "7 4- A ,77 .; c c 4".I\. T. 47.-Ds. siA f ---L-1. Ikik.. )C '5/ " t ": tr) 11 /, 1 • .446 Mr. Cushing's Currency Report to the House. Niles' National Register, February 26, 4. 1842. That it is no part of the proper business of the federal government to carry on (directly or indirectly) the business of discounting notes or bills, or otherwise lending money, or to p.407. furnish funds to be so lent. 3. It makes and can make no excessive issues, and cannot t suspend cash payments. a gold eagle in hand. For every paper eagle on the wing, it has p.4C7. Be it enacted, etc., That there shall be, and hereby is created and established in the treasury department at the seat of government of the United States, a board to be called the Exchequer Board of the United States, to be composed of the secrctary of the treasury for the time 4eing, and the treasurer of the United States for the time beini, and one c issioner, to be appointed by the president of Ile United States, vice and consent of the senate; pointed for four years; and ith the ad- the said commissioner to be ap- neither he nor the treasurer of the United States shall be removed f*om office, except for physical disability, incompetency, or neglect or violation of duty; and, ? in case of any such removal, i shall be the duty of the president to lay the reasons thereof befire the senate; and the said cora( missioner shall receive a sal ry of three thousand dollars; and 7 the secretary of the treasury shall preside over the board. Sec. 6. # # #1 1 , And it shall be the duty of the A \