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NELSON ALDRICH

Monetary COMIlliSSiG4

HECUAKI

7(//////K/If,,.
//

/"X•62..

oZ5`

112:Qam..44Q &cv.49-cAAA4 Lib

*The :none
renc;;:

Irob)..o718," s

utiAM4

t'.0 Cwt.:I0
- .1'0U or o

4--

in 7-1 is Last annual ro:mrt, p.
103, °which confront Congre:;:i

(rib arras:

adr: ini:;tr lt

o. fic ors of the Cr over;-!. lent

the b iino. world, and brin,.; a
91 ague upon k'n'ri(n pOLL t
rntuit

11 .
1-in tL el,' fin( : ()1lit ion ix: rir
ed

The L

cOrnil v!1-1,1ri

but on we'

),-,n1;.- in • iri,,rov %nen -1,c.

huch

les ol c. i

ci.it1 as will :7alce credit

everywhere

equal-

ly available to the extent to which
thoso seg_lkin: it are justly
entitled.
alai 1
- i

So, too, mu:;t a point be finiA
lly reached won b.-.n.ks

MAO a

I of

e cx.It cua.'r°nay of

• es pons ibl e, in:It ea(i of th o

courit.ry Ltnc

stand

ov,.:).-n:7!e3:10.:, for its red anp-

t ion in i.!;olci coin whenever Lir:0 in
WI t over ()Ilan titi es 0 • os on t'.!
.1
Oori.)troll Or':; recomendAt ions for
:1'cr.p.1(i.ial I ck:ivi
t ion

re n•tturally con!'"nod t

:improver-ten LS of

laws and the rotire,lont O
States flOteS•

cioes not helievo

money - notos anx, :sdocie
ion i; I

t it i

4- 'this p.t.or
for

7r qenb sok 8 and otho
L11:1t,

!•.a. t

in 1697,

Uni Led

the (mint int, volume of

it,; insufficient.

r'dunhiLnt, an,.6

t ional b;1 -• A

-7o if• of' the opin-

luck of bfLcIliticn
t

ene,0 lh to R op or't.

ency in thos,

strin.2-

the ;)rincipal case oi'

in the srr1.11'3r

co'ntry where there is a dearth of

)arts

money and ban;•-.able credit. '-e t,R.-•er•Tor,! reco.- -onds„, as & ntop
t Circe t ion, alentil-len it; to t*'. 1tion%1 harlicin

in t17!
lat

7fola.(.‘ 0.15thorizo

ir.21.-.1Atants, with a c..pital s took of

of ler;F; tun
au

•Thanization of Thtional banks in :11:1cfri

a proportiorte 1 emit of -Plite6 States boncir

ti)

ecul.o te

redenption of t]-d' oLretil.ation, tile minim/el cital :Look
,os

anc•

no-s r, cluired for or •,1,.i.v.izm.ion beinc;

'airors getieral arP.zationts that would.

tilreay.
• Lrl •)0() :oesoec
=

to ir.siAe noLes for cir

allow All

iation up to

.: a reducthe full mnount of 01.9 bonds cif):)osit.-)d ther,Ifor, rrt,•1.1-1,
tion of the one per cent annual tax now imposed on wnraCe
culat ion to one-fottrth of1..71
imburse the

rate (1-thich woulv. be ariple to re-

iov ern lent for ai I ey:7 ,:ns en incurred for print

notes, reciylntion, etc.)

ant: py-Airnit the b mks to oitablih

branches whi eh ';‘),L)...V3. enable

)arent hki to intro;.ucc loan-

able capital into places uhable to sup)ort indo?on('.etit
Thereby local ceposits an( capitf..1.1 woul( beeme lonnable caoi.
tal.

not

(03 MA 1:.

reconle.nda the redeal of the ten

cent tax levied unon the i.sue of fq .ite b3.11.1c no t(iS

th011i;11 ht

vim, in that all bank c ircu Lai ion should be based entirely. upon bn.nkini;
itievr

3et8 and not apon :;•overryient,

of' c,ourse,

ret?eal

orte

tax a lo,;ic..1 no-

.1tOasity. for entirely
l

anks," says the C!orv troller, " t!'!er L1aan

ion:)., do

not issue 1) .in: notes, simply because by doirr; so they must inc-w'
loss through the enforcin,..; of the ten per cent tax against th.)
notes no issmxl.

'Spon the f.,=e Grounds '.Tationsa banks do not
to than in so

issue notes Yther1 there in either a direct

ing, or a pro:IAA too rrlall to warrant the investment in bonds
and

i:;

pLtyment of tint) rat e of the tax

that 7..4,ional. banks a-ce in a

onso public.; instittions,

they are lincle.f. (.Lrect 3overn-,enta1 supervi!;.ton, LIi.ç :ire none
the 1e:1s ast7ociations of
pur2oses OS

formed wholly for

wiv-

iriw:ite

- ect to i.):11er $urrency, the • ational banAs an
In res:)
Unite(. S Le. 08 Vr9 SUI7 ar 0

the

o in ti y onred in the busineHs of
if)r

banking, and very much to t,be distulvarltk;e of the pul)lic.
fore comviess has he,m appealed to fro'.-1 time to tile ltr:,r

he dif-

t1i. ;):L-ties of the (;olmtry to enact measures of
ferent )-.1.1ticz,
financial "reforms," rriny oi' thPl of the most antagonistic
c108

firrIQ

fre,) coLn

of silver, sup11.1.n.mted by
inited

unlirlito6 iSWac of .. ):-ver mone;; direct frorl ti
, as a p ern
Treasury,

• ed o an ab 1 ,7; e, I

c ; others urn ing

the policy of leavin.,-, the rational h!tnkf.,; free
- er money necesfAry
volurne of pa i
and

-,,racLIal or i noc1 Late !'et ire

e b. :;i.x1C::
t an

;7.ates

C, nc

determine the
emin try,
or aLt

-Ated

-11 on the in!Ale of
ton :7,:•i• cent tax 1 ,..n71,

o /..c.)eal of

for
the

,rrery C•escription; still others ankini;
.atee riotT.s o!' (

J. loi

;/..al.,c) b oink notes, in order to

}.1.3 0001110 of eaoh 93.rt

Of the coJntry to ostaluif;h ban's of i5sue without 71 etera1 restraints.

Confronted 1.vith :3‘ac1a confliotins- 2olicies the 1al., tor

mode of relief Trail look o(2 1.1p011 With SrY,1(3

avor by the 19ading
4.iirrenCy of the last

members of the Go71-littel on _

1:ous e of Ilepr ,sentati,res an a e.o1,)1•o1.ise; but they did not oon-

oth

an ;het to retire the 51',-(Inbamks ;tr
11/0.re

sorie af3:31Zra

vote cou.1(,

so_oh

section of the oountry that

,; obtained.
rloro t.

as we 1a,r.7:
'Ftorn

(i or a '/ink in

Troamiry notes, and

ivon b: ::entle-(;,1 who :)rofqssed to know
:leople of

the nentiments or t

iSh

'Is

that Concres;.. Coos not
-uhleet of 1)it.rtking.
:rrobloris,
1,11in
-•
r)-Lii-,•‘,,r,

-d by Con ...r One

)1.1:.).1.1c at; I.

ho'r

>onness all the power to 1,1[7ir.tate
non ,-) of tilt) disousnionr; of the

t. e prenn or
ir in .;ltheth,
'adc3

Ll)at

hay° for.

lawyPirs and bankers

incLalina* the

or.

u thirty y(hIrs, Jn-

wholly 1'4!

riot to ho iion.(t)red.

to vote for

th woul, he 7Vill1fl

--relis from the
ori ,

mer41.) orf; o

no-ib ,,1, of

1..hat

ansuranees Ihr‘»m-:

unless sat

:)urpose

s Lcit31' LI1 rit, a bill. for

atc 1 f.V:13

tonu.;resF:, has
Atl.U.COS

1- 17`,17‘) Cin:1

power to .'olieve the siL,ation, whereas in fact the/ could in a
"or' 1.

;o meu!ture enact laws t' at woulcr, very

the ciolution of theve probtells

,id in

elievia; that to several

5tates of V.e 'Jnion have as much power as .:onnress to ch.:xter
banks of iEsue„ wHm such b .Lks ae Cesired o am: to exenpt them
fron

aleral taxation anC sloervLsion, 1 now A"esent th.at, remedy

or consideration, as on

that

:in be :maintained upon constitil-

tional t:rounds.
Tho;.)ower to onict laws proviCking for
lonfv an

of )a)e:o

the reuiRtion o: it s volume acorOin

foi• its circulation if; not ,r ,!st ,Jii

cwolusivi:ly in Coni;ress by the

7ithin well f..:;'theC. limits t.ny
may exercise that powiw
less of any

to the 6 ,riand

_oordin:: to

,ate lefLislature

own zHiscretiont regard-

'ep6e:.al restrictions, by taxation or et:Jorwise, tiT,t

ConL:ross ?)as itlosed 'pon the notes of 't:11,e banks i!,3ue
circulation

for

money.

Therefore t::e

of any aate who ar ,.7. not ,Iltisfied

with the existinp; monetary systum shoul

)a.y to ,,h'ar own lei;-

islature for 6sir ,:::e rolieLY as
B tead of wastin .: theip efforts ia IvAn ap.lef-an to ion!.;res
amonthientr3 to 1, f..!

11.ws, or .. ;n1imity3o

w greonbacks,u anc: other United SL:U.es motes.

ii;suef; of

2-1;11, ux11

such a c:ourso woul(k roliev e the two :Totit political

.rLien and

oonrrress from endless eincuioas of L'Io ymone:" tia6tion,"

7.r.tkin; 1

locJ1.1 if,,:ne in the dis:mtisfier:. Stat.:ea.

The ntronth of tho movement in the SAith and ',lest for
the free coina,,-,;o of silver, at its fixed ratio of "13 to 1," is
due not so

'.11i C

a ,-- esire onth'..3 part of the

sections to oilon

,eople of those

znintF-., to that ,netal, as to tho

e1ief that

the oxfistity: volume of mono
;
. is insufficeint, an.0 that the
prices of t'neir staple L)I•oducts are cue to that cause.
in3 this, it is not yt1'an:y2

th'* strongly resont !iny propo-

sition lookirv: to the ,.otirelient of

"rr.',en .- .acics" and other

United. r;tates notes, an(i..-tro h.r.)r,tilo to L'r:Ii. t .on
solutely necessary to

iiritti

.'‘sel..iev-

at ir ab-

that currency, am; gol,

and sil-

ver (.,
.01.n, at par.
If these

people knew there constit-ltional ricr,hts there

would be very little op)osition, on their part, to the speedy rem
t irerlent of e'ror

Th1 Lo(:

t i.t05 pa ier dollar, an

the main ton-

anc o of the gold standard; bout:v.:se banks of issue, simit.r to
the old State

n, could. be ...Authorized b:;7 the ftate lec;irAa-

tures on as sl-tfo

basis as the ,r ational 'anks,

nd the:: woul:i be
MAR-

riwth h

or adapted
an

t,han the latt fir tc, afford them bankinc;

pz*,))1r volume of dirc,lat ion. -And, of r;(qar'se,

theLr ',1(;a1.,i want Cleir bank notes to be "as i;ood as

olo."

.,71eVii.-2r a 24„ :to should! o.• should not establish such a
blnkin -

systom, is merely a question of 000nony and polioy for

1e,;_71s1ature to determine undf.:r the

Late Constit:;tion.

be .-1:1(•e
al :,1.n.(7

s if° as the present one, an,: .- '"nr more eco2lorli-

onv on i out to tho

1 at ion to a nin

eopi o thin one which y..0.1t

7) or cent

C ircu-

t t on on the )
- ar value

it-

ed States bonds which bear hitt low inte:-est, 7-rh
- •.
hich

- the rerta t b :n ,; t;1-11: in tho3e parts of

countrj whore loans cor

iand

hi.r:t rates, (the South and West) g

clr.not a ,'ford to inc .e3se such expensive ciroulo.ti ,)n as th

s r.g1 on inited St.ites bonds.

Thiv; C.s..!'ect in

:t tonal 1-rnit laws, !and th ,3 absurd one of takin;; the averaco
(Arculation of the banks, are well ry.ese:?nte0 in teFltateme:it of
the Comptroller - of the Currency,'
7on.
fore the .3o!-,riittee on

ankirp; an

;;:c31.1 OS, ni e be-

t'ur.ency of the uouSe of 'flop-

resentatives at the Last session of the 54th Conr,ress.

e clean:

ly demonstrated that the 1.(Jsue of cireulatim; notes is now Triere.•
ly a natter of businecs concern to the banks; where intefest
ratem are high they can use their capital to better adirantaf7e
than investing it in Unitf.xl
:7Lt;ura1ly

rind 7ron-xly

. 7 tates bonds for currency issues.

the :.)0wer to provide a currency for thl

whole country," :- -,eritionet

.r.

Thlei Jtico

frinion in 1,1-!e 'Toazie T'Ank c;ase, ;.5 h
the b ,rlics only to 17

Illase in his

1. :>3,

ex I cint of peori table Inv e

'ix
fro7-1

conservv.ive businer point of view, !
,
,IV not ;u;)ublic
•
4 ;u.t:".

It I

onorally, thought that safe banking requires full

bond od

ecurity to be

for ti ultimate r

t ion oifl

On 1.;;(1 other h-,ne. such soe„rity is, in the o_linion

bank note.

of t1-10

ra edg rid

rior!t sound financiers, not only unnecosYary to well conbanks ano their custormws

& )urden on th

but

(Iuct%1 bankin -

-xhic:h to:Ids to incre..se chari;as for lows.
sysLem.

could be .1:vo1ded in a
Undoubtedly in

se Crawbks
,
'1}:..

s tan thi.)

es adopting a sound b

was
desire of the people woul6 be to h;Ive the circ!.latint; notes
iitod:ta Les

to 1.1..1,re ,.,onr:ress retim

rood as gold,* anc

notes, thereby restorin:7 Ole rerenues oi

the United States to

in the
a coin basis which, when cone, woulti necestril:r -1?.inta
;:(311-:;.-.0 at par with the r•ol(.1. collar,. if' the f:'tates tiow
o.- the lack of currency .i:Grierally actopted a State

con)l Lfltfl

ankinL); systri.

:Por tht t,

rip,'. t or,

I do no

of:

why every State

in the .n.ion shoulo not prefer it to the existing banks of
nor Co

why tHe Southern anC. VP.entern Fational banks should

not )rofer to

e out

ch3rters as

•aticnal b•tak. law*.

t. inue
ity-

y,d,

l!otes is-

obj oct
woul•:

C-1:ifl cort.

72owever there is no inc OMB.

under thWI State sys tvsi

n.): circulate outside of the

to,

roulcl be a decided advanta:,e to

the .ropli J.f;
)1(3 of

tate Tanks

!ystulp Of hankin,le

evt,,,m

.I.
I:'I

L:r!

Et:A.Le.

r1c'r

progrecsive b .in.kint; clutter's

rotes are intended for local bt:siners only. "2'. W. -Jo

igifitles

1saw Y qr 0.. : c

feature of 1-:.- 3.nkin.
in

a.fl4

m rt.c! e a forcible pr,
.3synti.tion of this

end ,
i

lAtr:-enc:r

t -at cy:.1. h 'fore to ;ornfli
.
t t ee on 7ank-,

ifi

to rouse of rtenr;::sentativos on ,
••ecember '
- 19,

1693, rrhon ho wan

rgin': tLe repeal of* t.:1.1e ton pf...r (•;nt tax as

panacea for our firvAncia I i L Is.

7-0 said

the decade

endinr: in 1, ;';0, thr: hanks in thn countie!-,, th±ch

ow form the

State of "irginia n•irril) ,-.:r•,(9. three hitridreci., incluclin: branches,
anc: :laintaine(

CirelZ U.'.1;i0!": 0

alwa. s It nar in coin.

o orl

that LITne on 7ir:inia
to any ex ton

outsi

to the b:.in1cf.! at

tharl that of t;e'rlinr: `.‘ it

s aid h

;

;.1.a1'

notes, :trid they' did not circulate
at e.

Srlfill 1 incount

turnu

th ,3 expense of

ten million dollars,

fl, -

oro i'1!diito1l, returned

63:"

to the forei3n hold or, equal to
‘..!x)cnne not ;Tooter, perhaps,

flit. 1),?.nk notes to Tm'l-tin,Tton for ro;-

ion.
Compare this cirelation of 1-).?_rik notes in •firi.:inia vrith
total brznk circulation in :he thirteen Southern States on
October 31, 1(,9i), as flown. !):,? the Comptroll., r' a r000rt for
y ear: With -;
1,,10 00o,000.

ta : of :
4.;74,000,000, the o rc I•%t .on was only
Accordin:: to her anto-b ell‘n exim.)rioncg,

orrin of i5nitod States notes were

to be

retired,

jflj

could'

easily keep out a Stlike bank circulation of •::
. 1.:.,000,00

business,
Under such a systen of banking. as

its

1,71•kt,

I •

above clesorilled

-10oath

) .4)1

t _

ta L o of Lio

of paper carrency tho.

ion '•-;31)1c1

ref!,

volurno

at o

r Late

olv es by 1 oav inf; that mat 1, or tfi

Lind ev p;n' iteI L;ti1r i roTLut i0118 such as wisdom

banks,

fiX rY)r 1 once

miGht

ffer the conse-'

o!7;

0;* (313

•

arid

I anci not inS1it C 1IO1 upon t1': )00710 of oth
enc es,
e

S t at es who s o prud e.ice impel loci than to 7.-y,) -ly to t!,,Ar
L.9

t thirt

0_1 the

y 0:XS throvi.7,11.

syst,In.

7'*.atiOn.Z3.1

rofrain from

or I

s en tin;

,!anc,

1Z1 o

:u7r,111 Court in th
(lcI ion of the f.,

the

- erien.c e
dev el op od by tile t.!x 0

of; o!' fin anal

t princ

inks

constitiltion:,tlity o1' th ,:; r,tatutc....s that ill.*
cent upon not (_.s is avoxi

•ios e an internal ronuo 1.3x of t
t on b

•
ossary to

8 ocron

the S'ounc". ation of t o „ t
croa t s

eguard

not only

ho 1'0V ors oct ;

ab 11 ity it will not. no

64 11‘.;

a."11‘imed, art(: in

t; anc: hrsicirs, it haP

al t

alSO

II. tto L

at 13 i)flkS anc oth or b

1a3. b

st "w

niT

8" 01"1,

tv 1):r.k inn,.

but it

:eh o

GCja

of' State banking Which I

si()n Co)s not

conflict with the

ha'ro in view.

.17:o i;chrxno can he maintained upon th o higher t

c)nsti ti

rieroly 138.. now
draft

an( on 7r1nci

i onal

()rolls ieciion

SChale

of the? t:tulrern.? •'ourt of the

(X11

f)t

by nirn-

iited

it ,ould not bo a v ory difl'icult mat tor Li,

const it tirmal b

Mil for pa..:t3ap;ci by

't,f:tte.

-11.
1:-Atur(.: tmL woulci on:3.1)1 e I

utitorizc;

Late banks whose I;;;;ae ol' n.ot.qs for
sub j c t

o i.n t. ern 11 r r.).v enu..)
h.ti•

ti on
EX1

In s

ric !.‘2,1;ion wou./.:

at ion.

pri.))Ltr,x1 anotlior ;:)Jr,

isfy eonstItutina1
thi 3ni on

onr

avrj ors t:lat.
(Ira 213

, 700.1.
can b

(i ono in

011'2 :):0011i1) t ion in i

oi conr o,

Cons Li

dons I;i t u.-

on o1)

•

Intt- rview with
, Ltd.

t..1 •

• 4,

• **

'ill :p.m 3-1ve u.s a brief accou.:t of your institution?
The London and Amt:-.1noter T3ank-aas established in 7larch, 1834.
It was
regIstered as a Limitce. compan;; in 71arch, 1!.130.
It ori:Anated in
Lr)ndon, anc3 is still confined to London a.ld its m.iburbs.
•

..7ha', is the par value

your shams, ai C. what dividends do you. pay?

The par value of our shares is iv 100, of which iv 20 is paid.
or the last
four years dividends of L. p.!r amum have boon doclroe7he nrosont nrudket price of the shares is between Ja 50,L and iv 51.

TIow

frpwards of 10,800.

.at addition:-.1 payments can bo collected from your atockolders for the
aryvniorraent of busnesc, nnJ vilat in case of liquidation?

Does the law require you to accumulate a aertain anount of surplus?

No.

•

s',octholders have you?

20 per share have boon paid in, the shareholders are loft a liability of iv 80 per sharo 7hich can be collected for the dov:-.1opusart or.7
business, or for licuidation.

Is thero any limit to the number of si.vsres which may be held by any one
porstvi, R-:d is your approval ma-aired before a transfer of your stoc7.
cfn be made?

7.hero is no limit to the r.urfor of shares which ay individual may hold,
lylt the
. roval of diroctor3 is recyJired b(foro transfers can be
-ado.

low often do your shareholders meet?

7.7wic( a year.

•
A.

bees ov ry share have a vote at the shareholders' meotins?
o.

Votes are d1strib..1.tod as follows: '..'rom 1C to 49 s.iared, 1 vote;
frorl 510 to 99 shares, 2 votes; from 100 to 199 ohares, throo votes;
from 200 shares upward, four votes.

Describe thc) or,7nniza ion and runem,-Ilt of the ba,a, statinr7 the offto
and directors, and t'teir :-eopective functions, and for what purioan
or time and by whom are tte7 olected?

There aro 682 officers and 15 directors, Who are eloctod by shareholders.
Three of thole directors ret're annuv 71y.

Q,s

Is it castorra7 to re-oloc

Yen.

'Tow frequently do tho directors moot?

Daily.

"oli ma.ry branches have yacr

Thirty-six.

diroctors at the e:Tiratio.:1 of their torus?

in tvr. main, hr),
/ the7 b
oroatoj b 'ion, or 7:1:7-4-,! thy boe,. formeci by
the absorption or independent ban.

They have rrinly

•'
T.0V/ are year branches
A.

crentni b7 11.n.
Inan:•430c,

71y an a,)pointed
who is vlsitea periodically by the mrnerintenJen
tmd. Insifloctors of bra:Ichos,
occasionally .;:j directors.
oints the alnar3 of branches, and, are toy urnualy seloc'T,od from
siiborainato officers in the sale ba.ilf?

2h0 directors al-)oint the manaors e branches, vfx) are selected fro71
amon,c
lbordinate o'ficrs, but not necessarily in tile sno bvmch.

••

7..tow frecraently aro yo-1. mcrqred by la:v! to 71'31i:il1 11.3atanonts of condition?

?vice a year.

••

Tiow froqnet1i is it y?.lir c,Aqton to 7:1blirth them?

A.17onthly.
C.

In yollr cr)inion, should more 'rocqont ancl fuller bank returns be mblinhod?

77e do not consiJer thi

,Hat 10,7a1 or !ne.ral taxes are -)aid by the bank?

•

?he nsual parochial and.

nocelsary.

n ral taxes.

MINUTES.

7.,

/1
-46Li

Waehinzton, D. C.,
Saturday, December 2,1911

The Commission met at 11 o'clock, a. m., purruant
to the call of the Chairman.
Pre9ent: Messrs. ATYTICH (CEAIREAN), BURROWS, BURTON, WIFFKS, BONYNGE, PADGETT, and BURGESS.
In the absence of the Vice-Chairman, and as a
quorum did not appear, no formal busines

was trans-

acted.
The Chairman was authorized, however, to appoint
a sub-committee to consider the details of the Codification of the National Banking Laws, with Suggested
Changes, prepared by the (lomptroller of the Currency,
and to report the result of their examination to the
Commission.
The Chairman appointed on this sub-committee Mr.
BURTON (CHAIRMAN), Mr. WEEKS, and Mr. BURGESS.
At 12 o'clock meridian, the Commission adjourned
until 10 o'clock a. m., Monday, December 4, 1911.•

Wasl-ington, D.
Monday, December 4, 191).
MO •••

.1••

The Commission met at 10 o'clock, a. m.
Present:

Messrs. ALRITCH (C9kIRYAN), VRYELAYD (VICE-

CIATMAN), BT:LHOWS, M0TY, BUP7ON, WEEK, BONYNGE, PADGETT, and PURGES'S.
Mr. Burton moved that seven members of the r7ommission should constitute a quorum for the transaction of
business.

The motion was seconed by Mr. Burgess and

un,tnimcusly adopted.

Directors of the National Reserve Assoeition.
Mr. Weeks suggested that the rrovisions of
the plan in regard to diref•tors of the National Reserve
Association be changed as follows:
That the Board of Directors shall consist of
thirty-seven, to be composed of
!1) Seven ex officio members, one ex officio member being added to those already
provided for in the plan. This additional
ex officio member might be Evi a0ditiona1
Oeputy governor or some member of t'fie Cabinet.
(2) Pifteen directors to be elected L,,s provided by parap;raph 15.
(3) Fifteen directors, one from each district, to be elected as provided in paragraph 17.
Under this su77estion, raracraph 16 would be droppe
d.
Th1

Fugesticn was discussed at length and laid aside for

further consideraticn.
The "omission therenron, at 11:30 o'clock,
a. m.,
took a recess until 2:30 o'clock p. m.

3
AFTER

PECEr'S
es)

•

The Commission rea3oem11ed at 2:30 p. m.
Present:

Messrs. ALDRICIT (CHATH7I.AN), VREELAND (VICE-

BUPROWS, MONEY, P}

CJA

USE, BIMTON, WITS, BONYNGE,

PADGETT, BU, J.nd PRINCE.
At the sugwestion of Mr. Bonynge it was unanimously
agreed_ that the Revised Edition of the Suggested P1 n for
Monetary Legis1L.tion be made the basis of discussion.
The Chairman stated that it was his idea --

if it

should meet with the anrironal of the members of the Commission --

that with respect to provisions in +le plan

where there was no special objection, immediate steps be
taken to Place those provisions in the hands of two experts, oneA from tl'_e office of the Comptroller of the
Treasury Department and one from the Department of Justice,
in order that the language of the proposed monetar., law
might be p roper ly framed.
The Chairman further stated that at the morning session it had also

IpPen

decided that in the absence of a

quorum, all decisions reached would be tentative, and that
a.1:7 partic,Jar provision might be reconsidered on the request of any member of the Co/mission.
Upon motion of Mr. Weeks it was ag,reed that the
minutes of the meetincs of the Commissen be made full
and complete

somethirJr similar to the way the record

is kept in the Tournals of the Senp.te and t'in House of
Represent•ttives.

The Commission thereupon proceeded to further examine
and discuss the proposed plan and the following subjects
were considered:
With respect to the amount of authorized capital of
the National Reserve Association which would be paid in
under the twenty percent provision..
Dividends to be paid only on paid-in capital.
Yr. Aldrich stated the necesity for a provision
that dividends shall only be paid by the National Reserve
Association upon capital which has been paid in.
Length of Charter.
A Proposition by Mr. Bonynge that the time of
the lengt4 of the charter be made less than fifty years
was not accepted.

There was considerable discussion

to whether any provision sho,„ad be made whereby the charter
-)1 altered, amended, or repealed by Cons
.ress, but
no conclusion was reached upon this point.
Minimum Capital:
The subject of minimum capital was next considered, and while no definite conclusion was reached, the
opinion was general that some amount -000,000 --

probably $100,

should be provided as the minimum with which

the NA.tional Reserve Association might commence its
operations.

Contin:ent Fund for Imoaired
Sub36r:t !'-11 y discussed.
sion reached.

Irolus:
No def1 ,11e conclu-

Suggestions made that in no event should

fund be used for liquidation or otherwise to stockholders,
but shoull go to the United States Govelent; that fund
should not be a part of the book -.Tulle of the stock; that
the fund should .lot be more than f!Alomeif-L4 percent nor
less than fig. 414t per cent; that the percentage sou]d
be less than :In the case of ordinary bank losses.
Upon motion of Mr. Padgett it was agreed tnat a provision shoull be placed in the draft of the bill coverin
the subject of a contingent fund in the following langllage:
"When the surplus reaches twenty (20) per
cent, a fund not exceeding $2 1 000,000, or the
eqaivalent of one (1) per cent of the capital
muy be retained by tl-e bunk is linlivided profits to mec,t unexpected losses; and, upon the
final dl-solltion of the bank:,E.1.-a7 1 .:1;o to the
Government, and shall not be included in the book
value of the stock, or go to stockholders in any
contingency."
Holding Majority Stock of Banks which are members of
the National Reserve Asnoeiation:
Subject fully discussed on the basis of a proposition made by Professor Wildman of the Northwestern
Unive-sity. Dfcisicn reached to naE3s matter until Commiosion should 1,a-re an oppo,-tunity to examine Professor
Wildman's proposition.

Bonds:
Mr. Padgett (after reading section 75 of the Revis
ed
Plan) inquired whether it was contemplated
to put an
excise tax on the bonds provided for in that
section
they are to be perpetual.
it applies tv

Mr. Aldrich informed him that

bon(8 wheriever they are and the Reserve

Association is to pay that all the time independen
tly of
the ownership of the bonds.
4'ILIProximate Capital:

Mr. Weeks suggested whether 44Q-44et the capital
should not be stated

4 S400,000,000

insteadof S300,000,000

and was informed by the Chairman that the Revised
Plan
was only a frame -work or memorandum and that when
the law
was drafted a change in the amount, in his opinion,
should
be made; that there is a minimum limitation but nc
maximum.
Capital of Subscribing Banks:
The Chairman stated that on account of criticism he
had heard that possibly the provision for a minimum capit
al
of $25,000 might be too high.

Mr. Vreeland st..ted that

he had heard no objection to it.
Trust Companies:
The Chai-man

as of the opinion that in view of sug-

gestions from the Trust Section of the Ame-ican Banke
rs
Association, the minimum of
to trust companies.

$25,000 should be ap lied also

Mr. Burton stated that he desired to

7
consider the question of the limitation of the capital
of trust companies more fully, but he thought that there
should be a minimum.
Mr. Padgett stated that there was no limitation in the
laws of Tennessee as to the capital trust companies should
have.

Payment of Balance of 20 pe- cent Subscription.
Mr. Vreeland inquired as to the time of t.le payment
of the balance of tne 20 per cent subscription provided fcr
in section 1.

The Chaiyman stated that his understanding

was that no demand would be m „de for the balance of the
subscription, unless there were large losses as against
credit or impairment of the capital of the lese!-ve Assocition.

Mr. Vreeland thought that the subscribing

banks were being made liable for more than twice the amount
of their stock by this provision.

The Chairman stated that

as he unde-stood it banks could not call for the additional
10 per cent subscription for the purpose of incr: using
capital.
The discussion of the investment by banks of their
capital in real estate was Participated in by Messrs. Aldrich
Burton, NT eks, and Padgett, theconclusion being reached
that large investments of this kind on the part of banks
should not be made.
Transfer of Shares of the National

eserve Asociation stock.

Mr. Burton in commenting on section 3, rel.ltive to the

<1
transferring of the sliares of the capital stock ef tI-;e
N tinnal Reserve Asso-i-ition, stated that no law would
be constitutional which provided that they could not be
transferred under

,articulix conditions.

Mr. Padgett

called attention to the fact that the provisions of the
Revised Plan nerely prescribes the mode of transfer.

Mr.

Bonynge agreed with Mr. Burton as to the unconstiti2tionality
of attempting to provide that no transfer could be made.

Paid up Capital Stock.
Mr. Padgett made the following suggestion for the
amenment of section 4, which was agreed to:
words "paid up

That the

should be inserted before the word "capital"

wherever it appears with reference to the payment of dividends.

For instance, whe-e it is stated that they shall

receive 4 per cent dividends the text should read "4 per
cent dividends on paid-up capital stock;" and at the point
where the words "after stockholders receive 5 per cent,"
should be inserted the wards "paid-up capital s4- ock."
purpose of this amndment

The

is that there may be no qmQsticr

of construction as to whether dividends are to be received
on the subscribed stock or the paid-up stock.
Dividends of Stockholders shall be cumulati.e: (ection 4)
Mr. Burton inquired as to the meaning of this provision and Mr. Padgett was of the opinion that tie matter
shoul

be expressed more definitely.

The Chairman stated

that his understanding wus th,Lt the purpose of the rrovision is to guarantee to subscribing banks 4 per cent on

c4
I
their investment out of the earnings of any given year;
after the 20 rer cent.

lc?

SUGG7T,TIONS.
By Mr. Burton:

That, in his opinion, it is not best

to place the surplus of the National Reserve Association
beyond 20 per cent.
By Mr. Aldrich:

That some provision should be made

for the restoration of the surplus when impaired.
Mr. Ir. Burgess:

That it would be well in the final

draft of the bill to provide a definite limitation to the
earnings of the National Reserve Association.
By Mr. Bonynge:

That some provision ought possibly to

be made compelling state banks to furnish a list of the
owners of their stock, in order that members of the Reserve
Association may be protected.
By Mr. Al:lrich:

That a provision should be made pro-

hibiting that loaning on NLtional R2se-ve Assction stock.
By Mr. Al rich:

A provision should be incorporated

in the final draft of the bill that no bark shall be

,d-

mitted to membership in the National Reserve Association
that owns stock in any other bank, nor shall it hold
stock in any othr!r bank after it becometa member of the
Reserve Association.
By Mr. Aldrich:

Provision should be made whereby

state banks shall have not less than S25,000 capital
artually paid -in.
By Mr. Aldrich:

Provision for temporary organization

of the National 'ese ,-ve Association should be made by a
Commission, consisting, possibly, of the Secrc--.Lry of the

Treasury, tYe Secretary ofommerce an(1 Labor, and the
Comptroller of the Cur-ency.
This Co'rnission to decide until a permanent or6.anization is effected, the question or the limitation

of the

territory of the district and local associ:Aions.
The Commission thereupon adjourned at 5 o'clock p. in.,
until 10'30 o'clock, A. 11., Tuesday,

December 5, 1911.

Washington, T. C.
Tuesday, December

The Commission met at 10:30 o'clock, a.
m.
Present:

Messrs. ALICH (CHAIMAN), VRFELAND (VICE-

CHAIRMAN), BUTOCS, MON7Y, BnTON, WEEKS, BONYN
GE, PADGETT,
BURGE7,S, and PRINCE.
It was decided that there should be no chan:7e
made
in the provisions of the Revised Plan that the
combined
capital and surplus of the members of each local
association shall aggregate not less than $5,000,000
.
Mr. Aldrich suggested that a preliminary apror
tionment
of the associations provided for in section 5 shoul
d oe
made by directors of the Reserve Association after
a
permenent organization was effected.
Mr. Burton was of the opinion, in which all prese
nt
concurred, that

-1-ie provision of section 7, exempting

the National Reserve

Association frcm state and local

taxation should not be changed.
Mr. Alrlrich suggested that provision be made that no
real estate shoull be held by the Reserve Associatio
n,
except for banking purposes.

Mr. Al'rich also suggested

th:,t the amount of real estate held by the assoc
iation
should be limited.

Mr. Padgett suggested that the

language be glIalified by inserting the words "for
banking
purposes."
Mr. Weeks stated that the National Banking Law
made
Lmple Trovision as to real estate holdings
by National

/.s'

bunks, and suggested that a provision along similar lines
be drawn to apply to the National P.eserve Association.
This was unanimously agreed to.

24.

Mr. Padgett suggested that it should be provided

that the directors should submit to the President a fair
number of names from which to select the governor cf the
Reserve Association.
After some discussion of this pronosition, it was
agreed to add aftel the word "list" in line five the words
"not less than three in number."

As thus amended, the

paragraph was agrPed to.

In connection with the election of three-fiftne

of the Board of T)irectors of the local associ,tions,
Senator BA -ton raised the

tuestion whether the vote shol:ld

be cumulative or "en bloc. v"

There Was some discussion

on this point, but the language in the paragraph was not
changed.

AFTER

RECESS.

The Commission reassembled at 2:30 p. m.
Present:

Messrs. ALDRICH (CHAIRILAJf), VRTIPLAND (VICE-

CHAT:,
.MAN), BURROWS, MONEY, BURTON, WEEKS, BONYNGF, and
PADGETT.

9, 10, and 11.
It was agreed to provide that the number of directors
of branches should be fixed by the by-laws of each branch
,
but that there should not be less than twelve.

One-half

of this board shall be elected by the boards of the local
as:3ocitionsarid the other half

part by the stock and

part by represent;,tive vote.

21 and 22.
Agreed to without change.
23.
Was amended as follows, and as amended, was agreelto.
There shall be an audit in

committee to be elected by

the Roard of Directors from among its number (excluding
the members of the Executive Committee) of which the
Secretary of the Treasury shall be chairman.

This Committee

will make a public report at least once a year.

It shall

have authority, not only to audit the books of the National
Reserve Associ;,tion, but of the branches.
14.
Mr.

1., 4
4
;X:
11'f
suggested

that the Secretary of A6riculture

be added to the ex officio members of the board.

No action

was taken on this suggestion.
24.
Mr. Bonynge suggested that it be provided that the
term of the Governor shall be ten years and that he be
reeligible for appointment for another term.
He also thought that it should be provided that the
Deputy Governors should be reeligible for appointment for
another term.

These suggestions were agreed to.

25.
Mr. Bonynge suggested that the manager

of the branch

should be a resident of the district in whi-)11 the branch is
located.

This was agreed to, and this paragraph was

amended by inserting in the second line after the
word "appointed" the words "from the district."

26.
Mr. Padgett suggested that after the word "duties"
in the first line the following words be inserted "the
length of service to be subject to removal."

This

amendment was Egreed to.
28.
Referring to the third paragraph of section 28,
Senator Aldrich suggested that the FAcretary of the
Treasury, the Secretary of Commerce and Labor, and the
Comptroller of the (Airrency be authorized to provide the

preliminary organization of the National Reserve AsE;ocir.tion,
and to divide the country into fifteen districts.
Mr. Padgett surxested that it should be provided that
the country shall be divided acco-ding to geographical
and commercial conditions and also with regard to existing
banking facilities.

These suggestions were agreed to.

29, 30, 31, 32, 33, and 34.
Agreed to without change.

The Commission thereupon_wt..

adjourned

until 10:3C o'clock, a. m., Wednes4, December 6, 1911.

Washington, D. C.,
Wednesday, December 6, 1911.

The Commission met at 10:30 a. m.
Present: Messrs. ALDRICH (CHAVMAN), BURROWS, MONEY,
BURTON, BONYNGE, PADGETT, BURGESS, and PRINCE.
Purchase of Coin or Bullion:
Section 35 was taken up and agreed to down to
tho! first period.
With respect to the second part, it was the opinion
of Mr. Bonynge and Mr. Burgess that the word "gold" should
be struck out, in order that either gold or silver might
be purchased, their view being that the mention of gold
included silver by

implication.

The Chairman said that his understanding was the provision as it stands would not prevent the buying of silver
bullion, but merely provides the manner in which it may be
purchased, that is, in the open market.

He also stated

that it applied only to domestic excht:nges.
Mr. Burton thought that if the section were amended
it should be by some such expression as the following:
"or silver when required in the settlement of exchanges in
foreign countries."
Mr. Prince was in favor of letting the paragraph stand
unamended.
Mr. Padgett preferred to have it stand as it was un-

/4
less the words "of gold and silver coin" were inserted.
Mr. Money was of the opinion that the paragraph
should be left as it appears in the Revised Plan, unless
the right to buy silver were mentioned specifically.
Mr. Bonynge favored the suggested

amendment of Mr.

Burton.
It was fillefly agreed to allow section 35 remain unamen(led.

Rate of Exchange between the East and the West:
A general discussion Ikas had on this subject and
the Ch:Lirman was of the opinion that after the final report of the Commission had been made it might be desirable
to consider the subject more fvlly and specifically.:
During the session of the Commission Hon. Lawrence
O. Murray, Comptroller of the Currency, appeared to complete
arrangements for inviting State Bank Supervisors and
National BLnk Examiners before the Cormission for the
purpose of consultation on the question of bank examinations.
The Chairman, with the approval of the Commission,
requested Mt. Murray to communicate with Mr. J. L. Mohundro, Chairman of the Association of Supervisors of
State Banks, inviting them to appear on Thursday, December 14, 1911, and to make the necessary arrangements for the
attendance of the National Bank Examiners.
It was also decided to invite two or three of the
leading bankers of the country to be present at the same

time the State Supervisors and te 1Tational Bank
Examiners
appeared1 the selecticn
to be made by the Chairman.
The Commission thereupon took a recess until 2 o'cloc
k
. M.

•••

RECES:71

AFTER

The Commission reassembled at 2:30 p. m.
Present •

Messrs. ALJICfl( (77AIRMAN), VREF,LAI',I; (VICE-

CH AI 1-n1 A.N), BUTtiOWS, DIONFY, BLIP T ON

WEEKS, BONYNG14.;,

. A.7.)GET T ,
73

BURGESS, and PRINCE.

36.
It was agreed to insert after the word "necessary"
in the fifth line the words "in the discretion of the
Secretary of the Treasury."
Burton raised the question
"cash balance."

Hr. Vreeland and Semktor

to the meaning of the words

Does it include trust funds?

It was agreed that it was desirable to look into this
language and also find out from the Secretary cf.• the
Treasury how many t ust funds there are in the :reasury and
whether they are kept separate from the general funds of
the Treasury.
37 , 38,39, 40.
Agreed to without change.

41.
There was considerable discussion as to whether the
language of this paragraph carried out the intention of
Senator Aldrich, namely, to make the rates of discount of
the National Rese-ve Asnocition superior to the usury laws
of the several states.

Mr. Vreeland suggested that the

paragraph be amended as follows: "The N; tional Reserve As-

socirition shall have authority to fix the rates of discount from time to time, which, when so fixed, shall be
published, and shall be uniform throughout the United
states."
The paragraph as thus amended, was agreed to.

42.
This paragraph was amended by striking out in line
three the words "to a limited amount;" by inserting a ","
after the word 'bank" in line four; and by substituting
the word "acceptors" for the words "houses" in the same
line, and as amended was agreedtc.

43.
L.

This paragraph was amended by inserting aA

0-'
after

the word "bonds" in line two, and by substituting the word
"also"

for the word "a." in the same line.

As thus

amended, the para,7raph was agreed to.

44.
Was agreed to.

45.
This pararraph was amended by substituting for the
word "subscribers" in line two the words "subscribing
banks", and by W7riking out in line four the words "in
thgland, France, or Germany," and by striking out the
word "other" in the same line.
graph was agreed to.
46, 47, 48, and 49.
Agreed to wit out change.

As thus amended, the pi:tra-

23
Whereupon the r7ommissicn adjourned to 10:30 o'clock,
a. m., Thursday, December 7, 1911.

•

Washington, D. C.,
Friday, December 8, 1911.

'the Commission met at 1030 a. m.
Present:

Messrs. ALDRICH (CI:AMMAN), VRFHLArD (VICE'

CHAIRMAN), BITRROWS, MONEY, BURTON, WT2KS, BONYNGE, PADGET?, BURGESS, and PRINCE.
73, 74, and 75.
A discussion took place regarding the paraR:r..phs
relating to United States bonds, but no changes were made
In them.
14, 15, 16, 17, and 18.
The Chairman asked Mr. Weeks for his proposition
regarding tbe directors of the National Reserve Asuociation.

Mr. Weeks stated his proposition verbally and later

in writing as follows:

Directors:

The Secretary of the

Treasury, The Secretary of Commerce and Labor, the, Secretary
of AgricIllture, the Comptroller of the Currency, liewager
and As-s4-847*FA.-14anager.- e
Fifteen directors as elected in paragraph 15.
Tifteen directors as elected in paragraph 15 from
the business interests of the country.

The last fifteen

elan not be at the same time directors in other banking
institutions.
Consideration of these proposed changes was postponed

until the session of the Commission on 1Jonday.

During the session of the Coumission Hon. Lawrence
0. Murray, Comptroller of the Currency, Judge Oldham and
Mr. Quinn of -,;ne Yreas,)ry nepartmeatn, appeared to pe-lt
(t-Larrant;claents for the drafting of the bill to submit to
Congress.

These gentlemen agreed to cooprate wth the

Cogialission in drafting the bill.

At the sag,;estion or Mr.

Murray it wus agliod to invite Hon. Hurbert Knox Smith,
Commissioner of Corporations to act with them.
Messrs. Bonynge

Pitdgett were appointed as a com-

mittee to render s.ich assistance as mu,,/ be necessary.
The Secretary was authorized to procure rooms and all
needed clercal and other assistar,ce to work under the
direction of the gntlemen in the c}iarge of the preparation
of the bill.
At twelve

o'clock mend an, the CONniSSiGh ,dj»rned

until Monday, December li, 191t, at 10:30 a. _a.

Washington, D. C.,
Monday, Dc,ct.: il, 1911.

The Co'dclission net
• Present:

Mes1 -s.

VREELA7D (VIt!E-

CHAIRMAN ), BUR iOWS, MOITH]Y, BIT 1ON, tiriga:S , BO7ME, PADGETT , und BrIRGES.
The Chairman stated his view vij+fn rfd to te
features whicll would be incuded in the final report of
the Commission.

He stated thud, it should be applicable to

conditions in the United States and be smaething in which
the Am2rican people would be intereszed.

In a separate

report or elsewhere as an appendix, tie -e might be
treatment of foreign experiences.
There was generui discussion of the features to be
the
inciAded Lti the :eport anci •o. matter was left mum in
hands of the Chairmn.
Mr. Padgett sugested that a joint resollAtion be inshcAld
troduced in Congress providing that the Commission
file its final report by Jnuary 22nd.

No action was taken

on this sugil'estion.
Mr. Burguas raised the q -ueion of adjournillent for
the Holidays.

Sentiment seemed to be that those who wanted

were
to be away should have the privilege, while those aho
re.riaining in thecity should assist in the preparation or
the report.

At this point, Dr. Andrew WI° had come from the conference of the committee ln charge of the drafting of
the bill, stated that the Committee desired to know
with whom thecertificate of organization should be filed.
It was agreed by the Commission that such certificute
should be filed with the Sedretary of State.

33.
Mr. Aldrich raised tlie question as to whether it is
necessary to state in this act that the Government funds
the Reserve Association depositec; 31alL be held to be
money in the Treasury of tho United States.

This sug-

gestion was referred to the Coxptrolier of the Currency
and his Committee, who are drafting thelanguage of the
statute.
It was agreed to strike out the words "cash balance"
in line 2 and to insert in lieu thereof the words "general
funds", and also strikeout the following words *except
that when necessary

the Gcvernment may designate Na-

tional banks for that purpose in cities where there is no
branch of the National Reserve Association."
2.

The question was raised whether banks in the

colonial possessions of the UnitedStates could become
subscribing banks of the Reserve Asscciation.

It was

agreed not to touch upon this question in the statute
in terms, but the first sentence of section 2 was amended
to read as follows: "All national bunks, and all banks and
trust companies chartered by a State, Waich comply with the
requirea,ents for meiabership hereinafter set forth (Secs.
60-64)3 may subscribe to the capital stock of the National
Reserve Association.
In the ninth line of this section, it was also agreed
to insert the word "paid-in" after the v;:ord "minimum", and

to insert the following clause after the words 925,000,"
"and a trust company having a minimum capital of $100,0001".
(1)

It was agreed to provide in the first section

that before completing the organiztion of the National
Reaafve Association at least $100,000,000 of capitLa

aast

be paid in.
28.
The question was raised as to the expenses of the
Cowiaission which shall provide the preliminary organization of the National Reserve Association, and it was agreed
that the riastadvimna expenses of the Commission shall be advanced by the Government and be re-paid by the National
Reserve Association.
In this connection, it was also agreed that this Commission in admitting subscribing banks, must see that
no banks or trust companies are admitted, who do not comply with the provisions of the act as to minimum paid-in
capital.
Whereupon the Commission took a recess until 2:30 p. U.

AFTER RECESS.

The Commission met at 2:30 p. m.
Present:

Messrs. ALDRICH (CHAIRMAN), VREELAND (VICE-

CHAIRMAN), BURROWS, MONEY? BURTON, WEI,MS, BONYNGE, PADGETT,und
BURGESS.
49.
After a lengthy discussion as to

just what pro-

visions should be included in the statute as to the incorporation of foreign banks, as for instance, whether
the maximum capital, say $1,000,000, should be fixed,
whether these banks s)nould mLke reports to the Comptroller
cf the Currency and be governed generally by such provisions of the National Banking Act as are found applicable,
etc., etc., it wab agreed to refer this matter to a subcommittee, coasisting of

Mr.

Weeks and Mr. Bonynge, to pre-

pare a draft of incorporation and report the same to the
C'ammission.

53.
This section was taken up and after a full discussion
was agreed to without amendment.

At the suggestion of Mr. Vreeland, the Colinission proceeded to take up those provisisions of the plan that had
previously been considered and passed over.

(1)

It was agreed to provide in the first section that

the len7th of the charter should be fifty years, but that
Congress should reserve the right to alter, revise, and
amend the charter at the end of each ten year

period.

Mr. Vreeland calk d attention to the last sentence of
this section, which ruads as follows: "Fifty per cent of
the subscriptions to tile capital stock of the Nacional
Reserve Association shall be called in cash; the balance
of the subscription will remain a liability of the subscribers, subject to call."

He said that he thought it

desirable that the statute should state the circumstances
under which tile additional fifty per cent subscription could
be called.

No formal language was agreed upon, but it was

agreed to instruct Mr. Murray and his colleagues to so
draft the statute that this

additional subscription could

only be called mhen necessary to meet the obligations of
the National Reserve Association.
28.
Mr. Vreeland suggested that there ought to be some
general language of inscruction to guide the Commission
which is to provide the preliminary organization for the
National Reserve Association.

After full" discussion of

this suggestion, it was agreed that it should be provided
in cne statute that the fl. 'teen branches of the National
Reserve Association should be located as follows:

1 in the

New Enland Sates; three in the Eastern States; three in
the Southern States; four in the Middle Wesern States; anu
four in the Western and Pacific Coast States.
Thereupon the Cormission adjourned until 10:30 a. m.,
Tuesday, December 12, 1311.

Washin6;ton, D. C.,
Tuesuay, December 12, 1911.

The Commisson met at 11 a. in,
Present:

Me21-s. AL -flRICH (CHAIAN), VREA-JAND (VICE-

CHAIRMAN), BURROWS, /LONEY, BURTON, WEEKS, PADGETT, BONYNGE, L-Lnd
BURGESS.
Several Olases of the plan were discussed at both tile
morninF, and afternoon sessions, but no action was tztken.
The Commission

djourned

L o'clock p. m., until Wed-

nesday, Dtcember 13, 1911, at 10::30 a. m.

Wash:ton, D. C.)
Wednesday, DeoemLer 16, 1911.

The Coumission met at 10:30 a. m.
Present:

Messrs, ALDRICH (CHAIRMAN), 1TRELAND (VICE-

CHAIRMAN), BURROWS, MONEY, BURTON, WEEKS, BONYITGE, PADGETT)
and BURGESS.

70.
Decided to incorporate a paragraph to place an obligation or duty on the Reserve Association to maintain its
notes on

parity or a standard as prescribed under section

------ of the Act of January 14) 19 .

50.
Senator Nelson was called by the Commission to be
Whether the National Reserve
general
Association should allow banks to loan a part of theirlideposits

heard on the

T .airing questions:

on real estate or confine their loans to savings deposits, and
if on general deposits, what proportion o.P the same; also, what
restrictions should be pls,ced upon such loans and upon what
percentage of the real value.

Senator Nelson stated to the Com-

illission that he had investigated this matter thoroughly and his
opinion was that they should be permitted to negotiate mortgages
on one-third of the cash value of farm lands; also that it was
much easier to lean on farm vaper than commercial paper;Aaimmm

orier
1mOmmaiwaimederimelhew
,
710400

,,,14414•11114iimaa
He stated that they should oe permitted

to loan one -1.

- 1 -)f

'ime and interest bearing deposits

on real estates whi6h should be improl7ed and occupied property.
Whereupon the Commission too': a recess until 2:30 p. m.

IFTER RECESS.

The Commission reassembled at 2:30 p. in.
Present: Messrs. ALDRICH (CHAIRMAN), VREELAND (!CE.
CHAIRMAN), BURROWS, MONEY) WEEKS) BOITYNGE, PADGETT, BURGESS,
and PRINCE.
At the sugue-tion of the Chairmuo,

it Was

agreed that

each member of the Commission be arnizned a special er.3tion of
the plan as set forth in Senator Aldrichts speech at New Orleans on November 21, 1911, and prepare his own ideas, which
will be c,1")-)died in the final report.
40.
Power of rediscount granted by Sections 3, 39) and
40 shall, be exercised through the branch in the district in
which the bank making application for rediscount is located.
Whereupon, at 4:30 o'clock p. m., the Commission adjourned antil 10:30 1. in., Thirsda:7, December 14, 1911..

•

Washington, D. C.,
Thursday, December 14,1911.

The Commission met, at 10:30 a. m.
Present:

Messrs. ALDhICH (CHAIPAN), VRE:rLAND (VICE-

CHAIRMAN), BURROWS, MONEY, BURTON, WEEKS, BONYNGE, PADGETT,
BURGESS, and PRINCE.
At the request of the Chairman, Hon. Lawrence O. Murray,
Comptroller of the Currency, caused to be present a few of
the national bank examiners and state supervisors for the purpose of explaining certain features of the plan and asking
their cooperation in assisting in drafting that part.of the
bill which relates to examinations to be conducted by the
Reserve Association.
The following gentlemen spoke on the subject and their
remarks are attached hereto:
Washington; Mr. E. F.

Mr. L. J. Mbhundro, Seattle,

Rorebeck, of New York; Mr. Giles L.

Wilson, of Spartanburg, South Carolina; Mt. George Van Tuyl, Jr.,
of Albany, N. Y.; Mr. Arthur B. Chapin, of Boston, Massachusetts;
Mt. F. E. Baxter, of Lima, Ohio; and Mr. B. L. Gill, of Austin,
Texas.

At 1:15 p. m. the Commission took a recess until 2:30 p. in.

AFTER RECESS.

The Commission reassembled at 2:30 p. m.
Present:

Messrs. ALDRICH (CHAIRMAN),

EELAND (VICE-

CHAIMAN), BUPROWS, MONEY, WEEKS, BONY/4GB, and PADGETT.
Mr.

Perrin

addressed the Commission on the subject of permitting the
Reserve Association to make such examinations as it deems
necessary, and his remarks are attached hereto.
At the conclusion of Mr. Perrin's remarks, the Commission
adjourned until 10:30 a. m. Friday, December 15, 7.11.

Washington, D. r7.,
Friday, December 15, 1911.

The ComIlission met at 10:30 a. in.
Present:

Messrs. ALDRICh (CHAIRMAN), VIEK,AND (VICE-

liblrerW4S, MONEY, 3TT--;nry7; WFFKS, BONYNGE, PALGEZT,
and BariGESS.
14.
Agreed to strike out the mke,144spOrnmmber of directorsein
line 2

and insert the number "46" and also insert at the end of

the seoond paragraph as ex officio members "The Secretary of
Agriculture" thus making 15 directors as provided in section
15, 15 directors (non bunkers) one from each district represent/
ing commercial and agriculture interests, 9 stock directors,
and 7 ex officio members, or a total of 46.
It was agreed that all directors of the 'Reserve ::ssociation,
while serving as such, shall not be officers pi dirctors in any
or other financial institution such as insurance companies, etc.
It was also agreed to state in the report that the Commission was considering the question of banks making loans to
directors or to institutions of any description in which directors of the bunk are interested, which will be treated in an
appendix.
28.
The branches shall have by-laws which shall provide for the
appointment of executive and other comm17,tees which shall be

subject to the approval of the National Reserve Association.
Whereupon the Commission took a recess until 2:30 p. m.

AFTEP RECESS.

The Commission reassembled at 2:30 p. m.
Present:

Messrs. ALDRICH (CHAIRMAN), VREELAYD (VICE-

CHAIRMAN), BURROWS, BURTON,

BONYNG.M, PADGETT, BURGESS,

and PRINCE.
The Comptroller of the Currency and the National Bank Examiners and State Supervisors submitted their recommendations
in regard to examinations conducted by the Reserve Association,
which is attached hereto.
Suggested that standardization of blanks be adopted by the
Reserve Association for the national and state examinations
of banks.
Whereupon the Comuission adjourned until Monday, December
18 1 1911, at 10:30 a. m.

BANK EXAMINATIONS, STATE AND
NATIONAL.

WASHINGTON, D. C., December 15, 1911.
To the NATIONAL, MONETARY COMMISSION,
Washington, D. C.
GENTLEMEN: We have been asked to consider the question of bank examinations, both national and State, in so
far as they may relate to the National Reserve Association,
and after a careful consideration of the question, we beg
to submit our views.
In considering the question in a broad way we have had
in mind two points which seem to us very essential.
First. To avoid the added expense to the banks of
building up the machinery for an entirely separate and
additional system of examination.
Second. To utilize, in so far as possible and practicable,
the existing machinery for bank examinations as established to-day for both national and State banks.
It was necessary to carefully consider three important
points, as follows.
First. It is possible that the examinations as they exist
to-day, both State and national, might not meet the requirements of the directors of the National Reserve
Association.
Second. There are a few States where there is no
State supervision of any kind of State banks.
Third. There are a few States where there is State
supervision of State banks, but the executive officer
is not privileged by law to disclose information regarding
banks under his supervision.
20351-II

2
/
We have c sidered each of the above ptSints and,
in our opinion, he plan we present obviatei each difficulty and utiliz s, without additional expense to the
banks, the preset machinery of bank examinations,
/
both State and n ional.
We therefore mak the following recoritimendations:
That the National Reserve Associtition shall for all
member banks accept opies of the reports of the nationalbank examiners for rkitional bankt and copies of the
reports of State bank examiners:for State banks and
trust companies, where the furnishing of such information is not contrary to 1 w; provided, however, that the
standard of such examin ions, both national and State,
meet the requirements of thei directors of the National
Reserve Association.
That in all cases where i e standard of examination,
either national or State, is ot up to the said requirements, the directors of the. tional Reserve Association
shall make or cause to be nlitd ndependent examinations.
That the Directors of the Na ional Reserve Association
have the right to examipie or use to be examined, at
any time, any member sank, b its own representatives.
That the national anci State e miners be allowed such
additional compensatiqi, to be p d by the National Reserve Association, for inaking exti reports to it, as the
directors thereof may/consider justiand equitable.
The plan which w . recommend ll in a large measure
avoid the additional/expense to the banks of building up
for their exam ation ; it will give
another organizati
to the directors ofl the National Res ve Association, to
the branches the of, and to the loc 1 associations the
information whic is needed, and it r serves to the National Reserve Asociation the right to nake independent
examinations wftienever the directors thrreof desire to do
so. The plan As simple, practicable, arid workable from
, the start.

2
We have considered each of the above points and,
in our opinion, the plan we present obviates each difficulty and utilizes, without additional expense to the
banks, the present machinery of bank examinations,
both State and national.
We therefore make the following recommendations:
That the National Reserve Association shall for all
member banks accept copies of the reports of the nationalbank examiners for national banks and copies of the
reports of State bank examiners for State banks and
trust companies, where the furnishing of such information is not contrary to law; provided, however, that the
standard of such examinations, both national and State,
meet the requirements of the directors of the National
Reserve Association.
That in all cases where the standard of examination,
either national or State, is not up to the said requirements, the directors of the National Reserve Association
shall make or cause to be made independent examinations.
That the Directors of the National Reserve Association
have the right to examine or cause to be examined, at
any time, any member bank, by its own representatives.
That the national and State examiners be allowed such
additional compensation, to be paid by the National Reserve Association, for making extra reports to it, as the
directors thereof may consider just and equitable.
The plan which we recommend will in a large measure
avoid the additional expense to the banks of building up
another organization for their examination; it will give
to the directors of the National Reserve Association, to
the branches thereof, and to the local associations the
information which is needed, and it reserves to the National Reserve Association the right to make independent
examinations whenever the directors thereof desire to do
so. The plan is simple, practicable, and workable from
the start.

•
•

BANK NCAMINATIONS, STAIE AND
NATIONAL.
WASKINGTON, D. C., December 15, 1911.
To the NATIONAL MO*TARY COMMISSION,
Washington, D. C.
GENTLEMEN: We havet been asked to consider the question of bank examinations both iiational and State, in so
far as they may relate to thk Natibnal Reserve Association,
and after a careful considelitigh of the question, we beg
to submit our views.
In considering the question Ail a broad way we have had
in mind two points which segm\to us very essential.
First. To avoid the addid
pense to the banks of
building up the machinery for ala entirely separate and
additional system of exatsination
Second. To utilize, ino far as p ible and practicable,
the existing machinery for bank e minations as established to-day for both/national and S te banks.
It was necessary
carefully consicfr three important
points, as follows:
First. It is possiile that the examinatrons as they exist
to-day, both State and national, might nipt meet the requirements of the directors of the NAional Reserve
Association.
Second. There are a few States where 'there is no
State supervision of any kind of State bans.
Third. T ere are a few States where therc is State
supervisio of State banks, but the execute officer
is not prifrileged by law to disclose information regarding
banks tider his supervision.
20.351

http://fraser.stlouisfed.org/ 411g.
Federal Reserve Bank of St. Louis

3
In addition to this it will have a tendency to standardize on a higher plane all bank examinations.
Very respectfully submitted.
J. L. MOHUNDRO,
State Bank Examiner for the State of Washington.
ARTHUR B. CHAPIN,
Bank Commissioner for the
Commonwealth of Massachusetts.
F. E. BAXTER,
Superintendent of Banks for the State of Ohio.
0. L. GILL,
State Commissioner of Insurance and
Banking for the State of Texas.
GEO. C. VAN TuvL, Jr.,
Superintendent of Banks for the State of New York.
E. F. ROREBECK,
National Bank Examiner for the City of New York.
GILES L. WILsoN,
National Bank Examiner for South Carolina and Georgia
and formerly State Bank Examiner for South Carolina.
LAWRENCE 0. MURRAY,
Comptroller of the Currency.

Washington, D. (7.,
londay, December 18, 1911.
The Commission met at 10.30 A. —
Present:

-"essrs. Aldrich (Chairthan), vreeland (Vice-Chair-

man), Barcows, Money, Weeks, Ronynge and Padgett.
J).

The following paragraph was agreed to be inserted

at the end of paragraph 55 of the plan:

"Provided that no

circulating notes shall be issued by the Yational

eserve

Association whenever and so long as the reserve herein required
shall fail below 33 1/3 per cent of such notes outstanding."
70.

The following paragraph was agreed to be inserted

to the end of paragraph /0:

"That it shall be tha duty of

the Yational Reserve Association to maintain at all times a
parity of value of their circulating notes with the standard
established by the first section of the act approved March 14,
1900.
Mr. Bonynge theraJpon presented to the Chairman the rough
draft of the bill being prepared at the Treasury Department,
which was immediately made the subject of discussion.
Title.

Agreed to insert in the title of the pill a2ter

the words "United states" in line 21 "and for other purposes."
Sec. 2, line 1, after the word "13anks", 'Agr,led to strike
out the word "or" and insert the words "and
Sec. 3.

Agreed to insert in line 1, after the word

"Treasury", the aords "the Secrotary of Agriculture," and in

4,3

line 6, after the words "shall be" insert the words "payable out
of the Treasury," and to strike out the words "paid out of any
money in the Treasury not otherwise appropriated,"
In the second paragraph, line 4, after the word "Association," strike out the words "in such places us the sid committee
may designate."
Sec. 4.

Third palagraph, line 1, agl..,:La to atrike out

the words "from tine to time,

and inseri, shifie phrase in line

2 after the word
Wht/eLpon, at 1.00 o'clock P. H., the Commiseion took a
recess until 2.30 P. M.

AFTERNOON SESSION.
Monday, Dece,lber 18, 19]l.

The Commission reassambled at 2:30 o'clock p.m.
Present: Messrs. Aldrich (Chairman), Vreeland (ViceChairman), Burrows, Burton, Weeks, Bonynge, Padgett, and
Prince.
71r. Bonynge su7-ested that when new banks come into
the Association, the, should pay for their stock at its
book value at the time of their admission to membership.
The suggestion was agreed to.
Section 2.

The following sugges ion of Mr. Padgett

was agreed to: That in paragraph 3, under subdivision "b",
after the words "population of", where they first occur,
:rovision be made whereby cities having a population of
less than 10,000 and not more than 50,000 should be roqu:red
to have a paid-in and unimpaired capital of not less than
$50,000.
Upon the suggestion of the Chairman, it was agreed
that no subject headings for differ-nt provisions of the
bill be made, that not being the general form followed
in the make-up of bills.
Section

The aendments made at the morning sef- sion

of this date are to rmnain unchanged.
Secticn 4. Mr. Vreeland thoue7ht that at the end of
the first paragraph some provision should be made for indicating clearly that, where States are mentionec., it is not
intended to

limit the size of the districts by State lines.

The Chairman suggested the insertion of the words "having

reference to business centers," or "having reference to the
accom °dation of the banks in the territor::. If

Mr. Padgett

suggested that "natural divisions and comercial relations,
and trade centers" be

used.

The Chairman further suggest-

ed the words "having relation to themtural commercial diviejone in trade centers;" and T.r. Padgett further suggested
the words, "In forming saia districts, State lines need
not be followed."

After considerable discussion, it was

decided to allow the mL,.Lter to go over and to have the paragraph queried, to be taken up later.
Section 5 passed over.
Sectin C. 1:1)bject matter of last. paragraph to be taken
up later.

Pemainder of this section aereed to.

Section 7 was agreed to, with the exception that it
was thought that managers for the branches shol;ld also be
provided for in the last paragraph.
Section P. Agreed to.

Yr. Padgett suggested that some

r)rovision sho id be made that, in'L.he event the number of
districts is increased above 15, there should be for each
district two additio-eal directors, to be elected as set
forth in paragra-ehs 1 anH 2 of
Section 9.

t is section.

It was the: unanimous opinion that paragraph

24 of the :',evised
Plan for Sun' ested

lonetary

LegiaLtion

should be inserted at the beginning of the section.

Section 10.

To he changed and modified. Passed over.

-3On suYestion of H.r. Padgett, it was agreed to amend this
section as follows:

After the

cy.,..ds "execute and file", in-

sert the words nw L
- h the E'ecretary of State a certificate
setting forth the fact of the payment of one hundred millions of dollars; and they shall further file with the
Comptroller of the Currency a certificate showing the banks
which have subscribed."

Yr. Padgett also suggested that

there should be a further provision that, as the banks subscribe after the organization is complete, the Comptroller
of the Currency is to be notified of the fact.
Sections 11 and 12.
Section 13.
was agreed to:

Strike out.

The following suggestion of T -27. 7onynge

That after the words "and under no circum-

stances shall they be", there be inserted the words "hypothecated or".
wa , agreed to:

The following suggestion of 1:r. Padgett
In line 1 of this section, after the word

"ca-ital", insert the word "stock".

At the suggestion of

the Chairman, it was agreed to strike out the words "acknowledged before a judge of a

of record or a notary

The following suggestion of 77r. Pad-

public and shall be".
gett was agreed to:

Court

In the second paragraph of the section,

in next to the last line, before the word "stock", insert
the words "paid-in".

In the third paragraph of this section,

it 'as agreed to strike

the words "acknowledc,ed before

a judge of a court of record or a notary public and shall
be".

:;ection 14.. Agreed to.

-4-

Section 15. Agreed to.
Section 16.

The following suggestion of the Chairman

was agreed to: In line 1, strike out the words "an auditing
co'Inittee", and insert the words "a board of examination";
in line 5, strike out the word "committee", and insert the
word "board";

in line

strike out the words "audit the

books", and insert the words "carefully examine the condition and the business";

and in line 7, str:Ke out the word

"report", and insert the word "statement".
Section 17.

Mr. Padgett suggested that it be amended

by providing that the powers and duties shall be prescribed
by th

by-laws of the various branches, subject to the ap-

proval of the rational Reserve Association,
.

Upon the

suggestion of the Chairman l it was agreed to strike out the
words "and length of service".
Section 18.

It was agreed to strike out the words

"and terms of office".

Also, to

transfer this section to

place it near othe4provisions as to local association officials.
Section 19. Agreed to.
It was also agreed that some provision must be made
for incororating,in a limited way, the rational Reserve
Association, in which event the words "articles of association", wherever the, appear, shall be stricken out.
It was also agreed that after the preliminary work on
the draft of the bill was complete, the provisions should

•Or

be so rearranged that the various provisions might appear
in their proper and logical order.
The Conmission adjourned to meet at 10:30 a.m., Tuesday, December 19, 1911.

..............M11111111111111111111111i

11,

Wa3:-...inc;ton L • r •
Tuesday, .JecetYeer 19, 191.i.

The Coelic,ission me.c, at 10.30 A
Present:

Aldrich ((hairman), 7reeland (Vice-Chn),

Barrows, 'Ioney, Weeks, 13onynge :,-act Padgett.
r. Bonynge suggested that there Le inserted in the
first paragraph e.nd words "body corporate."
7.

Phe Chainman suggested that in Section

second

paragraph, and line 15, the words "caulercial and agricultural"
be transposed.
8.

.Tr. Padgett suggested that in paragraph second of Sec.

8, line 5, to strike out the words "of banks nor" and inser
the word"or".
9.

Agreed to strike out in the last iine of Section 9,

the words "articles of association or the".
2.

Agreed

u insert in Section 2

line 12

after -che

Aord "subscriptions" the words "or any part tnet. eof."
The question of the impairmont of the capital of the
Reserve Association was brought up ty the officials of the
Treasury Department and it was decided that the contingent
fund and the privilege of the call of 50 per cent amply covered
this point.
The qt(estion was also raised as to the right of the Association to own real estate and to erect banking houses, and it
was decided . nat it did have this privilege, with no

Another question was submitted by the Treasury officials whether tie.c Association will. pay for exteninations of banks,
and it was suggested that the plan submitted by the State and
National examiners (a copy of whiun was sent to the Department),
covered this point.
T,
. was decided to incorporate the foilowing section of
the report of the .,tate and 'Iationai examiners in the '31.11:
"That the rational 'eserve Association shv..1) for ail subscribing bLnis:a J.ocept copies of tlie reports of the national oank
examiners for national banks and copies of the reports of
'
14.
,ate bank examiners for

tte banks and trust companies, where

the filrnishing of such information is not contrary to law;
provided, however, that the standard of such examinations,
both nationai and State, must meet the Iequirments of the
directors of the National
Sec.

eserve Association."

Agreed. ,u cnange so as to read as follows:

"The earnings of the 7.7iational 7:eserve Association shall
oe disposed of in the following Lianner:
"Aftel. 6ne payraeni, of a..

expunses and tuxes the share-

holders shall be enitled to receive annually four per centum
on the paid-in capital, which minimum dividend shall be
Further net earnings shall oe paid into a contingent f.„ind Nrich shall be maintained at an amoun

equai to

one per cerit—calun c,ne paid-in capital, bot not to exceed ir
event two million dol ars, und ahiCh shall oe used to meet any

possible losseL,

and such fund shall upon the final dissolu-

tion of the National ?eserve Association go to the ';nited States,
and shall not under any circumstances be included in the book
value of the stock, or go to the shareholders.

After the

contingent fund has been established one-half of all additional
net earnings shall be paid into the surplus fund of the National
Reserve Association until sat d fund shall amount to twenty
per centum of the paid-in capital, one-fourth shall •be paid
to the United States as a franchise tax, and one-fourth shall
be paid to the shareholders, but when the shareholders'
dividends shall amount to five per centum per annum on the
paid-in capital they shall receive no additional dividends.
After the shareholders receive five per centum on the paid-in
capital, one-half of the net earnings shall be added to the
and
surplus fund,/one-half shall be paid to the United States as
a franchise tux.

After the shareholders receive five percentqm

per annum on paid-in capital and

'fie surplus fund of the

National Reserve Association amounts to twenty per centum of
that capit'il,

i excess earnings shall be paid to the United

States as a franchise tax."
Agreed to change the location of Section 21., and have same
follow section 1, with the following change in the first paragraph of same:

"Upon (1711y making and filing a certificate

by the board of directors of the National Reserve

Association

to the effect that one hundred million dollars of the capital
stock of the Association have been fully paid in, the said
Association shall become as and from date of the filingof
the said certificate a body corporate and as such and by tho.-t
name shalL have power ---"
Agreed to strike out in line 1 the words "a

Sec. 24.

local association may by a vote of two-thirds of its members"
and insert the words "The National Reserve Association may."
Insert "The National Reserve Associatic,a shall

Sec. 27.

be the principal fiscal agent of the United States."
To follow Section 31.

"Foger of rediscwint and dis-

count, granted by Sections 29, 30 and 31, to the National
Reserve Association shall be exercised through the branch
in the district in

oank making application for

rediscount is located."
Sections 29, 30 and 31.

Agreed to insert in each of

these sentions after the words "N—tional Reserve As3ociation"
in line 1, the words "through its branches."
Sec. 43.
following:

Strike out the last oantence and insert the

"The National Reserve Association shall pacjitTle

national and state examiners "or services rendered to it such
compensation as the directors thereof may consider just and
equitable."
Whereupon, at 1.30 P. M., the Commission took a recess
until 2.30 P. M.

AFTER RECESS.

The Commission met at 2.30 P. M.
Present:

Aldrich (Chairman), Vreeland (Vice-Chairman),

Burrows, Money, Weeks, Bonynge, Padgett and Prince.
Sec. 53.

Insert in line 2, after the word "period" thit

word "of", and in line 6, ufter the word"millions" the words
"of dollars."
Section 5.

In line 3, after the word "co:amittee" strike

out the words "or the National Reserve Association," and in
line6, after the word "provided," strike out the words "that
not more than ono such association shall be formed in any
city, and".

Strike olt all of section 5 after the second

paragraph and insert the following:

"The banks uniting tc

form such local associations shall, by the president or vicepresident, acting under authority from the board of directors,
make in duplicate and file with tl-te Comptroller of the Currency
and with the rational Reserve Association a certificate setting
forth the names of the banks composing the association, the
principal place of business of the association, and the name
of the association, which name shall be subject to the apnroval
of the National Reserve Association.

TJpon the filing of such

sertificate tl,e local association therein named shall become
a body corporate, and by the name so designated and approve
d
may sue and be sued and exercise the powers of a body corpora
te
for the purposes alithorized
by this act, and not otherwise."

Sec. 54.

Insert the following:

That banking corpora-

tions for carrying on the business of banking and in aid of the
commerce of the United States ar its citizens with foreign
countries and to act as financial agents of the United States
may be formed by any number of persons, not less in any case
than five, who shall enter into articles of association which
shall specify in general terms the object for which the banking
corporation is formed and may contain any other provisions not
inconsi tent with the provisions of this act which the
banking corporation may see fit to adopt for the regulation
and conduct of its business and affairs, which said regulations
elan be signed, in duplicate, by the persons uniting to form
the banking corporation and one copy thereof shall be forwar
ded
to the Comptroller of the Currency and the other to the Secret
ary
of State, to be filed and preserved in their offices.
Sec. 55.

That the persons uniting to form such banking

corporation shall under their hands make an organiation
certificate
which shall specify, first, the name assumed by such
banking corpor
ation which name shall be subject to approval by the
Comptroller;
second, the foreign country or countries or the
dependencies
colonies of foreign countries or of the United States
where
its operations of discount and deposit are to
be carried on;
third, the place in the United states where its
home office
&rindl be located; fourth, the amount of
its canital stock and
the number of shares into which the
same shall be divided;

ss
rift., tlie names and places of residence of the shareholders and.
the number of shares held by each of them; and, sixth, a declaration that said certificate is made to enable sch persons
to avail themselves of the adirantaes of this act.
Sec. 56. That no banking corporation shall be organized
under t'riis act with a less capital than two million dollars.
Sec. 57. That eirery banking corporation formed pursuant
to the provisions of this act shall from the date of the
execution of its or2;aniztion certificate be

body corporate,

but shall not be ai.;thorized to receive deposits in the United States nor compete with banks in the United States organized either under national or State laws for domestic
business not necessarily related to ti-p: business being done
in foreign countries or in the dependencies of the United
States.

Such banking corporations shall not have any power

to issue or cireulate notes under any of the provisions of
the laws relating to national banks doin
United States.

F-711

business within the

-1 1-wvikinr7 ecenorations shall have full

power to ma.ke acceptances of drafts, bills of exchange or
other commercial paper and maturing subsequent to the date
of acc,ptance.

Every such banking corporation shall have

power to purchase or seil secrities of the United states
or
of :Lny ntate in tne 7.;nion or of foreign governments or
su-Hcil-risions or monicipalities of foreign countrie
s.

Each

banking corooration organized hereunder shall have
power to
establish and maintain for the transaction of its business
a branch or branches in forein countries, their depeAden
eies

or the dependencies of the United StL,.tes at such places and
under !ludil regulations as the board of

directors may deter-

mine to be expedient.
A. majority of the members of the board of directors
of such banking corporation shall be citizens of the United
States.

Each director shall own in his own right at least

one hundred shares of the capital stock of the banking corporation of which he is a director.
Sec. 58.

The annual meeting of every such banking cor-

poration sha I be held at its home office in the United
States, and every such banking corporation shall keep at its
home office books containing the names of all stockholders
of such banking corporation and members of its board of di
rectors, together with copies of the reports furnished by it
to the Comptroller of the Currency exhibiting in detail and
under appronriate heads the resources and liabilities of the
banking corporation.

Every such banking corporation shall

make reports to the comptroller of the currency at the same
time as national banks make their reports under existing statutes and shall be subject to exaaination, when deemed necessary by the Comptroller of the Currency, through bank examiners appointed br the Comptroller.
Sec. 59.

Any bank doing businesc in the United r)tates

and being the owner of stock in the National Reserve Association may subscribe to the stock of any banking corporation
organized under the provisions of this act, but the aggregate
of such

stock held by any one bank shall not exceed ten per

cent of the capital stock of the subscribing bank.

Sec. 60.

That the provisions of all laws relating to

national banking associations

organized -thereunder so far

as applicable and not inconsistent with the provisions of
this act shall govern ane

ontrol banking corporations

organized hereunder.

Repeal Aldrich-Vreeland bill, etc., etc.

Whereupon, at 4.30 the Commission adjourned, to
meet
Wednesday, December 20, 1911, at 10.30
A. H.

lhashington, D. C.,
Wednesday, December 20, 1911.

The commission met at 10.30 A. M.
Present:

Aldrich (Chairman), Vreeland (Vice-Chairman),

71urrows, Money, Burton, Weeks, Bongyge, Padgett.
Yr. Arthur !?eynolds, of the Des Moines lational Bank,
of Des Moines, Iowa, and Mr. Pierre Jay, of the Bank of Manhattan Company, Yew York City, addressed the Commission on
the subject of permitting National banks to establish savings
departments under the Plan, and their remarks are attached
hereto.
The Commission took a recess at 1.00 until 2.30 P. M.

AFTER

RECESS.

The Commission met at 2.30 P. M.
Present:

Aldrich (Chairman), Vreeland (Vice-Chairman),

Burrows, Money, Burton, Weeks, Bonynge and Padgett.
The Commission immediately took up a draft of the bill
prepared by the Treasury Department officials, and made it
the subject of discussion during the entire afternoon session,
agreeing to the following changes:
Sec. 2, par. Fourth, line 2, strike out the word "and"
after the word "law" and insert "or."
Par. Fifth, line 2, after the word "manner" strike out

the word "hereinbefore" and insert the word "hereinafter."
Sec. 3.

Line 11, after the word "capital" insert the

word "stock."
Line 12, after the word "subscriptions" insert the words
"or any part thereof."
Last line, last paragraph, strike out the word "before."
Sec. 5.

Last paragraph, last line, after the word

"Association" insert the words "whenever, in their opinion,
the business of the country so requires."
Sec. 6.

Second paragraph, line 13, after the word "the"

strike out the words "associated banks" and insert the words
"local association," and in the last line of same paragraph,
after the word "act" insert the words "and not otherwise."

Third paragraph, line 2, after the word "be" strike out
the word "created" and insert the word "authorized."
Sec. 7.

Second paragraph, line 1, after the word "when"

strike out the words "appointed or".
Sec. 8.

Second paragraph, line 1, after the word "board"

Insert the words "of directors," and in line 6 make the word
"Bank" "banks."
Same paragraph, lines 15 and 16, chance the arrangement
of the words "industrial, commercial, agricultural," so they
wil] read "Agricultural, commercial, industrial," and in line
17 1 after the word "officers" strike out the word "or" and
insert the word "nor."

Third paragraph, line 1, strike out after the word "when"
and wuyds "appointed or".
Sec. 9.

Second paragraph, lines o an

4, change the

arrangement of the words "industrial, coiamercial, agricultural" so they will read "agricultural, commercial, industrial."
Fifth paragraph, line 3, after the words "nor of any of"
strike out the word "the" and insert the word "its."
Sec. 10.Last line, strike out the words "articles of
association or the".
See. 13.

Line 7, before the word "branches" strike ott

the word "the" and insert the word "its."
Sec. 16.

Line 5, after the words "time by the" strike

out the words "same authority" and insert the words "governor
with the approval of the executive committee of the National
eserve Association."
Sec. 18.

Line 6, after the word "shareholders" strike

out the words "and creditors" and in line 8, strike out the
words "verified by the oath of the governor or deputy governor."
Sec. 19.

Second paragraph, line 10, after the word

"Association" strike out the word "go" and insert the mords
"be paid", and in line 12, after the words "stock or" strike
out the word "go" and insert the words "be paid.

Also in

line 20, after the word "capital" strike out the word "but"

..,nd insert the word "provided" and in
line 21, after the word
"year" strike out the word "but" and inse
rt a semi-colon, and
ir line 26, after the word "shall" strike
out the word "go"
and insert the words "be paid."
Section 23.

Last line, after the word "act" insert the

word "provided" and then insert the enti
re section 22.
Sec. 27.

Line 5, before the word "notes" strike out

the word "only."
Sec. 30.

Line 2, strike out the words "by sections
27,

28, and 29", and insert in line 3, afte
r the word "Association"
the words by sections twenty-seven, twen
ty-eight and twentynine of this act."
IFIke a new section between 31 and 32,
and insert the
following:

"National banks shall be authorized to
accept

coNmercial paper drawn upon them, havi
ng not more than four
months to run, properly secured, and
arising out of commercial
transactions.
The amount of such acceptances outstand
ing
shall not exceed one-half the capital
and surplus of the
accepting bank, and shall be subject to
the restrictions of
section fifty two hundred of the Revi
sed Statutes."
sec. 33.

Line 2, after the word "bonds" insert
a semi-

colon, and in line 3 strike out the
words "having not more
than one year to run" and inse ,-t the
same words in lire 5
after the gord "government."

Sec. 35.

Line 4, after the word "board" inse
rt the

words "of directors", and inline 6 after the word "must"
strike out the words "have arisen" and insert the word "arise."
Sec. 36.

Line 4, after the word, "purchasing" strike

ou-: the word "and" and insert a coma, and in line 8, after
the word "exchange" strike out the words "which have arisen"
and insert the word "arising."
Sec. 37.

Line 10, after the words "by the" strike out

tile word "directors" and insert the word "manager," and in
line 11, after the word "originates" strike out the words
"or

n executive cordmittee thereof."
Sec. 38.

Paragraph 2ourth, line 2, before the word

"association" strike out the word "the" and insert the word
"said."
Sec. 39.

Strike out the entire paragraph entitled

"Third."
Sec. 42.

Line 1, after the words "of the" insert the

words "National Reserve".
Sec. 43.

Line 5, after the word"Currency"

insert the

words "by said association."
Make a new paragraph between Sections 44 and 45, as
follows:

"All reports of national bank examiners in regard

to the condition of banks shall hereafter be made in duplicate,
and one copy shall be filed with the National Reserve Association for the confidential use of its executive officers and
branch managers."

Sec. 45.

Line 8, after the word "requirements" strike

out the word "of" and insert the words "prescribed by".
Sec. 46.

Line 3, after the word "May" strike out the

words "if they choose."
Sec. 47.

Line 1, after the word "association" strike

out the word "must" and insert the word "shall," and in line
10 strike the word "fast" and in line 11 strike the first
word "as."
Sec. 48.

Line 3 strike out the words "United States "

the second time they are used and insert kit= after the word
"bonds" the words "of the qnited States."
Sec. 49.

Line 4, after the words "lawful money" insert

the words "gold bullion or foreign gold coin."
Sec. 55.

Line 6, after the word "million" insert the

word "dollars."
Whereupon, at 5.30. P. M., the lommission adjourned to
meet Thursday morning, December 21, 1911, at 10.30 A. Y.

Washington, D.C.,
Thursday, Dece- .ber 21, 1911.

The Commission met at 10:30 a.m.
Present, Mesrs. Aldrich (Chairman), Vreeland (ViceChairman), Burrows, Loney, Burton, Weeks, Bonynge, and Padgett.
Section 3.

Line 14, after the words "two hundred",

strike out the words "and fifty";

line 17, after the words

"two hundred",strike out the words "and fifty"; line 18,
after the. words "not more than", strike out the word

"four"

and insert the word "three"; in line 1(.1, after the words "not
less than" strike out the word "four" and insert the word
"three"; line 21, strike out the
word "three";

word "four" and insert the

in the same line after tl-e word "inl- abitants",

insert the words "and not more than four hundred thousand
inhabitants"; line 22, after the words "not less than",
s-,rike out the word "five" and insert the word "four"; in
the last line, after the word "dollars", insert the words
"and if located in a city having a population of more than
four hundred th:msand inhabitants shall have a paid-in and
unimpaired capital of not less than five hundred thousand
dollars."
Section 39.

A .reed to insert the following paragraph

at the close of this section: "National banks may loan not
more than thirty per centum of their time deposits, as herein defined,

upon improrfed and unencumbered real estate, such

loans not to exceed fifty per centum of the actual value of

.‘

Full text of Nelson W. Aldrich Papers : Monetary Commission : Miscellany, Reel 56, Box 81, Folder 6

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