mind we may then see how far and how squarely he has faced them. Discussion of details can be postponed until later. The important question at the outset is whether the plan in its broad outlines covers the field and is based upon sound principles.

FUNCTIONS OF THE RESERVE ASSOCIATION.

In the proposed Reserve Association of America, an institution is outlined to be owned exclusively by the banks and to deal exclusively with them. This institution, because of its preponderant capital and resources, its peculiar privileges and its recognized responsibilities, is intended to form a common bond between the banks, to serve them mutually and jointly, and to exert a controlling influence over their activities. It is intended that it shall clear their mutual accounts, not only within the same city, but between different cities; that it shall hold a large part of their cash reserves; that it shall furnish an ever ready market for their best commercial paper, very much as the stock exchanges furnish a market for stocks and bonds; that it restrain extravagant speculation, and control in some measure the movements of gold to and from the country.

With such an institution in existence the rigidity of the reserve operations would no longer be felt, for a bank could always increase its reserves by transferring to the Reserve Association some of its commercial paper in exchange for an increased balance upon its books; and for the same reason the banks in our large cities would not feel under the same obligations as at present to keep large portions of their funds liquid by loans to the stock market. On these accounts solvent banks could not be forced to suspend, and domestic exchange would not collapse.

NOTE ISSUE REGULATIONS.

In regard to note issue, the plan provides a mechanism by which the bond-secured currency shall be retired and a flexible issue based upon general assets shall gradually be sub

stituted, while ingenious methods are proposed for accomplishing this end without either depressing the value of the outstanding bonds or causing additional expense to the Government. The Reserve Association is to take over the bonds now held by the banks, along with all responsibility for the redemption of their outstanding notes, and as these notes are presented for redemption it is to issue its own notes in their stead. The association is then to be authorized to dispose of $50,000,000 of these bonds per year in addition to whatever bonds may be recalled and redeemed by the Government, or may be purchased by the trustees of the postal savings system, so that within a decade or so the plan contemplates the complete extermination of the bondsecured currency. Meanwhile the fluctuating needs of the community in different seasons for different amounts of money are provided for by additional issues upon payment of a graduated tax, increasing from 3 per cent, for the first $100,000,000 to 6 per cent. for the fourth.

GOVERNMENT FUNDS.

With regard to the independent treasury, which has exerted a potently disturbing influence at various times through the absorption of vast amounts of money from the circulation and through their reinjection into trade, the plan proposed to avoid those inconveniences in the future by substituting for the antiquated system of treasury hoards the deposit and disbursement of treasury money through the Reserve Association. Thus Government moneys can remain in the continuous service of the community and still be utilized by the Government as occasion demands.

NEW PRIVILEGES FOR NATIONAL BANKS.

The National banking system has suffered in recent years because of the rigidity of the Federal banking laws as compared with the banking and trust company laws of the several States. Not only are the laws of many of the States much freer in regard to the amount of capital and of reserve re

quired, but also as to the kinds of business which may be carried on by their banks; and, as a result, State chartered institutions have increased in size and number in recent years much more rapidly than the National institutions.

The Aldrich plan, without reducing the requirements for capital and reserve, contemplates the restoration and rehabilitation of the National banking system by allowing certain classes of National banks to open savings departments and to lend upon real estate; other classes of National banks to conduct business in foreign countries, and still others to exercise the functions of trust companies under proper re... strictions.

CONTROL OF RESERVE ASSOCIATION.

Any plan which contemplates the establishment of a new financial institution of such scope and powers as the Reserve Association must guard most carefully to avoid control by particular interests or subjection to political influences.

The Aldrich plan presents ingenious and carefully contrived arrangements for preventing both of these contingencies. Monopoly of stock control is out of the question, for the capital stock is not subject to sale or transfer and can only be held by banks in proportion to their capital. Domination of the directorate by the banks of any locality or any group of interests is also guarded against by the carefully devised provision through which the directors of the Reserve Association and its branches are to be selected by a distribution of voting power among local associations of banks in different geographical areas.

No political party can gain control or influence over the association for the same reason. The Governor is to be selected by the President from a list to be submitted by the Board of Directors, and, like the Chief Justice of the Supreme Court, will practically serve for life. The intrusion of politics is further prevented by a regulation that no member of any National or State Legislature can serve as director either of the Reserve Association or of any of its branches or of any local association.

SIGNIFICANCE OF ALDRICH PLAN.

Such are the larger outlines of the suggested plan of the Chairman of the Monetary Commission.

The plan provides, for the first time, a co-ordinating mechanism between the banks of different parts of the country which should secure unity of policy and uninterrupted exchange between them. It eliminates the present inflexibility of reserves by providing for their concentration in a single institution and by arranging for the increase of the reserves of a particular bank through the rediscounting of its paper by that institution. It provides for a National discount market with prime commercial bills which can be translated into available funds with the same facility that standard stocks may be converted into funds to-day upon the stock exchanges. It does away with the bond secured currency and in its stead offers a flexible note issue based upon commercial assets. It eliminates the objectionable features of the independent treasury system and provides for the deposition and handling of public moneys through a banking institution. Finally, it proposes to eliminate the irregularities which now exist between the Federal and State banking systems by extending to banks subject to Federal charter many of the privileges which are now enjoyed by the State-chartered institutions, and by drawing into a common system, National banks, State banks and trust companies.

The plan embodies most of the features which are common to the banking systems of other important countries, and which we hitherto have lacked. Yet it does not attempt to reproduce in this country any institution existing elsewhere. The Reserve Association is not like the Reichsbank or the Bank of France or the Bank of England, yet it embodies among its functions the valuable features common in all of these institutions.

There has been but little constructive legislation in this country since the early days of the Republic. From the time of Alexander Hamilton down to the present day the only important legislation of this character to which one can point is the institution of the National banking system

under the leadership of Secretary Chase. The National Bank Act provided the country for the first time with a uniform currency, subject to uniform laws in all parts of the country and of the same value everywhere. It was the first step looking toward the unification of our banking system; it brought a considerable measure of unity into our note issue. The plan which is before us proposes to complete this unifcation of the system by embracing the reserves, the discount market and the other functions of modern banking in one coherent organization. It marks, in my opinion, the most profound and comprehensive attempt at constructive financial legislation which the country has witnessed since the time of Hamilton. [Applause.]

The PRESIDING OFFICER.-I am sure I voice the sentiment of all present when I say that we have listened with a great deal of pleasure to the very instructive and interesting address of Mr. ANDREW.

Now, if it be agreeable to the convention, I will call on Mr. WELDING RING, of the New York Chamber of Com

merce.

Mr. WELDING RING, of New York.-Mr. Chairman and gentlemen of the convention, I suppose I am another "fill-in," for I was not asked to speak until a few moments ago, and then only in order to fill up the time until more eminent speakers could appear before you.

Some time during the past summer the proposition for a Monetary Commission and the general subject of the monetary condition of the country were presented clearly to the members of the New York Produce Exchange, the Chamber of Commerce and the Merchants' Association of New York, these bodies representing very largely the commercial interests of the city of New York, and to these subjects we have given a great deal of attention and a large amount of study.

In order to arrive at our conclusions we took up, first, the large banks of Europe, including the Bank of England, the Bank of France, the Bank of Germany and others, taking them from their inception up to the present time, and fol