u.s.money vs. corporation currency, Aldrich plan. wall stree confessions! great bank combine

Front matter

U.S. MONEY VS. CORPORATION CURRENCY, “ALDRICH PLAN.”: WALL

STREET CONFESSIONS! GREAT BANK COMBINE

U.S. Money Vs. Corporation Currency, "Aldrich Plan.": Wall Street Confessions! Great Bank Combine

Contents

CHAPTER PAGE

I. Crentrat Money Trust. A warning. Wall Street and Big Banks promoting ‘Aldrich Plan.’”’ Patriotic Bankers are fighting the measure, Will this new issue create a new party—the National Progressive Party?

‘Shall the people rule”’—their money supply?

Chapter II. {the Aldrich Plan

The Bill in Full Reported to Congress by Monetary Commission Anal: Amazing and Dangerous “Jokers.”” 24,392 Banks Legally Tied Together in Great Money Trust for 50 Years.

The bill attached to the National Monetary Commission’s report to Congress made January 8, 1912, now pending, is herein printed in full. After each section the comments of writer analyzing the measure will be found. Only a few brief points are so made, because the entire contents of this volume in one way or another bears on some feature of the bill, or on subsequent conditions likely to prevail if the measure becomes law. Comparison of its provisions with those of the two plans for a central bank originated by the New York Chamber of Commerce, one in October, 1906, and the other in January, 1911, reproduced elsewhere in this book, will conclusively show that the proposed functions of the National Reserve Association and of such central bank are practically identical. The chief material change since 1906 is in the management or control. In 1906 Wall Street only proposed a Government Central Bank with the Federal Government in absolute and supreme control. In 1912, emboldened by the panic of 1907 and its results, and belief that the Administration and Congress can be induced to entirely surrender to Wall Street and the banks, it is now actually demanded that Congress create a Private Central Bank named “National Reserve Association,” with the banks in absolute and supreme control, the Government selecting 4 and the banks 42 of the 46 directors. The governmental function of issuing and regulating from day to day the volume of the entire public currency, that in 1906 was to be granted because it was to be a public institution under absolute Government control, is now to be delegated to and exercised by this mere private corporation.

The Aldrich plan bill is as follows:

POISONOUS!

SNAKE */N MOST OF THE 58 SECTIOKS

OF THE ALDRICH BILL.

A BILL

To Incorporate the National Reserve Association of the United States, and for Other Purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the National Reserve Association of the United States be, and it is hereby, created and established for a term of 50 years from the date of filing with the Comptroller of the Currency @ certificate of paid-in capital stock as hereinafter provided. It shall have an authorized capital equal in amount to 20 per centum of the I Siob and unimpaired capital of all banks eligible for mem ership in said National a2 UNITED STATES MONEY vs.

Reserve Association. Before said association shall be wuthorized to commence business $200,000,000 of the capital stock shall be subscribed and $100,000,000 of .its capital shall be paid in cash. The capital stock of said association shall be divided into shares of $100 each. The outstanding capital stock may be increased from time to time as subscribing banks increase their capital or as additional banks become subscribers or may be decreased as subscribing banks reduce their capital or leave the association by liquidation. The head office of the National Reserve Association shall be located in Washington, in the District of Columbia,

June 7, rg11, the 24,392 reporting national and state banks and trust companies had a combined capital stock of $1,952.411,085.

If all joined, the reserve association stock would be about $400,000,000. That size capital is “authorized” whether they all join or not. The figure is 20 per cent of combined capital of “all banks eligible for membership.” If only the 7,331 national banks join, their combined capital on October 31, 1911, being $1,032,632,131, the total reserve association stock will be about $200,000,000, the amount that must be “subscribed” (one half being paid in) before the association can “commence business.”’ Evidently when the $200,000,000 minimum was fixed, it was anticipated that probably only national banks would join; and possibly such state banks and trust companies as are directly controlled by national banks. Although there is no important advantage to be gained by state banks and trust companies by joining, and very serious disadvantages, it was necessary to make a show of impartiality to keep state institutions from fighting the scheme in Congress. Apparently state institutions can join or not, as they like. Subsequently, however, they will be forced to surrender and become a minor part of this universal banking trust or see their deposits and business gradually diverted to national banks by the cry that only such banks as join the association have been made “panic-proof” by the Government. Once the law is passed, ~ every bank can be forced into the combination; and once in they are powerless and never can get out, except by insolvency or liquidation. If necessary, another little panic easily can be sprung as an “object lesson” to accelerate the decision of all banks to join this salvation corporation. Elsewhere we shall see that every bank joining must in everything submit to the orders of the central bank. A universal bank trust—a great money. combine—is certain the moment Congress passes and the President approves this bill. The President has indicated that he will approve it, so Congress is the only protector of the .country and the people against the imperial money tnonster this bill would bring into being. And the “interests” believe they can control a majority of the present Congress. If they can, then only the people can block the measure. The total capital of this financial colossus, and its power, is to automatically increase as new banks are organized or old banks increase their stock, Congress having no voice in the matter during the next 50 years. While the official head-office is to be in Washington, of course the real headquarters will be at the New York Branch in Wall Street. The moment this bill becomes law it will be an enforceable contract, a “vested right,” that neither Congress or any other authority can cancel or change to the financial disadvantage of the corporation. A member of the Monetary Commission so stated to writer recently.

Sec. 2. Upon duly making and filing with the Comptroller of the Currency the certificate hereinafter required the National Reserve Association of the United States shall become a body corporate and as such and by that name shall have power—

First. To adopt and use a corporate seal,

Second. To have succession for a period of 50 years from the date of said certificate.

Third. To make all contracts necessary and proper to carry out the purposes of this act.

Fourth. To sue and be sued, complain and defend, in any court of law or equity, as fully as natural persons.

Fifth. To elect or appoint directors and officers in the manner hereinafter provided and define their duties. .

_ Sixth. To adopt by tts board of directors by-laws nat inconsistent with this act, regulating the manner in which its property shall be transferred, its general business conducted, and ide privileges granted to it by lew exercised and en-

joved.

Seventh. To purchase, acquire, hold, and convey real estate as hereinafter provided,

Etghth. To exercise by its board of directors or duly authorized committees, officers, or agent, subject to jaw, all the powers and privileges conferred upon the National Reserve Association by this act. Baars.

This lax-wild-cat form of incorporation is enough to make corporations under the laws of New Jersey, Delaware or Arizona turn green with envy. It was not considered by the fathers safe to allow even the Federal Government to exercise any functions or powers except such as were delegated to it by the States and specifically enumerated in the Constitution, even with the people constantly in control for the benefit of the people. This private corporation owned by the banks for the benefit of the banks is granted life for 50 years, a half century, almost half as long as the republic has existed, and it is practically given legal power to do anything and everything without limitation, restraint, regulation or serious government supervision, except as to a few minor and relatively unimportant things specifically mentioned. No public regulation or supervision of its investments or conduct is provided. Paragraphs “third,” “sixth” and “eighth” grant the corporation prace tically unlimited power and turn it loose to work its will and pleasure for 50 years. Granting its board of directors this wide-open power to “adopt by-laws” is giving the corporation legal authority for 50 years to legislate for itself on all subjects not expressly illegal, except that such by-laws must be “not inconsistent with this act.” The unconditional grant of power “to make all contracts necessary and proper to carry out the purposes of this act” enables it to do practically everything; for almost anything can be made “necessary and proper” by the by-laws. The two former central banks, abolished by Congress refusing to renew their charters because of their political activity and becatise they had too much power, did not have a tenth of the power this bill would confer upon this corporation, and the length of their charters was but 20 years.

In the whole measure there is not provided even one criminal penalty upon any officer, director or agent of the association, or any of its branches, or upon the corporation itself, for the violation of one or all of the provisions of the bill.

Paragraph “second” almost confers immortality on this “soulless corporation,” and “fourth” seems to grant it “human rights” as well as corporate powers by making it equal to “natural persons.” Individuals do not have corporate

wers and ordinary corporations do not have “natural

uman rights,” but this bill seems to endow this money octopus with both corporate powers and human rights.

ad

It was unnecessary expressly to say that it shall be equal to Omnipotence in authority, because that is practically assured by the other sections of the bill.

Sec. 3. All national banks, and all banks or trust companies chartered by the laws of any State of the United States or of the District of Columbia, complying with the requirements for membership in the said National Reserve Association, hereinafter set forth, may subscribe to tts capital to an amount equal to 20 per centum of the paid-tm and unimpaired capital of the subscribing bank, and not more nor less; and each of such subscribing banks shall become a member of a local association as hereinafter provided. Fifty per centum of the subscriptions to the capital stock of the National Reserve Association shall be fully paid in; the remainder of the subscriptions or any part thereof shall become a liability of the subscribers, subject to call and payment thereof whenever necessary to meet the obligations of the National Reserve Association under such terms and in accordance with such regulations as the board of directors of the National Reserve Association may prescribe.

The subscriptions of a bank or trust company incorporated under the laws of any State or of the District of Columbia to the capital stock of the National Reserve Association shall be made subject to the following conditions:

First. That (a) tf a bank, it shall have a paid-in and unimpaired capital of not less than that required for a national bank in the same locality; and that (b) if a trust company, tt shall have an unimpatred surplus of not less than 20 per cenium of its capital, and if located in a place having a population of 6,000 inhabitants or less shall have a paid-in and unimpaired capital or not less than $50,000; tf located in a city having a population of more than 6,000 tnhabitants and not more than 50,000 inhabitants, shall have @ paid-in and unimpaired capital of not less than $100,000; if located in a city having a population of more than 50,000 inhabitants and not more than 200,000 inhabitants shall have a paid-in and unimpaired capital of not less than $200,000; if located in a city having a population of more than 200,000 tthabitants and not more than 300,000 inhabitants shall have G paid-in and unimpaired capital of not less than $300,000; ff located in a city having a population of more than 300,000 inhabitants and not more than 400,000 inhabitants shall have & paid-in and unimpaired capital of not less than $400,000, and tf located in a city having a population of more thar 400,000 inhabitants shall have a paid-in and unimpaira capital of not less than $500,000.

Second. That it shall have and agree to maintain agains its demand deposits a reserve of like character and propor. tion to that required by law of a national bank in the sam locahty: Provided. however, That deposits which it ma) have with any subscribing national bank, State bank or trus company in a city designated in the national banking laws a: a reserve city or central reserve city shail count as reserve is like manner and to the same extent as similar deposit: of a national bank with national banks in such cities.

Third. That it shall have and agree to maintain againsi other classes of deposits the percentages of reserve requires by this act.

Fourth. That tt shall agree to submit to such examina: tions and to make such reports as are required by law and to comply with the requirements and conditions imposed by this act and regulations made in conformity therewith.

The words “subscribing banks” when used hereafter in this act shall be understood to refer to such national banks, and banks or trust,compantes chartered by the laws of an State of the United States or of the District of Columbia, as shall comply with the requirements for membership herein defined,

Paragraph “second” of Section 3 indicates that bank re serves are to be as now kept in other banks in reserve cities instead of in the “Central Reservoir” of the National Re serve Association as had been represented. In fact, this bill seems to force all joining State banks and trust companies to send their reserves to Wall Street or to put the same in the national banks that now are constantly sending hundreds of millions of dollars of the deposit savings of the people to Wall Street and thus are depriving the communities wher¢ such deposits are owned of their use. Paragraph “fourth’ legally binds all joining State banks and trust companies to forever ‘comply with the requirements and conditions imposed by this act and regulations made in conformity therewith.” se

The association is empowered to adopt by-laws contaimng such “regulations” as it may from time to time care to impose. The courts will compel all banks and trust companies to obey the regulations or orders of the Central Association, for each in advance by adopted resolution and

CORPORATE CURRENCY ay in writing legally binds itself to do so. Every act of each bank thus can be regulated or dictated by the association, ‘such as interest rates, paid to depositors or charged on loans, investments, loans made, securities bought, expansion and contraction of the volume of its loans, etc. Under this power a mere circular order or “round robin” to the banks by the association can suddenly contract the volume of bank loans to business men to the extent of billions of dollars. The power of the association over every bank and trust company is about as great as it would be if it owned all of the stock of each bank and trust company. Instead of the association being a subsidiary of the banks, the 24,392 banks all are to be mere helpless subsidiaries of the National Reserve Association. Thus the new born child is stronger than its parents. Through this clever means the big banks controlled by Wall Street that—wilt-dominate the-association will be able-to-rule-every individuatbank and

Z zi OU Vy Da

er will be mere clerks for Wall Street. There never was such a big, powerful, nation-wide complete combine in all trust annals. It will be a trust of the trusts, and it is all to be done by act of Congress. And yet in his message indorsing this measure, President Taft said, “And I trust also that the new legislation will carefully and completely protect and assure the individuality and independence of each bank to the end that any tendency there may ever be toward a consolidation of the money or banking power of the nation shall be defeated.” If he meant what he says, he will have to veto this bill. If he did not mean it, why did he say it? Did he in a public message to Congress indorse a measure of great importance without knowing its provisions, and this only a few days before the bill was introduced into Congress? Or, did Aldrich conceal from the President the already prepared bill while inducing him to publicly indorse the same? - |

Sec. 4. The Secretary of the Treasury, the Secretary of Agriculture, the Secretary of Commerce and Labor, and the Compiroller of the Currency ave hereby designated @ committee to effect the organization of the National Reserve Assoctation, and the necessary expenses of said committee shall be payable out of the Treasury upon vouchers approved by the members of said committee, and the Treasury shall be reimbursed by the National Reserve Association to the full amount paid out therefor.

tre ait

Within sixty days after the passage of this act said committee shall provide for the opening of books for subscriptions to the capital stock of said National Reserve Assoctation in such places as the said committee may designate. Before the subscription of any bank to the capital stock of the National Reserve Association shall be accepted, said bank shall file with the organization committee or after organization with the National Reserve Association a certifed copy of a resolution adopted by the board of directors of said hank accepting all the provisions and liabilities imposed by this act and authorizing the president or cashier of said bank to subscribe for said stock. ———~

This and other provisions tend to give the.impression ” that the association is acpublic institution, being promoted by the Government, when it-is.only a mere private corporation: Morally it binds the Government, which is to

ave responsibility without power. The Government should not go into partnership with, or loan its credit or influence to, any private individual_or corporation. It is deceiving the people into believing that the association and its paper currency has behind it the credit of the Goveram atc it is claimed is not a fact. Under this_bi che the publi : ex-officio directors in a board of 46, and allowing the President to appoint the Governor; 2 ree nominated board, gives not the slightest power o public control. It is intended to mislead the people. And should solicit subscriptions to the stock SELB aaa poration a ses_paid from the public tr: ~ It is, of course, a mere bluff. == >>> of $200,000,000 the organization committee hereinbefore provided shall forthwith proceed to select 15 cities in the United States for the location of the branches of said National Reserve Association: Provided, That one branch shall be located in the New England States, including the States of Maine, New Hampshire, Vermont, Massachusetts, Rhode

CORPORATE CURRENCY ag

Island and Connecticut; two branches in the Eastern States, including the States of New York, New Jersey, Pennsylvania and Delaware; four branches in the Southern States, including the States of Maryland, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, Texas, Arkansas, Kentucky, Tennessee and also the District of Columbia; four branches in the Middle Western States, including the States of Ohio, In-. diana, Illinois, Michigan, Wisconsin, Minnesota, Iowa and Mtssourt; four Brakes in the Western and Pacific States, including the States of North Dakota, South Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado, New Mexico, Oklahoma, Washington, Oregon, California, Idaho, Utah, Nevada and Arizona.

When the cities in which the branches are to be located have been selected the organization committee shall forthwith divide the entire country into 15 districts, with one branch of the National Reserve Association in each district: Provided, That the districts shall be apportioned with due regard to the convenient and customary course of business and not necessarily along State lines.

The districts may be readjusted, and new districts and new branches may from time to time be created by the directors of the National Reserve Assoctation whenever, in their opinion, the business of the country requires.

It is made to appear that the Government is to control the dividing of the country up into districts. It is loudly claimed that Wall Street control is forever barred by this particular arrangement of districts. But the directors of the association expressly are given power to change the districts at will. In other words, they can immediately “readjust” so Wall Street will have complete control. And these district associations choose the directors of the National Reserve Association.

SEc. 6. <All subscribing banks within a district shall be grouped by the organization committee or after organizaton, by the National Reserve Association, into local associations of not less than 10 banks, with an aggregate capital and surplus of at least $5,000,000, for the purposes hereinafter prescribed: Provided, That the territory included in each association shall be contiguous and that in apportioning the territory due regard shall be had for the customary course of business and for the convenience of the banks forming the association: Provided further, That ir apportioning the territory to local associations comprising @ district every bank and all of the territory within said district shall be located within the boundaries of some local association: And provided further, That every subscribing bank shall become a member only of the local association of the territory in which it is situated.

The banks uniting to form a local association shall, by thewr g Arab or vice presidents, under authority from the board of directors, execute a certificate in triplicate setting forth the name of the association, the names of the banks composing it, its principal place of business, its territorial limits, and the purposes for which it ts organized. One copy of this certificate shail be filed with the Comptroller of the Currency, one copy shall be filed with the National Reserve Association, and one copy shall be filed with the branch of the National Reserve Association of the district in which the local association ts included. Upon the filing of such certificates the local association therein named shall become a body corporate and by the name so designated may sue and be sued and exercise the powers of a body corporate for the purposes mentioned in this act, and not otherwise.

The local associations in each district may be readjusted from time to time and new associations may be authorized by the directors of the National Reserve Association.

Local associations with their boasted republican form of government can be changed, “readjusted,” at will by the imperial board of directors of the central association. The whole management is despotism disguised as a democracy.

Sec. 7. Each local association shall have a board of directors, the number to be determined by the by-laws of the local association. Three-fifths of that number shall be elected by ballot cast by the representatives of the banks that are members of the local assoctation, each bank having one representative and each representative one vote for each of the positions to be filled without reference to the number of shares which the bank holds in the National Reserve Association. Two-fifths of the whole number of directors of the local association shall be elected by the same representatives of the several banks that are members of the assoctation, but in voting for these additional directors each representative shall be entitled to as many votes as the bank which he represents holds shares in the National Reserve Association: Provided, That in case 40 per centum of the capital stock in any subscribing bank is owned directly or indirectly by any other subscribing bank, or in case 40 per centum of the capital stock in each of two or more subscribing banks, being members of the same local association, 1s owned directly or indirectly by the same person, persons, copartnership, voluntary association, trustee, or corporation, then and in either of such cases, neither of such banks shall be entitled to vote separately, as a unit, or upon its stock, except that such banks acting together, as one unit, shall be entitled to one vote, for the election of the board of dtrectors of such local association. In no case shall voting by proxy be allowed. The authorized representative of a bank, as herein provided, shall be its president, vice president, or cashter.

Each director shall take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of such association and will not knowingly violate or willingly permit to be violated any of the provisions of this act.

The directors originally elected shall hold office until the second Tuesday in February immediately following their election, and thereafter the directors shall be elected annually on that date and shall hold office for the term of one year.

The board of directors of the local association shall have authority to make by-laws, not inconsistent with law, which shall be subject to the approval of the National Reserve Association. |

If Congress exists to serve the people instead of the banks, it will consider immaterial the method of electing directors so'long as the banks select all and the people none for the local associations. The whole scheme is for the benefit of the banks and not the people. All local by-laws must be approved by the supreme association. Sec. 7 seems to authorize ownership of one bank by another, branch banking, now illegal; 40, 51 or 75 per cent of a bank’s stock could be put in one or more codperating holding companies and thus easily evade ‘the restriction.

Each director of a local, a branch, or of the national association must take an oath that he will faithfully perform his duties. This is a joke, in view of the U. S..Comptroller’s charges that about 40,000 bank officers and directors almost every day knowingly violate their oaths which all take as bank officials. This oath is to serve the bank or the association, not the Government. No penalty or method of impeachment is provided in the bank act or this bill against directors who break their oaths. The provision is a mere bluff. There should be a penalty of fine and imprisonment against bank officers and directors who knowingly violate their sworn duty. This would at least modify the evils and somewhat improve administration. The central association can approve or veto the by-laws of local associations. It is the autocrat.

Sec. 8. Each of the branches of the National Reserve 2{ssoctation shall have a board of directors, the number, not less than twelve in addition to the ex-officio member, to be fixed by the by-laws of the branch. These directors shall be elected in the following manner:

The board of directors of each local association shall elect by ballot a voting representative. One-half of the elected directors of the branch shall be elected by the vote of such representatives, each representative having one vote for each of the positions to be filled, without reference to the number of shares which the banks composing the association which he represents holds in the National Reserve Association. One-third of the elected directors shall be elected by the same voting representatives, but each voting representative in this case shall have a number of votes equal to the number of shares in the National Reserve Association held by ail the banks composing the local association which he represents. The remaining one-sixth of the directors shall be chosen by the directors already elected and shall fairly represent the agricultural, commercial, industrial, and other interests of the district and shall not be officers nor while serving, directors of banks, trust companies, insurance companies, or other financial institutvons. The manager of the branch shall be ex-officio a member of the board of directors of the branch and shall be chairman of the board.

‘Each director shall take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of such association and will not knowingly violate _ or willingly permit to be violated any. of the provisions of this act.

All the members of the board of directors of the branch except the ex-officio member shall at the first meeting of the board be divided into three classes. One-third of the directors shall hold office until the first Tuesday in March immediately following the election; one-third of the directors shail hoid office for an additional period of one year after the first Tuesday in March immediately following the election; the remaining one-third of the directors shall hold ofice for an additional period of two years after the frst Tuesday in March immediately following the election. All elections shall be held on the first Tuesday in March of each year, and after the firsi election all directors shall be elected for a term of three years: Provided, That the by-laws of the National Reserve Association shall provide for the manner of filling any vacancies which may occur in the board of directors of the branches.

The board of directors of the branch shall have authority to make by-laws, not inconsistent with law, which shall be subject to the approval of the National Reservé Association.