726 



Not only did Congress object to the work of the committee but in the legislative, executive 

 and judicial bill (which PresidentTaft twice vetoed) it required estimates to be submitted in 

 the same way as before and in another way. Hence the President 's letter of September 19. 



The problem of rural credit has attracted much attention and in October 1912 the 

 Federal government published a Preliminary Report on Land and Agricultural Credit 

 in Europe, with a letter to governors of the states by President Taft recommending the 

 introduction of co-operative credit on the lines of the Raiffeisen banks of Germany. 1 



The National Monetary Commission (which terminated March 31, 1912) presented 

 in October 1911 and on January 8, 1912 its recommendations, 2 notably for a National 

 Reserve Association, formed of 15 district reserve associations, each made up of local 

 associations of 10 banks or more, each local association with a combined capitalisation 

 of $5,000,000. To secure membership banks must subscribe for 20% of their capital 

 in stock of the National Reserve Association and must fulfill certain requirements 

 regarding capital, surplus, reserves and examination which put state banks and trust 

 companies under supervision similar to that now in force for national banks. Earnings 

 of the association are to be divided between the stockholders and the United States, 

 a certain part, however, going to a surplus reserve for the association. No more national 

 bank notes would be issued, their place being taken by notes of the association, based 

 on bonds, and by additional circulating notes based on bankable commercial paper, etc. 

 The association would be required to make weekly public reports to the comptroller 

 of the currency and full reports five times a year. Its advocates think that the plan 

 would be of particular value in financing crops and argue that as fiscal agent for the 

 treasury the association would effect a more satisfactory relation between the treasury 

 and the banks. In general opposition to the plan was: partisan, arising partly from 

 the unpopularity of the reactionary or stand-pat wing of the Republican party with 

 which Senator Nelson W. Aldrich, the chairman of the commission, was affiliated 

 a party group which was inextricably connected in the popular mind with tariff in- 

 iquities and favouritism to "Wall Street," the "interests " and the "Trusts"; or based 

 on economic or political theory, which distrusted the management of a central institu- 

 tion and Federal interference in banking. The popular aversion to Wall Street im- 

 mediately urged that the association could not fail to be under the control of this interest, 

 in spite of the large size of the board of directors (47) and of the probable effect of the 

 association to minimise the influence of the stock exchange on business conditions. 

 The plan has practically the undivided opposition of the Democratic party, and the 

 incoming administration will almost certainly not adopt it or any part of it. 



The attitude of the Democratic party towards financial questions is hinted at by the 

 " Money Trust " investigation carried on by the " Pujo committee " on banking and cur- 

 rency 3 of the Federal House of Representatives (resolutions of February 24 and April 

 25, 1912), although it was charged that this was prompted not merely by hostility 

 to organised finance but largely by a desire to make political capital to be used in the 

 presidential campaign. Besides prominent bankers, including J. P. Morgan, the com- 

 mittee called before it Mr. Roosevelt, who testified on the action he had taken in the 

 panic of 1907 (see E. B. xxvii, 734d); much of the testimony before the committee 

 was of great interest and importance. 



In 1912 Professor Irving Fisher of Yale 4 suggested a gold seigniorage, adjusted 

 by reference to price index numbers, as a means of reducing the cost of living through 

 restoration to the gold dollar of its purchasing value. Woodrow Wilson had previously 



1 See O. R. Hobson, Agricultural Credit Banks (Washington, 1912). 



2 Sec Ludwig Bendix, The Aldrich Plan in the Light of Modern Banking (New York, 1912, 

 and in German); J. L. Laughlin, Banking Reform (Chicago, 1912), a defence of the plan of 

 the monetary commission, and the unfavourable criticism of Albert A. Bowles in North 

 American Review, March 1912, vol. 195, pp. 310-318, on the ground that the system is too 

 complicated and tries to secure the maximum of profit. Victor Morawetz, The Banking and 

 Currency Problem and its Solution (New York, 1911) opposes the note-issue plan. 



3 Chairman, Arsene Pajo (b. 1861), representative from Louisiana since 1903. 



4 In a paper before the International Chambers of Commerce at Boston, printed in the 

 Independent (New York) of September 26, 1912. 



