You will all of you remember, I am sure, what a cold reception the idea of a "Central Bank" at the hands of Aldrich received. Does anyone of common intelligence believe that Aldrich ever changed his scheme below its throat? It is true he put a mask on its head; but that is all. He hunted around for an all-concealing name to hide the thing under—"The National Reserve Association." I assert that his proposal would mean the greatest and most centralized Central Bank in the world.
Note these figures and draw your own conclusion:
| Nat. Reserve Assn. | Bank of France | Bank of England | Bank of Germany |
| Capital | |||
| $400,000,000 | $36,500,000 | $72,000,000 | $45,000,000 |
| Deposit | |||
| 1,500,000,000 | 100,000,000 | 250,000,000 | 200,000,000 |
| Note Issue | |||
| 2,400,000,000 | 1,000,000,000 | (See Note.) | 400,000,000 |
| Possible Note Issue | |||
| 4,500,000,000 | Possible large issue with tax. |
Note.—The Bank of England is not in any sense a bank of issue, because the amount of notes it issues is limited to the amount of gold coin in the issue department. The notes are gold certificates. There is an exception to the law, to the extent of the arbitrary amount of notes issued against the Government debt and securities, held in the issue department, amounting to $90,000,000.
Now, gentlemen, here you have a proposal to organize in this country an institution with a capital greater than the combined capital of the Central Banks of England, France and Germany, because the capital of all of our banks now exceeds $2,000,000,000, and the subscription to the National Reserve Association must be 20 per cent of this amount, to entitle them to participate. Certainly the idea must have been that they all would participate in so beneficent an institution. "It was to be a bank of banks for all the banks."
It was the declared purpose of the author of the scheme that the banks should surrender all their real money, now carried as reserves, to this central institution in exchange for its notes; or that the banks would deposit more than $1,500,000,000 with the National Reserve Association. This would be a deposit nearly three times as great as all the deposits of the Central Banks of England, France and Germany combined.
The bill provides, Section 51, that the National Reserve Association can issue $900,000,000 of its notes, and as many more as are covered "by an equal amount of lawful money" (United States notes, silver, or silver certificates, and gold in some form), without paying any tax. But if the banks turned over their present reserves, amounting to $1,500,000,000, as contemplated by the author of the National Reserve Association, it could issue $2,400,000,000 before beginning to pay any tax on circulation. By paying a tax of 1½ per cent per annum, it could put out $300,000,000 more notes, not covered by lawful money, or $2,700,000,000; then, by paying a tax of 5 per cent, it could go any limit until its lawful money reserve was reduced to 33 per cent. This makes a possible issue of $4,500,000,000, or a possible note issue today two or three times as great as all the note issues at any time outstanding of the Central Banks of England, France and Germany combined. Every dollar of this vast amount is only the credit of the so-called National Reserve Association, and yet is a lawful reserve for over twenty-five thousand banks to hold.
Mr. Merchant: By the way, Mr. Banker, I would like to ask you what you think of a tax upon bank notes to be paid by the Central Bank of Issue as it is practiced in Germany where they got this idea.
Mr. Banker: Economically speaking, a tax paid under such circumstances is of no more use than your appendix.