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1908: The Aldrich-Vreeland Act

It is just ten years since the Report of the Indianapolis Monetary Commission of I898 gave to the public a study of the evils in our monetary system, and proposed certain reforms. The dangers arising from the silver circulation and the steps for establishing the gold standard, brought forward by this report, were largely, if not fully, provided for in the Act of March I4, I900.

The recommendations for the gradual withdrawal of the greenbacks, however, in connection with a revision of the system under which national bank notes were issued, were not carried out. In the proposals for improving the system of issuing bank notes a careful study was made of the so-called asset-currency, as opposed to an inelastic bond-secured issue. That presentation in the Report, for the first time brought the subject before bankers and legislators for serious consideration. It has taken ten years for that leaven to produce any practical results. The plan was at first coldly received by the bankers; but in the bill drawn up by the Currency Commission of the American Bankers' Association, in the early part of 1908, and presented to Congress, all the essential features of the Monetary Commission Bill of 1898 were included; although the later bill was advisedly meant to be only a transition measure, and retained a partial bond feature as a compromise. Likewise, the bills introduced by Mr. Fowler, chairman of the House Banking Committee, were founded on the same general principle, although differing from the other plans in simplicity and in the means for carrying out the change from the old to the new system.

Finally the panic of I907 pricked public feeling into a demand for additional legislation on banking; and the politicians became firmly convinced, especially in view
of the coming presidential campaign of I908, that this public opinion must be satisfied by some kind of legislation. The consequence was the Aldrich-Vreeland Act (H. R. 2I871) of May 30, I908. It is a curious compound of conflicting views, compromise, haste, and politics; but it is now the law of the land, and its provisions ought to be submitted to careful scrutiny.