It was strongly felt that Congress ought to do something by way of relief, particularly as another presidential election was in sight. Consequently, in the spring of 1908 a bill was reported by the House Banking and Currency Committee and another by the Senate Committee on Finance. The House bill was a measure calling for the issue of currency based on commercial paper, while the Senate plan, speedily known as the Aldrich bill, sought to meet the difficulty by allowing banks to deposit with the Treasury other kinds of bonds in protecting their circulation. The philosophy of the House bill was more complex, being based on the view that what the country needed was a thorough revision of its banking methods, particularly as related to the issue of currency, with a flexible note issue backed by commercial paper. By a legislative maneuver there was now substituted for the original bill a plan which became known as the Vreeland bill, and called for the issue of currency by associations of banks, called at first clearing-house associations on the basis of commercial paper deposited with such associations. The bill was originally incredibly crude, and was changed almost daily for a long period of time. It finally assumed greater feasibility and was passed by the House of Representatives. The Aldrich bill had meanwhile been passed in the Senate, and efforts were now made to adjust and combine the two. Ultimately this attempt resulted in the so-called Aldrich-Vreeland Act of May 30, 1908, which permitted the issue of currency based on commercial paper by associations of banks known as "National Currency Asso-ciations," while it also permitted national banks to deposit bonds of specified classes with the Treasury Department and to receive direct issues of currency based thereon. In every case the new currency was made the subject of a very high rate of taxation, it being supposed that this would force the notes to retire rapidly. One feature of the Act was a provision for a "National Monetary Commission" to consist of Senators and Representatives only. The commission was given almost unlimited power of spending money in furtherance of its inquiry, and was directed to investigate currency and banking conditions wherever it saw fit, and report to Congress what further action was needed.

The control of Congress changed in 1910, a Democratic majority appearing in the House of Representatives, while dissatisfaction with the expenditures of the commission for traveling and publishing began to be expressed. Late in the summer of 1910 Senator Cummins of Iowa succeeded in securing the adoption of a resolution calling for some report by the Monetary Commission within a specified period. In December following the outlines of a bill drafted for Senator Aldrich became known to the public, and shortly thereafter the measure was adopted by the National Monetary Commission. This later became known as the Aldrich bill.

The Aldrich, or Monetary Commission, bill was a lengthy and detailed legislative proposal which had been worked out with the aid of banking authorities, and which presented a plan for the complete reorganization of the banking system of the country. In order to understand the Aldrich bill thoroughly it must be remembered that, as already suggested, it was merely the outcome of a long period of discussion and controversy. The brief treatment to which we are necessarily limited prevents us from considering more than a very few of the antecedents of the bill; but it is important to note that the measure had been preceded by two other proposals of similar character, which had been worked out independently of those who had the Aldrich bill in hand. These were the Fowler and the Muhleman bills. A true understanding of the Aldrich bill, and what was done in the way of legislation subsequently, can best be attained, therefore, by a brief sketch of these three measures.

The object of the plans presented in these three proposed measures was that of arranging a co-operative organization of the banks of the United States which should serve to afford these banks the means of re-discounting their paper at times when they required assistance or accommodation in order to continue extending loans to their customers, and in order to avoid the curtailment of credit which in the past had frequently resulted in precipitating commercial panics and stringency. The fundamental idea running through the proposals was that of centralizing the control of discounts as well as that of applying a more rigorous method of oversight to the operations of the several banks expected to participate in the new scheme. It was supposed by the authors of these plans that the institution which they aimed to create would accomplish at least the following financial results:

1. Establishment of a more or less uniform rate of discount throughout the United States, and thereby the furnishing of a certain kind of control over bank operations which should be similar in all parts of the country.

2. General strengthening of reserves in order that such reserves might be held ready for use in protecting the banks of any section of the country and so enabling them to go on meeting their obligations instead of suspending payments, as had so often been necessary in the past.

3. Furnishing of an elastic currency by the abolition of the existing bond-secured note issue in whole or in part, and the substitution of a freely issued and adequately protected system of bank notes which should be available to all institutions which had the proper class of paper for presentation.

4. Management and commercial use of the funds of the government which were then isolated in the Treasury and subtreasuries in large amounts.

5. General supervision of the banking business and furnishing of more stringent and careful oversight.

Other objects were sought, incidentally, in these plans, but they were not as fundamental as the chief purposes just enumerated.

The plans presented a general community of design and similarity of arrangement which was not necessarily the outgrowth of plagiarism or imitation, but had resulted from the facts that some proposition of the same general kind had been under consideration for many years previous, and had commended itself to leading bankers and business experts, and that the idea of combined action had also the support of European experience, nearly every European country being equipped already with a central banking mechanism of some kind. This notion of a central banking mechanism which should economize resources and sustain the several banking units was thus admittedly desirable, provided that various difficulties connected with it could be overcome. It was in overcoming these difficulties and avoiding the embarrassments that necessarily arise from such a proposition that the three plans under consideration, as well as numerous others of the same general description, varied from one another. These variations were of great significance when it was sought to adopt a piece of practical legislation for the purpose of remedying existing conditions: but they were not fundamentally important from the general theoretical standpoint.

The particulars in which the various plans differed one from another are numerous, but the principal points upon which those who had framed these plans concentrated their attention may be enumerated as follows:

1. Methods of providing capital for the suggested central organization.

2. Relationship between the central organization and branches of the same.

3. Details of the relationship between the institution and its branches, on the one hand, and existing banks, on the other.

4. Relations between the proposed institution and its branches, on the one hand, and the public, on the other.

5. Relations between existing institutions, on the one hand, and the government, on the other.

6. Methods of controlling the proposed mechanism.

7. Details of the lines of business to be transacted by the proposed institution.

Although the Aldrich bill was in a general way in line with what had been often urged and widely talked about both in Congress and out of it, and although it could have been amended in such a way as to eliminate many of the objectionable ideas which had been veneered upon the fundamental basis of banking theory and practice which constituted its substructure, the measure never commended itself to the public. As a matter of fact, it never received consideration at the hands of a committee in either house of Congress, and within a few months after it was introduced the control of both houses had largely slipped from the hands of the political group which was responsible for it. The Democratic party had succeeded the Republican in full charge of the House of Representatives, and a combination of party groups had practically deprived the conservative Republicans in the upper chamber of Congress of the majority control which they had long exercised there. Upon the Banking and Currency Committee of the House of Representatives fell the duty of examining the great mass of information already collected with reference to currency and banking, of analyzing the data at hand, of simplifying the results thus obtained, and of selecting those which were deemed most worthy to be incorporated into a measure for the reorganization of the banking and currency system of the nation.