Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1911-08-10

1907 events transpired which created q
rum upon certain banking institutions
In New York City, and the newspaper
reports Of this started a general move
ment by banks in the interior to With
draw funds from New York, partly 70
strengthen their own cash holdings anu
partly no doubt In anticipation OF what
actually followed, towit, the restriction
OF cash shipments ny the New York
banks.
with no means at their command
for converting their assets into curren-
CIV. and facing a demand OF immeasur-
able proportions, the banks OF new
York City were obliged as choice OF
evils to place restrictions upon cash
trail reserve cities found 1t immediately
necessary to do the same. and the coun-
Itry banks generally felt compelled TO
follow their example.
Mr.. Vanderlip explains the plan to
organize the National Reserve Assn
as follows:
Lett is proposed to form what shall be
called the National Reserve Associa :
ton Of America, !. the capital OF which
shall. be provided entirely by the bank
ing institutions of this country: sNo
other subscriptions VIII be received am.
the banks will be allowed to subscribe
or acquire stock only In fixed pro-
rata Of. their capital. The authorized
capital OF the Reserve association IS 10
he 20 per cent Of the capital of all the
banks ioining 1t, each bank subscribing
that percentage Of ITS own capital. ~
case a bank increases or d1mln1snes us
capital its shares In the Reserve asso-
citation will be increased or diminished
accordingly. One-half Of the subscribed
lcapital will be called in at first, and
the remainder will probably never be
called for, but the subscriptions Will
stand as a liability Of the banks and
thus serve to fortify the credit and
prestige Of the institution In the eyes
Of the world. Assuming that the banks
generally come into it, the National
strongest organization in the world
for the performance Of banking func-
tons.
association to pay dividends upon Its
outstanding shares up to Ave per cent
per annum; after which, and after the
accumulation of q given surplus, all
profits are to be turned into the treas
ury Of the United States. This dis
position Of the earnings Is consistent
with the theory upon which the asso-
citation 10 formed, viz: That 1t Is not
an institution for profit, but an asso-
citation Of banks for mutual support
and assistance in their service to their
local communities, and to enable the
banking system as a whole to dis
charge certain public functions which
the Individual banks cannot so effec-
lively perform.
The organization OF the Reserve as.
ISOLATION is modelled after our federal
form. Of government. 1t begins at the
bottom with local hank associations,
which must consist OF not less than ten
banks and not less than $5,000,000 OF
combined capital and surplus: then the
entire country Is divided into fifteen
districts and the local associations s'f
each district are organized into dis
trict association; and finally the Ma
tional Reserve Association, with 'ts
head office in Washington, is founded
upon the district associations. The
control of the local associations is
wholly within themselves: the MEM
|bers elect their own directors and the
directors for each district are elected
by the banks within that district, and
finally, all Of the districts participate in
the election Of directors for the ma
tional association. The plan Of choos-
ing directors is ingeniously devised
throughout to give the small banks
more Influence than they would have
| il their voting power was based upon
their holdings of capital stock In the
association. In the local associations,