Santa Fe new Mexican. [volume] (Santa Fe, N.M.) 1898-1951, 1913-12-23

ing closely to the technical DIVISION vi
language of the measure.
Al the head OF the system will stand
a federal reserve board AT Washing
ton. appointed by the president and
to consist of the secretary OF the
treasury, the comptroller of the cur
rency and five other members. Two
of these shall be expert bankers but
none shall have banking affiliations or
own bank stock during their service.
This board will exercise general con.
troll over the entire system.
The temporary, Organization com
mittee,' or the federal reserve board,
will select from eight to twelve cities
where regional reserve banks shall be
located, and will divide the entire
country geographically with these
cities as the centers of districts. The
national banks in district will be re-
quired to subscribe for the stock OF
the regional reserve bank in that dis
trict and to keep a portion of their re-
serves there.
Local banks will be known as
member banks,' because they will
own the stock of the regional reserve
bank of their district. Each men,
ber bank will be required to take cap
ital stock of the regional reserve
bank, equal to six per cent of the
member banks capital and surplus.
The capital of the regional bank will
increase or descrease so that it always
represents six per cent of the COM
bined capital and surplus Of all the
banks of the district that have joined
the system.
National banks are compelled to
join and state banks are permitted to-,
If they bring their reserve require
ments up to the standard set for ma
tional banks and submit to national
examinations.
Public ownership of the stock of
the regional reserve banks is permit
ted only in case enough banks do not
join in any district to provide a capi'
tai stock of $4,000000. In such event
the public may purchase the stock in
quantities limited to $25,000 for each
individual but the voting of this
stock will be placed in the hands of
government representatives on the
board of directors of the regional re-
serve bank.
The regional reserve banks may do
business only with their member
banks not with the public, except that
certain, open market operations
such as the purchase and sale of gold,
government or municipal bonds and
certain forms of bills of exchange are
permitted. These banks will make
their earnings from the loans made to
member banks and from the purchase
and sale of bonds and foreign bills of
exchange.
Member banks will be compelled to
put up in cash only one half of tteir
subscription to the capi. al If the new
banks: the remainder can be called
for if needed by the regional banks.
Dividends of six per cent will be paid
this stock will be non-taxable. After
these dividends are paid one-half of
the surplus net earnings goes to Gre
ate regional surplus fund and when
this has reached 40 per cent of the
regional banks paid-in capital, these
earnings are to go into the United
States treasury. The remainder of
the net earnings are to be paid to the
United States as a franchise tax.
With the machinery thus created
for a new banking system that is
supplementary to the commercial
banks of the country, the law provides
for gradual transfer of part of the
bank reserves to these new "reser-
voir" banks.
In order not to disturb business con-
ditions or to withdraw too suddenly
the heavy deposits of country banks
in the large cities the law provides
that three years may be consumed in
these balances.
The amount of reserve required
from every bank under the new law
and the place where it must be kept
are as follows:
Country banks: Total reserve re-
suired, IL per cent of demand depcs-
its and five per cent of time deposits.
Five-twelfths must be held in the
banks own vaults for two years and
after that time; two
twelfths in the regional reserve bank
for the first year. increasing one
twelfth each six months thereafter un
til it reaches five-twelfths.
For three years the unallotted part
Of the reserves may be kept in the
banks of reserve cities; after that
time, it must be kept in the country
bank vaults, or in the regional reserve
bank
Reserve city banks: Total reserve
fifteen per cent of demand
and five per cent of time deposits |
must be kept in the
banks vaults for the first two years |
and five-fifteenths after that time !
must be kept in the !
year, increasing one-fifteenth every !
six months thereafter until it reaches !
,ix-fifteenths. For three years the I
lnallotted portion of the reserve may
De kept in other banks, in its own i
,aults or in the regional banks; after
hat time in one of the latter two |
places.
Central reserve city banks New
York, Chicago and st. Louis): Total
'eserved required: IS per cent OF de-
nand and per cent of time deposits.
must be kept in the
,ank's own vaults; seven-eighteenths
n the regional reserve banks; and
he remaining five-eighteenths in eth
II place the bank may choose.
III. i'm, FRI nf