El Paso herald. (El Paso, Tex.) 1901-1931, 1913-10-29
MAY Oppose Fletcher Bill
Plan For National. State and Com
munity Rural Banks Not Expect
ed to Meet With Approval
of All FinancEers.
~ Frederic II
= By Frederic j. Haskin-
ASHINGT0N n q a. 3

w the Fletcher scheme of organ
W izing a national rural banking
system, the local banks of each state
will form a banking association which
will act as the Ink binding them to
the big central institution which will
be located in Washington. AS soon
as 80 local banks are formed In any
one state, they Will be advised by the
government that a meeting has been
; called for the purpose of organizing
a state bank. Each local bank will
send one of its directors as a delegate
to this meeting. Here they win organ
lie a state bank with a capital of not
less than $4,000, with power to indef-
initely increase it, the shares OF
The charter will be for so years with
power of renewal. The stock of the
bank will be owned by the local banks
of that state exclusively.
VIII Serve as Clearing House.
In addition to having general bank
ing powers, the state bank viii serve
as a clearing house for its members
and serve them as a reserve agent. 1t
will rediscount their paper, and may
act as a broker in selling long-term
farm bonds which bear the guarantee
of a local bank as well as its own o. X.
It can buy such bonds in its own name.
and it can also deal in the government
securities of the United States and of
foreign nations, as well as of states,
counties and municipalities
The Management of a state bank will
be vested in a directorate of at least
nine members, chosen by the local
banks, one vote to each bank, no proxy
voting being allowed. There will be
the other usual banking officers, the
president and two vice presidents be-
ing elected from the board bv the To-
bank board can be member of
board of any local bank. The profits
shall go first to the payment of eX-
penses, then a six per cent dividend
of the stock, and then to the creation
of a surplus. When this reaches one
and half times the capital all further
profits shall go into annual dividends.
Must Maintain Reserve.
This bank must always maintain
reserve of one-fifth of its check de-
posits and a tenth of its time deposits,
of which one-half must be in cash in
its own vaults. The balance may be
deposited with the national rural bank
or with other banks approved by the
Treasury Department 1t may estab-
lish branch banks, and enter into re-
ciprOcal relations with other banks
with the consent of the Treasury De-
partment.
National Rural Bank.
The national bank is to be known
as ''The National Rural bank of the
United States" and each state bank
must invest one-fifth of its capital in
the stock of the national bank. This
national bank shall begin with capt.
tai of half a million dollars, in shares
of 500 each, and it shall have a char
ter for so years, renewable at the
option Of congress. In addition to the
usual banking functions it will act as q
clearing house for all rural banks and
cooperative societies. whether they be
organized under state OF federal laws,
and also will serve as their reserve
agents.
II will also act as a depository bank
for the funds of the United States gov
eminent particularly for postal saw
ings- bank funds, paying interest on
them and reinvesting them under ap-
propriate SAT guards. It will redis-
count paper Or the local and state
rural banks, and guarantee both as to
principal and interest mortgage base
bonds or notes guaranteed by these
banks. Ii will also reliscount farm
loans held by national Banking as
sociations under the provisions of the
federal reserve act
In addition to these functions the
national bank, 1t is proposed, will be
allowed to issue debentures to run for
not exceeding 80 years, and to be Sc
cured by trust deposits of farm mort
gage one and a fourth times as large
as the face value Of the debentures.
These must be contributed as nearly as
possible over the five great sections
of the United States. 1t may also
purchase and sell on its own account
farm loans that have been guarantees i
by the banks below, and NAV operate
branch banks. The surplus must be
Drought up to one and a half times
the value of the stock. after paying a
per cent dividend. and thereafter all
extra earnings will go to dividends.
The bank must always have one-fifth
OF It's deposits in reserve, half of the
reserve in its own vaults.
Board of Nine Directors.
II Is proposed that the management
Of this national bank shall be vested
IN board of nine members, four OF
them appointed by the president and
confirmed by the senate, to serve for
life or during good behavior. and the
other five to be selected by the stock
holding banks, one for four years, two
for s1X,i and two for eight. Thereafter
the banks may fill any vacancies that
occur in its quota. and the permanent
term shall be eight years. In choos-
ing the directors allotted to the banks
each bank may cast a number of votes
equal to the number of local banks
by which 1t is constituted. and the To-
cal banks may instruct the state banks
for whom to vote. Out of the nine
directors appointed the lstockhoIdinE
banks shall select two out of the five
elected by them and one from the four
appointed by the president and from
these the president will name the pres-
ldent and the two wee presidents of
the bank, who will serve for eight
years. The salaries shall be resDec-
lively $4,000, $4,000 and $40 600 for
president. vice presidents and directors.
all of whom shall devote their entire
time to the business of the bank and
give bond in penalty of 100000 for |
the proper performance of their duties
A temporary organization for this
national bank is proposed in the |
Fletcher bill Under it. the rural bank |
ing board, created under the bill and /
consisting of the secretaries of the /
treasury, agriculture, and labor, will /
select a board of nine directors, max !
ing one of them president ard two vice /
presidents, all of whom shall serve IN /
III the permanent organization is ef- |
fected- a half million dollars is set /
aside out of the treasury to be used in !
buying stock of the national bank this /
sum- with interest, to be repaid as the /
state and local banks take the stock of |
the central institution.
To Be Under SnecinI DIri.inn