Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1913-12-31
IAA|KE|sCHANGES IN
CURRENCY system.
New! Money Law Displaces 122-
Year-Oid Code.
s. FAR REAc HING IN SCOPE

important Law Relating to FL.
ance Passed in Many Years. :s
u .sSa ssential Features of the Meas
ure Explained In Nonteeh-
", nlcai Language. b;
Washington. Dec. 23.-The new Dill
Affecting the currency, banking banking anu
finances Of the country is one OF the
most far.reaching measures relating TO-
4 finance that have been enacted IN
many years. !,
The magnitude Of the subject, the
diversity Of interests affected and the
length OF the debates in both branches
Il az congress has to follow the changes
and grasp the essentials Of this highly
technical measure in its important
bearings on money, finance, banking
and the entire range Of fiscal subjects
public and private, which it affects.
.sI55 Summary Of the Bill. ..5a
with a view. therefore, OF present
1 Ing succinctly and in non-technlcai
language an epitome Of the salient + fea-
lures OF the measure as finally framed
the following summary is given OF the
bill as whole and OF its principal De-
tails: D Il. d
Generally speaking. the first steps
ITO be taken to bring into operation the
nations new financial system Will pc
through an organization committee
consisting OF the secretary OF the
treasury. secretary OF agriculture ana ana
controller Of the currency.
ss$s Banks have 60 days within which to
Y ale their applications for membership .elrt
y in the new system. and one years
time is allowed before the government
\ will compel the dissolution of any ma
tional bank that refuses to join.
Viii TAKE Up the Slack.
The new law will make little direct
change in the operation OF the pres
ent national banks, except to allow
them to loan certain amount OF their
funds upon farm mortgages.
Its chief purpose is to add new
piece OF machinery to the banking
system that Will take up the slack"
during the changing business condi-
tons Of each year; that will give the
banks place to quickly convert their
assets into cash in time of need, and
that will bring out new federal cur
rencyi when 1t Is needed, and retire it
when money becomes CHEAP.
Banks are now required to keep q
certain percentage Of their deposits as
reserves, part in cash in their own
vaults and part OF which may be re-
n deposited In the banks Of New York.
Chicago st. Louis and other designat-.
ed cities. VI "; II: 4 *
IN H times OF sudden financial de-
mands. when banks have loaned up to
the full limit Of their resources, these
/ reserves furnish little relief, because
{ IL they are paid out to meet demands
4 the banks are left In q precarious con
80 s..ic prinolp,. 4 Law.
The basic principle ofNthe new law
Ks to get these reserve funds out into
circulation when necessary without
lessening the safety Of any bank, and
& to provide a place to which local
\ banks may rush in a crisis and get
II cash for the prime commercial pa
per" they hold in their vaults.
This is to be accomplished through
4 q chain of regional reserve banks, or
of reserves" in which all
banks shall deposit a stated part of
4 the money they are required to hold
: Is reserves.
Under the new system, when a
financial furry comes the banks can
y take commercial paper such as notes.
drafts and bills Of exchange, to these
reservoirs, J" and secure the use Of
q their own reserves, or, If necessary,
even the reserve Of other banks, by
4 depositing this security.
8 The new regional banks will re-
" ceive about one-half of the bank re-
\ serves OF the country They in turn
y viii be permitted Ito loan back to the
4 banks all but IS per cent. Of these
Y reserves, so that in case Of emergency
millions OF cash can be brought OUT
q into circulation quickly. ~ TIL
The banks will have to pay for these
loans, however, as individuals have to
y pay for loan from any local bank.
and this charge is expected to prevent
u the too free use OF the reserves held
4 by the regional banks. E !. " 3.a
AM New Paper Currency.
"A new form of paper currency Is
/ also provided for, to come out in case
aofSemergency, and which is expected
4 10 go back into the hands OF the gov
eminent when times are normal.
d These treasury notes. will be printed
4 by the government and issued through
{, each regional reserve bank, and will
bear the guarantee both Of the re-
Z 1ional bank and Of the government.
5 y II the demand for currency in any
section of the country exceeds the
] supply Of circulating money a regional
\ bank can secure this new money!
& from the government and put 1t into
circulation; but gold reserve Of 40
per cent. and commercial paper equal
( to the full value Of the note must be
held as a reserve behind each note
Issued.
This provision is expected to be the
influence that will drive the new
money back into retirement when it
is no long preceded.
!. :as Clearly Explained. n,
The following analysis presents the
details Of the new law without adj.
herring closely to the technical division
or language OF the measure:
At the head Of the system will stand
] ~c~~c~~~~o~
Coming TO Herself. 5.l
~ On ono occasion sDr Francis War