The Tucumcari news and Tucumcari times., 1913-12-31

ktouAi uhnh anu Oi tue government.
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 II into
circulation but a 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 Ia expected TO be the
influence that will drive the new
money back into retirement when II
10 no longer needed.
Clearly Explained.
The following analysis presents the
details OF the new law without ad.
herring closely to the technical division
or language OF the measure:
At 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 controller OF the curren.
cy and Ave other members. Two OF
these shall be expert bankers. but
none shall have banking Affiliations or
own haii' stock during their service.
This IcS. 4 will exercise general con.
trol over 80. entire system.
gad temporary organization com.
inittee." or the federal reserve board,
will select from eight 70 twelve cities
where regional reserve banks shall be
located and will divide the entire
country geographically with these
cities as the centers OF districts. All
national banks in a district will be
required TO subscribe for the stock OF
the regional reserve bank in that dis
trict and 10 keep o portion OF their
reserve there.
known 40 "Member Banks
Local banks will be known as mem
Der banks" because they will own the
stock OF the regional reserve bank
OF their district. Each member bank
will be required 10 take capital stock
OF the regional reserve bank. equal TO
6 per cent. OF the member banks capt
tai and surplus. The capital of the re-
gional bank will increase or decrease
so that IL always represents per
cent. OF the combined capital and sur
plus OF all the banks OF the district
that have joined the system.
National banks are compelled to
join and state banks are permitted TO
II they bring their reserve require.
ments up to the standard set for ma
tional banks and submit 10 national
examination.
Public Can Buy Stock.
Public ownership OF the stock OF the
regional reserve banks Is permitted
only in case enough banks do not join
In any district to provide a capital
stock for si000,000. In such event the
public may purchase the stock In
quantities limited TO $4,000 for each
individual, but the voting OF this stock
will be placed In the hands OF govern.
ment representatives on the board OF
directors OF the regional reserve bank.
The regional reserve bank 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, gov.
ernment, or municipal bonds. and Ger.
tain 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 or
exchange
Must Pay Up Cash.
Member banks will be compelled TO
put up in cash only one.half Of their
subscription 10 the capital OF the new
banks, the rest can be called for II
needed by the regional bank. Divi'
dends OF per cent. will be paid on
this stock 10 the member banks, and
the stock will be- non.taXable.
After these dividends are paid one
half OF the surplus net earnings goes
to create n regional surplus fund, and
when this has reached 10 per cent. Of
the original banks paid in capital
these earnings are TO go into the
United States treasury. The balances
OF the net earnings are TO be- paid 10
the United States as franchise tax.
With the machinery thus created
lbI a. H'N udlhlHE ngoNtlN AlldA 10 sup
! Elementary 10 the commercial banks
OF the country, the law provides for a
gradual transfer OF part OF the bank
reserves To these new reservoir
| banks.
In order not TO disturb business con
| ditions or 10 withdraw too suddenly
the heavy deposits OF country banks in
the large cities, the law provides that
/ three years may be consumed in shift
| ing these balances and that, II neccs
sary. part OF the reserves transferred
TO the regional banks may consist OF
commercial paper.
Reserve Required.
The amount OF reserve required
from every bank under the new law
and the place where IL must be kept
are as follows:
Country banks.-Total reserve requir
ed. ~ per cent. OF demand deposits
and per cent. OF time deposits. Five
twelfths must be held In the banks
own vaults for two years and four
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