The Bridgeport evening farmer., 1913-12-24
PROVISIONS OF NEW CURRENCY BILL EXPLAINED Government Board Super vises System Tn Its
 Entirety FEDERAL BANKS MAY STATE MUST ENTER Currency Made Elastic But Undue Imitation Pre-
 vented

been enacted In many years.
 The magnitude of the subject, tht diversity of interests affected, and the length of the debates in both branch es of Congress, has made it difficult for the ordinary observer to follow the changes and grasp the essentials ,o1 this highly technical measure in It's important bearings on money, finance banking and the entire range of hsca subjects, public and private, which il affects. With a. view, therefore, o1 presenting succinctly and in pon-tech- niea1 language, an epttome of the sal lent features of the measure as i'm ally framed, the following summary is given of the bill as a whole and of its principal details.
 Generally speaking the first steps to be taken to bring into operation the nations new financial system will be through an organization commit tee consisting of the secretary of the treasury, the secretary of agriculture and the comptroller of the currency. Banks have sixty days within which to file their ap- plications for menb bership in the new system; and one years time is allow ed before the government will com pei the dissolution of any national bank that refuses to join.
 Few Direct Changes.
 The new law will make little direct change in the operation of the pres ent national banks, except to allow tn eIn to loan a certain am mount of their funds upon farm mortgages. It's chief purpose is to add a new piece of machinery to the banking system that will take up the slack" during the changing business conditions of each year; that will give the banks a place to quickly convert their assets into cash in time of need. and that will bring out new federal currency when it is needed, and retire it when money becomes cheap
 Banks are now required to keep a certain percentage of their depos- its as reserves" part in cash in their own vaults and part of which may be redeposited in the banks of New York, Chicago, St. Louis and other desig- mated cities. In times of sudden f. nancial demands, when banks have loaned up to the full limit of their resources. these reserves furnish little relief. because if they are paid out to meet demands, the banks are left in a precarious condition.
 The basic principle of the new law is to get these reserve funds out into circulation when necessary, without lessening the safety of any bank; and banks may rush in a crisis and get cash for the prime commercial pa- per- they hold in their vaults.
 This is-to be accomplished through a chain of regional reserve banks. or reservoirs of reserves" in which all banks shall deposit & stated part of the money they are required to hold as reserves. Under the new system, when a financial furry comes the banks can take commercial paper, such as notes, and bills of exchange, to these "reservoirs,'' and secure the use of their own reserves, or if neces- sary even the reserve of other banks by depositing this security.
 Will Hold Reserves.
 The new regional banks will receive about onA-half of the bank reserves of the country. They, in turn, will be permitted to loan back to thu banks all but 35 per cent. of these reserves, so that in case of emergen- cy, millions of cash can be brought out into circulation quickly. The banks will have to pay for these loans. however, as individuals have to pay for a loan from any local bank; and too free use of the reserves held by the regional banks.
 new form of paper currency is also provided for, to come out in case of emergency, and which is expected to go back into the hands of the gov erhment when times are normal. These treasury notes" will be print ed by the government and issued through each regional reserve bank, and will bear the guarantee both of the regional bank and the governme
 If the demand for currency in any section of the country exceeds the supply of circulating money, a region al bank can obtain this new money from the government and put it into circulatiop; 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 so issued. This provision is expect ed to be the influence that will drive the new money back into retirement when 1t is no longer needed.
 The following analysis presents the details of the new law without adher- ing closely to the technical division or language of the measure.
 At the head of the system will stand a federal reserve board at Washington, appointed by the president, and to consist of the secretary of the treasury and six 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 control over the entire system.
 Organization Committee
 The temporary organization com or the federal reserve board will select from eight to twelve cit ies where regional reserve banks shall be located, and will divide the entire country geographically with these cit ies as the centers of districts. All national banks in a 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 reserves there.
 Local banks will be known as "member-banks," because they will own the stock of the regional reserve