The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-06-20


discount the paper or another and
would establish n rate on discount not
necessarily uniform for all reserve
oanks, but made with view 10 ac-
coi1nodating the commerce or the
country and promoting a stable price
level
Market Shock Avoided
ror recastlng the present bank re
serve system. the bill proposes to trans
Ier the reserve from national banks in
sne present reserve and central reserve
citles 10 Federal reserve banks carry
ing the process of transfer over thirty
eisnt months to avoid shock 10 mar
ket conditions
ne o'll proposes. according TO Mr.
'iiass statement. ultimately the
testament Of reserve system IN
"hlch country banks will have - per
cent OF reserve q. e Is per cent OF
totai demand liahilities). such IL per
cent 10 be held per cent in the
oanKs' vaults. per cent with the ma
tional reserve bank. and 5 per cent
either a. home or with the reserve
oaAk' while reserve and central re
serve city banks have reserves or 80
Per cent OF demand liabilities. OF
winch 10 per cent will be at home
per cent with the reserve bank OF tho
district. and per cent either at home
or with the reserve bank" The state
ment says:
The presumed effect or this plan
viii be To end the placing OF reserves
with central reserve city banks for
use IN stock market operations. to
Keep reserves in some measure at
nome. and 10 require Spectators 10
get the funds they need in their opera
tons either by directly borrowing
them from persons who hold them and
want TO lend the cash for that pur-
pose. or else by borrowing from the
n ,kt
tons are 10 BE- carried on
In the belief that the present re.
serve system, is antiquated and uusat-
isfactory. that 10 the nassinz ~ funds
IN New York and other financial cen
tres, OF which 50 much has heea said
IN recent years. IS largely due 20 the
present reserve requirements or ma
tional banks, and that in order - get
the real beneEt from the system or
rsdis count. which has been proposed
ms remedy for many existing evils,
~ IS necessary 10 base such a system
unon an actual control Of reserves.
provision has been made for recast-
ing the present bank re$erse system
It's Hasic Principle.
The bill is based on the belief that
no one should participate In control
of the system unless lie is Tna7ctallv
interested himself, or chosen ey those
VINO arc. except in so far as the .0v-
eminent steps in and asserts the AM
thority of the whole community WIKI
this in mind. the system has been ~.
vised so as 10 provide for tho con
tnuatiou OF existing national BANKS
with their organization powers and
functions unchanged In addition
there Is established a system of Fed
cral reserve banks which arc ircor
Dorated stations holding Federal char
ters and in all respects managed like
national banks except as TO tine elcc-
ton Of directors
There are twelve or these Federal
reserve banks each managed nv a
hoard Of directors, throo OF whom will
be expert bankers selected hy the
banks. three will be members selected
in the same way, but required 10 rep
resent tho commercial. Industrial or
agricultural interests or the districts.
and subject i removal hy .hc Fed
eral reserve board lin case they do
not fairly represent these interests
The remaining three directors are 10
be chosen By the Federal reserve
board
The ohiec, of the bill IS 10 effect
. Dloler7se division and classification
Of banking business along Indicated
lines tho net result presumably be,ns
stunned up as fellows
National reserve banks wtl ~
strictly limited 10 rediscouut:ng Ac-
tua! commercial and industrial trans
actions evidenced by very shotl-larm
paper and, Oh rare occasions. under
carefully prescribed conditions. TO u
nancial operations protected BY col
lateral rney Will also he able TO en-
gage In foreign exchange operations,
etc
National banks viii be sublec, u
prec,sely the same restrictions rs at
present. Wit ha rolaNatlon in favor ~