New-York tribune., 1913-06-20

or to reclassify existing reserve and CEN
| trail reserve cities and 10 designate the
banks therein situated as country banks
at its discretion.
! O) To require the removal of officials
of .ederal reserve banks for incompetency'
dcrelicton of duty. fraud or deceit
| Ch) To require the writing or Of doubt
ful or worthless assets upon the books
and balance sheets Of federal reserve
| banks
| % To suspend the further operations
of any federal reserve bank and appoint
n receiver therefor
D To perform the duties. functions or
services specified or implied in the act
Federal Reserve Banks.
The bill is based on the belief that no
one should participate in the control OF
the system unless he is financially inter
cstcd himself or chosen by those who arc
except in so far as the government steps
| in and asserts the authority of the whole
community With this i'm mind the sNs-
TEN has been devised SO as 10 provide for
the continuation of existing national
hanks with their organization, powers and
| functions unchanged. In addition there Is
established a system Of federal reserve
| banks. which are incorporated institutions
holding federal charters and in all re
spects managed like national banks. eN-
cop, as TO the election OF directors.
! As stated. there are twelve Of these
/ federal reserve banks. each managed by
board Of nine directors three oi WAOm
will be expert bankers selected by the
banks. three will he members selected IN
J the same way. but required 10 represent
, the commercial. industrial or agricultural
! interests Of the district. and subject to
removal by the federal reserve board IN
case they do not fairly represent these
interests
| The remaining three directors are 10 be
chosen by the federal reserve board and
one OF them is TO be designated By said
board as chairman OF the board OF direc-
tors OF the federal reserve bank Of the
district TO which he Is appointed. and IS
to be the agent Of the federal reserve
| board
The national banks are compelled 10 re
stockholding members Of the federal re-
serve banks o. their respective districts.
and state banks and trust companies are
permitted TO be members under certain
/ well defined regulations. All the dom"s-
tic transactions Of the federal reserve
bank must be with member banks and
the government, except that II may puF-
chase bankers bills and bills Of cNchanse
in the open market from individuals. as
well as from domestic or foreign banks.
Division Of Business.
The object Of the bill is to effect a mod
crate division and classification OF bank
| ing business along indicated lines. the net
result. presumably. being summed up o.
! follows:
I'D Nationa reserve banks Will he
strictly limited to rediscoJnting actua!
| commercial and Industrial transactions
evidenced by very short term paper ana
on rare occasions. under carefully pre-
| scribed conditions. 10 financial operations
protected by collateral They will also be-
able to engage in foreign exchange opera
tions. sales Of government securities. etc,
as already explained.
! Cl National banks will be subjected 20
precisely the same restrictions as at pres
ent. with "A relaxation in favor OF "A mod
| crate amount OF real estate loans by
| country banks. under carefully guarded
| conditions
Cd BY a revision OF the administrative
! figures OF the national banking act pro-
vision will be made for close oversight of
national Institutions with view TO
holding them strictly up to the require
ments Of a legitimate banking business.
| (D In order to possess themselves Of
| the kind Of paper emitting them To re-
discounts national banks Will hnd them
selves Obliged to keep reasonable pro-
portion of their assets in the form Of
paper eligible for rediscountug. and this
will mean very considerable emphasis
upon the strictly commercial aspects OF
the business done by national institu-
| tions.
1t is believed that the present sub
| treasury system is unsatisfactory,
| clumsy, injurious to business and difficult
10 manage in times Of stress. The bill,
therefore, provides for:
| /. The placing OF all current
funds Of the treasury IN federal reserve
4
| creditors by check thereon.
g The equalization OF the pub
! lie funds between the different reserve
banks by direction Of the Secretary Of
the Treasury and subject to a rate Of
interest TO be fixed by the federal re.
servo board.
| & The trust funds Of the treas
ury are to be held, as at present, IN the
vaults Of the treasury.
Division Of Earnings.
Under the terms Of the bill the federal
reserve bank, after the payment Of all
| expenses and taxes. is entitled TO pay
an annual cumulative dividend Of 3 per
cent on paid-in capital TO its stockhold-
ing members One-half the net earnings
Of the bank must be paid into the surplus
fund until said fund shall amount TO 10
pcr cent of the paid-in capital Of the
bank. The remaining one-half OF the
banks earnings shall be paid TO the
| United States and whenever and 50 long
as the surplus fund of each federal re-
serve bank amounts to 20 per cent OF the
| paid-n capital, the shareholders having
| received their permissible dividend Of 3
per cent, all excess earnings shall be paid
| to the United States.
! Every federal reserve bank is exempt
from federal. state and local taxation. ex-
cept in respect to taxes upon real estate
Reserves.
In the belief that the present reserve
.,.o,ou, ls antiquated and unsatisfactory