Daily Kennebec journal., 1913-12-23

needed by the Regional Bank. DiVl-
dends of per cent. will be paid on
| this stock to the member banks, ana
the stock will be non-taxable. After
these dividends are paid, one-half OF
ate a Regional surplus fund, and when
ate a Region surplus fund, and when
thih has reached 40 per cent. of the
Regional Banks paid in capital these
earnings are to go into the United
States Treasury. The balance of the
net earnings are to be paid to the
United States as a franchise tax.
With the machinery thus created
| for a new banking system that is
| supplementary to the commercial
| banks of the country, the law pro-
vides for a gradual transfer of part of
| the bank reserves to these new
reservoir" banks. In order not to
disturb business conditions, or to
withdraw too suddenly the heavy de-
posits of country banks in the large
cities, the law provides that three
years may be consumed in shifting
these balances, and that if necessary
part of the reserves transferred to the
Regional Banks may consist of COM
mercial paper.
| The amount of reserve required from
every bank under the new law, and
the place where it must be kept, are
as follows:
Country banks: Five-twelfths must
tbe kept in the banks vaults for two
years and four twelfths after that
time. For the first year two-twelfths
must be kept in the regional bank in
creasing one-twelfth each six months
thereafter until it reaches five
twelfths of the total reserve. For
three years the unalloted part of the
reserves may be kept in the banks of
reserve cities: after that time it must
be kept either in the country banks
vaults, or in the regional reserve bank.
Reserve city banks: Total reserve
required, 10 per cent. of demand and
| five per cent. of time deposits. Six
! f1fteenths must be kept in the bank S
vaults for the first two years, and
/ five -fifteenths after that time. Three
fifteenths must be kept in the region
al reserve bank for the first year, in
ereasing one fifteenth every six
months thereafter until it reaches six
! fifteenths. For three years, the un-
allotted portion of the reserve may be
kept in other banks, in its own vaults
or in the regional banks; after that
time in one of the latter two Places
Central reserve city banks (New
York. Chicago and ST. Louis): Total
reserve required, Is per cent. of de-
mand, and five per cent of time de-
posits. Six-eighteenths must be
in, ha
eighteenths in the Regional Reserve
bank and the remaining five -eigh-
teenths in either place the bank may
choose.
These immense funds of reserves
from member banks,' together with
government moneys, will make up the
deposits of the Regional Reserve
banks. Each of these banks will be
administered by a board of nine di-
rectors. six of whom will be elected
by the banks, and three appointed by
the Federal Reserve Board
The Regional Reserve banks may
rediscount-that is, buy at discount
from its member banks-"price COM
mercial paper" when the member
banks desire to convert these assets
f siAto HlohCSs ne t&aCi TERMS OF TINS
important provision as to the charac-
ter of paper upon which the Regional
Reserve Banks may furnish cash are
as follows:
Upon the Endorsement of any of it:
member banks. with a waiver of demand
notice and protest by sucn bank, any
Federal (RegonaD Reserve bank may
discount notes, drafts and bills of ex
change arising out of actual commercial
transactions; that is, notes, drafts, an(
bills of exchange issued or drawn foi
agricultural, industrial or commercial
purposes or the proceeds of which have
been used. or are to be used, for sucI
purposes, the Federal Reserve Board Il
have the right to determine or define tht
character of the paper thus eligible tol
discount, within the meaning of thi:
act.
Nothing in this act contained shall b'
construed to prohibit such notes, drafts
and bills of exchange, secured by stapl'
agricultural products. or other goods
wares or merchandise from being eligible
for such discount; but such definition
/ shall not include notes, drafts or Dill
covering merely investments or issue'
!
t trading in stocks, bonds or other invest
ment securities, except bonds and note
of the Government of the United States
Notes, drafts and bills, admitted t
discount under the terms of this para
graph must have maturity at the tim
of not more than 80 days: Provided, tha
/ notes, drafts and bills drawn or issued TO
agricultural purposes or based on liv
stock and having a maturity not exceed
ing six months may be discounted in a.
amount to be limited to a percentage o
the capital of the Federal (Regional
Reserve bank, to be ascertained ana nXe'
nv the Federal Reserve Board
The Regional banks may also oiscoufi
"acceptances based on the importation
or exportation of goods"
The new treasury notes, when are
furnish the elastic" element in the cur
rencv system, and to add to the coun
trv's circulating money in time OF neeo
will come into use in the following way
The notes will be printed by the gov
ernment. with distinctive style for eacl
! Regional Reserve bank. One of the thre
directors named by the Federal Reserv
Board for each Regional bank will b
| known as the Federal Reserve agent