The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1913-12-23

stocks. bonds or other investment Sc
curitles, except bonds and notes Of
the government of the United states.
Notes, drafts and bills admitted to
discount under the terms M this
paragraph must have q maturity at
the time OF discount OF not moro
drafts and bills drawn or issued for
agricultural purposes or based OH
live stock and having n maturity
not exceeding six months may be dis
counted In an amount To be limited to
9. percentage OF the capital OF tho
federal (regiouaD reserve bank, TO be
ascertained and fixed By the federal
reserve board"
The regional banks may also dis
count "acceptances based on tho i'm.
portation or expectation OF goods
Issuance Of Treasury Notes.
The new treasury notes. which are
to furnish the elastic" element in
the currency system and TO add TO
the country's circulating element in
time of need, will come into usc in
the following way;
The notes Will be printed by tho
government will, a distinctive style
for each regional reserve bank. one
OF the three directors named by the
federal reserve board for each re-
gional bank will be known as the
federal reserve agent for that bank
and supply of the notes Will he
placed In his custody.
Should a regional bank desire TO
pay out more money than it's cash
resources will permit, the law pro-
vides that 1t may put some OF its
rediscounted commercial paper into
the ands OF the federal reserve
agent and receive In return the new
treasury notes. For each note that
II puts out into circulation the re-
sional reserve bank must set aside
In gold 10 per cent OF the value OF
the note. as a guarantee for Its re-
demption.
Protection of New Money.
This gold with the commercial pa
per held by the federal reserve
agent" Is the protection behind the
new money, but these notes Will also
be guaranteed by the government and
may be redeemed III gold at the
United States treasury
Each regional bank. under tho act,
must keep a reserve of 80 per cent
of the deposits IT has received. be-
sides the ~ per cent gold reserve
behind the treasury notes i issues
II the gold reserve behind the notes
falls below 40 per cent, "a heavy tax
is imposed ON the bank. which I'm
turn adds the tax 10 the rate 1t
charges member banks FOR redis-
counts,
One regional bank cannot again pay
der heavy tax, These notes are cX-
pected to return to the regional banks
and be withdrawn from circulation
when the need for their use passes.
None of the existing forms of cur
rency except the national bankrotes
Will be disturbed by the new law.
The United States bonds now used
10 secure the issue of national bank
notes are to he taken up at the rate
OF S25,000000 d year by the regional
reserve banks and new treasury notes
or short-term per cent bonds VIII
take their place. National bank cur
Tency is expected gradually TO be re-
tired
Final Control by Board.
The federal reserve board will eX-
ercise final control over the entire
operati OF the system, 1t can conf
pei one regional bank to loan to an
other in time OF need; can suspend
all restrictions surrounding the re-
serve which regional banks must
hold: and can remove directors or re
glonal reserve banks whenever 1T Is
believed necessary.
While the banks retain control of
the boards Of the regional reserve
banks their connection with the fed
eval reserve board is only through an
advisory council. made up OF one rep
rcsentative from each federal reserve
district.
An important change in national
ba anking methods. embraced In the
except those In New York, Chicago
and st. Louis TO make direct loans
on five-year farm mortgages up 10
25 per cent OF their capital and sur
plus, or up TO one-third Of their time
deposits.