The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1913-12-23

graph must have a maturity at the
time OF discount of not more than
ninety days: Provided, that notes,
drafts and bills drawn or issued for
agricultural purposes or based on live
stock and having a maturity not ex-
ceedlng six months may be discounted
IN an amount to be limited to a per-
centage OF tho capital Of the federal
(reEtonal) reserve bank. to be ascer-
tanned and fixed by the federal reserve
BANK
The regional banks may also dis
count "a~cceptances based on the inn
portation or domestic shipments of
goods"
New 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 money in the
time Of need, will come into use in the
following way:
The notes will be printed by the
government. with q distinctive style
for each regional reserve bank. One
OF the three directors named by the
federal reserve board for each region
al bank will be known as the FEEDER.
al Reserve Agent" for that bank. and
a supply Of notes will he placed in his
custody.
Should a regional bank desire to pay
out more money. than it's cash re-
will permit. the law provides
that 1t may put some of it's rediscount-
ed commercial paper into the hands
federal Q agents." and re-
oetve in return the new treasury notes.
For each note that 1t puts into circu-
lation, the regional reserve bank must
set aside in gold 40 per cent Of the
value of the note. as a guarantee for
It's redemption. This gold, with the
commercial paper 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 in gold at the
United States treasury.
Regional Reserves.
Each regional bank, under the act.
must keep a reserve of 36 per cent in
the deposits it has received, besides
the 40 per cen gold reserve behind
the treasury notes it issues. If the
gold reserve behind the notes fall be-
low 40 per cent, q heavy tax is Inn
posed on the bank, which in turn adds
the tax to the rate It charges member
banks for r~ediscounts. This was de-
signed to stop an over-expansion Of
currency. In times OF sudden stress,
So AS0Sk VIC ~ Cdn HuSOVnO
these reserve provisions in order to
furnish quick relief to any communi-
ty.
One regional bank cannot again pay
out the notes Of another, except under
a heavy tax. These notes are expect.
ed to return to the regional banks
and be withdrawn from circulation
when the need for their use passes.
Existing Forms Unchanged.
None Of the existing forms of paper
currency will be disturbed by the new
law. Provision is made, however,
that the government two per cent
bonds. upon which national banks now
secure the issue Of their bank notes,
may be purchased by the government
at par. through the regional banks.
This provision is expected to result in
the gradual retirement Of most Of the
national bank currency.
Board in Final Control,
The federal reserve board will ex-
ercise final CONTROL. over the entire
operation Of the system. It. can COM
pei one regional bank to loan to an
other in time Of need; can authorize
banks to use the treasury notes or
even national bank notes as part Of
their legal reserves: can suspend all
restrictions surrounding the reserves
which regional banks must hold, and
can remove directors of regional re-
serve banks whenever it, is believed
necessary.
While the banks retain control of
the boards Of the regional reserve
banks. their connection with the feder-
al reserve board Is only through an
advisory council Esfyde up Of one rep
re%scntative from 'sxhch federal reserve
district. This 'codncila WILL meet in
Washington to confer with the feder-
al reserve board for general business
conditions. and to make recommends
tions and suggestions concerning dis
count rates, rate issues and reserve
conditions.
loans on Mortgages.
An important change i'll national
banking methods embraced In the new
law will permit all national banks ~
cept those in New York, Chicago and
st. Louis, to make direct loans on
five-year farm mortgages, up to 20
per cent of their capital and surplus,
or up to one-third Of their time depos-
its. Another provision in the law per-
mits national banks having a capital
Of $1,000, 900 or moro to open foreign
branches. Similar authority is given
to the regional reserve banks, the pur-
pose being to facilitate the develop
ment Of American trade abroad.