The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-12-23

| SoAioiheu capital ana surplus or NIL tho
banks of the district that have joined
| tho system
National banks arc compelled to Join.
| ana state banks are permitted to IL
| they bring their reserve requirements
| up to tho standard set for national
| nations.
Public Ownership. =
Public ownership OF the stock OF tho
| regional reserve banks is permitted
| only In case enough banks do not Join
| In any district to provide q capital
stock OF 100000. In such event the
| public may purchase the stock In guam
tlttes limited to $4,000 for each indl-
vidual: but the voting OF this stock
Will BIO placed In tho hands of govern
! ment representatives on tho board OF
| directors OF the regional reserve bank.
The regional reserve banks may
DO business only with their member
banks. not with the public. except that
certain open market operations" such
as the purchase and sale OF gold. gov
| ernment or municipal bonds, ana Ger
| tain forms of bills OF exchange, arc
permitted. These banks will make
their earnings from tho loans made to
member banks. and from tho purchase
and sale OF bonds and foreign bills Of
exchange.
| Member banks Will DO compelled TO
put up In cash only onc-half of their
| subscription to the capital OF the new
| banks; the rest can be called for IL
| needed BY tho regional bank Divi-
dends OF per cent Will DC paid on
this stock to tho member-banks. and
the stock VIII be nontaxable. After
these dividends are paid. onc-half of
the surplus net earnings goes to create
Al regional surplus fund, and when
this has reached 40 per cent OF the
regional banks paid-in capital, these
l f-,,t
States Treasury. The balance OF tho
net earnings arc to be paid TO the
| United States n franchise tax.
Provides for Gradual Transfer
! With the machinery thus created for
now banking system that Is sup
Elementary to the commercial banks
of the country, the law provides for
a gradual transfer OF part OF the bank
reserves TO these now reservoir
banks, In order not to disturb bust
mess conditions, or to Withdraw too
suddenly the heavy deposits Of country
banks in the large cities, the law pro-
rides that three years may be CON
stunned in shifting these balances. and
that. II necessary, part of the reserves
transfcrrc dto tho regional banks may
consist Of commercial paper.
! The amount OF reserve required from
every bank under the new law. and the
! place where 1t must be kept, are as
/ follows:
! Country banks: Total reserve re-
( quired. IL per cont of demand deposits
and . per cent OF time deposits Five
! twelfths must be kept In the banks
vaults for two years, ana four-tweifths
aftcr that time. For the first year two
twelfths must be kept IN tire regional
! bank. increasing oue-twelfth each
six months thereafter until i, reaches
/ five twclfths of the total reserve For
three years. the unallottcd part OF the
reserves may be kept in the banks OF
! reserve cities: after that time IL must
/ be kept either in tho country banks
| vaults or in the regional reserve bank
/ Reserve city banks: Total reserve
required. IL per cent OF demand. and
. per cent OF time deposits. Six-nf-
tecnths must be kept in the bank
vaults for the first two years. and two
hfteerths after that time. Threc-iif
teenths must be kept in tho regional
reserve bank for tlc first year. incrers-
J ing one thirteenth every six months
thereafter until II reaches six III
teenths. For three years the unul-
looted portion or tho reserve may he
kept II other banks, in Its own vaults.
or in the regional bank; 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 per cent or time deposits
| SiN-eightecnths must be kept In the
banks own vaults; sevcn-c! ghteenths
In the regional reserve bank, and re-
naming ve-ciEhtcenths In either
] place tho bank may choose.
Character of Deposits.
These immense funds OF reserves
from member banks" together with
I government moneys, will make up the
deposits OF tho regional reserve banks
| Each OF these banks VIII be administ-
! cred By q board OF nine directors six
! OF whom Will be elected by the banks
and mrcc appointed by the Federal
j.! Reserve Board.
| The regional reserve banks may re-
| discount-ttat is, buy at n discount
from it's member banks-"Drimc COM
nercial paper.' when tho member
banks desire to convert these assets
| into money. The exact terms OF this
acter of paper upon which the regional
reserve banks may furnish cash are
as follows:
Upon the Endorsement OF any OF It's
| member banks. with a waiver OF de-
mand notice and protest by such bank,
any Federal TeEionaD reserve bank
may discount notes, drafts ana bills
of exchange arising out of actual com
mercial transactions; that is. notes
drafts and bills of exchange issued
or drawn for agricultural. Industrial
or commercial purposes. or the pro-
ceeds OF WHICH have been used. or are
10 be used for such purposes. the Fed
cral Reserve Board TO have the right
to determine or define the character
OF the paper thus eligible for dis
count. within the meaning % this act
Nothing In this act CO. ,ained shall
be construed to pro'.,p.t such notes
drafts and bills of exchange. secured
by staple agricultural products. or
other goods. wares or merchandise
from being eligible 10. such discount:
but such definition shall not include
notes. drafts or bills covering merely
Investments or issued or drawn for the
purpose OF carrying or trading in
stocks, bonds or other investment Sc
curities, except bonds and notes OF the
government of the United States.
Notes, drafts and bills admitted 10
discount under the terms of this para
graph must have n maturity ut the
time of discount OF not more than
ninety days: provided, that notes.
drafts and bills drawn or issued for