Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1913-12-23

Washington ID. c, Dec. 23.-The
rev bin affecting the currency. bank
ing, and finances OF the country was
passed By the house last night The
senate will pass the measure this
afternoon. and then il viii be ready
for President Wilson's signature. II
Is one OF the most far-rsaching meas
ures Trating 20 finance that have been
enacted in many years.
The magnitude OF the subject. ths
diversity OF interests affected. and the
length OF the debates in both branches
81 congress has made IL difficult for
the ordinary observer 70 follow the
changes and grasp the essentials OF
this highly technical measure in its
important bearings on money, finance,
banking and the entire range OF fiscal
subjects. public and private, which il
affects.
With a view. therefore. OF present
.nE succinctly and in nOn-technical
language IN epitome Of the salient
features OF the measure as finally
framed. the following summary is Civ
en- OF the bill as a whole and OF its
principal details;
Generally speaking. the first steps
70 he taken 20 bring into operation the
nations new financial system will be
through an organization committee
consisting OF the secretary OF the
treasury. secretary o. agriculture and
controller OF the currency.
Parks have 81 days within which
20 file their applications for member
ship ia the new system. and one years
tine is allowed before the government
will compel the dissolution Of any ma
:!onaI bank that refuses 20 join
The new law will make little direct
change in the operation OF the pres
ct national banks. except 10 allow
them 10 loan a certain amount OF their
funds upon farm mortgages.
rs chief purpose IL 70 add new
niece OF machinery 70 the banking
system that will take I'D the slack
during the changing business condi-
lions OF each year. that Will give the
banks a place 10 quickly convert their
assets into cash in time Of need, and
that viii bring out new federal cur
reurv when II is needed. and retire II
when money becomes cheap
Banks are now required TO keep
certain percentage Of their deposits as
reserves" part in cash in their own
vaults and part OF which may be re
deposited in the banks OF New York.
Chicago. s.. Louis, and other desig-
mated cities.
In times or sudden financial de-
mands. when banks have loaned up TO
the full limit Of their resources, these
reserves furnish little relief, because
y they are paid out TO meet demands
the banks are left in a precarious
condition
The basic principle OF the new law
f. to get these reserve funds out
into circulation when necessary with
CIT Iasseuing the safety OF any bank.
and 10 provide a place TO which local
banks may rush in a crisis and get /
cash for the prime commercial paper
d ~ hold in their vaults.
This Is to be accomplished through
? chain OF regional reserve banks or
reservoirs OF reserve" IN which AL
banks shall deposit a stated part OF
the money they are required 10 hold
a. reserves.
Under the new system. when a
financial furry comes the banks can
lake commercial paper. such as notes. /
drafts. and bills OF exchange. 10 these
Reservoirs" and secure the use OF
heir own reserves. or. IL necessary.
even the reserve OF other banks. By
depositing this security.
The new regional banks will re-
Ceive about oue-half OF the bank re
serves OF the country. They in turn
will be permitted TO loan back 20 the
banks all but 30 per cent OF these re
sC-ves. so that IN case OF emergency
millions OF cash can be brought out
into circulation quickly
The banks will have 20 pay for
these .oaus. however. a. individuals
have 20 pay for loans from any local
bank. and this charge is expected to
prevent the 700 free use OF the reserves /
held by the regional banks.
\ new form OF paper currency is |
also provided for. 20 come out in case 7
OF emergency. and which Is expected I.
20 20 back into The hands Of the gov
eminent when times are normal.
These treasury notes" VIII he printed \
by the government and issued through 4
each regional reserve bank. and will
bear the guarantee both Of the re-
si0nai bank and OF the government.
u the demand FOR currency in any
section Of the country exceeds the
supply 81 circulating money region
al bank can secure this new money
from the government and put Il into
circulation, but gold reserve OF 40
per cent and commercial paper equal