Evening star., 1913-11-22
Report by Chairman Owen;
Defends Bill Modelled on
Measure Passed by House

Defending he administration measure
Chai: man Owens report gives full his
tory of the development of the proposed
legislation. After tracing the bill down
to the time when the Senate committee
split over the bill the report says:
Both. sections Of the committee. how
ever. agreed on the great fundamentals
of the bill-that is:
First. The concentration of the bank.
ing reserves of the country.
Second. The volume Of such reserves.
Third. The volume Of the capital of
the proposed banks.
Fourth. The mobilization of such re-
serves.
Fifth The promotion of an open dis
count market.
Sixth. The provision for elastic cur
rency; the issuance Of federal reserve
notes
Seventh That the federal notes should
be the obligations Of the United States.
Eighth. That the system should be
the regional federal reserve bank sys-
tenn instead of central bank: and
Ninth. The control of the system
itself by the government.
The differences related to numerous
matters regarding the holding of stock.
the administrative management of the
banks. the number of the banks. etc.
Two Schools of Thought.
And these differences are based upon
two schools of thought, one section of
the committee having a strong tendency
toward the central bank idea admins
tered by a central board. and the other
section of the committee, believing in in
dependent district federal reserve banks,
administered by a board of directors
chosen by the banks representing the
several districts.
But the two sections of the committee
disagree upon the number Of the federal
reserve banks, the method Of subscribing
for the stock of such banks. the method
of electing the directors OF such banks,
the method of administering the regional
reserve banks. and these differences arise.
in the main. because of two schools Of
thought. one part Of the committee be-
lieving in a central bank administered by
a central board and the other part of the
committee proposing to establish a num-
ber of comparatively independent district
banks administered by boards of direc-
tors chosen from representing the several
districts.
Discussing the views Of the administra-
ton senators the report says:
These important national ends are
proposed to be obtained by the mechan-
ism of eight federal reserve banks or
ganized with a capital equal to 6 per
national and state banks in the several
districts.
THE eight districts are proposed to be
laid off by an organization committee,
who shall organize a federal reserve
bank with headquarters in central city
of each district, each bank to establish
as many branches in its district as may
be found expedient.
Directors of Reserve Banks.
TT is proposed that each federal reserve
bank shall have nine directors. six elect
ed by the banks and three chosen by the
federal reserve board
THE entire system is proposed to be
under the supervisory control of the
federal reserve board. consisting of the
Secretary of the Treasury and six other
members of such board appointed by the
President and confirmed by the Senate,
for terms of six years.
THE federal reserve board is given
very broad powers of supervision, and is
assisted by a federal advisory council,
consisting of one representative from
each of the federal reserve banks.
The federal reserve districts are pro-
posed to be organized by the Secretary Of
the Treasury and not less than two men,
bers of the federal reserve board.
when the districts shall have been laid
out and the city determined in which such
federal reserve banks shall be located.
five of the subscribing banks in such dis
trict are authorized to take out a charter
I'm the same manner and with similar
powers as a national bank, except that
the business of the federal reserve bank is
confined to member banks and other fed
eral reserve banks and to the United
States, except its open market operations
which may be with any responsible con-
cern.
.These banks are given, as part of the
charter rights. the right to issue federal
reserve bank notes against United States
bonds in the same manner as a national
bank. the purpose being to permit said
banks to absorb as much of the 2 per cent
0yontinued on Fifth PasRl