The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1913-12-25

peTs. NO oil these SiaIi be e&peft
bankers. This board will exer-
else general control over the entire
system.
The temporary Organization com
mittee,' or the federal reserve board.
will select from eight to twelve cities
where regional reserve banks shall
be located. and will divide the entire
country geographically With these
cities as the centers OF Districts. All
national banks in a district will be
required 10 subscribe for the stock
Of the regional reserve bank in that
district, and TO keep a portion of their
reserves there.
Banks To Own Stock.
Local banks Will be known rs
'member-banks," because they VIII
own the stock of the regional reserve
bank OF their district. Each member
bank will be required to take capital
stock OF the regional reserve ban,t,
equal TO & per cent of the member
banks capital and surplus. The cap
ital of the regional bank viii increase
or decrease so that it always repro
SCENTS six per cent of the combined
capital and surplus OF all the banks
IUl INC NiSllitt lHdt iJdNc Iullltd lut
system.
National banks are compelled to
join, and state banks are permitted
TO il they bring ~theifreserye require
ments up to the standard set for ma
tional banks, and submit to national
examinations.
Public ownership of the stock of
the regional reserve banks is permit-
ted in case enough banks do % join
in any district to provide a capital
stock of $4,000, 900. In such event
the public may purchase the stock
in quantities limited to 10000 for
each individual; but the voting OF the
stock Will be placed in the hands OF
government representatives OF the
board OF the directors of the regional
reserve bank.
Do No Public Business
The regional reserve bankf may do
business only with their member
banks. not with the public, except
that certain open market opera
lions" such as the purchase and sale
Of gold. government or municipal
bonds, and certain forms OF bills OF
exchange, are permitted. These banks
will make their earnings from the
loans made to member-banks. and
from the purchase and sale of bonds
and foreign bills OF exchange.
Member-banks will be compelled to
put up in cash only one-haif OF their
subscription to the capital of the new
banks; the rest can be called for ii
needed by the regional bank. DiviI-
ends OF six per cent will be paid on
the stock to the member-banks, ana
the stock will be non-taXable. After
these dividends IRE paid, one-hali
OF the surplus net earnings goes to
create a regional surplus fund, and
when this has reached forty per cent
OF the regional banks paid-in capita.
these earnings are to go into the
United States treasury.
Time for Changing Reserves.
With the machinery thus create,
for a new banking system that is sup
Elementary TO the commercial banks
of the country, the law provides for a
gradual transfer of part of the hant
reserves to these new "reseryoir'
banks. In order not to disturb bust
ness conditions, or to Withdraw toe
suddenly the heavy deposits of coun.
try banks in the large cities. the Law
provides that three years may be con.
sumed in shifting these balances, anu
that II necessary, part of the reserve>
transferred to the regional banks
may consist OF commercial paper.
Reserve Requirements.
The amount OF reserve required
from every bank under the new law
and the place where it must be keut
are as follows:
Country banks: Five twelfths must
be kept in the banks vaults for tive
years and four-twelfths must be kent
in the regional bank. increasing one
twelfth each six months thereafter
until it reaches five-twelfths of the
total reserve, For three years the
unallotted part of the reserves ma
be kept in the banks of the reserve
cities; after that time. it must be
kept either in the country banks
vaults or in the regional reserve
bank.
Reserve city banks: Total reserve
required 10 per cen of demand and
D pei cent of the time deporits. Six
fifteenths must be kept in the banks
vaults for the first two years, and
one-fifteentb after that time. Three
fifteenths must be kept in the reg
ional reserve bank for the first year,
increasing n fifteenth every six
months thereafter until it reaches six
fifteenths. For three years the un-
allotted portion of the reserve may
be kept in other banks, in it's own
vaults or in the regional banks: after
that time in one of the latter Two
places.
Central reserve city banks New
York, Chicago and ST. LOUISE: Total
reserve required, is per cent of de
mand, and five per cen of time de-
posts.
SiN-eighteenths must be kept in
the banks own vaults; ~seven-eigh-
teenths in the regional reserve bank
for the first six months, and the
remaining five-eighteenths in any
place the bank may choose.
These immense funds OF reserves
from member banks. together with
government moneys, will make up the
deposits of the regional reserve banks
Each OF these banks will be admins
tered by a board of nine directors.
six OF whom Will be elected by the