Santa Fe new Mexican. [volume] (Santa Fe, N.M.) 1898-1951, 1913-12-23
CURRENCY Bill.
MEANS MUCH
TO u. S.
SYNOPSIS or new MEASURE WHICH
The PRESIDENT WILL SIGN TO-
NIGHT.-WILL IMPROVE FiNhR-
ClAL CONDITIONS THROUGHOUT
the COUNTRY. !
SUMMARY OF THE new
LAW IN PLAIN ENGLISH

Washington, D, c., Dec. 23.-The
new bill affecting the currency, bank
ing and finances OF the country which
of congress and goes to President
Wilson for his signature, is one of
the most far-reaching measures relat.
ing to finance that has been enacted
in many years. The magnitude of
the subject, the diversity of interest
affected and the length Of the de-
bates in both branches of congress
has made it difficult for the ordinary
observer to 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 sub
jects, public and private, which it af-
fects, With view, therefore, of pre-
senting succinctly and in non-technical
language, an 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 it's
principal details:
Generally speaking the first steps
to be taken to bring into operation
the nations new financial system will
be through an organization commit
tee, consisting Of the secretary of the
treasury, secretary of agriculture and
comptroller of the currency. Banks
have sixty days within which to file
their applications for membership in
the new system; and one years time
is allowed before the government will
compel the dissolution of any nation.
al bank that refuses to join.
The new law will make little direct
change in the operation of the present
national banks, except to allow them
to loan certain amount of their
q fnnds upon farm mortgages. It's chief
purpose is to add a new piece of ma
chinery to the banking system that
will take up the "slack" during the
changing business conditions of each
year. that will give the banks place
to quickly convert their assets into
cash in time of need and that will
bring out new federal currency when
it is needed and retire it 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
ho I1rocifoI ;,, o,,1- of
York. Chicago. ST. Louis and other
designated cities. In times of sudden
financial demands, when banks have
loaned up to the full limit of their
resources, these reserves furnish lit
tie relief, because if they are paid
out to meet demands, the banks are
left in a precarious condition.
The basic principle of the new law
is to get these reserve funds out into
circulation when necessary without
lessening the safety of any bank. and
to provide place to which local tanks
may rush in a crisis and get cash for
the prime commercial paper they
hold in their vaults.
This is to be accomplished through
chain of regional reserve banks or
reservoirs of reserves in which all
banks shall deposit a stated part OF
the money they are required to hold
as reserves. Under the new system
when a financial furry comes the
banks can take commercial paper,
such as notes, drafts and bills OF ex-
of s<rocaruoirc - and
cure the use of their own reserves or
if necessary, even the reserve of
other banks by depositing their secur-
ity.
The new regional banks will receive
about One-half of the bank reserves
of the country. They, in turn, will be
permitted to loan back to the banks
all but 35 per cent of these reserves.
so that in case of emergency, millions
of cash can be brought out into cir
culation quickly.
The banks will have to pay for these
loans, however, as individuals would
have to pay for loan from any local
bank: and this change is expected to
prevent the too-free use of the re-
r
serves held by the regional banks.
A new form of paper currency is
also provided for to come out in case
of emergency and which is expected
to go back into the hands of the gov
ernment when times are normal. I
These treasury notes" will be print !
ed by the government and issued
through each regional reserve bank
and will bear the guarantee both OF
the regional bank and the govern
ment.
If the demand for currency in any |
section of the country exceeds the /
supply of circulating money. region
al bank can secure this new money
from the government and put it into
circulation; but gold reserve of 40
per cent and commercial paper equal
to the full value of the note must be
held as a reserve behind each note so
issued. This provision is expected to !
be the influence that will drive the |
new money back into retirement when
it is no longer needed.
The following analysis presents the |