The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1913-12-23

countries where the charge per local
call exceeds the letter postage rate,
After these dividends are paid, one-half
Of the surplus net earnings goes to create
regional surplus fund, and when this
has reached 40 per cent of the regional
banks paid in capital. these earnings are
to go into the United States treasury.
The balance of the net earnings are to
be paid to the United States a franz
chise tax.
New Banking System
With the machinery thus created for
rev banking system that is supple
mentary to the commercial banks of the
country the law provides for a gradual
transfer of part of the bank reserves to
these new reservoir banks. In order
not to disturb business conditions or to
withdraw too suddenly the heavy de-
positg of country banks in the large
cities, the law provides that three years
may be consumed in shifting these bal
ances, and that if necessary part of the
reserves transferred to the regional banks
may consist of commercial paper.
The amount of reserve required from
every bank under the new law, and the
place where it must be kept, are as fol-
lows:
Country banks: Total reserve required,
u per cent of demand deposits and per
cent of time deposits. Five-twelfths must
be kept in the banks vaults for two years
and four-twelfths after that time. For
the first year, two-twelfths must be kept
ir the regional bank, increasing one
twelfth each six months thereafter until
it reaches five-twelfths of the total re-
serve. For three years the unallotted
part of the reserves may be kept in the
banks of 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 re-
quired. 10 per cent Of demand and per
cent of time deposits -fifteenths must
the regional reserve bank for the first
two years, and five-fifteenths after that
time Three-fifteenths must be kept in
the regional reesrve bank for the first
year, increasing one-fifteenth every six
months thereafter until it reaches six-fif-
teenths For three years the unallotted
portion of the reserve may be kept In
other banks, in it's 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. LOUISE Total reserve re
CURED Is per cent of demand, and per
cent of time deposits. Six-eighteenths
must be kept in the banks own vaults,
bank for the first six months, and six
eighteenths thereafter. After six months
the remaining six-eighteenths may be
kept In the banks own vaults, or In the
regional reserve bank.
These immense funds of reserves from
member banks" together with govern
ment moneys, will make up the deposits
of the regional reserve banks. Each of
these banks will be administered by
board of nine directors, six of whom Will
be elected by the banks and three APP
pointed by the federal reserve board.
May Rediscount
The regional reserve banks may redis-
count--that is buy at discount from its
member banSs--"prime commercial pa
per-" when the member banks desire
to convert these assets into money. The
exact terms of this important provision as
to the character 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 demand
notice and protest by such banks. any
federal (regionaD reserve bank may dis
count notes, drafts and bills of exchange
arising out of actual commercial trans
actions; that is, notes. drafts. and bills
of exchange issued or drawn for agri-
cultural, industrial or commercial pur-
poses or the proceeds of which have been
used, or are to be used, for such pur-
poses the federal reserve board to have
the right to deermine or define the char
acter of the paper thus eligible for dis
count, within the meaning of this act.
Nothing in this act contained shall
be construed to prohibit such notes, drafts
and bills of exchange, secured by staple
agricultural products, or other goods
wares or merchandise from being eligible
for such discount; but such definition
shall not include notes, drafts or bills
covering merely investments or issued or
drawn for the purpose of carrying OF
trading in stocks, bonds other invest
ment securities, except bonds and notes
of the government of the United States
Must Have Maturity
Notes, drafts and bills admitted to
discount under the terms of this para