The Birmingham age-herald., 1913-06-20
Would Control Reserve Banks


cral reserve banks entirely through Il
federal reserve board of seven members
iii which the banks would have no repre-
sentation The board would be composed
of the Secretary of the Treasury, Secre-
tary OF Agriculture, the comptroller of
the currency as members eX-officio four
other members would be chosen by the
President and confirmed by the Senate.
The national bank note circulation
would remain undisturbed and no proposal
is made in the bill for retiring approx
mately $70000O,000 two per cent bonds
upon which that note issue now rests An
amendment or separate bill to refund
those bonds into 3 per cent bonds may
be introduced later.
In addition to the 500 0000,C0O existing
national bank notes. not more than $780,
600 GOO in what are to be known as fed
eral reserve treasury notes might be Is
sued at the discretion of the federal re-
serve board solely for the purpose of
making advances to the federal reserve
banks, which would do no business with
the public, deal only with their men,
ber banks and receive deposits only from
the United States. While the notes would
on their faces purport to be the obliga-
tions of the United States, they would
be required to be secured by a gold re-
serve of 80 10 per cent provided by the
federal reserve bank, would be a first
oiiu Pdi diiiodHt lltii ol all lile dSStlS Oi
these banks and would be redeemable in
gold on demand at the treasury depart
ment in the city of Washington or any
federal reserve bank.
Stringent Provisions
Stringent provisions are made against
counting any of these notes as a part of
bank reserves and the system is guarded
against initiation by lodging power with
tie federal reserve board to exact an
interest charge upon the treasury notes
In order to insure their prompt redemp-
ton The notes are not made legal ten
aer, but would be receivable by the gov
ernrnent and every bank of the system at
par without exchange.
No change would be made In the pro-
lection of other existing notes.
The federal reserve board would require
one federal reserve bank to rediscount
the paper of another and would estab-
llsh rate on discount not, necessarily
uniform for all reserve banks, but made
with a view to accommodating the conf
merce of the country and promoting a
stable price level.
For recasting the present bank reserve
system, the bill proposes to transfer the
resolves from national banks in the pres
ent reserve ard central reserve cities to
federal reserve banks carrying the pro-
cess of transfer of rs months to avoid
shock to market conditions. The bill pro-
poses, according TO Mr.. Glass statement,
ultimately the establishment of a re-
serve system In which country banks will
nave 15 per cent to be held per cent In
the banks vaults. per cent with the
national reserve bank and 5 per cent
either at home or with the reserve
bank, while reserve and central reserve
city banks have reserves of 20 per cent
demand liabilities of which 10 per cent
will be at home. per cent with the re-
serve bank of the district, and per cent
either at home or with the reserve bank
of the district" the statement says.
Effect Of Plan
The presumed effect of this plan will
be to end the placing of reserves with
cntral reserve city banks for use in stock
market operations, to keep reserves in
scnie measure at home, and to require
sreculators to get the funds they need in
their operations either by directly bor-
tCeptinaed on Page Nine.)