The Ocala evening star. [volume] (Ocala, Fla.) 1895-1943, 1913-12-24

banks, not with the public, except
that certain ..open market opera
tions'' 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-half of
their subscription to the capital of
the new banks; the rest can be call
ed for if needed by the regional
bank. Dividends of 6 per cent. will
be paid to the member-banks on this
stock to the member-banks, and the
stock will be non-taxable. After
these dividends are paid, one-half of
the surplus net earnings goes to Gre
ate a regional surplus fund, and
when this has reached 40 per cent.
of the regional banks paid-in cap
ital. these earnings are TO go into
the United States treasury. The
balance of the net earnings are to be
paid to the United States as a fran
chise tax.
With the machinery thus created
for new banking system sup
Elementary to the commercial banks
o. the country, the law provides for
a gradual transfer of part Of the
bank reserves to these new ''reser-
voir" banks. In order not to dis
turb business conditions or to with
draw too suddenly the heavy depos-
its OF country banks in the large cit
les, the law provides that three years
may be consumed in shifting these
balances, and that if necessary part
: OF the reserves transferred to the re-
gional banks may consist of COM
: mercial paper.
Amount of Reserves
The amount of reserve required
from every bank un Ter the new law,
ami the place were it must be kept.
are as follows:
l Country banks: Total reserve re-
quired. y per cent. Of demand de-
I posts and per cent deposits.
Fiye-twelfths must be KEEP in the
: banks vaults for two years and four
twelfths after that time. For the
first year, two-twelfths must be kept
in the regional bank, increasing one
: twelfth six months thereafter until
J. It reaches five-twelfths of the total
: reserve. For three years the unal-
u lOtte1 part OF the reserves may be
: kept in the banks Of reserve cities;
u after that time it may be kept either
). in the country banks vaults or in
Il the regional reserve banks.
t Reserve city banks: Total reserve
[ required, / per cent of demand and
! five per cent. OF time deposits. Six
ffteenths must be kept in the banks S
vaults for the first two years and
: five-ffteenths after that time Three
II ffteenths must be kept in the re-
J. gional reserve bank fer the first
b year increasing one-ffteenth every
o six months thereafter until it reach
Il es six-fifteenths. For three years
# the unallottei portion of the reserve
= may be kept in other banks, in it's
Il own vaults or in the regional bank;
O after that time in one of the latter
r two places:
d Central reserve city banks (New
= York. Chicago, st. Louis): Total re-
serve required, IS per cent. OF de-
. mand, AMI ) per cent. Of time de-
+, posits. Six-eighteenths must be
;. Ell eighteenths in the regional re-
- serve banks and the remaining five
eightea2ths in either place the bank
= er may choose
These immense funds Of reserves
- fUnis OF reserves from member
> banks" with government moneys
= rfll make up the deposits OF the re-
- gional reserve banks Each OF these
banks viii be administered by a
!. board OF nine directors, six OF whom
- will be elected by the banks. and
: three appointed by the federal re.
-, serve board.
May Rediscount
The regional reserve banks may
rediscount-that is, buy at dis.
r (CCncIu9eI on Seventh Paoel