The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1913-12-23
HOT DEBATE OVER
CURRENCY BILL
Continued From Page One.

| W hS w , AA<S NsS
nations new financial system will be
through an organization committee
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 member
ship in the new system, and one
years time is allowed before
the government will compel the
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 a certain amount of their
funds 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 a 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 none
becomes Cheap"
mi are now required to keep a
certain percentage of their deposits as
reserves" part in cash in their own
vaults and part Of which may be re-
deposited in the banks of New York,
Chicago, ST. Louis and other designat-
ed cities. In time Of sudden financial
demands, when banks have loaned up
to the full limit of their
these reserves furnish little relief, be-
cause II they are paid out to meet de-
mands, the banks are left in O pre-
carious 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 a place to which local
banks may rush in a crisis and get
cash for the prime commercial pa
per- they hold in their vaults.
This is to be accomplished through
a chain Of regional reserve banks, or
reservoirs Of reserves in which all
banks shall deposit q stated part Of
the money they are required to hold
as reserves. Undr the new system
whenever a financial furry comes, the
bank can take commercial paper, such
as notes, drafts and bills Of exchange,
to these Reservoirs" and secure the
use Of their own reserves, or If neces-
sary even the reserve of other banks,
by depositing this security.
The new regional banks will receive
about one-half of the bank reserves
Of h country. They, in turn. will be
pa ~ Col DbC W lIIS Ud1lhS
all but 35 per cent Of these reserves,
so hat in case Of emergency, millions
Of cash can be brought out into
circulation quickly. The banks will
have to pay for these loans, however.
as individuals have to pay for a loan
from any local bank; and this charge
Is expected to prevent the too-free use
of the reserves held by the regional
banks.
A new form Of paper currency is
also provided for, to come u in case
OF emergency, and which Is expected
to go back into the hands of the gov
eminent when times are normal. These
treasury notes will be printed by the
government. and issued through each
regional reserve bank, and will bear
the guarantee both Of the regional
bank and he government.
If the demand for currency in any
section of he country exceeds the
supply Of circulating money, a regional
bank a secure this new money from
the government and put it into
circulation; but a 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
1t is no longer needed.
The following analysis presents the
details of the new law without adher-
ing. closely. to the technical division
Or language Of the measure.
At the head Of the system will stanf
a federal reserve board at Washing.
ton. appointed by the president, ant
to consist Of the secretary Of the
treasury. the comptroller Of the cur.
rency. and the five other members
Two OF these shall be expert bankers
but none shall have banking affilia,
tons or W bank stock during theil
service. This board will exercise gen.
eral control yer the entire system.
The temporary Organization com
mittee". or the federal reserve board
will select from eight to twelve cite
where regional reserve banks shall b
located, and will divide the entir
country geographically with these cit
les as the centers OF districts. All ma.
. tional banks In a district will be re
, CURED to subscribe for the stock O
the regional reserve bank in that dis
triot, and to keep a portion Of thei
reserves there.
Local banks will be known as mem
: ber-banks', because they will own th
!, stock OF he regional reserve bank @
their district. Each member bank wi
be required to take capital stock q
the regional reserve bank. equal to
per cent of the member-bank's cant
tai and surplus. The capital of tn
regional bank will increase or de
crease so that it always represents
per cent Of the combined capital an
surplus Of all the banks of the distric
that have Joined the system.
National banks are compelled
join, and state banks are permitted t
II they bring their reserve require
y ments up to the standard set for ma
i" tional banks, and submit to nations
examinations.
Public ownership of the stock of tn
y regional reserve banks Is permitted /
case enough banks do not join in an
district to provide a. capital stock c
$4,000,000. In such event the publ
may purchase the stock in uuantitie
limited to $4,000 for each Individual
but the voting Of this stock will b
placed in the hands Of governmer
representatives Of the board of direc
tors of the regional reserve bank.
4 The regional reserve banks NAV d
business only with their member
banks. not with the public, except ths
certain "open-market operations sue
as the purchase and sale of gold, gov
eminent or municipal bonds, and cer
tain forms Of bills of exchange, ar
permitted. These banks will mak
their earnings from the loans made I
member-banks, and from the purchas
and sale of bonds and foreign bills {
exchange. :
Member Banks will be compelled I
put up in cash only one-half Of the
subscription to the capital Of the ne
banks; the rest can be called for
d needed by the regional bank. Div
dends of s per cent will be paid q
V this stock to the Member Banks, an
the stocks will be non-taxable. Ate
these dividends are paid, one-half