The Topeka state journal., 1913-12-23
HOUSE PASSES IT.


(Cont1nued from Page 0neJ
Majority Leader Underwood. that the
house recess upon adjournment today
until Jan. IL was adopted.
Senator Owen announced that
separate bill to provide for guaranty
of bank deposits would be considered
in the near future. This has been in
timated in debate by Chairman Glass
of the house banking committee.
Provisions of the Bill.
The bill Is one of the most far
reaching measures, relating to finance.
that has been enacted in many years.
The magnitude Of the subject, the di-
length of the debates, In both
branches of congress. has made it diff
ficult for the ordinary observer to fol-
low the changes and grasp the essen
tials of this highly technical measure
in it's important bearings on money,
finance, banking and the entire range
of fiscal subjects. public and private,
which 1t affects. With a view, there
fore, of presenting succinctly and in
non-technical languafe, an epitome OF
the salient features of the measure as
finally framed, the following summary
is given 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 fiscal system will be
through an organization committee
consisting of the secretary of the
treasury, the secretary of agriculture
and the comptroller of the currency.
Banks have sixty days in 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.
~ lou 10
change in the operations of the pres
ent national banks, except to allow
them to loan a certain amount of their
funds upon farm mortgages. Its CHIEF
purpose is to add q new piece of ma
chinery to the benking system that
will take up the slack" during the
changing business conditions of each
year; that will give the banks a place
to convert their assets into cash
quickly. in time Of need, and that will
bring out new federal currency when
1t is needed. and retire 1T when money
becomes cheap"
Banks are now required to keep q
certain percentage Of their deposits
as reserves, part in cash in their owr
deposited in the banks OF New York
Chicago, st. Louis and other desig.
n-ted cities. In times Of suddeT
financial demands when banks have
loaned up to the full limit of their re-
sources these reserves furnish LITTLE
relief, because il they are paid out tt
meet demands the banks are left in 6
precarious condition.
The ..aSic Principle.
The basic principle of the new law II
to get these reserve funds out into cir
culation. when necessary. withou
lessening the safety of any bank. ant
to provide a place to which local banks
may rush in a crisis and get cash fo
the prime commercial paper" the.
hold in their vaults.
This is to be accomplished through ;
chain Of regional reserve banks O
reservoirs of reserves, in which al
banks shall deposit a stated part Of tn
money they are required to hold as re
serves. Under the new. system, whel
a financial furry comes the banks cal
take commercial paper. such as notes
drafts and bills of exchange, to thes
RESERVOIRS" and secure tho use Of thei
own reserves, or II necessary even tn
reservc of other banks ty depcsitinI
this security.
The new regional banks will receiv
about one-half of 'he bank reserve
of the country. They. in turn. will b