Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1913-12-23
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soss,.a JOURNAL SPECIAL LEssro wR9l
washington. Dec. 22.-vThe new
hin affecting the currency banking
ana apances OF the country when
both branches ~ congress prepared
A. mass before adjournment tonight
after which it will go TO President VII
son for his signature. is one of inc
most far-reaching measures relatlnF
10 finance that has been enacted
many years. The magnitude "
subieet. the diversity Of Interests
faeted and the length of the debates
In bath branches Of congress has
made Il difficult for the ordinary OBJ
server 10 follow the changes ana
grasp the essentials 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, therefore. Of presenting
snceinctlr and in nQn-technieal lah-
guage. ah e4itome OF the salient tea-
ures of the measure az finally franz
ed, the following summary is given
of the bin as a whole and OF its pilu-
cipal details
Generally speaking, tho first steps
10 be taken TO bring into operation
the nations new financial system VIII
be through an organization commit
tee consisting of the secretary OF the
treasury. secretary of agriculture ana
comptroller Of the currency Banks
have sixty days within which TO iiie
their applications for membership IN
the new system; and one years time
Is allowed before the government VIII
compel the dissolution Of any national
bank that refuses to join.
The new Law viii make little direct
change in the operation of the pres
ent national banks. except to allow
them to loan a certain amount OF
their funds upon farm mortgages. lts
chief purpose is to add a new piece
Of machinery to the banking system
that Will take up the slack during
the changing business conditions OF
each Year; that will give the banks
place TO quickly convert their as
sets into cash in time of need and
that will bring out new federal cur
rency when it is needed and retire II
when money becomes cheap
Banks are nov required to keep a
certain percentage Of their deposits
as reserves part in cash in their
own vaults and part of which may
be redeposited in the banks of New
York, Chicago, ST. Louis and other
designated cities In times of sudden
financial demands. when banks nave
loaned up TO the full limit Of their re-
sources. those reserves furnish llttle
relief, because if they are PAID oul
to meet demands, the banks are lelt
in a precarious condition.
The basic principIe OF the new law
is TO get these reserve funds into err
culaHon when necessary without les
sening 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 paper
they hold in their vaults.
This is to be accomplished through
chain of regional reserve banks OF
reservoirs of reserves, in winch az
banks shall deposit a stated part OF
the money they are required to hold
as reserves. Under the new system
when a financial furry comes the
banks can take commercial paper
such as notes. drafts and bills Of eX-
change to these reservoirs and Sc
cure the use of their own reserves or
if necessary even the reserve of other
banks by deposting this security
The new regional banks Will re-
eeive about one-half Of the bank re-
serves Of the country. They in turn
will be permitted to loan back to the
banks all but S5 per cent Of these re-
serves, so that in case Of emergency
millions of cash can be brought oue
INTO circulation quickly
The banks viii have to pay for
these loans, however as ipdividuals
would have to pay for loan from
any local bank and this change IS
expected to prevent the too-free use
81 the reserves held by the regional
banks.
A new form Of paper currency IS
aiso provided for to come out in case
u emergency and which is expect
ea to go back into the hands Of the
government wnen times are normal
These treasury notes will be printed
ey the government and issued
through each regional reserve bank
ana viii bear the guarantee both OF