The daily banner. (Cambridge, Md.) 1897-2008, 1913-06-20
TO REvOLUTIONIzE|
BANKING SYSTEM
Currency Bill Divides Country
Into Reserve Associations.
ALL BANKS MUST BELONG
The Government Will Have an EN-,
phatic Voice In Management of the
New Scheme.

The Government Will Have an EN-
phatic Voice In Management of the
New Scheme.
Washington, June 20.-Administra-
ton leaders began an earnest effort to
whip the currency bill into final shape
and get into accord on every detail.
With fundamentals and essentials
agreed upon by President Wilson, Sec
rotary McAdoo and Chairmen Owen
and Glass, of the senate and house
banking and currency committees, the
leaders will attempt to perfect it as an
administration measure.
The fundamentals of the bill as
agreed upon have been published from
time to time. The measure would revo-
lutionize the banking and currency
system of the United States, and it
has been the aim of its trainers to
place the financial system, especially
the issue of currency, under the con
troll of the government.
AS now agreed upon, the country
would be divided into not less than
twelve regional reserve associations,
and all national banks will be compel
ed to become members of the reserve
association in their respective dis
tricts.. State banks will be eligible to
membership.
The reserve associations will organ
ize federal reserve banks in each dis
trict with a minimum capital of $5,-
100000, which will be supplied by the
membership banks at the rate of 20
per cent of their capital. These reserve
banks will receive the deposits of the
federal government and thus prevent
the treasury department from locking
up great quantities of money from cir
culation. The reserve bank will be a
bank of banks with the privilege of re-
discounting commercial paper.
In the place of the national bank
notes, which will be retired over a
period of twenty years, the govern
ment will issue to the federal reserve
banks new kind of currency, prob
ably to be designated as federal re-
serve treasury notes." The limit of this
issue will be $50O,O0O,0OO, and it will
be backed by commercial paper of
prime quality, or other valuable Sc
curity. Elasticity will be given the sys-
tenn in this manner While these notes
will not be secured by gold, they will
be redeemable in gold by the treasury
or the federal reserve banks.
Means are taken to protect the Unit
ed States per cent bonds, which now
form the security for the national
bank notes by permitting the grad
uated retirement of these notes over a
period of years, and their exchange for
8 per cent bonds without the circulat-
ing privilege.
The government, leaders declare,
will have an emphatic voice in the
management Of the new system. Direc-
tors of the federal reserve banks will
consist of three members chosen by
the federal reserve board, one of whom
shall be chairman; three members to
be chosen by the public interests in the
district and three elected by the
banks. The federal reserve board will
consist of nine members, composed OF
the. secretary of the treasury, secre-
tary If agriculture and probably an
other caL,ret officer as ex-oficio mem
bers, and three members chosen by the
president Of the United States and
three by the central reserve banks.