The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1913-12-23

consumed in shifting these balances,
and that If necessary. part Of the re-
serves transferred to the regional
banks may consist Of commercial pa
per.
Country banks: Total reserve re-
quired, IL per cent of demand deposits
and s per cent Of time deposits. Five
twelfths must be kept in the bank
vaults for two years and four-twelfths
two-tWelfths must be kept in the re-
gional bank increasing one-twelfth
each six months thereafter until 1t
reaches f1ve-twelfths of the total re-
serve. For three years the unallot-
ted part OF the reserves may be kept
that time. 1t must be kept either in
the country banks vaults or in the
regional reserve bank.
Reserve city banks: Total reserve
required Is per cent Of demand and
s per cent Of time deposits. Six-ff-
teenths must be kept in the bankS
vaults for the first two years, and Ave-
f1fteenths after that time. Three-1f-
teenths must be kept in the regional
reserve bank for the first year, in
creasing one-ffteenth every six
months thereafter until it reaches
six~-fifteenths. For three year s the
unalloted portion Of the reserve may
be kept in other banks, in it's own
vaults OF in the regional banks; after
that time In one Of the latter two
places.
Central reserve city banks (New
York, Chicago and st. Louis: Total
reserve required, 10 per cent of de-
mand and s per cent Of time deposits.
Six-e ighteenths must be kept in the
lbank's own vaults, seven -~edghteenths
in the regional reserve bank, and the
remaining fve-eighteenths in either
place the bank may choose.
These immense funds of reserves
from "member-banks', together with
government moneys, will make up the
deposits Of the regional reserve banks.
Each Of these banks will be admins
tered by a board of nine directors,
six of whom will be elected by the
blanks, and three appointed by the fed
eral reserve board.
The regional reserve banks may re-
discount-that Is, buy at a discount
from It's member-banks-'prime COM
mercial paper, when the member
banks desire to convert these assets
into money. The exact terms Of this
important provision as to the charac-
ter of paper Upon which the regional
reserve banks may furnish cash are
as follows:
Upon the Endorsement of any Of Its
member-banks, with a waiver of de-
mand notice and protest by such bank
any federal (regional) reserve bank
may discount notes, drafts and bills
Of exchange arising out Of actual com
mercial transactions, that Is, notes
drafts, and bills Of exchange issued OIL
Z commercial. purposes, or the proceeds
Of which have BEEN used, or In to bs
Z used, for such purposes. the fedora
} reserve board to have the right to de.
termine or define the character of the
paper thus eligible for discount, with
in the meaning Of this act.
; "Nothing in this act contained shal
| be construed to prohibit notes, drafts
t and bills Of exchange, secured by sta
pile agricultural products. or othe1
, goods, wares Or merchandise from be-
, ing eligible for such discount; bu
such definition shall not include notes
drafts or bills covering merely invest
| ments or issued or drawn for the pur.
pose of carrying or trading In stocks
bonds or other Investments securities
/ except bonds and notes Of the govern.
ment of the United States.
E "Notes. drafts and bills admitted t
discount under the terms of this par.
time of discount Of not more thai
ninety days; provided, that notes
t drafts and bills drawn or issued fol
:. agricultural purposes or based OF
livestock and having a maturity no
, exceeding six months may be dis
: counted In an amount to Nbe limited tt
a, percentage of the capital Of the fed
eral (regional) reserve bank, to be as
: certained and fixed by the federal re
serve bank"
. The regional banks nay also dis
. count .~"acceptances based on the i'm
, portatton or expectation of goods"
The new treasury notes, which ar
{ tn furnish the elastic element in tn
currency system. and to add to tn
0 country's circulating money in time o
r need, will come into use in the FOL
v lowing way:
The notes will be printed by tn
government, with a distinctive styl
for each regional reserve bank. ON
! of the three directors named by TIN
= federal reserve board for Zach region
2 al bank will be known as the fedora
: reserve agent for that bank, and
supply Of the notes will be placed 1
e his custody.
! Should a regional bank desire I
1 pay out more money than its cash re
! sources will permit, the law provide
4 THAT 1t may put ON OF It's redis
counted commercial paper into tn
hands Of federal agents. an,
receive in return the new treasur,
j notes. For each note that it puts int
+ circulation, the regional reserve banl
( must set aside In gold 40 per cent o
. the value of the note, as a guarantee
for it's redemption. This gold, wit
o 1.-THE commercial paper held by tn
federal reserve agent, is the protec
u ltion behind the new money; but thes
q 9nates will also ha guaranteed By th