Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1913-12-23

the regional bank and the govern
ment
lf the demand for currency in any
section Of the country exceeds the
supply of circulating money, a region
al bank can secure this new money
from the government and put it into
circulation. but a gold reserve of 30
Der cent and commercial paper equal
10 the fun value of the note must be
fele resot ,e behind each note so
issu,,.. This provision is expected TO
be the influence that will drive the
new money back into retirement when
Il is no longer needed.
The following analysis presents the
details of the new law without adj
herring 10 the technical division or LAM
guapc " the measure.
AZ iho hfad Of the system will
stand t federal reserve board az
Washngi D. appointed by the presi-
cont CONSIST Of the seeretary
of the treasury, the comptroller 81
the currency and five other members.
Two Of these shall be expert bankers
but none shall have bankng affilia-
tions or own bank stock during their
service. This board win exercise gen
eral control over the entire system.
The temporary organization com-
mittee." or the federal reserve board,
will select from eight to twelve cities
where regional reserve banks shall be
located. and will divide the entire
country geographically with these. cit
les as the centers of districts The ma
tional banks in a district will be re-
quired to subscribe for the stock of
The regional reserve bank IN that dis
trict and 10 keep a portion of their re-
serves there.
Local banks will be known as
member banks. because they will
own the stock of the regional reserve
bank of their district Each member
bank will he required to take capital
stock of the regional reserve bank.
equal to 6 per cent of the member
banks capital and surplus. The cap
ital Of the regional bank will increase
or decrease SO that it always repre-
sents per cent of the combined cap
ital and surplus Of all the banks OF
the district that have joined the sys-
tenn.
National banks are compelled TO
join and state banks are permitted to-,
If they bring their reserve require
ments up to the standard set for ma
tional banks and submit to national
examinations.
Public ownership of the stock Of
the regional reserve banks is permit
ted only in case enough banks do no.
join in any district to provide a cap
nal stock Of S4,000,000 In such
event the public may purchase the
stock in quantities limited to $25,-
GOO for each individual but the vot-
ing of this stock will be placed in the
hands Of government representatives
on the board of directors Of the re-
gonal reserve bank.
The regional reserve banks may do
business only with their member
banks. not with the public, except
that certain open market opera
tions" such as the purchase and sale
of gold. government or municipal
bonds and certain forms of bills Of
exchange are permitted. These
banks will make their earnings from
the loans to member banks and from
the purchase and sale of bonds and
foreign bills Of exchange.
Member hanks will be compelled
TO put up IN cash only one-half OF
their subscription TO the capital OF
the new banks; the remainder can be
called for if needed By the regional
banks Dividends OF six per cent will
be paid on this stock 60 member
banks and this stock will be non-tax-
able After these dividends are paid
one-half of the surplus net earnings
goes to create @ regional surplus fund
and when this has reached forty per
cent Of the regional banks paid-in
capital, these earnings are TO go into
the United States treasury The bal
ance Of the net earnings are to be
PAID Ia the United states as fran
chise tax
With the machinery thus create I
for a new banking system that is sup
Elementary to the commercial banks
Of the country, the law provides for 4
gradual transfer Of part Of the bank
reserves to these new reservoir
banks In order not to disturb BUSH
ness conditions or 10 withdraw too
suddenly the heavy deposits of coun-
try banks ia the large cities the law