The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1913-12-25
SUMMARY OF NEW
MONEY LAWSHOWS
SYSTEM NEW THING
Measure Passed Today
Put in Plain Lang
uage.
TO SAFETY
Provides Method Whereby
Currency Can be Expand
ed to Meet Needs.
ADDS TO SAFETY

w W tNl\Sl
Washington, ID. C.-The rev bill
affecting the currency, banking and
finances of the country, which has
now been passed by both branches OF
congress and goes before President
Wilson for his signature, is one Of
the most f~ar-reaching measures relat-
ing to finance thai has been enacted
In many years. The magnitude of the
subject, the diversity OF interests af-
fected. and the length OF the debates
in both branches of congress-, has
made it difficult for the ordinary oh
server to follow the changes and
grasp the essentials of this highly
technical measure in its important
bearings on money, finance, banking,
and the entire range OF fiscal sub
jects, public and private. which II
affects With IA view, thercfore, OF
presenting suecincliy and in nom
technical language, an cpitomo CT lhV
salient features OF the measure as
finally framed, the following sum-
mary ~ SINtD VI tiiG III 40 ~ NHOlt
and of it's principal details.
Generally speaking, tho first steps
TO be taken o bring iato c%peratton
the nations nav rnagiai .Ja6efn
Will be through al ofgt .9 No:s-
mit.ee of three nielabcrs TO consist
OF the secretary of the treasury, sec
cetary of agriculture and comp
troler of the currency. Banks
have sixty days within 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.
Little Change in National Banks
The new law will make little di-
rect change in the operation OF the
present national banks. except to al.
low them to loan a certain amount OF
their funds upon farm mortgages. Its
chief purpose is to add a new piece
OF machinery to the banking system
that will "take'u up the Slack during
the changing business conditions o.
each year; that will give the banks
a place to quickly convert their as
sets into cash in time of need, and
| Illdl VIII DIlHS OuL HCN lGuSi al WI
rency when it is needed, and retire
it when money becomes 'cheap."
Banks are now required to keep q
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 have
loaned up to the full limit of their
resources, these reserves furnish lit
tie relief, because if they are pad
out to meet demands, the banks are
left in "A precarious condition.
Will Help Banks i'll Need.
The basic principle of the new law
is to get these reserve funds out into
circulation when necessary, without
lessening 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 pap
er" they hold in their vaults.
This is to be accomplished through
Il chain of regional reserve banks, OF
reservoirs of reserves in which all
banks shall deposit a stated part of
the money they are required to hold
as reserves. Under the new system
whenever a financial furry comes,
the bank can take commercial paper,
such as notes, drafts and bills of eN-
change, to these reservoirs" and
secure the use of their wv reserves,
OF is necessary ever the reserves OF
other banks. by depositing this Sc
curity.
The new regional banks will re-
#ceiye 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 35 per cent of these
reserves so that in case of emergency,
millions of cash can be brought out
into circulation quickly. The banks
will have to pay for these loans.
however, as Individuals have to pay
for a loan from any local bank; and
this charge is expected to prevent
the too-free use of the reserves held
by the regional banks.
A new form of paper currency is
also provided for, to come u in case
OF emergency, and which is expected
to go back into the hands of the GOV
.ernment when times are normal.
These treasury notes will be print
ed by the government, and issued
through each regional reserve bank,
and will bear the guarantee both OF
the regional bank and the govern
ment.
Special Currency May Be Issue.
If the demand for currency in any
section of the country exceeds the
supply of circulating money, a reg
ional bank can ecu this new
money from the government and put
ii into circulation; but a gold reserve
of forty per cent, and commercial
paper equal to the full value of the
note, must be held as a reserve be-
hind each note so issued. This pro-
vision is expected TO be the influence
that will drive the new money back
retirement when it is no longer
needed.
Details of the Law.
The following analysis presents the
of the new law without adher-
ing closely to the technical division
or language OF the measure.
AT the head of the system will
stand a federal reserve board at
Washington, appointed by the presi-