Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1913-09-21
THE RESERVE PROVISIONS Of
THE FEDERAL CURRENCY BILL

in the United States, was distributed
as follows: i,
In the national, banks -. $685., 29O,97l
In state banks .......... 219,S23,67S
In private banks .:....... 11,053,75O
In loan and trust c0mpan.
les 04,44I ,SOS
In mutual savings banks !. 14,630,24S
In stock savings banks =. 1906, 773
In all banks $50. $1,444,312,33S4
In United states treasury 56,5S4,577
In the pockets of the
people and not other
wise accounted for. 1857 ,42G,25S
Grand total ...... .$3,34S, 323,2l9
The inspection Of the table shows
at u glance that the only idle money
in the United States from which the
additional margins required for the
necessary increase of bank credits
could be obtained was the huge pile
of $31G.5S4,577 which was locked up
idle and useless in the United States
treasury. sNf""
Opportunity for Remedy.
The framework of the federal re.
serve banking bill offers the oppor-
tunity to correct the impracticable
reserve provisions Of the present
law by allowing an increase i'll the
free reserves and reducing the per-
centages required for the permanent
margins by making its reserve pro-
visions commensurate with the
amount Of money which Is available.
The total reserve none, gold, sill
YER and legal tenders, which the ma
tiOnal banks possess, is $9l77ysGj55123S
and there Is no source from which
more can be obtained except from
the United States treasury. This
fact is conclusively proven from the
foregoing statistical table:
ca In order to carry on the bank
ing business, the banks must have
some amount of free reserve money.
How much? At the time Of the last
report, June 4, the country banks
had 81 per cent. the banks in re-
serve cities had S of 1 per cent, and
the central reserve banks had -
per cent Of free gold, silver and legal
tenders, amounting in the aggregate
to 100000 900. In addition, they had
$51 900 100 of national bank notes.
In my judgment, it is no use to Grip.
pie banks for the sake Of locking up
money: therefore, I would. suggest
that all classes of banks should be
allowed 3 per cent of free reserve
money, which, in the aggregate,
would amount to-. say, $215,0OO,OO0. !
90 The banks would be required
to pay for their subscription to the
stock of the federal reserve banks q
sum equal to 10 per cent Of their
capital. $105, 900, 900.
(c) The balance of cash, amounting
to. say, $4,000 900, assessed against
the banks at the rate Of 10 per cent,
for central reserve and reserve city
banks, and 5 per cent for country
banks could DO turned over to the
federal reserve banks to be held as
margins, or locked.up, reserves, for
the respective contributing banks.
(d) The United States treasury
turns over the amount in its general
fund, say. $250,000,0 900. q, \
The federal reserve banks would
thus come into possession of gold.
silver and legal tender notes amount:
ing in round numbers to 1862, 00O, 900.
Condensed Balance Sheet. S%E
The condensed balance sheet would
be as follows: ~
Gold. silver and legal
: tender notes .......... 1882, 100000
T. Liabilities. /
Capital stock ,OO0, OOO
United States treasury de-
posits ............. --oO.oOO,OOO
National bank deposits :. 597, 900 600
This huge pile of reserves, consist
ing Of gold. silver and legal tender
notes is five times the usual reserve
of the Bank of England 81
The bill requires SO IL per cent
($249,009.000 of its deposits to. be
perpetually locked up in the reserve
chests of the federal reserve banks,
but authorizes the loaning Of the bal
ance, say. $500, 600, 600, to national
banks, which would make it possible
for them to maintain their legal re-
serves, and increase them, as the de-
mands for bank credits increase and
thus it solves the crux of the bank
ing problem. /
1t would do more. The whole $780,.
100000 would be emergency cur
rency," available for moving the crops
or for other emergencies, where unu-
sual amounts of actual money are re-
quired. Probably its availability.
would prevent such emergencies.
Gross Injustice to Country Banks.
The reserve provisions which, have
been herein suggested consume all
the money the banks possess, and,
If the reserve requirement would be
thus satisfied, the enactment tDf the