The Ocala evening star. [volume] (Ocala, Fla.) 1895-1943, 1913-06-19
STRONG AND ELASTIC
CURRENCY SCHEME


tentative draft of the proposed bank
ing and currency measure which Sen
ator Owen and Representative Glass,
as the respective chairman of the
Senate and House banking and cur
rency committees, have been prepar-
ing in cooperation with Secretary
McAdoo of the treasury, the New
York Times presents herewith an ac-
curate outline of it's essential fea-
lures. The Star prints it in full, as
it is most interesting to any bust
ness man. The plan is simple and
practical, and is the best safeguard
against the unreasonable financial
panics that sometimes distress the
country because part of its abund
ant wealth cannot be applied to some
threatened point at the proper time.
Under the terms of the bill the
country will be divided into fifteen
geographical subdivisions, in each of
which a regional reserve association
may be formed. The federal board
of reserve, which it proposes to es-
tablish at Washington, would be
vested with authority to increase the
number of such regional associations.
The national banks in each of
these subdivisions would be required
TO participate in the formation of the
regional reserve associations, while
state banks which met certain con-
ditions and requirements of organi-
cation would be permitted to partic-
ipate as member banks of these asso-
Citations.
There will be nine directors for
each regional reserve bank. Three
of these directors will be bankers
elected by vote of the directors of the
member banks divided into three
groups. Three other directors will
be representative business men to be
elected by the member banks, while
the remaining three will be appoint
ed by the president of the United
States. Under this plan, it is believ-
ed, neither the government, the
banks, nor the public will control the
selection of these regional reserve
banks, but they will be named so as
To give the banks, the government,
and the public joint representation.
Each of these regional reserve as
sociations will be the reserve agency
for, the member banks in it's respec-
tive division of territory. State
banks desiring to join these associa-
tions and the national banks requir-
ed to do so will each subscribe to the
capital stock of the association in its
region in an amount pro-rated on its
capital and surplus.
The bill will provide, however
that no regional reserve association
may be formed with a capitalization
below a definite figure.
No Bank Deposit Guarantees
In each regional district the re-
serve association will be the depos-
itary of the United States govern
the right of examination of the lat.
ter to ascertain whether they meet
the required conditions as to solv-
ency, but the reserve association viii
not be responsible for the solvency
of a member. bank This means that
the bill will not contain any provis
ion for guarantee of bank deposits
Each regional reserve association
will be required to carry reserve o.
one-third to one-ha1f of its deposits
They will serve as banks for redis
count for their member banks, bu
only for prime commercial paper
which must mature is not more thar
forty-f1ve days from date of its max
ing.
The proposed federal board of re
serve, to be established at Washing
ton, will be superimposed upon tht
entire system of regional reserve as
sociations. This federal board vii
have broad powers of supervision anC
regulation. The plan calls for min,
members for this board. Three o
them will be elected by vote of tn
regional reserve associations, foul
will be appointed by the president
and the eighth and ninth member
will be the secretary of the treasur!
and the secretary of agriculture.
The bill does not provide member
ship on this board for the controlle
of the currency. With the exception
of the two government officers, wh'
will be ex-officio, all the other mem
bers of the board will be elected o.
appointed, as the case may be.
Through the federal board of re
serve treasury notes will be issued t.
the regional reserve associations 70,
the proposed additional or expansion
currenry. These treasury notes vii
be secured by first lien on the cap
ital stock and gold reserve of the re
gional reserve banks. that first neI
carrying with it also a first lien o
331-3 per cent of like amount o
the gold of the member banks in tbs
vaults of the reserve banks, further
protected by double security on tht
combined assets of the regional re
serve association and its member
banks, and finally secured by the
prime commercial paper Endorsed By
the member bank over to the re
Rfnnal reserve bank