The silver state. [volume] (Winnemucca, Nev.) 1909-1925, 1913-06-21
FEATURES OF new
CURRENCY BILL

Next week the administration .
currency bill will be introduced in
poth houses of congress. The meas.
ure mas been drafted, but will be gone
over more thoroughly in detail before
presented. The principal objects to be
accomplished are as follows:
Provision for a means for redis.
counting commercial paper of specifi.
ed types;
a basis for elastic notes, properly
safeguarded;
Machinery for doing foreign bank
ing business.
Inc measures essentials provides
Tor twelve Or more Federal reserve
banks which will rediscount paper
deal in government securities. ex'
change and conduct government fiscal
operations. National banks and such
state banks and trust companies as
conform to fixed standards would be
stockholders of the reserve banks.
The government would hold no stock.
Control Of Recerve Banks.
The government would control the
Federal reserve banks entirely
through a Federal reserve board of
seven members, in which the banks
would have no representation. The
board would be composed of the sec
retary of the treasury, the secretary
OF agriculture and the controller of
the currency as members ex-officio:
four other members would be chosen
by the president and confirmed bv
the senate.
The national bank note circulation
would remain undisturbed, and no
proposal is made in the bill for re-
tiring approximately 800. 900, 900 2
per cent bonds upon which that note
issue now rests. An amendment or
separate bin to refund these bonds
into 3 per cent bonds may be intro
dueed later.
How Notes Are Issued.
In addition to the $700,000,0 900 ex-
listing national bank notes, not more
than $500. 100000 in what are to be
known as Federal reserve treasury
notes might be issued at the discretion
of the Federal reserve board solely
for the purpose of making advances
to the Federal reserve banks, which
would do no business with the public.
deal only with their member banks
and receive deposits only from the
United States.
While the notes on their faces
would purport to be the obligations
of the United States, they would be
required TO be secured by a gold re-
serve of 33 1-3 per cent provided by
the Federal reserve bank and would
be first and permanent lien on the
assets of the banks and would be
redeemable in gold on demand of
the treasury department at the City
of Washington or any Federal bank
Notes Not Legal Tender.
Stringent provisions are made
against counting any of these notes
as part of bank reserves and the
system is guarded against initiation
by lodging power with the Federal
reserve board to exact an interest
charge upon treasury notes in order
to insure their prompt redemption.
The notes are not made legal tender,
but would be received by the govern
ment and every bank of the system
at par without exchange.
No change would be made in the
protection of other existing notes.
The Federal reserve board would
require one Federal reserve bank to
rediscount the paper of another and
would establish rate on discount not
uniform for all reserve
banks. but made with view to ae-
the commerce of the
country and promoting a stable price
level.
Recasting of System.
For recasting the present bank re-
serve system, the bill proposes to
the reserves from national
banks in the present reserve and CEN
tral reserve cities to Federal reserve
banks, carrying the process of trans
fer oevr thirty eight months to avoid
shock to market conditions.
The bill proposes, according to
Glass statement, ultimately the es-
tablishment of reserve system in
which country banks will have 10
per cent of reserve { i. e., Is per cent
of total demand liabilities), such Is
per cent to be held 5 per cent in the
bank vaults, per cent with the ma
tional reserve banks and 5 per cent
either at home or with the reserve
bank, while reserve and central re-
serve city banks have reserves of 20
per cent of demand liabilities of which
10 per cent will be home, per cent
with the reserve bank of the district
and 5 per cent either at home or with
the reserve bank