The Birmingham age-herald., 1913-06-20
CHAIRMAN GLASS
MAKES CURRENCY
MEASURE PUBLIC
CONTINUED from Page one)


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rowing them from persons who hold them
ana want to lend the cash for that pur-
pose, or else by borrowing from the banks
In the places where the operations ar.
to be carried on.
In the belief that the present reserve
system is Anticipated and unsatisfactory,
that to the massing of funds in New
York and other financial centers, of
which so much has been said In recent
years is largely due to the present re-
serve requirements of national banks.
and that in order to get the real benefit
from the system of rediscount which has
been proposed as remedy for many
existing evils, it is necessary to base
such system upon an actual control of
reserves, provision has been made for
recasting the present bank reserve sys-
TEN.
The bill is based on the belief that no
one should participate in the control of
the system unless he is financially in
terested himself, or chosen by those who
are, except insofar as the government
steps in and asserts the authority of the
VI hole community. With this in mind the
system has been devised so as to provide
for the continuation of existing national
banks with their organization, powers
and function unchanged. In addition
there is established a system of federal
reserve banks, which are Incorporated
institutions holding federal charters and
in all respects managed like national
banks, except as to the election of direc-
tors.
There are L of these federal reserve
banks. each managed by a board of nine
directors three of whom will be expert
bankers elected by the banks, three will
be members selected in the same way
but required to represent the CONNER
cia1 a apricnlttlrol MI r..
of the district and subject to removal
by the federal reserve board in case they
DO not fairly represent these interests.
The remaining three directors are to be
chosen by the federal reserve board.
Moderate Division
The object of the bill is to effect a mod
crate division and classification of bank
ing business along indicated lines, the
net result presumably being summed up
as follows:
National reserve banks will be strictly
limited to rediscounting actual CONNER
cial and industrial transactions evidenced
by very short term paper and on rare
occasions under carefully prescribed con-
ditions, to financial operations. protected
by collateral. They will also be able to
engage in foreign exchange operations
etc.
National banks will be subjected to
EicSlotiy tiic sdiilc icStflCllOIlS as III pres
ent with relaxation in favor of a mod
crate amount of real estate loans by
country banks under carefully guarded
conditions.
By revision of the administrative fea-
lures of the national banking act, pro-
vision will be made for close oversight
of national institutions with view to
holding them strictly up to the require
ments of legitimate banking business
In order to possess themselves of the
kind of paper entitlting them to redis-
counts, national banks Will find them
selves obliged to keep a reasonable pro-
portion Of their assets in the form Of
paper eligible for rediscounting.
System Unsatisfactory
1T is believed that the present SUBJ
treasury system is unsatisfactory, clumsy,
Injurious to business and difficult to man.
age In times of stress. The bill, there
fore, provides for
THE placing of all current funds Of
the treasury in federal reesrve banks
and the payment of government creditors
by check thereon.
THE equalization of the public funds
between different reserve banks py direc-
tion of the Secretary of the Treasury
and subject to rate of interest to be
fixed by the federal reserve board.
1.-The trust funds of the treasury are
to be held as at present in the vaults
of >the treasury.
Under the terms of the bill the federal
reserve banks, after the payment of ali
expenses and taxes. are entitled to pay
an annual cumulative dividend of per
cent on paid in capital to its stockhold.
ing members. One half Of the net earn
ings of the bank must be paid into the
surplus fund until said fund shall amount
to the 20 per cent Of the paid In capital
of the bank. The remaining one-haif
of the banks earnings shall be paid to
the United States and whenever and so
long as the surplus fund of each federal
reserve bank amounts to 20 per cent of the
paid In capital, the shareholders having
received the permissible dividend Of S
per cent all excess earnings shall be paid
TO the United States. Every federal re-
serve bank is exempt from federal. state
and local taxation, except in respect to
axes upon real estata.' -