Evening star., 1913-11-22
Public Ownership of Stock.

Public Ownership of Stock.
In. our opinion the ownership of the
stock by the people is highly important
III SlO6.OOO.0OO of stock in these four re-
serve banks can De sold to the public as
D per centum investment there will be
thereby added to the banking capital of
the United States that great sum of
money. We think this very desirable At
present there is deficiency in the bank
ing capital N many sections of the United
States.
1T has seemed to us. moreover, wise
that upon these reserve banks the gov
eminent should have majority of the
board of directors. We have, therefore,
proposed an amendment giving the gov
ernment five and the banking interests
four of these directors.
LIN the division of earnings we have
provided that after the payment of per
cent dividends and the accumulation of a
surplus the net profits. instead of being
divided between the stockholders and the
government. shall be disposed of by Civ
ing the government one-half and with the
other half creating a depositors' insur-
ance fund, SO that when a member bank
shall fail. in spite of this new system
the depoSitors may be REIN mbursed out of
these accumulated profits.
We have proposed that the national
banks shall decide whether TO join this
new system or not within six months as
it has seemed to us that a year is an
unnecessary length of time.
I'VE have recommended that the size
of the federal reserve board be increased
to nine. because of the vast interests
Whicn intrusted to it. the great
country which must be covered and the
many questions and complaints which
must be considered.
Rediscount Time Extended.
merciaI paper which may be discounted
by federal reserve banks from three
months to six months. because we have
found that thousands Of banks in the
west and in the south necessarily take
six-month papers because of the longer
time> required for agricultural processes
than for the manufacturing and mer-
camille processes of the east.
We have. however. provided that of
the discounted paper of any bank not
more than 20 per cent of it shall be
sought further to limit this by providing
that in no case can any bank have over
100000 of paper discounted exceeding
a maturity Of ninety days.
I'VE have recommended an amendment
by which every member bank is given as
matter of right the privilege of dis
count at it's reserve bank to the amount
of Its capital stock at the lowest cur
rent rate of interest providing 1t pre-
sents eligible paper. On .the other hand
we also have recommended that federal
reserve bank shall not discount the paper
of any member bank to a greater extent
than twice its capital stock. We design
also to place check upon undue ex-
pansion OF bank credits by providing that
when a bank is allowed discount paper
to greater amount than its capital
stock it shall pay higher rate of
discount
1--WE have raised the reserve agains.
notes in federal reserve banks from 33 ] ::
to A. per centum because the experience
of the great countries of the world and
because our own experience with green
backs has indicated that this limit is the
safe one We have provided. however
that in case of emergency the reserve
board may authorize a reserve bank to
fall below it's limit of 45 per centum
when it is necessary to give relief to
member banks. but in such cases it shall
pay a tax for each PA per centum of de-
ficiency. We have provided that the re
serve against notes must be gold or gold
certificates and we have therefore recon-
mended that the words or lawful money
in the House bill be stricken out. We
feel that no argument upon this is neces-
sary, as it is obviously unsafe to provide
that one government obligation may be
redeemed by another government oblga-
tion.
Reserves Against Deposits.
I'VE have recommended that tho ra