The citizen. (Frederick City, Md.) 1895-1923, 1913-06-27


currency bill was made public by Rep
resentative Glass, chairman of the
House Committee on Banking and
Currency. 1t was introduced in the
House and Senate after President Will
son delivered in person his address to
Congress.
An outline of the measure prepared
by Mr. Glass describes it as "a basis
for legislative action states that it
will be gone over in detail for altera-
tons, and sets out that its purpose is
to accomplish three principal objects:
Provision of means for rediscount-
ing commercial papers of specified
types.
A basis for elastic notes properly
safeguarded
Machinery for doing foreign banking
business.
The measures essentials remain as
they have been outlined from time to
time since the President began a study
Of the subject with House and Senate
leaders, Secretary McAdoo and other
advisers. providing II or more federal
reserve banks, which will rediscount
paper, deal in government securities,
exchange and conduct government
fiscal operations. National banks and
such state banks and trust companies
as conform to standards would be
stockholders Of the reserve banks. The
government would hold no stock
The government would control the
federal reserve banks entirely through
a federal reserve board of seven men,
brs, in which the banks would have no
representation. The board would be
composed of the Secretary of the
Treasury, Secretary of Agriculture the
Comptroller of the Currency as mem
bers ex-oficio; four other members
would be chosen by the President and
confirmed by the Senate.
National Bank Circulation.
The National Bank note circulation
would remain undisturbed and no pro
posal is made in the bill for retiring
approximately $700,000,000 two per
cent bonds upon which that not issue
now rests. An amendment or separ-
ate bill to refund those bonds into
three per cent. bonds may be intro
duced later
In addition to the 500, 100000 exist
ing National Bank notes. not more
than $5OO,0OO.OOO in what are to be
known as federal reserve treasury
notes might be issued at the discre-
ton Of tie 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 members banks and
receive deposits only from the United
States. While the notes would, on
their faces purport to be the obliga-
tons of the United States, they would
be required to be secured by a gold
reserve of SO 1-3 per cent. provided by
the federal reserve bank and would be
a first and paramount lien on all the
assets of these banks and would be
redeemable in gold on demand at the
/ Treasury Department of the City of
Washington or at any federal reserve
bank
Preventing Imitation.
Stringent provisions are made
against counting any OF these notes as
part of bank reserves and the system
is guarded against imitation by lodg-
ing power with the federal reserve
board to exact an interest charge upon
treasury notes in order to insure their
promised redemption. The notes are
not made legal tender, but would be
receivable by the government and
every bank of the system at par with
out exchange No change would be
made in the protection of other exist
ing notes.
The federal reserve board would re-
quire one federal reserve bank to re-
discount the paper of another and
would establish a rate of discount not
necessarily uniform for all reserve
banks, but made with a view to ac-
commodating the commerce of the
country and promoting stable price
level
For recasting the present bank re-
serve system the bill proposes to
transfer the reserves from national
banks in the present reserve and cen
trail reserve cities to federal reserve
banks, carrying the process of trans
fer over 80 months to avoid shock to
market conditions.