The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-12-23

currency system, and to add 10 tho
country's circulating money in tim,
or need, will come into use In the fol.
lowing way
Tho notes Will be printed by tho gov
eminent, with distinctive style for
each regional reserve bank. ono OF
the three directors named By tho
Federal Reserve Board for each re-
gional bank will DO known AS tho
Federal Reserve Agent for that
bank. ana supply OF the notes will
DC placed in his custody.
Should "A regional bank desire TO my
out moro money than IT'S cash re
sources VIII permit. tho law provides
that IL may put some of its rcdiscount-
cd commercial paper into tho hands of
tho Federal Reserve Agent" and re-
ceiVc in return tn. new Treasury notes
For each note that II puts out into
circulation. the regional, reserve bank
must set aside in gold 40 per cent ot
the value OF the note as "a guarantee
for its redemption. This gold with
the commercial paper held by the "Fed-
cral Reserve Agent" is the protection
behind the new money; but these uotca
VIII also he guaranteed by the govern
inent, and may be redeemed IN gold
Each regional bank, under the act
must keep Il reserve OF So per cent OF
tho deposits II has received, besides
the 40 per cent GOLD reserve behind tho
treasury notes ~ issues. If the gold
reserve behind the notes falls below
80 per cent a heavy tax is imposed OH
the bank. which In turn adds the tax
TO the rate II charges member banks
for rediscounts. This was designed TO
81 NJ. -.ns
In times or sudden stress. the Federal
>Heserve Board can suspend these re-
serv" provaions, IN order 10 furnish
quick relief TO any community.
one regional bank cannot again pay
out the notes OF another except Under
heavy tax These notes arc expect
cd To return to the regional banks. and
be withdrawn from circulation when
the need for their use passes.
Existing Forms Not Disturbed.
None OF the existing forms OF cur
rency. except the national bank notes
viii be disturbed By the new law. The
United States bonds, now used 10 SC
cure the issue OF national bank notes
are 10 be taken up al the rate OF S25,-
oOo.oo0 year by the regional reserve
hanks, and new Treasury notes. or
short-tern per cent bonds Will take
their place National bank currency
is expected gradually to retire
The Federal Reserve Board will OK
erclse nnal control over the entire
operation of the System. IT can com
pei one regional bank to loan to an
other in time OF need; can suspend all
restrictions surrounding the reserves
which regional banks must hold and
can remove directors OF regional re-
serve banks whenever 1t is believed
necessary.
While the banks retain control OF
the boards OF the regional reserve
banks. their connection with the Fed
crai Reserve Board Is only through
an advisory council. made up or one
representative from each Federal re-
serve district This council will meet
In Washington, 10 confer with the FED
cral Reserve Board ION general bust
ness conditions" and to make recon-
mendations and suggestions concerne
Ing discount rates, note issues and rec
serve conditions
AN important change in national
banking methods, embraced in the new
law. will permit all national banks
except those in New York, Chicago
and ST. Louis. to make direct loans on
! nve-ycar farm mortgages. up TO 2S
per cent OF their capital and surplus.
or up to one-third of their time de-
pcsits Another provision in the law
permits national banks having IL
capital OF Sl.o00,0O0 or more, TO open
foreign branches. Similar authority is
given to the regional reserve banks,
the purpose being TO facilitate the de-
velopment Of American trade abroad.