The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1913-12-23
LEGISLATION FINALLY ENACTED Today
ONE Of THE MOST FAR REACHING ACTS
COVERING finance IN RECENT YEARS
Method of Reorganization Outlined and Will be 1redi-
atey Taken up-Three Officers Placed in Charge of
First Steps Towards Establishment.
RESERVE BANKS INTERESTING FEATURES OF
THE newly CREATED SYSTEM Of BANKING
Gradual Transfer of Cash From Present Places Deposit
to the New Insttutions-Local Banking Houses will
Become Member Banks" in System -.

their service. This board will exer-
else general control over the entire
system.
The temporary Organization COM
mittee, or the federal reserve board,
will select from eight to twelve cities
where regional reserve banks shall De
located. and will divide the entire
country geographically with these oit-s
les as the centers Of districts. All ma
tional banks in district will be re-
quired to subscribe for the stock 81
the regional reserve bank in that dis
trtct, and to keep q portion Of their.
reserves there.
'tMember-Banks.s
Local banks will be known n
Memper- Banks. because they will
own the stock Of the regional reserve,
Der bank will be required to take
capital stock Of the regional reserys
bank. equal to per cent Of the mem
ber-bank's capital and surplux The
capital Of the regional bank will in
crease or decrease so that It always,
represents six per cent Of the COM
bined capital and surplus Of ali the
banks Of the district that have Joined
the system.
National banks are compelled to,
join, and state banks are permitted
to II they bring their reserve require.
ments up to the standard set for ma
ttonal banks. and submit to national
examinations.
;;....-..s -, Ownership 0f Stock. .,..,
Public ownership of the stock Aof3
the regional reserve banks Is permits
in any district to provide a capital
stock Of s4.00o,ooo. In such event the,
public may purchase the stock in
quantities limited to $4,000 for each
individual; but the voting Of this
stock will be placed in the hands Of
government representative Of the
board Of directors Of the regional re-
serve bank.
"Open-Nfarket' Operations.
The regional reserve banks may do
business only with their member
banks, not with the public. except
that certain "open-market opera
tons such as the purchase and sale
Of gold, government or municipal
bonds. and certain forms Of bills Of
exchange, are permitted. These banks
will take their earnings from tho.
loans made to memper-oanks, AMI
from the purchase and sale Of bonds
and foreign and domestic bills Of ex.
change.
One-Half in Cash.
Member-banks will be compelled to
put UP In cash only one-half Of their.
subscription to the capital Of the new
banks; the rest can be called for IL
needed by the regional bank. Diw-
dends OF six per cent will be paid on
this stock to the member-banks. ana
the stock will be non-taxable. After
these dividends are paid, one-half Of
the surplus net earnings goes to cre-
ate a regional surplus fund. and whom
this has reached forty per cent Of the
regional banks >paid-in capital, these
earnings are to go into the United
States treasury. The balance of the
net earnings are to be divided be-
tween the payment Of United States
franchise tax, and the creation Of
fund to guarantee the payment Of de-
positors in member-banks that may
fail.
The Gradual Transfer.
With the machinery thus created
for new banking system that 10 sup
Elementary to the commercial banks
Of the country, the law provides for
gradual transfer of part Of the bank
! reserves to these new reserve
banks. In order not to disturb busi-
ness conditions, or to withdraw too
suddenly the heavy deposits Of coun-
try banks in the large cities, the law
provides that two years may be con-
sumed in shifting these balances, and
that IL necessary. part Of the reserves
| transferred to regional banks may
consist of commercial paper.
The amount of reserve required
from every bank under the new law,
and the place where it must be kept.
are as follows:
Country banks: Total reserve re-
duired, twelve per cent Of demand
! deposits and five per cent of time de-
posits.
Five per cent must be kept in the
banks vaults for two years. and four.
twelfths after then. For the first
year. two-twelfths must be kept in
the regional bank, increasing a.
twelfth each six months thereafter
until it reaches fve-twelfths Of the
total reserve. For three years, the
unallotted part Of the reserves are TO
be kept in banks in reserve cities. at
ter then to be kept, either in country
banks vaults or regional reserve
bank.
Reserve city banks: Total reserve
required. Is per cent of demand, AMI
five per cent Of time deposits. Six
fifteenths must be kept in the banks
own vaults; three-fifteenths In the re-
gional reserve banks. first six months,
increasing one-ffteenth each six
months. After two years, the re-
naming three-fifteenths of the re-
serve must be kept either in the
banks own vaults or in the regional
reserve banks.
Central reserve city banks (New
York. Chicago and St. Louis: Total
reserve required, 1S per cent Of de-
mand. and five per cent Of time de-
posits.
Six-eighteenths must be kept in the
banks own vaults; three-eighteenths