The Washington herald., 1913-12-21
LOCAL BANKERS
FAVOR new BILL
'More Good Than Bad in the
Measure" Is Feeling of
Most Of Them.
TO ENTER THE SYSTEM
Loss of Government Deposits lmpOr.
tant Feature in Dissemination.
Studying Proposed Law.

The attitude in local financial circles
over the currency measure, winch De-
comes law this week, generally continues
favorable.
Bankers Yesterday were inclined to FOL.
low the views of Senator weeks Oh
Massachusetts, that there Is 10 per cen,
good in the bill. and an expression OF
hope was added that as soon as the lsM
is put in operation the bad may oe
minimized by the operation OF the laS
and the efficient administration thst may
be given IL. The Federal reserve ooarc
win have wide power In the making oi
rules and in the event that II is exer.
cIsed wisely a strong and substantial
measure, It was declared, would be the
result. -,
The opinion was reiterated last nlgh'
that all the local national banks event
ualIy would enter the system ana thh'
not overly enthusiastic attitude nov
being held in some quRrers later VIII
give way to more optimism. A failure
to enter the reserve system means the
loss of government deposits, which, ol
course, includes postal savings ane
Philippine funds.
Local Counsel Busy.
Counsel for the Washington banks
were busily engaged yesterday in going
over the measure. Several ambiguous
features remain in the bill. These have
peen pointed out to Senator Owen by
local financiers and there are assurances
that they will be corrected in conference
In discussing the bill last night a bank
official said it would seem to be necessary
for every bank to start a debit and
credit account with the provisions OF the
\ aNF 49, NIvaN a a n.
vantages and debiting IL with all disad'
yantages. The resulting balance would
decide the course TO be followed.
Changes in the present system are oi
interest to every banker. Those who
guide and control national banks must
scQuaint themselves with the provisions
of the new law, as many important ques'
tions will be placed before them for i'm
mediate decision. Old paths will have
to be abandoned and new trails followed
AS soon as practicable after the pas
sage of this act the Secretary of the
Treasury and not less than two Other
members OF the Federal reserve board
acting as the reserve bank organization
committee, shall divide the continental
United States into a specified number oi
districts and designate a city in each
district to be known as a Federal reserve
city, and said committee shall super
wise the organization, in each one OF the
cities designated, of 4 Federal reserve
bank
Every national bank in the United
States is required to signify in writing
within sixty days after the passage Oi
this act its acceptance of the terms and
provisions thereof. Any national banl
falling to do SO within the time limi
mentioned shall cease to act as n reserve
agent upon thirty days notice to b,
given within the discretion Of the or
ganization comittee or the Federal re
serve board.
Form Of Subscription.
When a Federal reserve bank shal
have been organized every national ban
in that district shall subscribe to tn
capital stock of the Federal reserve BAN
a sum equal to per cent Of the capita
and surplus of said national bank. Is 4
be paid Oh call; l-6 within three months
and 1-6 in six months thereafter. an
remainder to be subject to call by tn
Federal reserve board. All such pay
ments must be made in gold or gold Ger
tificates.
ANY National Banking Association
which fails to comply with the provision
within one year after the passage OF thi
act shall, within the discretion of tn
Federal reserve board. forfeit its char
ter as a national bank. But no Nations
Banking Association shall be dissolve
until its cause has been tried by a cour
| of competent Jurisdiction in a sui
| brought for that purpose by the Comp
troller of the Currency.
In organizing Federal reserve banks
thS Federal reserve organization commit
tee calls meetings OF directors Of the sew
eral banks which have subscribed to tn
| stock of Federal reserve banks, for tn
purpose Of electing six directors of eacI
Federal reserve bank. The board of dj
rectors of each member bank shall cleo
| one of its own members to act as a dis
trict reserve elector. From a list of sue
| electors the electors themselves procee
to elect by a preferential ballot three di
rectors Of Glass A and three directors O
Class B.
When any member bank increases Il
capital and surplus 1t must subscribe I
the capital STOCK OF the Federal -esery
| bank an amount equal to per cent O
| be decreased IL 1t reduces Its capital @
| surplus.
Shares Not Transferable.
Shares of the capital stock of Fedora
reserve banks owned by member bank
are not transferable nor can they b
hypothecated.
Cumulative dividends at rate OF 6 De
cent per annum will be paid on sue
stock held by member banks. The re
mainder of earnings will become tn
property OF the United States to be use
in several ways as provided in the Law
but not more than 6 per cent shall b
paid to the stockholders.
ha.
the supervision and direction of the Fed
eral reserve board. But a careful an
alysis OF the duties and authority Of tn
board creates the impression that II
powers are somewhat more than super
visory. In addition to many duties i'm
posed by the act, 1t is required to per
| form any and all duties implied by tn
act, as well as make numerous rules an
regulations for the conduct of bushes
OF the Federal reserve banks and tn
member banks and make rules and regu
lations necessary 10 enable 1t effective
ly to perform all its own specified O
implied duties.
It would seem that its authority is bot
| executive and legislative with respect t
the system which the act creates.
The authority heretofore granted to tn
Comptroller of the Currency to examin
| national banks twice yearly is continued
But the authority to require additons
examinations and the publication of state
ments In given 10 the Federal reserv
| board.
The reserves 70 be carried by nationa
R,A.r thIa ara rhapOad 80