Forest City press. (Forest City, Potter County, D.T. [S.D.]) 1883-19??, 1914-01-09
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the government.
II the demand for currency in my
section OF the country exceeds the
supply OF circulating money, q regional
Dank can secure this new money from
M government put It into circu-
lation; but a gold reserve Of 10 per
cent and commercial paper equal to the
full value of the note must be held as
q reserve behind each note SO issued.
This provision Is expected to be the
influence that will drive the new
money back into retirement when 1t is
no longer needed.
The following analysis presents the
details of the new law without adher-
ing closely to the technical division or
language OF the measure:
AT the head OF the system will stand
a federal reserve board at Washington
specified by the president. and to con-
sist Of the secretary OF the treasury.
other members. Two OF these shall be
expert bankers, but none shall have
banking affiliations Or own bank stock
during their service. This board will
exercise genera control over the entire
system.
The temporary Organization COM
mittee" Of the federal reserve board
will select from eight to IL cities where
regional reserve banks shall be located,
and will divide the entire country geo.
graphically with these cities as the CEN
tiers OF districts. All national banks in
a district will be required to subscribe
for the stock OF the regional reserve
ton OF their reserves there.
Local banks will be known as "mem-
Der banks" because they will own the
stock Of the regional bank Of their dis
trict. Each member will be required to
take capital stock Of the regional re-
serve bank equal to 6 per cent OF the
The capital of the regional banks will
increase or decrease so that It always
represents 6 per cent OF the combined
capital and surplus Of all the banks Of
tho district that have Joined the sys-
tenn.
National banks are compelled to Join
and state banks are permitted to II
they bring their reserve requirements
up to the standard set for national
banks and submit to national examina-
tions.
Public ownership OF the stock of the
regional reserve banks is permitted
only in case enough banks do not join
in any district to provide q capital
stock OF 81, 000, 900. In such event the
public may purchase the stock in guam
titles limited to $780, 900 to $4,000 for
each individually; but the voting of this
stock will be placed in the hands of
government representatives on the
board OF directors Of the regional re-
serve bank.
The regional reserve banks may do
business only with their member banks.
not with the public, except that certain
open market operations such as the
purchase and sale Of gold, government
OF municipal bonds and certain forms
OF bills OF exchange are permitted.
These banks will make their earnings
from the loans made to member banks
and from the purchase and sale OF
bonds and foreign bills Of exchange.
Member banks will be compelled to
put up in cash only one-half of their
subscription to the capital Of the new
banks; the remainder a be-. called
for IL needed by the regional bank.
Dividends OF 6 per cent will be paid on
this stock to the member banks and the
stock will be non-taxable. After these
| dividends are paid one-half OF the sur
| plus net earnings zoe to creat a re-
gional surplus fund, n when this has
reached 40 per cent OF the regional
banks paid in capital, these earnings
are to go into the United States treas
ury. The remainder of the net earn
ings are to be paid to the United States
as a franchise tax.
with the machinery thus created for
a new banking system that is supple
mentary to the commercial banks OF the
| country, the law provides for a gradual
transfer OF part, Of the bank reserves
to these new reservoir banks. In
order o to disturb business condi-
tions or to withdraw too suddenly the