The Idaho recorder. [volume] (Salmon City, Idaho) 1886-1927, 1914-01-08


vlded For.
Washington, Dec 23.-The new bill
.&ffecting the currency, banking and
finances of the country is one OF the
unost far-reaching measures relating
ID finance that have been enacted in
xnany years.
81 The magnitude of the subject, the
diversity OF interests affected and the
1ongth OF the debates in both branches
a congress has to follow the changes
nd grasp the essentials of this highly
technical measure in it's important
BEARINGS on money, finance, banking
nd the entire range of fiscal subjects
Dhblic and private. which 1t affects.
Summary Of the Bill.
With view, therefore, OF present
xng succinctly and in non-technical
language an epitome of the salient fea-
xhres of the measure as finally framed,
be following summary Is given Of the
Dill as whole and of its principal
Details:
Generally speaking, the first steps
q be taken to bring into operation the
nations new financial system will be
through an organization committee
consisting of the secretary OF the
treasury, secretary of agriculture and
Controller of the currency.
Banks have go days within which TO
Ole their applications for membership
In the new system, and one years
time is allowed before the government
Eill compel the dissolution of any ma
elonal bank that refuses to join.
Will Take Up the Slack"
The new law will make little direct
change in the operation of the pres
ent national banks, except to allow
chem to loan certain amount OF their
3unds upon farm mortgages.
Its chief purpose is to add a new
piece Of machinery to the banking
system that will take up the slack"
During the changing business condi-
lions OF each year; that will give the
banks place to quickly convert their
assets into cash in time of need, and
Fhat will bring out new federal cur
rency when 1t is needed, and retire 1t
when money becomes cheap"
Banks are now required to keep a
certain percentage of their deposits as
reserves" part in cash in their own
vaults and part of which may be re-
deposited in the banks Of New York,
FChicago, st. Louis and other designat-
ed cities.
In times OF sudden financial de-
mands, when banks have loaned up to
tne full limit of their resources, these
Preserves furnish little relief, because
II they are paid out to meet demands
dition.
Basic Principle of Law.
The basic principle Of the new law
as to get these reserve funds out into
circulation when necessary without
iessening the safety of any bank, and
TO provide a place to which local
banks may rush in crisis and get
cash for the prime commercial pa
per" they hold in their vaults
This is to be accomplished through
chain of regional reserve banks. or
reservoirs of reserves" in which all
banks shall deposit a stated part of
the money they are required to hold
as reserves.
81 Under the new system. when n
financial furry comes the banks can
take commercial paper. such as notes,
drafts and bills of exchange to these
reservoirs" and secure the use OF
their own reserves. or. II necessary,
even the reserve OF other banks, by
depositing this security
q The new regional banks will re-
ceive about one-half of the bank re-
serves OF the country. They In turn
will be permitted to loan back to the
banks all but 30 per cent OF these
reserves, so that in case of emergency
millions OF cash can be brought out
into circulation quickly.
The banks will have to pay for these
soans, however, as individuals have to
pay for loan from any local bank.
and this charge is expected to prevent
he too free use OF the reserves held
by the regional banks.
New Paper Currency.
A new form OF paper currency Is
also provided for, to come out in case
OF emergency, and which is expected
70 go back into the hands OF the gov
eminent when times are normal.
These treasury notes" will be printed
oy the government and issued through
each regional reserve bank, and will
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