Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1914-01-02
Explains Leading Features
In Recent Admins.
tfatlOn Bill
Shows That Its Provisions
Are Safety Clutch 90
Banking
Bv e, D, Hubert,

BY e. D. Hubert.
Chicago, Jan. 1.-The leading rea-
lures of the new currency law are as
follows: y IL. .
The country will he divided into
eight districts. regardless of. state
lines, to be known as federal reserve
districts. Each district will have a
federal reserve bank located in its
principal city, with branches in the
other principal cities Of the district.
The capital of each reserve bank will
be equal to 6 per cent of the capital
and surplus of the national and elig.
ible state banks Of the didstrict. Ev-
cry national bank will be required
to subscribe to an amount of this
stock equal to 6 per cent of it's CAPT.
tai and surplus or cease to be a ma
tional bank at the end Of one year.
Every state bank desiring to enter
the system will be required to make
a like subscription.
If the required amount of stock is
not subscribed in this way, sufficient
stock will be sold to, the public to
provide each reserve bank with sutfi.
cient capital. II sufficient stock is
not subscribed by the public for this
purpose, the balance may be taken by
the government. All. stock will carry
with it a double liability.
The law provides. for a 6 per cent
cumulative dividend on this stock. the
balance of earnings to he applied to
surplus until a surplus of 40 per cent
has been accumulated. After that
all earnings in xcess of 6 per cent
shall go to the government.
Creates Federal Board.
Each reserve bank will have a
board Of nine directors, six to be
elected by the s%tockholding banks
and three appointed by the govern
ment. OF the six elected by the
banks, three may be bankers and The
other three must be- fairly representa-
tive of the industrial, agricultural
and commercial interests of the dis
trict. The management of each re.
serve bank will be vested in its board
of directors under the supervision OF
a federal reserve board to be located
at Washington.
This federal reserve board will con
sist of the secretary of the treasury
the comptroller of currency and five
men appointed by the presiden. with
the consent of the senate. Two OF
these five must be bankers. This viii
be a very powerful board, having
general supervision over all the bank
ing affairs of the country. Its pow
ers are strictly limited by the bill
but are ample. There will also be
a council of bankers, consisting Of
one banker from each federal reserve
district, whose powers will be advis.
DRY only. %e5
The reserve banks will receive de.
posits only from the government and
from stockholding banks. They may
loan without limit TO stockholding
banks on strictly commercial and ag'
ricultural paper, having not more
than 80 days to III The local boards
also fix the discount rate, subject 70
review by the board of control. Such
rate may be different in the different
districts and for different classes of
paper in the same district.
The federal reserve board is also
authorized to purchase from firms
and individuals direct and without
bank Endorsement certain kinds of pa
per not clearly defined in the bill.
The declared object Of this is to reg
ulate rates by going into competition
with the banks when necessary.
1t is also hoped to establish a traf-
fc in bankers bills and acceptances,
such IS is common in Europe but
comparatively unknown in this cOul-
try. The reserve banks may act as
general clearinghouse and collection
agencies for the handling of checks,
making a proper charge therefor. 1t
is thought that this will lead to a
great saving, both to the banks and
the public in exchange and collection
charges. 49,. RI
Banks May Sell Bonds.
The act provides that, beginning
with two years after the passage of
the act, national banks may file ap-
plication with the treasurer of the
United states to sell their 2 per cent
bonds at par and accrued interest,
and the federal reserve banks must
on the order of the treasurer of the
United States purchase such bonds
and deposit with the treasurer law
full money equal to the amount of
such purchase. The treasurer will
then retain a sufficient amount to
cover outstanding circulation against
the bonds and pay the balance, if
any, to the bank selling the bonds.
The amount of such sales is limit.
ed to $25,000,000 a year. The federal
reserve banks purchasing such bonds
may, if they desire, issue their own
circulation for an amount equal to
such bonds, which will be in all re.
spects similar to IL present national
bank notes, or they may have the op.
ton of either having these bonds re.
funded into 3 per cent bonds payable
in 1888, or one.year treasury notes
bearing 8 per cent interest, such
notes and bonds, however, not to be
available as security for circulation.
The act authorizes. the issue of fed.
eral reserve notes without limit in
denominations Of II to $500. These
notes will be direct obligations of the
United States, but will not be lega!
tender or available for bank reserves.
They will be redeemable in gold or