The Birmingham age-herald., 1914-01-02
CAREFUL STUDY IS
: BEING MADE OF THE
NEW CURRENCY
Will Become Effective With
Far Less Friction Than at
FirstAnticipated
ANALYSIS is MADE
OF IT'S PROVISIONS
., How Capital Stock of Federal Re.
serve Banks Is to Be Subscribed.
Clearing House and the
New Law
BY HOLLAND

New York, January 1.-(Special.)
Charles Elliott Warren, who was presi-
dent of the New York State Bankers as
1 scciation, and who has been prominently
identified with the American Bankers as
sociation, has occupied every moment
available for investigation and study
since the passage of the new banking
anc currency law in analysis of it's pro-
visions and in the preparation of a very
brief and concise digest so brief that it
can easily be folded and carried in the
coat pocket.
Y Mr.. Elliott is president Of the Lincoln
l;ational bank of this city and is one of
'Efhe New York bankers who gave early
approval to this measure. The brief di-
gest which he has prepared is as COM
plete as a card index, and is even more
convenient For instance, he describes the
names by which banks that are included
In the system will hereafter be known.
There is to be no change in the name of
Ia national bank or of the National Bank
Nng association. But state banks, banking
associations and trust companies which
participate in the new system will here
after be called by the single term bank"
= national bank, a state bank and
trust company which are spoken of in
connection with their participation in the
new system will be termed member
bank" The federal reserve district is to
be termed the board district in each
! case. A federal reserve bank is to be
termed simply reserve bank" and the
federal reserve agent will be known as
the chairman of the board of directors OF
the federal reserve bank.
Every bank which desires to become
member of the system must make appli-
cation before February s1, 1914.
The Capital Stock Subscriptions
The subscriptions to the capital stock of
federal reserve bank must be made
upon a basis which may be illustrated by
the following example: Suppose a bank
} has capital of sl0o0,0C0 and surplus
OF s1,000.0O0, making a total of 1000, 000
The subscription requirements in that
case would be, first sum equal to 6 per
cen. of the s2,oOO. .OO0-namely, $4,000. OF
this amount, $4,000 or one-sixth, is pay
.apie upon call $4,000 within three months
sof after. 2oooQ within SIX months or after
and the balance of 100000 on call as re-
quired.
The Required Reserve
IF there be an average Of demand de-
pcsts of $l4.000.00O to use that sum for an
example, there must be kept in the vaults
$4,000. There will be required for the
central reserve bank $3.50 600, leaving a
balance of 100000 in the vaults or in
federal reserve banks, since the total re-
serve required would he s2,520,0O0 The
reserve requirements are is per cent upon
demand deposits and per cent upon time
deposits.
BY the term demand deposits is meant
ALI deposits payable within 80 days. and
by the term time deposit is meant all
deposits after 30 days. The national
currency associations act is extended by
the new law to June 80, 1916
These are the features OF the new bank
Ing and currency law which will require
Immediate attention by those who con-
template joining the system.
In all probability majority of the ma
tional banks which will come into the
system will make announcement of that
purpose Immediately after the annual
meeting takes place on the second Tues
day in January. This undoubtedly eX-
plains why many of the larger banks
of the United States have not as yet in
dicated their purpose to join the associa-
ton. The directors are awaiting formal
action by the stockholders
The country, however. is not to expert
sncc the prolonged delay which followed
the enactment of the original national
barking law. For at least a year doubt
prevailed whether or not state banks
would surrender their charters and take
out charters under the new national
banking law. In fact, it was not until
new banking capital had been found
with which to organize national banks
that gradually the state banks surren-
dered their charters aad took out ma
tional banking charters.
Not until legislation which was earnest
ly recommended by the Secretary of the
Treasury, Salmon p Chase, whereby
state bank circulating. notes were taxed
out of existence, was secured, did ma
tority of the state banks surrender their
charters and make application for federal
charters under which they could be or
ganized.
As application must be made before
February 21, 1914. by all banks which de-
sire to participate in the new system, the
country will know early in the spring now
many banks will at The very beginning
become members. A year later it may be
found that some of those which made
application by February p have deemed
It expedient to withdraw and reorganize