Weekly journal-miner. [volume] (Prescott, Ariz.) 1908-1929, 1914-01-07
SALIENT POINTS
OF CURRENCY
MEASURE


The new bill affecting the cu7-
rency. banking and finances OF the
country, which has now been passed
bv both branches OF congress and
signed by President Wilson, is one
OF the most far-reaching measures
relating to finance that has been en-
acted in many years. The magnl-
tude OF the subject, the diversity OF
interests affected and the length OF
the debates in both branches OF
congress has made it difficult foI
the ordinary observer to follow the
changes and grasp the essentials
of this highly technical measure n
its important bearings on money
finance, banking and the entire range
OF fiscal subjects. public and pri-
waite. which it affects. With a view
therefore, of presenting succinctly
and in not technical language, an
epitome OF the salient features of
the measures as finally framed, the
following summary is given OF the
bill as whole and OF its principal
details:
Generally speaking. the first steps
to be taken to bring into opera
ton the nations new financial sys-
TEN will be through an organization
committee of three members. Banks
have sixty days within which 70
file their applications for member
ship IN the new system; and one
years time is allowed before the
government will compel the dissolu-
ton OF any national bank that re-
fuses to join.
The new law will make little di-
rect change in the operation of the
present national banks. except to al
low them to loan q certain amount
OF their funds upon farm mort
cages. Its chief purpose is to add
4 new piece OF machinery to the
banking system that viii take up
the slack during the changing
business conditions OF each year;
that will give the banks a place
to quickly convert their assets into
tcash in time OF need, and that will
bring out new federal currency when
it is needed and retire it when mon
ey becomes cheap"
Banks are now required 10 keep
a certain percentage of their de
posts as reserves" part in cash
in their own vaults and part Of
which may be redcposited in the
banks of New York. Chicago. St.
Louis and other designated cities. !
In times OF sudden financial de-
mands when banks have loaned I'D
the full limit OF their resources.
these reserves furnish little relief. !
because il they iare paid out 10
meet the demands. the banks are
lett in a precarious condition.
The basic principle OF the new
law is to get these reserve funds 4
out into circulation when necessary
without lessening the safety OF anv
bank; and to provide a place TO
which local banks may rush in /
crisis and get cash for the -"primc
commercial paper" they hold in their
vaults.
This is to be accomplished through
a chain Of regional reserve banks /
or reservoirs OF reserves" in
which al banks shall deposit a /
stated part OF the money they are
required to hold as reserves. Under
the new system when 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 if necessary
even the reserve OF other banks, by
depositing this security.
The new regional banks will re-
celve 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 IS per cent oil
these reserves. 50 that in case Of
emergency millions OF cash can be
brought out into circulation quickly.
The banks viii have to pay for
these loans, however, as individuals
have to pay for loan from any
local bank; and this charge is ex- 4
pected to prevent the too-frec use
OF the reserves held by the regional
banks.
A new form Of paper currency IS
also provided for to come out in ,
case OF emergency and which is OK
pected to go back into the hands of
the government when times arc nor
NAL These treasury notes" will be
printed by the government and IS
sued through each regional reserve
bank and will bear the guarantee
both OF the regional bank and the