The Liberal democrat. [volume] (Liberal, Kan.) 1911-1924, 1914-01-02
Most Far-Reaching Measure Re-
lating to Finance Enacted
In Many Years.
SALIENT POINTS REVIEWED
Essentials Of New Law Summarized
In NontechenicaI Language 4
Makes Little Change In oper-
alton Of Present National
Banks--Reolonal Re-
serve Banks Pro-
vlded For.

- Washington, Dec. 23.-The new bill
affecting fthe currency, banking and
finances Of the country Is one OF the
most far-reaching measures relating
to finance that have been enacted In
many years.
The magnitude of the subject, the
diversity of interests affected and the
length of the debates In both branches
OF congress has to follow the changes
and grasp the essentials Of this highly
technical measure in its Important
bearings on money finance, banking
and the entire range OF fiscal subjects,
public and private. which it affects.
Summary Of the Bill.
With view, therefore, of present
ing succinctly and in non-technical
language an epitome OF the salient fea-
lures OF the measure as finally framed,
the following summary is given OF the
bill as a whole and Of its principal
details:
Generally speaking, the first steps
to 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
file their applications for membership
in the new system, and one years
time is allowed before the government
will compel the dissolution of any ma
tional bank that refuses to join.
VIII "Take Up the Slack"
The new law will make little direct
change in the operation of the pres
ent national banks, except to allow
them to loan certain amount OF their
funds 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 a place to quickly convert their
assets into cash In time of need, and
that 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,
Chicago, st. Louis and other designat-
ed cities.
In times of sudden financial de-
mands, when banks have loaned up to
the full limit OF their resources, these
reserves furnish little relief, because
II they are paid out to meet demanGs
the banks are left in precarious con-
ditlon
Basic Principle Of Law.
The basic principle of the new law
is to get these reserve funds out into
circulation when necessary without
lessening the safety of any bank, and
TO provide place to which local
banks may rush in a crisis and gel
cash for the prime commercial pa
per" they hold in their vaults.
This is to be accomplished through
a chain OF regional reserve banks, OF
reservoirs of reserves" in which al
banks shall deposit stated part o.
the money they are required to hole
as reserves.
Under the new system. when {
financial furry comes the banks car
take commercial paper, such as notes
drafts and bills of exchange, to these
reservoirs" and secure the use o
their own reserves, or, II necessary
even the reserve Of other banks, b!
depositing this security.
The new regional banks will re
ceive about one-half Of the bank re
serves Of the country. They in turf
will be permitted to loan back to thu
banks all but 35 per cent. Of thes'
reserves, so that in case Of emergenc.
millions Of cash can be brought on
into circulation quickly.
The banks will have to pay for thes
loans, however, as individuals have t
pay for a loan from any local bank
and this charge is expected to proven
the too free use of the reserves hell
by the regional banks.
New Paper Currency.
A new form of paper currency
also provided for, to come out in cas-
of emergency, and which is expecte
to go back into the hands Of the GOV
eminent when times are norma
These treasury notes" will be printe
by the government and issued throug
each regional reserve bank, and wi