Lincoln County times. (Jerome, Idaho) 1911-1919, 1914-01-01

by the president, with final powers
of control and supervision over the
entire system.
days; provided, that notes, drafts and
bills drawn or issued for agricultural
purposes or based on live stock and
having a maturity 10 exceeding six
months nay be discounted in an
amount to be limited to a percentage
of the capital of the federal (regionaD
reserve bank, to be ascertained and
fixed by the federal reserve board"
The elastic" Element.
The new treasury notes, which are
to furnish the elastic" element in the
currency system, and to add to the
country's circulating money in time of
need, wi. come into use in the follow
ing way:
The notes will be printed by the gov
eminent, with a distinctive style for
each regional reserve bank. One of
the three directors named by the fed
eral reserve board for each regional
bank will &c known as the federal re-
serve agent" for that bank, and a sup
ply of the notes will be placed in his
custody.
Should a regional bank desire to
pay out more money than its cash re-
sources will permit, the law provides
that it may put some of its rediscount-
ed commercial paper into the hands
of the federal reserve agent and re-
ceived in return the new treasury
notes.
For each note that it puts out into
circulation, the regional reserve bank
must set aside in gold 40 per cent. of
the value of the note as a guarantee
for its redemption. This gold, with
the commercial paper held by the
federal reserve agent" is the pro-
lection behind the new money; but
these notes will also be guaranteed by
the government and may be redeem
ed in gold ia thS United States treas
ury.
Reserve Required.
Each regional bank, under the act,
must keep a reserve of 80 per cent of
the deposits it has received, besides
the 40 per cent. gold reserve behind
the treasury notes it issues. If the
gold reserve behind the notes falls be.
low 40 per cent. a heavy tax is i'm.
posed on the bank, which in turn adds
the tax to the rate it charges member
banks for rediscounts. This was de
signed to stop an ove--expars!on OF
currency. In times of sudden stress
the federal reserve board can suspend
these reserve provisions, in order 70
furnish quick relief to any commu
nifty.
One regional bank cannot again pay
out the notes of another, except under
a heavy tax. These notes are expect
ed to return to the regional banks and
be withdrawn from circulation wher
the need of their use passes.
Take Up Bonds.
None of the existing forms of cur
rency except the national bank note!
will be disturbed by the new law. Tht
United States bonds, now used to Sc
cure the issue of national bank notes
are to be taken up at the rate of s25,
000, 600 a yea by the regional re
serve banks and new treasury note.
or short term three per cent bond
will take their place. National ban
currency is expected gradually to re
tire.
The federal reserve board will exei
else final cc1trol over the entire OF
ell alton Of She system. 1t can compe
ole regional bank to loan to anothe
IL time of need; can suspend all r,
stictions surrounding the reserve
wsich regional banks must hold, an
cap remove directors of regional r.
se.ve banks whenever it is believe
necessary.
banks In Control.
While the banks retain control {
the boards Of the regional reserv
banks, their connection with the fe,
eral reserve board is only throug
an advisory council. made up of on
representative from each federal r.
sexve district. This council will met
in Washington to confer with the fe'
eIal reserve board ION general bus
mass conditions" and to make rec
mendations and suggestions concerl
ing discount rates, note issues, and r
serve conditions.
An important change in nationi
banking methods embraced in he ne
low will permit all national banks e
cspt those In New YorK. Chicago ar
81. Louis to make direct loans on fly
year farm mortgages up to 20 per cen
of their capital and surplus, or up
one-third of their time deposits.
Another provision in the law pc
mits national banks having a capt.
of $1,000. 900 or more to open foreis
branches. Similar authority is give
to the regional reserve banks, the pu
Pose being to facilitate he develo
ment of American trade abroad