Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1914-01-06
THE REGIONAL SYSTEM
Nom Teehnical Explanation of Office
of New Central Banks.

Lucid beyond the generality Of such
articles is the digest Of the Glass
Owen currency act appearing in the
current issue of America" (New
York;, and the article is reproduced
here for that reason:
THE currency bill, which is now
law, has for a longer title An act
for the establishment Of Federal re-
serve banks, to furnish an elastic cur
rency, to afford means of rediscount-
ing commercial paper, to establish a
more effective supervision Of bankinl
in the United States and for other
purposes It's official short title is the
Federal Reserve Act and indeed one
reading it finds that it has to do with
the establishing Of such reserve banks
their management and powers. This
being so, the question arises: Why
then is it called, both on the title page
of the copy printed by the govern
ment and by the commercial world al
large, a currency bill? The answer
is that the solving Of the problem OF
an elastic currency, that is, one which
adaptS itself to the country's needs
expanding when there is demand for
money, contracting as the demand
slackens, is the chief object it has in
view; the reserve banks are means
used to attain the end.
What is q Federal reserve bank in
the sense Of the act? Here there may
be some confusion. One knows what
Federal courts are as opposed to site
courts, and the idea may come up that
the Federal banks are to be depart
ments Of the Federal government. The
idea is not altogether wrong. A state
bank is one established under the laws
Of a state and existing under its su
pervision; the Federal banks will be
established under this act Of congress
and will be under the supervision o1
the national government. Moreover
they will be more closely connected
with the national government than
the national banks heretofore exist
ing They will be controlled by board
appointed by the president of the Unit
ed States, with the advice and consent
of the senate. Of this board the Sec
retary of the treasury and the comp
troller of the currency will be eX-ofti-
clio members. In their operations they
will be more closely connected with
the treasury Of the United States thar
the national banks. They will be eX-
empt from the jurisdiction of state
governments.
Nevertheless there seems to be
another and a more intimate reason
for the name. The country is to be di-
vided into districts. In each Of these
one of the new banks is to be estab-
lished. Its proprietors are to be, first
the national banks of the district
which are obliged to subscribe to its
capital a sum proportional to theil
capital stock and surplus, and, Sec
ond, approved state banks, which are
allowed to subscribe under similar
conditions. Should these not suffice tc
give the necessary capital, private in
dividuals will be permitted to sub
scribe for a limited amount Of stock
under certain restrictions, and, should
the required capital be still lacking
the United States treasury becomes g
subscriber. The bank is not to engage
in general business. Its functions are
first, to receive on deposit the reserves
Of the proprietary banks, which are
obliged to place with it a certain pro-
portion of their reserve and may de-
post the whole Of it. Hence the pro-
prietary banks are federated within
their district, which is called a FEEDER
al district, is properly called Fed
eral bank.
Secondly, the Federal bank, may
also receive in current account the cur
rent account funds Of any member