The Washington herald., 1914-04-06
i -
capital DOLLARS
GO TO RICHMOND
Stock and Subscription of
$2,ll2,048 Will Be Sent
Virginia City.
BENEFIT WILL RESULT
Net Loss in Deposits Shown Not Suffi-
cient to Affect Banking Situa--
ton in Washington.
BENEFIT WILL RESULT
by W. sTEALEN.

ny W. s1EALEA.
Since the designation Of Federal re
serve cities and districts Washington
bankers are beginning to estimate hoy
much they will have 10 keep on deposi
with reserve banks in addition to tn
amount they will have to pay on accoun
Of capital subscribed and what amoun
OF funds now tied up in reserves will b.
released by the new law.
The act which the President had passet
provides that when the Secretary of tn,
Treasury shall have oficiaIly announced
IN such manner as he may elect, the es.
taoilshment Of a Federal reserve banI
In any District, every subscribing mem.
Der bankA shall establish and maintain
reserves as follows: Country banks, IL peI
cent of demand and per cent of time
deposits: Reserve city banks, Is per cenr
OF demand and per cent of time deposits
Central reserve city banks, IS per cent
OF demand and per cent Of time deposits
washington is a reserve city, therefore
the members OF the Federal reserve sys.
tenn here will maintain a reserve of Il
per cent against demand deposits and {
per cent against time deposits.
Amount to BE Maintained.
The law defines a demand deposit for
| reserve purposes as one due in thirty
| days or less and it defines a time deposit
as one due after thirty days and all saw
ings deposits and certificates OF deposit
which are subject to not less than thirty
days notice before payment. Beginning
| with the establishment of a Federal re-
serve bank each member bank in a re-
serve city must maintain in its own
vaults six-fifteenths of the required re-
serve for thirty-six months and perma-
nently thereafter fve-ffteenths. 1t must
maintain in the Federal reserve bank for
| a period OF twelve months at least three
fifteenths, and during each succeeding six
months an additional one-fifteenth until
six-fifteenths are deposited which is the
amount required TO be kept in the Fed
eral reserve bank permanently The re-
mainder OF the required reserve may be
held in the banks own vault or in a CEN
tral reserve city. After thirty-six months
from and after the organization Of a
Federal reserve bank each member bank
shall hold the remainder in its own vaults
or deposit II in the Federal reserve bank
The report OF the Controller Of the
Currency as of March 4 indicates that
the twelve national banks in Washing
ton which have Joined the system have
81, 900 Of individual deposits and S.
SSs,OOo of bank deposits. making So, ,3ss 600
show that there are due to them from
other banks. not reserve agents, A.l57,OJO,
which deducted from their total deposit
liability. leaves S29,2l1 900 subject to re-
serve requirements. At the present rate
Of . per cent, reserve funds amount
ing TO S,S0S0o0 are required by law.
Reserve Fund Reduction.
Assuming that all the 81, ,21l, 900 of de-
subject to Is per cent reserve under the
new law, the national banks in Wash
ington will be able 10 reduce their re-
serve fund, as soon as the Secretary of
the Treasury announced the actual estab
lishment OF the Federal Reserve Bank OF
Richmond from . per cent to Is per
cent, or from ;7,3OS.O0O to coo. thus
releasing nearly S3.OOo.OOO Of funds now
held in reserve.
The twelve national banks in Wash
ington will subscribe for S1lS010 OF the
capital stock of the Richmond bank and
will pay oneJhalf Of that amount in cash
during the first year. That amount added
to the reserve which they will be re-
quired to keep on deposit in the Rich
mond bank will make their contribution
as follows: During the first year, Sl.2S.-
649: increased at the end OF one year TO
81 so 7S2: increased at the end of eight
cen months TO Sl.Sl9, ,9l5: increased at the
end of two years 10 s2,ll2O4S. The latter
figure is the maximum amount they will
be required 10 contribute in capital and
deposits to the Richmond bank. This is
based on the amount OF capital and de-
posits reported on March 4. The Fed
eral Reserve Board. Of course. may call
for the per cent subscription to capital
stock
The amounts given above will be af-
feCted by the rise and fall in deposits OF
the twelve national banks from time TO
time and these amounts will be augment
cd by the contribution on account -of cap
ital and reserve from the Continental
Trust Company, the Munsey Trust Com |
pany. and the Franklin National. which |
became a member when it !
received its charter to begin business last |
Distinct Benefit Coming.
The funds released by the new act from /
present reserve requirements is 81, 900 |
the maximum amount that will
be required 10 be kept by the national
banks of Washington in the Richmond
bank. including capital paid in is only
g. ll2. .O4S. Therefore the released rel
ments on account of capital of the Rich
mond bank. deposit the required reserve
funds in the Federal reserve Richmond
bank and have remaining SS0S, ,aJ2-
Except for breaking long blished
relations between banks. the new reserve
appear TO be a distinct
benefit to the Washington banks. 1t is as
serted i'm some CHARTERS that the percent
age is too low. but it should be borne in
mind that many banks will continue TO
AIRY deposits with reserve agents even
lfter the three-yesr period during WhichI