Weekly journal-miner. [volume] (Prescott, Ariz.) 1908-1929, 1914-01-07

I Will Drive inc uCW ilo4iNN JAIN 4AA'
retirement when it is no longer
needed.
The following analysis presents
the details Of the new law without
adhering closely to the technical di-
vision or language of the measure
At the head OF the system will
stand federal reserve board at
Washington appointed By the presl-
dent and to consist OF the secretary
OF the treasury and six other mem
bers. Two of these shall be eX-
pert bankers, but none shall have
banking affiliations or own bank
stock during their service. This
board will exercise general control
over the entire system.
The temporary organization COM
mittee" or the federal reserve board
will select from eight to twelve
cities where regional reserve banks
shsall be located and will divide the
entire country geographically with
these cities as the centers of dis
tricts. All national banks in a dis
trict will be required to subscribe
for the stock OF the regional reserve
bank in that district and to keep a
portion OF their reserves.
Local banks will be known rs
member banks" because they will
own the stock of the regional re-
serve bank of their district. Each
member bank will be required 20
take capital stock of the regional
reserve bank, equal to 6 per cent of
the member banks capital and sur
plus. The capital OF the regional
bank viii increase or decrease so
that It always represents 6 per cent
OF the combined capital and surplus
OF all the banks of the district that
have joined the system.
National banks are compelled 70
join and State banks are permitted
to # they bring their reserve re-
quirements up to the standard set
for national banks and submit to
national examinations.
Public ownership of the stock Of
the regional reserve banks is per-
mitted only in case enough banks
DO not join in any district TO pro
vide capital stock OF S3,00U,0O0.
In such event the public may pur-
chase the stock in quantities limited
to $4,000 for each individual. but
the voting of this stock will be
placed in the hands of government
representatives on the board OF di-
rectors OF the regional reserve bank.
The regional reserve banks may
do business only with their member
banks, not with the public, except
that certain open market opera
tons, such as the purchase AMI
sale OF gold, government or munich
pal bonds and certain forms of bills
Of exchange are permitted These
banks will make their earnings from
the loans made to member banks
and from the purchase and sale %
bonds and foreign and domestic
bills OF lading.
Member banks will be compelled
to put TIP in cash only one-half IF
their subscription to the capital of
The new banks; the remainder can
be called for if needed by the re-
gional bank. Dividends OF o per
cent will be paid on this stock 20
the member banks and the stock
will be non-taxablc. After these
dividends have been paid, one-half
OF the surplus of the earnings goes
to create regional surplus fund
and when this has reached 40 per
cent OF the regional banks paid N
capital, these earnings are to 90 into
the United States treasury. The re-
OF the net earnings are 20
be divided between the payment OF
. United States franchise tax and .
the creation OF d fund to guarau-
tee the payment OF depositors in
member banks that may fail.
With the machinery thus created /
for new banking system that Is
supplementary to the commercial
banks OF the country, the law pro-
vldes for a gradual transfer OF par,
OF the bank reserves to these res
ervolr banks. In order not 10 dis
turb business conditions or TO with
draw too suddenly the heavy ds-
posts Of country banks in the large
cities the law provides that two
years may be consumed in shifting
these balances and that if necessary.
part OF the reserves transferred 70 H
Inc regional banks may consist Of
paper.
The amount OF reserve required
rom every bank under the new ;
aw and the places where it must
DC kept arc as follows: /,