The Rice belt journal. (Welsh, Calcasieu Parish, La.) 1900-19??, 1914-01-09
New Money Law DispIaceS 1872
Year-0Id Code.
IS FAR-REAcHING IN SCOPE
Most important Law Relating to RI
nance Passed in Many YeaTs-ES-
s.nttsl Features of the Meas
ure Explained in Nonteeh'
nicaI Language.

most far-reaching measures relating 10
finance that have been enacted III
many years. .,o
The magnitude Of the subject, tAe
diversity of interests affected and tne
length Of the debates in both branches
of congress has to follow the changes
and grasp the essentials Of this hlshiy
technical measure in its important
hearings on money, finance, banking
and the entire range of fiscal SUBJECTS
public and private, which 1t afrects'
Summary Of the Bill
With a view, therefore, OF present
ing succinctly and in non-technlcal
language an epitome OF the salient 1ea'
TIRES of the measure as finally framed
the following summary is given OF the
hill as a whole and of its principal de-
tails
Generally speaking, the first steps
to be taken to bring into operation the
nations new financial system Will be
through all OISaIllLdClOh
consisting of the secretary OF the
treasury, secretary of agriculture ana
controller of the currency.
Banks have 60 days within which to
file their applications for membership
in the new system, and one years
time IL allowed before the government
will compel the dissolution Of any ma
tional bank that refuses to join.
VIII take Up the Slack"
TIE new law will make little direct
chance in the operation of the pres
ent national banks, except to allow
theln to loan certain amount OF their
funds upon farm mortgages.
It's chief purpose is to add new
piece of machinery to the banking
system that will take up the slack
during the changing business condi-
tons of each year; that will gire 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 it is needed, and retire II
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 tc
the full limit of their resources, these
reserves furnish little relief, because
If they are paid out to meet demands
the banks are left in precarious con
ditlon.
IO 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, anC
to provide a place to which loca
banks may rush in q crisis and ge
cash for the prime commercial pa
per" they hold in their vaults.
This is to be accomplished through
chain of regional reserve banks, o
reservoirs of reserves" in which al
banks shall deposit stated part 0
the money they are required to hol,
as reserves.
Under the new system, when
financial furry comes the banks ca
take commercial paper, such as notes
drafts and bills Of exchange, to thes
, reservoirs and secure the use @
a their own reserves, or, If necessary
even the reserve Of other banks, b
t depositing this security.
4 The new regional banks will RI
e ceive about one-half of the bank RI
serves OF the country. They in tur
!. will he permitted 10 loan back to tn
4 banks all but 35 per cent. of thes
q reserves, so that In case Of emergenc
i millions Of cash can be brought OIL
into circulation quickly.
u The banks will have to pay for thes
:. loans. however, as individuals have
- pay for a loan from any local ban
: and this charge is expected to prevel
% the too free use of the reserves he
. by the regional banks.
~ New Paper Currency.
NJ A new form of paper currency
q also provided for, to come out In ca
"a of emergency, and which is expects
to go back into the hands of the go
20 eminent when times are norma
), These treasury notes" will be printt
=, by the government and issued throul
y each regional reserve bank, and W
"a bear the guarantee both of the !
~ gional bank and of the goyernmel
= If the demand for currency in al
al section OF the country exceeds t
- supply of circulating money region
=, bank can secure this new mon
, - from the government and put it in
"A circulation; but gold reserve of
~ per cent and commercial paper ECU
to the full value OF the note must
-. held as a reserve behind each nc
~ issued.
This provision is expected to be
influence that will drive the n,
i, money back into retirement when
Is no longer needed.