Oxford eagle., 1914-01-01

uc9T tns k1ar1ntee rotn % t0e -
gioaal bank and Of the sovernment-
n ths demand for currency In any
section Of the country excseds the
supply Of circulating money Q regional
bank can secure this new money
from the government and put Il into
circulation: but . gold reserve Of 70
per cent and commercial paper equal
to the fun value Of the note must -
held - . reserve behind eaeh note
Issued
This provision b expeeted to - the
Influence that viii drive the new
money back into retirsment vhsa Il
b no longer needed
Clearly Ezp,sinsA
TIE following analysis prsssnts the
dseails Of the new law without ID
herring closely 20 the technical division
% langua~s Of the measure:
AZ the head Of the system viii stand
. federal reserve board ~ washing-
ton. appointed By the president. and
to ccus1st Of the secretary Of the
treasury. the controller Of the eurrsn-
cy and ave other members Two OF
these shall Be expert hankers. but
none shall have banking Affiliations or
own bank stock during their service.
This board viii exercise general con
troll over the entire system.
The temporary -orRnnfxasfcu com
mittee.- or the federal reserve board.
viii select from eight to twelve cities
where regional reserve banks shah be
located and will divide ths entire
country Geographically with these
cities - the centers Of districtsL An
national banks in q district viii be
required to subscribe for the stock Of
the regional reserve bank In that dis
triet and to keep . portion Of their
reserve there.
Known - -Asmbsr Dsaka~
Local banks will be Known - mem
Der oanks- because they vii own the
stock Of the regional reserve bank
Of their district Each member bank
Win se required to take capital stock
OF the regional reserve bank. equal TO
per cent Of the member hank's capt
tai and surplusL The capital Of the re-
gionai bank win Increase or decrease
20 that Il always represents 9 per
cent Of the combined capital and sur
plus Of all the banks Of the district
that have Joined the system.
National banks are compelled to
Join and state hanks are permitted to
IL they bring their reserve require
ments up to the standard set for M
tioual banks and submit to national
examination.
Public Can Buy Stock
Pubic ownership Of the stock Of the
regional reserve banks b permitted
only In case enough hanks do not Join
In any district 70 provide . capital
stock for a. .0oo. 900. In such event the
public may purchase the stock N
quantities limited to S7s.0oo for zach
individual. but the voting Of this stock
WI - plaesd In ths hnnas cf gcvsrnr
atFeceon e ths regfsnal reserve hank.
ne rsgksan1 rssnrvs hank ~ -
has1nsss only Win thsir msDhsr
banks. Bos with the pablie exeep< hat
certain open market operations. such
- the purchass and sale Of gold. gov
ernment. or municipal bonds. and Ger.
tain forms Of bills Of exchange. ars
permitted These banks viii make
their earnings from the loans made to
member banks. and from the purchase
and sale OF bonds and foreign bills Of
exchange
Must Pay Up Cash.
Member banks will Be compelled to
put up In cash only one-half Of their
subscription to the capital Of the new
banks. the rest can be called for II
needed by the regional bank D4vi-
dends Of per cent. Will be paid on
this stock to the member banks. and
the stock win be non-taxablsL
After these dividends are paid one
half Of the surplus net earnings goes
to create q regional surplus fund. and
when this has reached 20 per cent Of
the original banks paid In capital
these earnings are to 20 into the
United States treasury. The balances
Of the net earnings are to be paid 70
the United States ~ . franchise tax
With the machinery thus created
for . new banking system that In SUP
Elementary to the commercial banks
Of the country. the law provides npr .
gradual transfer Of part Of the bank
reserves % these new reservoir
bann-
In order not to disturb business con-
dftions. or 10 withdraw too suddealy
the heavy deposits Of country banks In
the large cities. the Law provides that
three years may be consumed In shin
ing these balances and that. n neces-
sary. part OF the reserves transferred
to the regional banks may consist Of
commercial paper
Reserve Required
The amount Of reserve required
from every bank under the new Law.
and the place where II must be kept.
are - follows.
Country banks.-Totzl reserve reQufr.
ed. II per cent Of demand depos1fs
and per cent Of time depostts- Five
tweifths must be held in the hank's
own vaults for two years and four
twelfths after .ha.- For the arst year
two-tvelfshs must be kept In the rs
gfonaI hank. Increasing one-twelfth
each SIX months thereafter until II
reaches nvetvelfths Of the total re-
serve. For three years the unailotted
part Of the reserve may be Kept In
TIE banks Of reserve cfties- After
that ttme II must bs kept either IN
-.~->~~~~~~-~~-~~--
THE Ass - Lszsry.
ons thousand dollars ssems . good
daai 70 pay hsr . 1oll. yst this sum has
bean paid ~ = city masnsts for deii
Ia nRonnnt n hfn Ytsela Sau~hes1 Tha