The Idaho recorder. [volume] (Salmon City, Idaho) 1886-1927, 1914-01-01
THE CURRENCY AND BANKING LAW.

In view Of the general feeling of confidence
pervading the banking and business interests in
the country over the final passage, and signing by
the President OF the new Currency, Banking and
Finance measure it may be opportune to review
and set out the salient features Of the new law, in
easily understood language.
The carrying out Of the preliminary require
ments necessary to put the law in operation is left
to committee consisting of the Secretary of the
Treasury, the Secretary Of Agriculture and the
Comptroller of the Currency
Within sixty days, national banks are expect
ed to apply for membership under the new system
but will not be dissolved as such, should they moi
jon until year has elapsed.
Banks will be permitted to loan a certain
amount Of their funds on farm mortgages; anc
through the regional reserve bank will be enabled
to quickly realize their collateral and resources
in time of stringency or panic. Through this re-
serve bank also federal currency will be ISSUED
when money is needed or Figh priced, such cur
rencY being retired automatically as money becomes
plentiful and cheap
Instead of calling upon and using the reserves
the law requires every bank to keep on deposit, ir
its own vaults or in banks in certain designated
cities, in times of astrngency it is provided thai
prime commercial paper may be used as colatera
for funds obtained through the regional reserve
bank
Such regional reserve banks will be formed
in from to / 2 principal cities throughout the
country Each member bank will be expected tC
take capital stock of the regional reserve bank to
the extent of six per cent Of the member banks
capital and surplus One-hah of the subscribed
amount will be put up at once, the remaining one
half being called for when needed. These banks
will lso receive about one-half Of the reserves of
the member banks and may loan back to the
member banks each to the extent of IS per cent
of such reserve. Member banks will be ex..
pected to pay interest on such emergency oans so
it is expected the privilege will only be used in
times of emergency.
To still further guard against panics and avoid
the use Of reserve funds to meet sudden emerg-
encies, new paper currency is provided for.
These treasury notes will be issued by the govern
ment through the regional reserve banks, being
guaranteed by both the government and the bank,
To further secure the scundness of this new cur
rency, every note as issued is secured by a gold
reserve equal to 40 per cent Of its full value and
commercial paper to its full value This forty per
cent additional reserve is expected to compel the
retirement of these special notes whenever the
stringency necessitating their issue has passed.
State banks may also join as member banks
IN their respective regions, providing they bring
their reserve requirements up to the standard set
by national banks, also submit to examination by
federal examiners.
In event enough banks do not join in any dis
tTCt To subscribe for capital stock IN the reserve
bank of $4,000, 900, then the public may purchase
such stock in quantities limited to $4,000 to any
one Individual but such publicly owned stock will
be voted by government representatives appointed
on the board of directors of the regional reserve
bank
The total amount of reserves required from
country banks is ten per cent of their demand de-
posts and per cent Of time deposits. Five
twelfths must be kept in the banks vaults for two
years and four-twelfths after that time. For the
first year two-twefths must be kept in the region
al reserve bank, increasing one-twefth each six
months thereafter until it reaches five-twelfhs Of
the total reserve. For three years the unaotted
part of the reserves may be kept in the banks of
the reserve cities THE same banks with which
country banks are now permitted to carry their re-
serves after that time i must be kept in the cour
try banks vaults or in the regional reserve bank.
Each regional reserve bank will be governed
by q board of nine directors, six of whom will be
'iected oy the member banks the other three ap-
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