Barton County democrat., 1914-01-02
AsW Money Law DispIaces 122-
Year-0Id Code.
Is FGR-REAcHINe IN SCOPE
Nest Important Law Relating to r.
'Naaes Passed In Many Years-Es-
Genital Features Of the Meas
i ure Explained In Nonteeh-
/ nIeaI Language.

AAOSAAB IuO SullSASyJ OohhAAo SAN
finances Of the country is one Of the
most far-reaching measures relating to
finance that have been enacted in
many years.
The magnitude of the subject, the
diversity of interests affected and the
length Of the debates in both branches
St congress has to follow the changes
and grasp the essentials of this highly
technical measure in its important
bearings on money, finance, banking
and the entire range of fiscal subjects,
public and private, which it affects.
Summary Of the Bill.
With a view, therefore, of present
ing succinctly and in non-technical
language an epitome of the salient fea-
lures of the measure as finally framed,
the following summary is given of the
bill as whole and Of Its principal de-
tails:
Generally speaking, the first steps
70 be taken to bring into operation the
nations new financial system will be
through an organization committee
consisting of the secretary of the
treasury, secretary Of agriculture and
controller of the currency.
Banks have 80 days within which to
He their applications for membership
Z the new system, and one years
time Ii allowed before the government
Wtl compel the dissolution Of any ma
NaAal bank that refuses to join.
Will "Take Up the Slack"
Tie new law will make little direct
1Aange In the operation Of the pres
ut national banks, except to allow
Aom 10 loan certain amount Of their
9moS upon farm mortgages.
1ts chief purpose il to add new
Dieco Of machinery to the banking
System that will take up the slack"
= curing the changing business condi-
uonS Of each year; that will give the
banks place to quickly convert their
assets into cash In time Of need, and
that will bring out new federal cur.
Eency when 1t is needed, and retire II
when money becomes cheap"
Banks are now required to keep 9
certain percentage Of their deposits as
reserves" part In cash in their OWL
vaults and part of which may be re
deposited in the banks Of New York
Chicago, St Louis and other designat
Cd cities.
In times Of sudden financial de
mands, when banks have loaned lp tc
the full limit Of their resources, thest
reserves furnish little relief, because
Il they are paid out to meet demands
he banks are left in a precarious con
oition.
Basic Principle of Law.
The basic principle of the new Law
d TO get these reserve funds out int
eirculation when necessary without
lessening the safety of any bank, ant
to provide place to which loca
banks may rush in a 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 a stated part o
The money they are required to hol
% reserves.
Under the new system, when
anancial furry comes the banks ca,
take commercial paper, such as noteI
drafts and bills Of exchange, to thes
RESERVOIRS" and secure the use Q
0oir own reserves, or, II necessar!
even the reserve Of other banks, b
espositing this security.
The new regional banks will r,
eetve about one-half Of the bank r,
oeFves Of the country. They in tur
WI b permitted to loan back to th
banks all but IS per cent. Of thes
reserves, 20 that in case Of emerEenc
millions Of cash can be brought OF
into circulation quickly.
The banks will have to pay for thes
. loans. however, as individuals have [
pay for loan from any local banl
and this charge is expected to prever
the too free use Of the reserves hel
by the regional banks.
New Paper Currency.
A new form Of paper currency
also provided for, to come out in caI
OF emergency, and which Is expecte
to 20 back into the hands Of the 70
Ornment when times are norma
These treasury notes" will be printe
By the government and issued throus
each regional reserve bank, and wi
bear the guarantee both Of the r
EioaAl bank and Of the government
II the demand for currency in ar
section of the country exceeds Il
supply Of circulating money q region
bank can secure this new none
nom the government and put It In
. circulation; but gold reserve Of
pr cent and commercial paper ECU
70 the full value Of the note must |
asld a. reserve behind each no
Issued.
This provision Is expected to be u
lnnusnce that win drive the ne
money. back into retirement uhAn.