Western Carolina Democrat and French Broad hustler. [volume] (Hendersonville, N.C.) 1913-1915, 1914-01-08
CONDENSED REVIEW OF
NEW CURRENCY LAW.

~
! meal language of the statute itself:
At the head of the system will be
| placed a federal reserve board at
| Washington, appointed by the presi-
dent, which will consist of the secre-
tary of the treasury, the comptroller
of the currency, and five other mem
bers. Two Of these, the law requires,
shall be expert bankers, but none
shall have banking affiliations or own
any bank stock during their service.
This board will have general control
over the entire system.
The temporary organization con-
mittee, or the federal reserve board,
will select from eight to twelve cities
in which regional reserve banks shall
be established, and will divide the
whole 9ountry geographically with
these cities as the centers of districts.
All national banks in a district are,
by the law, required to subscribe Tor
stock in the regional reserve bank IN
that district. and to keep a portion OF
their reserve funds there.
Local, banks are to be known as
member banks" because they will
own the stock of the regional reserve
bank of their district. Each member
Lank is required by the law to take
capital stock of the REGIONAL reserve
bank, equal to s per cent. of the mem
Der banks capital and surplus. The
capital of the regional bank viii in
crease or decrease so that it will al
ways represent 6 per cent. of the COM
bined capital and surplus OF all the
banks of. the district that join the
system.
National banks are compelled to
join, and state banks are permitted to
do so If they bring their reserve re-
quirements up to what is required of
national banks, and submit to exam
nations by government officials.
The public cannot own stock in the
regional banks, except in cases where
a sufficient number of local banks do
not join in any district to provide a
capital stock of $4,000, 900. In such
event the public generally may pur-
chase the stock In quantities limited
to $25 900 to each individual. The
voting of this stock, however, will be
placed with representatives of the
government who hold positions on the
board of directors of the regional
banks.
The law provides that regional re-
serve banks may do business only
with their member banks, and not
with the public, except that certain
open market operations" such as
the buying and selling of good govern
ment or municipal bonds, and certain
other form. of bills of exchange named
in the act, are permitted. The regio-
nal banks will make their earnings
from loans to the member banks, and
from the purchase and sale of bonds,
and foreign bills Of exchange.
Member banks are required to pat
in cash only one-half of the amount
OF their subscriptions to the capital
OF the regional banks; the rest to- be
called for, if V e needed by the re-
serve bank. Dividends of six per
cent. are to be paid on the amount of
stock subscribed for by members
banks, and the stock shall be non
taxable. After these dividends are
paid One-half of the surplus of the
net earnings go to create a regional
surplus fund, and when this has
reached 40 per cent. of the regional
banks paid in capital these earnings
are to be turned into the United
States treasury. The balance of the
net earnings will be paid to the gov
eminent a sa franchise tax.
With the machine-y CT this new
banking system created supplemental
to the commercial banks of the coun-
t.y, the law provides for a gradual
transfer of part of the bank reserves
to these new regional banks In or
der not to withdraw too suddenly the
heavy deposits of country banks into
large cities, the law provides that
three years may be consumed in shift
ing these balances, and that, if neces-
sary, part of the reserves transferred
TO the regional banks may be of com
nlercial paper.
The mourn of reserves required
from e bank under this new Law,
and the place where it has got to be
kept, are as follows:
Country banks: Total reserve re-
Quired, II per cent. of demand de,
J post and 5 per cent. OF time deposits.