The Blackfoot optimist. [volume] (Blackfoot, Idaho) 1907-1918, 1914-01-01
PROVISIONS OF TIE +
NEW CURRENCY LAW

Washington, Dec. 27.-The following
analysis presents the details Of the
new currency law without adhering to
the technical division or language Of
the measure.
At, the head Of the system will
stand federal reserve beard at Wash
ington appointed by the president and
to consist of the secretary of the
treasury and six other members. Two
Of these shall be expert bankers. but
none shall have banking affiliations sor
own bank stock during their service.
This board will exercise general con.
ttrol over the entire system.
The temporary Organization com.
fmittee" or the federal reserve board.
viii select from eight to IL cities
where regional reserve banks shall be
located and, will divide che entire
country geographically with these
cities as the centers Of districts. All
national banks in district will be
required to subscribe for the stock
Of the regional reserve bank in that
| district and to keep a portion Of theiS
reserves there.
The Local Banks
| Local banks will be known rs
member banks" because they will
own the stock of the regional reserve
bank Of their district. Each member
bank will be required to take capital
stock OF the regional reserve bank.
equal to six per cent Of the member
banks capital and surplus. The CAPT.
! tai of tho regional bank will increase
or decrease so that 1t always repre-
sents six per cent Of the combined
icapital and surplus Of all the banks
of the district that have joined the
system.
National banks are compelled to
join and state banks are permitted to
if they bring their reserve require
ments up to the standard set for
national banks and submit to national
Examinations.
Public ownership of the stock Of
the regional reserve banks is per-
mitted only in case enough banks do
not join in any district to provide a
capital stock OF $4,000,O0 In such
event the public may purchase the
stock in quantities limited to $4,000
for each individual; but the voting OF
this stock will be placed in the hands
of government representatives on the
board of directors of the regional re-
serve bank.
:'open Market Operations
The regional reserve banks may do
business only with their member
banks, not with the public, except
that certain "open market operations
such as the purchase and sale OF gold,
government or municipal bonds and
certain forms of bills OF exchange arc
permitted. These banks will make
their earnings from the loans made
to member banks and from the pur'
chase and sale of bonds and foreign
bills of exchange
Member banks will be compelled to
} put up in cash only one-half of their
subscription to the capital of the new
banks; the remainder can be called
for if needed by the regional bank
Dividends of six per cent will be
paid on this stock to the member
banks and the stock will be non-tax
) able. After these dividends are paid
one-half of the surplus net earnings
goes to create a rgional surplus fun
and when this has reached 40 pei
cont of the regional banks paid-ir
capital, these earnings are to go into
the United States treasury. The bal
ance of the net earnings is to be
, paid to the United States as fran
chise tax.
General Transfer Provided
With the machinery thus created
for a new banking system that IL
supplementary to the commercial
banks of the country, the law pre-
vides for a gradual transfer OF par
OF the bank reserves to the new res
eryoir'' banks. In order not to dis
turb business conditions or to with
draw too suddenly the heavy deposits
of country banks In the large cities
the law provides that three years ma!
be consumed in shifting these balances
and that if necessary, part OF tns
reserves transferred to the reglona
banks may consist Of Commercial
paper.
The amount of reserve requires
from every bank under the new law
and the place where it must be KEEP
are as follows: