Semi-weekly herald. [volume] (Durango, Colo.) 1907-1917, 1914-01-22

up Of the general assets of the bank.
The National Reserve bank of Chi
cage could loan some of this money
issued to it by the government to
member bank, and take as security
commercial paper, notes, bonds, etc,
rendered by the member bank. This
is where the idea OF asset currency
comes in.
The New Banking Act win Grow in
Popularity.
The reading Of the new banking
act on the part of any capable bust
ness man will convince him that it is
well thought out system. 1t is
drawn on right lines. With good
management it can be made great
success. 1t can only be made fail
ure by bad management. The sys-
tenn is inaugurated which may be
made the basis OF wide legislation in
the future. Something had to be done
and the old system could not well
have been continued.
The Old System Little Disturbed.
The new banking act inaugurates n
new system and introduces central
banking systems but with little dis
turbance to old systems. Not dol
lar of existing money is repudiated
and not a single item of government
paper is made of less value than it
was before.
Where Did They Get the Word
Regional"
The word regional does not oc-
cur in the banking act. The news
papers are all the time talking about
regional banks" This might refer
to the district reserve banks or 10
the member" banks, but the law
does not make use Of the word.
The Greenbacks win Remain.
The existing greenback currency,
amounting to $40 millions Of dollars,
remains undisturbed and will be in
use as heretofore The greenback
currency may be changed or may dis
appear by future legislation, which l.
not now contemplated. The new fed
eral reserve notes will be backed by
the government and also by all the
resources OF tile district reserve bank.
When a member bank secures cur
rcncy from the district reserve bank
II must be by rediscounting notes
taken in due course Of business.
what IS "Member" Bank?
A member bank is national OF
state bank which has purchased =
portion of the capital OF the district
reserve bank as required by law, and
has ,hus become a part Of the district
reserve system. Des Moines will have
several member banks.
Careful Supervision Provided for.
The new law guards every point in
the interest of the bill holder and the
depositor; it provides penalties for
all orfenses, and calls for careful sup
elyision. An emergency currency S
provided for to be available at the
clop-moving season from September
to February, although these months
are not named.
An Elastic Currency.
The law provides what the country
has been talking about for fifty years
-to-wit, an elastic currency. 1t can
90 up and down in response to the
demands of trade and commerce.
This was thought TO be a dangerous
feature, but IL is well guarded. When
emergency currency is issued, provis
ion is made for its early retirement,
so that there shall be no permanent
initiation.
May Still BE the Basis of Currency.
After the two per cent bonds be-
come the property of any federal re-
serve bank, currency may be issued
against them to the full face value of
the bonds. The present banking law
permits the issuance of currency to
the amount of ninety per cent of the
face value of such bonds.
Not to Do General Banking
Business.
District federal reserve banks may
loan money to member" banks by
the rediscounting process on notes
not written for a longer period than
ninety days Notes originating from
the export trade may be for $50 days.
Federal reserve bands will not be au
thorized To receive deposits from
manufacturers, merchants, farmers
or other individuals. The deposits of
these banks must come from the gov
eminent or from member banks,
Cannot Loan Money for Speculation.
Men dealing in stocks and bonds
which are listed in the stock ex-
changes cannot borrow money on the
same. The theory of the federal re-
serve bank is that Wall street should
not have access to all the idle money
in the country for purposes of specu-
lation. Money cannot be obtained
from a federal reserve bank on even
IL