The Dickson County herald. (Dickson, Tenn.) 1907-1979, 1914-01-02

&s<<xt4 H&AA I'LL ~ - &Wx#@AAAt%Hssy
X tie 6ezn&ad mr. jtnFreAxF Id mp
sscfion q the ccuntry srrsgds the
supply Of circulating moaey tsskionsi
bank caa secure this ncw rn0nsy
fren ne Eprsrnrsens and rat II lnso
circulation; bait sold RESERVE u -
per cent and commercial paper equal
70 tia fsll value On the noss must "
held - = reserve behind sarh nsse
issRed. Al
'rhis provision o. expected 70 be the
influence that viii drive the set
money back into ,,etir0ment when n
ID no longer needed
Clearly Explained.
The following analysis presents the
details Of the new law without ad
herring closely TO the technical division
or language OF the measure,
Al the head OF the system win stand
federal reserve board at Washing
ton. appointed BY the president. and
TO consist OF the secretary OF the
treasury. the controller OF the carren.
ey and ave other members Two OF
these shall be expert bankers. but
none shall have banking affiiiattcas or
own bank stock during their service,
This board viii exercise general con.
troll over the entire system.
The temporary organization CON
mittee," or ahs federal reserve board,
win select from eight TO twelve cities
where regional reserve banks snail be
located and will divide the entire
country geographically with these
cities as the canters OF districts. All
national banks In q district will be
required 10 subscribe for the stock OF
the regional reserve bank III that dis
trict and to keep portion or their
reserve there.
Known ~ "Msnber Banka"
Local banks will be known a. mem.
Der banks" because they win own the
stock OF the regional reserve bank
OF their district Each member bank
viii be required to take capital stock
Of the regional reserve bank. equal 20
per cent. OF the member banks capt
tai and surplus The capital OF the re.
gional bank Will increase or decrease
so that Il always represents . per
cent OF the combined capital and sur,
plus of all the banks OF the district
that have joined the system
National banks Are compelled to
jo,n and state banks are permitted 10
II they bring their reserve require.
ments up TO the standard set for ma.
sIonal banks and submit 10 national
examination
Public Can Buy Stock,
Public ownership Of the stock OF the
regional reserve banks is permitted
only In case enough banks DO no, Join
IN any district 10 provide a capital
stock for 81 0ae, goo In such event the
pubic may purchase the stock in
quantities limited to $4,000 for each
Individual but the voting OF this stock
viii he placed N the hands Of govern
ment representatives on the hoard Of
directors OF the regional reserve bank,
The regional reserve bank 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, gov.
eminent, or municipal bonds, and Ger
tain forms OF bills OF exchange, are
permitted. These banks viii make
their earnings from tho loans madrs,o>l
member banks. and from the purchase
aud sale OF bonds and foreign bills OF
exchange
Must Pay Up Cash.
Member banks viii be compelled TO
put up In cash only one-haif Of their
subscription 10 the capital OF the new
banks. the rest can be called for II
needed by the regional bank. Nvt
dends OF per cent. Will be paid on
this stock to the member banks, and
the stock will be non.taxable
After these dividends are paid one
half OF the surplus net earnings goes
to create a regional surplus fund. and
when this has reached 10 per cent OF
the original banks paid In capital
these earnings are TO 20 into the
United States treasury The balances
OF the net earnings are TO be paid 10
the United States as 9 franchise tax
With the machinery thus created
for new banking system thar Is sup
Elementary to the commercial banks
OF the country, the Law provides for
gradual transfer OF part OF the bank
reserves 10 these new reservoir
banks
In order not to disturb business con-
dItlous, or 10 withdraw too suddenly |
the heavy deposits Of country banks In !
the large cities. the law provides that |
three years may be consumed In shit |
ing these balances and that, II neces
sary part OF the reserves transferred |
to the regional banks may consist OF |
commercial paper
Reserve Required.
The amount OF reserve required |
from every bank under the new Law, |
and the place where II must be kept.
are ass follows;
Country banks Total reserve reouir- |
ed IL per cent OF demand de3osits
and per cent Of time deposits, Five
twelfths must be- held In the banks
own vnuits for two years and four
twelftha after that For this arst year