Lower coast gazette., 1914-01-03
Most Far-Reaching Measure Re-
iating to Finance Enacted
in Many Years.
SALIENT POINTS REVIEWED
Essentials of New Law Summarized
In N%ontechenicai Language
Makes Little Change In oper-
alton of Present National
Ranks-ResionaI ae-
serve Banks Pro-
yided For.

Washington, Dec. 23.-The new bill
affecting the currency, banking and
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
OF congress has to follow the changes
and grasp the essentials Of this highly
technical easur In its important
bearings On money. finance, banking
and the entire range Of fiscal subjects,
public and private. which 1t affects.
Summary Of the Bill.
With q view, therefore, OF present.
ing succinctly and in non-technich
language an epitome Of the salient fea-
lures of the measure as finally framed,
the following summary Is given OF the
bill az a whole and OF it's principal
details:
Generally speaking, the first steps
to 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 60 days within which to
file their applications for membership
In the new system. and n years
time is allowed before the government
will compel the dissolution Of any ma
tional bank that refuses to Join.
viii "raks Up the Slack"
The new law will make little direct
change in the operation Of the pres
ent national banks. except to allow
them TO loan q certain amour. Of their
funds upon farm mortgages.
Its chief purpose is to add a new
piece of machinery to the banking
system that will take up the slack"
during the changing business condt.
lions Of each year; that will give the
banks a place to quickly convert their
assets into cash in time of need, and
that will bring out new federal cur
rency when 1t is needed. and retire 1t
when money becomes cheap"
Banks are now required to keep 3
certain percentage Of their deposits as
Reserves" part in cash in their w
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 up to
the full limit of their resources. these
reserves furnish little relief, because
II they are paid out to meet demands
the banks are left In a %precarious con-
dition.
BasIc Principle Of Law.
The basic principle OF the new law
Is to get these reserve funds out into
circulation when necessary without
lessening the safety Of any bank, and
to provide a place to which local
banks may rush In a crisis and get
cash for the prime commercial pa.
per" they hold In their vaults.
This Ia to be accomplished through
q chain Of regional reserve banks, or
reservoirs Of reserves" in which all
banks shall deposit a stated part of
the money they are required to hold
as reserves.
Under the new system. when a
financial furry comes the banks can
take commercial paper, such rs notes,
drafts and bills of exchange. to these
reservoirs" and secure the use OF
their own reserves, or. il necessary,
even the reserve of other banks, by
depositing this security.
The new regional banks will re.
ceive about one-half OF the bank re-
serves of the country. They In turn
will be permitted to loan back to the
banks all but IS per cent. of these
reserves. so that In case Of emergency
millions Of cash can be brought out
into circulation quickly.
The banks will have to pay for these
loans, however, as individuals have to
pay for a loan from any local bank,
and this charge is expected to prevent
the too free use OF the reserves held
by the regional banks.
700
New Paper Currency.
A new form Of Eaper currency is
also provided for. to come out in case
of emergency, and which is expected
to go back into the hands of the gov
eminent when times are normal.
These treasury notes" will be printed
by the government and issued through
each regional reserve bank, and will