Lincoln County times. (Jerome, Idaho) 1911-1919, 1914-01-08

a FEDERAL reserve board at Washing
Ton appointed by the president, and
10 consist OF the secretary Of the
treasury, the controller of the curren-
cy and five other members. Two of
these shall be expert bankers. bat
none shall have banking affiliations or
own bank stock during their service.
ms board will exercise general con-
trol over the entire system.
The temporary Organization COM
mlttee, C. the federal reserve board,
Will select from eight to twelve cities
where regional reserve banks shall be
located and will divide the entire
country geographically with these
cities as the centers Of districts. All
national banks In a district will be
required to subscribe for the stock Of
the regional reserve bank in that dis
trict and to keep a portion OF their
reserves there.
Known as "Member Banka."
Local banks will be known as mem
Der 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
or the regional reserve bank, equal to
b per cent. OF the member banks capt.
tai and surplus. The capital Of the re-
gional bank will increase or decrease
SO that 1t always represents 6 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
join and state banks are permitted to
II they bring their reserve require
ments up to the standard set for ma
tional banks and submit to national
examinations.
Public Can Buy Stock.
Public ownership of the stock OF the
regional reserve banks is permitted
only in case enough banks do not join
in any district to provide a capital
stock Of 1900, 900. 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 govern
ment representatives on the board Of
directors of the regional reserve bank
The regional reserve banks may dc
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, arc
permitted. These banks will MAKE
their earnings from the loans made t.
member banks. and from the purchas,
and sale Of bonds and foreign bills o
exchange.
Must Put Up Cash.
Member banks will be compelled t,
put up In cash only one-half of thei
subscription TO the capital Of the new
banks, the rest can be called for 1
needed by the regional bank. Div
dends of 6 per cent. will be paid OIL
this stock to the member banks, an
the stock will be non-taxable.
After these dividends are paid one
half OF the surplus net earnings goe
to create a regional surplus fund, an
when this has reached 40 per cent. o
but lcSiOndi JAIN . pdlu III CAPITA
these earnings are to go into tn
United States treasury. The balance
OF the net earnings are to be paid t
the United States as a franchise ia,
With the machinery thus create
for a new banking system that Is SUI
Elementary to the commercial bank
of the country, SAe law provides for
gradual transfer of part OF the ban
reserves to these new reservoir
banks.
In order not to disturb business col
d~itions, or to withdraw too suddenl
, the heavy deposits of country banks l
the large cities, the law provides tbs
+ three years may be consumed in shift
ing these balances and that, II nece
sary. part Of the reserves transferre
, to the regional banks may consist {
commercial paper.