The Julesburg grit-advocate., 1914-01-01

oCssu0 u N10 CV8noy oAC000b SA~
supply Of circulating money . regional
hank can secure this nsw money
from the government and put 1t into
circulation: but . gold reserve q -
per cent. and commercial paper equal
to the full value Of the note muse ~
held - Q reserve behind each note
issued
This Drovisioa 10 expected 70 be the
influence that will drive the new
money hack into rstiremeat whsn II
10 10 leassr needed.
Clearly Gne.aiaed.
The following analysis prsssats he
details Of the nsv law without ~
herring closely to the technical Aivissoa
or language Of the measure:
Al the hssl OF the system will stand
. federal reserve board at Wishing
ten. aD0oantsA by the DresiAsat. and
70 consist Of the secretary of tAo
treasury. the controller Of the evrrea-
cy and Eve other member. Two Of
tAses shall - sxDsst bankers. bat
nons shall have banking aMiiations or
own bank stock duriAg their ssrvics.
This board will exercise general con-
troll over the entire system.
The temporary "organization cen
nittss." o. the federal reserve hoard,
will select from eight to twelve cities
whore regional rsssrvs hanks shall b.
located and will divide the. entire
country geographically with these
cities - the csntsrs Of districts. All
national banks in . district will b.
required to subscribs for the stock of
the regional reserve hank In that dis
trict and to keep . portion Of their
reserve there.
kRsw~ - "Msmbse Oaaks."
Local banks will b known - mem
ber banks" because they will own the
stock Of the regional reserve bank
Of their district. Each member hank
will bs required to take capital stock
Of the regional reserve bank, equal to
per cent. Of the member banks capt.
tai and surplus. The capital Of the re-
gional bank will increase or decrease
10 that 1t 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
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
examination.
Public Can Buy Stock.
Public ownership Of tho stock Of the
regional reserve banks 10 permitted
only In case enough banks do not Join
in any district to provide . capital
stock for 100000. 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 tho board 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
- the purchase and sale Of gold. gov
eminent. or municipal bonds, and GER
tain forms Of bills Of exchange, are
permitted. These banks will mako
their earnings from the loans made to
member banks. and from the purchase
and sale Of bonds and foreign bills Of
exchange
Must Pay Up Cash.
Member banks will be compelled to
put up in cash only one-half of their
subscription to the capital Of the new
banks, the rest can be called for II
needed by the regional bank. Divi-
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 4 regional surplus fund, and
when this has reached 40 per cent. Of
the original banks paid in capital
these earnings are to go into the
United States treasury. The balances
Of the net earnings are to be paid to
the United States a. . franchise tax.
With the machinery thus created
for 4 new banking system that 10 sup
Elementary to the commercial banks
Of the country. the law provides for .
gradual transfer of part of the bank
reserves to these new reservoir"
banks.
In order not to disturb business con.
ditions. or to withdraw too suddenly
the heavy deposits Of country banks in
the large cities, the law provides that
three years may be consumed in shift
ing these balances and that. il 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 1t must be kept.
are as follows:
Country banks.-Total reserve reQuir-
ed, II per cent. of demand deposits
and s per cent Of time deposits. Five
twelfths must be held In the banks
own vaults for two years and four.
twelfths after that. For the first year
two-twelfths must be kept in the re-