The Twin Falls times. [volume] (Twin Falls, Idaho) 1905-1916, 1914-01-06
DETAILS OF The CURRENCY BILL

HS ne" VII dlltCtluS lHe /,
banking and finances, which has now
been passed by both branches of con-
gress and went before President Will
son for his signature is one of the
most far reaching measures relating to
finance that has 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 made it diff
ficult for the ordinary observer to fol-
low the changes and grasp the essen
tials of this highly technical measure
in it's important bearing on money, fl
nance, banking and the entire range
of fiscal subjects, public and private,
which it effects. With view, there
fore, of presenting succinctly and in
non-technical language an apitome of
the salient features of the measures as
finally framed, the following sum
mary is given of the bill as a whole
and of its principal details.
Generally speaking the first step to
be taken to bring into operation the
nations new financial system Will be
through an organization committee OF
three members to be named soon by
President Wilson. Banks have sixty
days within which to file their appli-
cations for membership in the new
system; and one years time is allow
ed before the government will compel
the dissolution of any bank that re-
fuses to join.
The new law makes little direct
change in the operation of the present
national bank, except to allow them
to loan certain amount of their funds
upon farm mortgages. It's chief pur-
pose is to add new piece of machin-
cry to the banking system that will
take up the slack" during the chang
ing business conditions 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 currency when it is need
ed and retire it when money becomes
cheap"
Banks are now required to keep a
certain percentage of their deposits
as reserves" part in cash in their
own vault and part of which may be
redeposited in the banks of New York
Chicago, st. Louis and other desig-
mated cities In times of sudden fin
ancial demands, when banks have
loaned up to the full limit of their re-
sources, these reserves furnish little
relief, because if they are paid out
to meet demands, the banks are left in
a precarious condition.
The basic principles 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 is to be accomplished through
chain of regional reserve banks OIL
reservoirs of reserves" in which al
banks shall deposit stated part OF
the money that is required to hold as
reserves. Under the new system wher
financial furry comes the banks
can take commercial paper, such as
notes, drafts and bills of exchange tt
| these reservoirs" and secure the USE
of their own reserves, or il necessary
even the reserve of other banks, by de
posting this security.
| The new regional banks will receive
about one-half of the bank reserves o
the country They, in turn, will be per
mitted to loan back to the banks al
| but 80 per cent of these reserves, 81
| that in case of emergency millions o
cash can be brought out into circula
ton quickly. The banks will have Il
pay for these loans, however, as in
divduals have to pay for a loan from
any local bank; and this charge is eX
pected to prevent the too-free use o
the reserves held by the regiona
! banks.
A new form of paper currency is al
so provided for to come out in case o
emergency and which is expected tt
go back into the hands of the govern
ment when times are normal. Thest
treasury notes" will be printed by the
government and issued through eacl
regional reserve bank and will bea,
the guarantee both of the regiona
bank and the government.
| If the demand for currency in an!
section of the country exceeds thu
supply of circulation money, region
al bank can secure this new none.
from the government and put it int
circulation; but a gold reserve of A.
per cent and commercial paper equa
to the full value of the note must bt
held as a reserve behind each note 81
! issued. This provision is expected
to be the influence that will drive tht
new money back into retirement wheI
| it is no longer needed.
| The following analysis presents thu
details of the new law without adher
| ing clearly to the technical division OF
| language of the measure.
| At the head of the system will stanc
federal reserve board at Washing
ton appointed by the president and tC
consist of the secretary of the treas
ury and six other members. Two Of
these shall be expert bankers but none
shall have bank affiliations or OWL
bank stock during their service. This
board will exercise general contro
over the entire system.
The temporary Organization com.
mittee" or 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 cit.
les as the centers of districts. All ma
tional banks in district will be re.
ouired tO subscribe for the stock oil