Clinch Valley news. [volume] (Jeffersonville, Va.) 18??-2019, 1914-11-06
WHAT WILL HAPPEN WHEN
REGIONAL BANKS HAVE OPEN
ED FOR BUSINESS?

Secretary of the Treasury has an
nounced that the twelve Federal re-
serve banks will open their doors in
two weeks, on November 16, the ques-
tion has been often heard, "just what
will happen when the new currency
law goes into eifect?" The secretary
has stated roughly that $500, 900 900
reserve money would be released as
soon as the new regional banks open
cd their doors. Others have placed
the sum released ut $275, zoo, 900,
while the compilations given out by
the Comptroller of the Currency show
ed that in the three central reserve
cities of New York, Chicago and st.
Louis, $li6,000,000 of reserve money
would be released.
The process will be better under
stood by showing just what will hnp-
pen to the largest bank in the system
when the new system of reduced re-
serve tnkes effect. This bank on Sep
TENDER 1.-THE last occasion when the
national banks made their report to
the Comptroller of the Currency
showed Sol ,000, 900 cash in vault. This
amount, on the basis of the present 20
per cent. required reserve, would sup
port net deposits of 500, 100000 IN
der the new reserve requirements the
bank will have to carry only per
cent. of it's demand deposits in cash
in vault. Assuming that the balance
of IL per cent. (lS per cent. reserve
in all on demand deposits being re-
quircd) was carried in the Federal
reserve bank, half of that sum could
be pnid over to the reserve bank in
cash, and the other half, If desired,
in paper eligible for rcdiscount.
TO support $20i 100000 net depos-
it's under the new law only $24 $780,
600 cash would be required. Deduct
ing that amount from the SOL ,000, 900
cash now held by the bank, $26 $780,
600 reserve money would be released.
But per cent. of the banks capital
and surplus must be subscribed for
the Federal reserve bnnk stock, only
onc-siXth of the sum, however, to be
paid in at once. That payment will
call for $500, 450, which, with the re-
serve required, would be $27,000,000
That the bank will have TO set aside or
invest under the new law. This sum
deducted from the reserve IL already
carries, would release $4,000, 900
cash.
Taking the three national
banks of this city, the same method
of calculation shows that under the
new law about $88,000,000 of cash al
together will be released here when
reduced reserve requirements take cf-
feet. The Federal Reserve Board has
asked, however, that all member
banks, so fur AZ possible, pay over
their reserves in gold or in gold GER
tificates. Under the law, "nny Federal
reserve bank may receive from the
member banks as reserves, not exceed
| InU -hnlF of nurh ipci nl, al
ible paper" Many banks, in view of
the boards recommendation, however,
may not avail themselves of this priv
ilcge, but may pay over cash as re-
quested. Ech bank will probably act
independently in the matter unless the
Clearing House Association recon-
mends specific action by all contribut-
ing banks here.
| 1t has not been determined yet
\ whether to discontinue publication of
the weekly bank statement by the New
York Clearing House. The Federal
reserve act provides that the Federal
Reserve Board "shall publish once
cch week statement showing the
condition of each Federal reserve
bank, and consolidated statement
for all Federal reserve banks" This
| statement must show in detail the as
sets and liabilities of the banks, sim
gle and combined, together with all
information touching the character of
the money held as reserve, and the
amount, nature and maturities of pa
per and other Investments held by
the Federal reserve banks.
Before the New York reserve bank
begins business, the Clearing House
Association will revise its reserve re-
quirements to conform with the new
law. A committee is now engaged
with this work, and the chances are
that the entire constitution will be
altered so as to meet the new condi-
tions. In addition to the national
banks in the clearing house, there are
thirty State banks and trust compa-
MES which will be affected by what
ever changes are made in the clear
ing-hOuse requirements. The same Is
true of each of the eleven other cities
where regional banks ar located, and
where much remains to be done in the
two weeks which will elapse before