Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1914-02-07
New Currency Bill
Helpful Suggestions.

The First National Bank of this city
has just issued a circular letter to its
depositors, reciting the main features
of the new Currency Bill in such a
way as to make 1t easily understood.
The Kennebec Journal quotes from 1t
for the benefit of all its readers. The
letter says in part:
The Federal Reserve Act passed Dec.
%, 1913.
The New System has three distinct
branches: The Federal Reserve Board,
the Federal Reserve Banks and the
Member Banks.
The entire management will rest in
the Reserve Board, consisting of the
Secretary of the Treasury, the Comp
troller of the Currency and five others
to be appointed by the President. The
term of office is ten years. and the
salary is $4,000 per year
The Reserve Board is to divide the
country into Reserve Districts-not
less than eight and not more than
twelve-and to establish a Reserve
Bank in each of these Districts.
The capital stock Of a Reserve Bank
must be not less than $4,000, 900 and
this stock is taken by the Member
Banks, each one subscribing, to the
amount of per cent. of its own CAPT
tai and surplus.
Beginning after two years from the
passage of this act thei bank bills now
in circulation are to be gradually re-
tired, so far as the banks may desire.
The bills now are based on Govern
ment bonds held by the Treasury De-
partment to secure the bills. There
are about 725 millions in circulation.
If a bank wishes to keep its circu-
lation it may do SO, but if it wishes
to retire it, the Reserved Banks are
authorized to take up not exceeding
% millions per year of the bonds, and
retire that amount of circulation.
New circulation will be issued by the
Government to the Reserve Banks.
and by them to the Member Banks,
and so to the people.
This new currency will be the obli-
CATION of the Government, redeemable
in gold at the Treasury in Washing
ton. and in gold or lawful money by
the Reserve Banks. 1t Is secured, al
so, by a pledge of commercial notes
from the Member Banks, and, in adj
dition, it will be first lien on the as
sets of the Regional Banks.
No Reserve Bank is allowed to pay
out the bills of another Reserve Bank,
but must forward them for redemp-
ton.
Since the banks will have to pay
interest to the Government while the
bills are out, it is expected that this
plan will prevent imitation.
The act also changes the matter OF
reserves and in so doing it makes
classification of accounts, by which
time deposits are defined as compris-
ing all deposits payable after 80 days,
and all savings accounts and certifi-
Gates of deposit subject to 80 days
notice.
This is Of little practical concern
to depositors Savings deposits are
what the name implies. They are to
assist people in saving, earning them
a good rate of interest, being readily
available and carrying a security of
the highest order Though technically
subject to notice, no bank ever re-
quires 1t.
Another change provides that the
member banks may make farm loans,
to run not more than five years ana
at not more than so per cent. OF value.
to an aggregate amount of 25 per cent.
of banks capital and surplus, or one
third of its time deposits.