Lincoln County times. (Jerome, Idaho) 1911-1919, 1914-01-01
MAKES CHANGES IN
CURRENCY SYSTEM
New Money Law DispIaces 122-
Year-0Id Code.
is FAR-REACHiNG IN SCOPE
Most Important Law Relating to FL
nance Passed In Many Years-Es-
sential Features Of the Meas
ure Explained In Nontech-
nical Language.

Washington, Dec. 23.-The new bin
affecting the currency. banking and
finances of the country is II of the
most ~far-reaching measures relating to
finance that have 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 to follow the changes
and grasp the essentials OF this highly
technical measure in its important
bearings on money, finance. banking
and the entire range OF fiscal subjects.
public and private, which it affects.
Summary Of the Bill.
With a view, therefore. OF present
ing succinctly and in non-technical
an epitome OF the salient fea-
lures OF the measure as finally framed,
the following summary is given OF the
bill as a whole and OF its principal de-
tails:
Generally speaking. the first steps
10 be taken TO bring into operation the
nations new financial system will be
through an organization committee
consisting OF the secretary of the
treasury, secretary OF agriculture and
controller OF the currency.
Banks have 90 days within which to
hle their applications for membership
IN the new system. and II years
time IA allowed before the government
will compel the dissolution of any ma
tional bank that refuses TO join.
viii take Up the Slack"
The new law will make little direct
change In the operation OF the pr~-
mt national banks. except to allow
them to loan a certain amount OF their
funds upon farm mortgages.
Its chief purpose Is to add a new
piece of machinery to he banking
system that will take up the slack
during the changing business condi-
tons OF each year: that will give the
banks a place 10 quickly onyer their
assete into cash in time OF need. and
that will bring out new federal cur
rency when II Is needed. and retire IL
when money becomes cheap
Banks are now required to keep a
certain percentage OF their deposits as
reserves" part in cash in their own
vaults and part OF which may be re
deposited In the banks OF New York
Chicago. ST. Louis and other ~designat
ed cities.
In times OF sudden financial de
mands. when banks have loaned up t'
the full limit OF their resources. thes'
reserves furnish little relief, because
II they are paid out to meet demand
the banks are left in a precarious con
dition.
Basic Principle Of Law.
The basic principle of the new lay
Is to get .hesn reserve funds out int
circulation whom necessary withou
l%esseailg the safety OF any bank. an
20 provide a place to which loca
banks may rush in a crisis and &c
cash for the prime commercial p'
per" they hold in their vaults.
This IL TO be accomplished throug
n chain OF regional reserve banks,
reservoirs OF reserves" in which a
banks shall deposit a stated part
the money they are required TO hoI
as reserves.
Under the new system. when
financial furry ONE the banks ca
take commercial paper. such as note
drafts and bills OF exchange. to tines
Reservoirs and secure the use
their W reserves. or. II necessar
even the reserve OF other banks. |
~depositing this security.
The new regional banks will 7
ceive about one-half of the bank I
serves OF the country. They In tn
will be permitted to loan back to q
banks all but 35 per cent. of the
reserves. so that in case OF emergen
millions of cash can be brought o
into circulation quickly.
The banks will have TO pay for the
loans. however. as individuals have
pay for n loan from any local ban
and this charge is expected to prove
the too free use of the reserves he
by the regional banks.
New Paper Currency.
A new form OF paper currency
also provided for. to come out In ca
OF emergency. and which is expect
70 go back into the hands of the &c
m when times are norm
These treasury notes" will be print
by the government md issued throu
each regional reserve bank. and "
bear the guarantee both of the
slonal bank and Of the governme
II the demand for currency In n
section of the country exceeds I
supply of circulating money n regioi
oank can secure this new mon
from the government and put 1t II
circulation; but a gold reserve OF
per cent. and commercial paper eq'
10 the full value OF the note
neid as a reserve behind each M
Issued.
This provision is expected to be
influence that will drive the n
money back into retirement when
Is no longer needed.
Clearly Explained.
The following analysis presents