Lincoln County times. (Jerome, Idaho) 1911-1919, 1914-01-08
New Money Law DispIaces 122-
Year-0ld Code.
Is FAR-REACHING IN SCOPE
Most Important Law Relating to FL
nance Passed In Many Yesrs-Es-
sentlal Features Of the Meas
ure Explained In Nontech-
nlcal Language.

most ~far-reaching measures relating 10
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 1t affects.
Summary Of the Bill.
With a view, therefore, of present
ing succinctly and in non-technical
language 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
TO 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 tho currency.
Banks have 60 days within which to
nle their applications for membership
In the new system, and one years
time Is allowed before the government
will compel the dissolution Of any ma
tional bank that refuses to join.
VIII Take Up the Slack"
Ths new law will make little direct
rhange in the operation OF the pres
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 the banking
system that will take up the slack"
during the changing business condi-
; tons 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 cur
rency when II is needed. and retire II
when money becomes cheap"
hanks are now required to keep q
certain percentage OF their deposits as
reserves" part in cash in their OWL
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 to
the full limit OF their resources, these
reserves furnish little relief, because
II they are paid out TO meet demands
the banks are left in a %precarious con
ditjnn.
Basic Principle Of Law.
The basic principle OF the new law
Is to got .hese reserve funds out into
circulation when necessary without
~lessenlug the safety OF any bank. ant
to provide a place to which loca
banks may rush in a crisis and ge'
cash for the prime commercial pa
DER" they hold in their vaults.
This is to be accomplished through
4 chain OF regional reserve banks, o.
reservoirs OF reserves" in which al
banks shall deposit a stated part o
the money they are required to holt
as reserves.
Under the new system. when
financial furry ONE he banks cal
take commercial paper, such as notes
drafts and bills of exchange. to thes'
reservoirs" and secure the use o
their own reserves. or, II necessary
even the reserve OF other banks, b.
depositing this security.
The new regional banks will re
ceive about one-half OF the bank re
serves OF the country. They In turl
sill he permitted to loan back to tn
banks all but 35 per cent. OF thes
reserves, so that in case of emergenc
millions Of cash a be brought GU
into circulation quickly.
The banks will have to pay for thes
,oans however. as individuals hav I
nav for a loan from any local bani
and this charge is expected to proven
the too free use Of the reserves mel
by the regional banks.
New Paper Currency.
A new form of paper currency !
also provided for, to come out In cas-
NJ and which is expecte
VII IL
IN 90 back into the hands OF the gov
srnment when times are norma
These treasury notes" will be printe
nv the government and Issued throug
each regional reserve bank, and wi
hear the guarantee both OF the r.
yional bank and of the government
II the demand for currency IN an
section of the country exceeds Tn
supply of circulating money a regloh'
bank can secure this new mon
from the government and put 1t I'M
circulation; but n gold reserve or 4
nor cent and commercial paper equ'
n the full value OF the note must !
,eld IA a reserve behind each mol
, issued. A.
This provision is expected TO De I'll
,reuence that will drive the ne
money back into retirement wneh
is no longer needed.
Clearly Explained. ~,
The following analysis presents u
,ata,ls of the new law without a
: lering closely to the technical oi'i''o
.r, language of the measure;
At the head of the system wni~