The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1914-01-01
CURRENCY Bill
BECOMES A Law
Most Far-Reach;ng Measure Re-
Iating to Finance Enacted
in Many Years.
SALIENT POINTS REVIEWED
Essentiais Of New Law Summarized
In Nontechenical Language
Makes Little Change In Oper-
alton Of Present National
Banks-ReelonaI Re-
serve Banks Pre-
vided For.


vided For.
Washington, Dec. 23.--The new bill
affecting the currency, banking and
finances of the country is one Of the
most farreaching 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 view, therefore, of present
Ing succinctly and in non-technical
language all epitome Of the salient fea-
lures of the measure as finally framed,
the following summary is given of the
bill as whole and of its principal
details:
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 the currency
Banks have 60 days within which to
file their applications for membership
in the new system. and one years
time is allowed before the government
will compel the dissolution of any ma
ticnal bank that refuses to join.
WIN "Take Up the Slack
The new law will make little direct
change In the operation OF the pres
ent national banks. except to allow
them to loan certain amount Of their
funds upon farm Mortgages.
Its chief purpose Ia to add a new
piece Of machinery to the banking
system that will take up the slack"
during the changing business condi
tions OF each year; that will give the
banks a place to quickly convert their
assets into cash in time OF need. and
that win bring out new federal cur
rency when it Is needed. and retire 1t
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 deslgnat-
ed cities.
in times OF sudden financial de-
msnds. 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 precarious con.
dition.
Basic Principle Of Law.
The basic principle OF the new law
Is 10 get these reserve funds out into
circulation ghen necessary without
Iessening the safety Of any bank, and
to provide a place to which local
banks may rush in crisis and get
cash for the prime commercial pa.
per" they hold in their vaults.
This rs to be accomplished through
reservoirs Of reserves" in which all
banks shRfi deposit stated part OF
. the money they are required to hold
as reserves.
Under the new system. when a
financial furry comes the banks can
take commercial paper. such as notes.
drafts and bills Of exchange. TO these
reservoirs" and secure the use of
their own reserves, or. if necessary.
even the reserve of other banks, by
depositiug this security.
The new regional banks will re-
ceive about one-half OF the bank re-
serves OF the country. They in turn
will be permitted to loan back to the
banks all but 35 per cent of these
reserves. SO that In case Of emergency
millions Of cash can be brought out
into circulation quickly.
The banks will have to pay for these
loans. however. as individuals have to
pay for loan from any local bank.
and this charge is expected to prevent
the too free use Of the reserves held
by the regional banks.
New Paper Currency.
A new form Of paper currency is
also provided for, to come out in case
OF emergency, and which Is expected
to 20 back into the hands of the gov
eminent when times are normal
These treasury notes will be printed
by the government and issued through
each regional reserve bank, and viii