The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1914-01-01
an.ee both of the regional bank and

anteo Doen OK the regional bank AM
the government
II the demand for currency In an.
section Of the country exceeds tn
Supply OF circulating money, a regtona
nank can secure this new money r
o n put It into circu
iaton; but a gold reserve Of 40 pc
cent and commercial paper equal to tn,
full value OF the note must be held a.
@ reserve behind each note so Issued
RMS provision Is expected to be tn,
influence that will drive the new
money back Into retirement when 1t !.
no longer needed.
the following analysis presents thu
details Of the new law without adher-
ing closely to the technical division OIL
language OF the Measure
AT The head OF the system win stand
q FEDERAL reserve board at Washington
speclfied by thep president, and to con-
slst OF the secretary OF the treasury
tn controller Of the currency and Ave
other members. Two OF these hall be
expert bankers, but none shall have
banking affiliations or own bank stock
during their service. This board will
exercise general control over the entire
system.
The temporary organization COM
mittee' OF the federal reserve board
Will select from eight to IL cities where
regional reserve banks shall be located,
and Will divide the entire country geo.
graphically with these cities as the CEN
tiers OF districts. All national banks in
Tor n stock Of the regional reserve
bank in that district and to keep q por-
ton OF their reserves there
Local banks will be known as mem
Der banks" because they Will own the
stock of the regional bank of their dis
trict Each member will be required to
IA Iva ~ r{foy ptNllra - 49, -1-J1-- -
serve bank equal to 6 per cent OF the
membe banks capital n surplus.
The capital of the regional banks will
increase Or decrease so hat 1t always
represents s per cent of the combined
capital and surplus of all the banks of
the district that have Joined the sys-
tenn.
National banks are compelled to Join
and state banks are permitted to If
they bring their reserve requirements
up to the standard set for national
banks and submit to national examina-
tons.
Public ownership of the stock OF the
only in case enough banks do not Join
in any district to provide a capital
stock Of 81, 600, 900. In such event the
public may purchase the stock in guam
titles limited to $4,000 to $4,000 for
individual; but the voting of this
stock will be placed In the hands of
government representatives on the
board OF directors OF the regional re-
serve bank.
The regional reserve banks may do
only with their member banks,
not with the public, except that certain
open market operations" such as the
purchase and sale OF gold, government
or municipal bonds and certain forms
OF bills of exchange are permitted.
These banks will make their earnings
from the loansm made to member banks
and from the purchase and sale of
bonds and foreign bills of exchange.
Member banks will be compelled to
put ZIP In cash only one-half Of their
subscription to the capital Of the new
banks; h remainder ear be called
for IL needed by the regional bank.
Dividends OF 8 per cent will be paid on
this stock to the member banks and the
stock will be non-taxable. After these
are paid one-half of the sur
plus net earnings goes to creat a re-
gional surplus fund, nj when this has
reached 40 per cent OF the regional
banks paid In capital, these earnings
are to go into the United States treas
Try The remainder OF the net earn
tngs are to be paid to the United States
as a franchise tax.
With the machinery thus created for
q new banking system that is supple
mentary to the commercial banks OF the
country, the law provides for a gradual
transfer OF part OF the bank reserves
to these new reservoir" banks. In
order not to disturb business condi-
or to withdraw too suddenly h