Montpelier examiner. [volume] (Montpelier, Idaho) 1895-1937, 1914-01-02


vlded For.
Washington, Dec. 23.-The new bill
affecting the currency, banking and
finances of the country is one 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 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 whole and OF its principal
details:
Generally speaking, the first steps
to Je taken to bring into operation the
no ions 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 go days within which to
Hle 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.
Will "Take Up the Slack"
The new law will make little direct
change in the operation of the pres
emit national banks, except to allow
them to loan q 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 place to quickly convert their
assets into cash in time of need, and
that will bring out new federal cur.
rency when 1t is needed. and retire II
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.
I'd 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 precarious CON
dition.
Basic Principle of Law.
The basic principle OF the new Law
Is to get these reserve funds out into
circulation when necessary without
Iessening the safety of any bank, ant
to provide place to which loca
banks may rush In a crisis and ge
cash for the prime commercial pa
per" they hold in their vaults.
This is to be accomplished through
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
Rs reserves.
Under the new system. when
financial furry comes the banks car
take commercial paper, such as notes
drafts and bills of exchange. to thes'
reservoirs" and secure the use 0
their own reserves, or, If 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 turi
win be permitted to loan back to tn
banks all but 35 per cent of thes
reserves, SO that In case of emergenc,
millions Of cash can be brought GU
into circulation quickly.
The banks will have to pay for thes
loans, however, as individuals have t
pay for loan from any local banI
and this charge is expected to proven
the too free use of the reserves he'll
by the regional banks.
New Paper Currency.
A new form of paper currency /
also provided for, to come out in cas-
Of emergency, and which is expecte
to go back into the hands of the gol
eminent when times are norma
These treasury notes" will be printe
by the government and issued throug
zach regional reserve bank. and wi
sNo~oe~@-e-o-o.o~-o-o~
Should Be Made TO Divulae Secret.