The Twin Falls times. [volume] (Twin Falls, Idaho) 1905-1916, 1914-01-06

stock of SO 100000 In such event the
| public may purchase the stock in
quantities limited to $4,000 for each
| individual; but the voting of this stock
will be placed in the hands of govern
ment representatives on the board of
directors of the regional reserve bank.
The regional reserve banks may do
business only with their member
banks, not with the public, except that
certain open market operations" such
as the purchase and sale of gold, mu-
nicipal or government bonds and GER
tain forms of bills of exchange are
permitted These banks will make
their earnings from loans made to
member banks and from the purchase
and sale of bonds and foreign and do
nestle bills of exchange.
Member banks will be compelled to
put up in cash only one-half of their
subscription to the capital of the new
banks the remainder can be called
for if needed by the regional bank.
| Dividends of six per cent will be paid
on this stock to the member banks and
the stock will be non-taXable. After
| these dividends are paid one-half of
! the surplus net earnings goes to ere!
ate a regional surplus fund and when
| this has reached forty per cent of the
regional banks paid-in-capita these
earnings are to go into the United
! States treasury.
The remainder of the net earnings
are to be divided between the payment,
of a United States franchise tax and
the creation of a fund to guarantee the
payment of depositors in member
banks that may fail.
| When the machinery thus created
| for a new banking system that is sup
Elementary to the commercial banks
of the country the law provides for a
gradual transfer of part of the bank
reserves to the new reservoir banks,
In order not to disturb business condi-
tons or to withdraw too suddenly the
heavy deposits of country banks in the
| large cities, the law provides that two
years may be consumed in shifting
these balances and that if necessary,
part OF the reserves transferred to the
regional banks may consist of COM
| mercial paper.
The amount of reserve required
from every bank under the new law
and the place where it must be kept
are ar follows.
Country banks: Total reserve re-
quired, IL per cent of demand depo-
sits and five per cent of time depos-
it's. Four-twelfths must be held in
the banks own vaults; two-twelfths
in the regional reserve bank for the
first six months, increasing one
twelfth each six months until it
reaches five-twelfths. After years
the remaining three-twelfths of the re-
serve must be kept either in the coun-
t,,xy hn,, II II 10 in, hn oil no
serve banks.
Reserve city banks: Total reserve
required, ID per cent of demand and
five per cent of time deposits. Six
fifteenths must be kept in the banks
own vaults; three-fifteenths in the re-
gional reserve bank for the first six
months, increasing one-fifteenth each
six months until it reaches siX-fifteen-
tbs. After two years, the remaining
-fifteenths of the reserve must be
kept in the banks own vaults or in
the regional reserve bank.
Central reserve city banks New
York, Chicago and ST. Louis, Total
reserve required, Is per cent, of de-
mand, and five per cent of time depos-
its. Six eighteenths must be kept in
, the banks own vaults; three-eigh-
teenths in the regional reserve bank
for the first six months and siX-eigh-
teenths thereafter. After six months
, the remaining siX-eighteenths may be
kept in the banks own vaults or in
the regional reserve bank.
These immense reserves from 'mem-
Der banks" together with government
moneys will make up the deposits of
the regional banks. Each of these
banks will be administered by board
of nine directors, six of whom will be
elected by the banks and three ap-
,, pointed by the federal reserve board.
The regional banks may rediscount
that is, buy at discount from its
member banks-"prime commercial
paper" when the member banks desire
to convert these assets into money.
The exact terms of this important pro-
vision as to the character of paper up
on which the regional reserve banks
may furnish cash are as follows:
Upon the Endorsement of any of it's
member banks with waiver of de-
mand notice and protest by such bank,
any federal (regionaD reserve bank
may discount notes, drafts and bills of
exchange arising out of actual COM
mercial transactions; that is, notes,
drafts and bills of exchange issued or
drawn from agricultural, industrial
or commercial purposes or the pro-
ceeds of which have been used or are
to be used for such purposes, the fed
eral reserve board to have the right to
determine or define the character of
the paper thus eligible for discount
within the meaning of this act.
Nothing in this act contained shall
be construed to prohibit such notes,
drafts, or bills covering merely drafts
and bills of exchange, secured by sta
pie agricultural products, or from be-
ing eligible for such discount, but such
definition shall not include notes,
drafts or bills covering merely invest
ments or issued or drawn for the pur-
pose of carrying on trading in stocks,
bonds or other investment securities,
except bonds and notes of the govern
ment of the United States.
Notes, drafts and bills admitted to
tJ1 .p{ III 30,