The Meridian times. (Meridian, Idaho) 1909-1938, 1914-01-09
MAKES CHANGES IN
CURRENCY SYSTEM
New Money Law Displaces 122-
Year~0ld Code.
is FaR-REAcHING IN SCOPE
Most Important Law Relating 20 r.
nance Passed In Many Years--Ss-
asntIal Features Of the Meas
ore Explained In Nontech-
I nlcaI Language.


washington. Dec. a. The new bill
affecting the currency, banking ana
finances or the country is one OF the
most far-reaching measures relating 70
anancs 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 hignIy
technical measure In Its important
bearings on money, finance, banking
and ahe entire range of fiscal subjects,
public and private, which it AFFECTS.
Summary Of the Bill.
with view, therefore. of present
ing succinctly and Ia non-technical
language an epitome OF the salient fea-
lures OF the measure as finally framed,
the following summary Is given OF the
bin as whole and of Its principal de
taiIss
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 tsa currency.
Banks have 60 days within which to
Ole their applications for membership
In the new system. and one years
time Ii allowed before the government
will compel the dissolution OF any ma
tlonai bank that refuses to join.
VIII .Take Up the Slack"
1he rasw law will make little direct
change In the operation OF the pres
national banks, except to allow
them to loan a certain amount OF their
funda upon farm mortgages.
It's chief purpose Is TO add q new
piece of machinery to the banking
system that will take UP the slack
during the changing business condl-
lions 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 it is needed, and retire Il
when money becomes cheap"
Hanks are now required to keep
certain percentage OF their deposits as
reserves part In cash in their owr
vaults and part of which may be re
deposited in the banks OF New York
Chicago. ST. Louis and other designat
ed citica
In times of sudden financial de
mands, when banks have loaned up. t
the full limit OF their resources, thes,
reserves furnish little relief. because
n they are paid out to meet demands
the banks are left In a precarious con
ditinn.
Basic Principle Of Law.
The basic principle OF the new Law
ia to get these reserve funds out Int,
circulation whom necessary withou
siesaeni:ag the safety OF any bank. ant
to provide place to which loca
banks may rush in crisis and &c
cash for the prime commercial pa
DER" they hold in their vaults,
This is to be accomplished through
q 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 hol
as reserves,
Under the new system, when
financial furry comes the banks cal
take commercial paper, such as notes
drafts and bills of exchange. to thes
Reservoirs" and secure the use 0
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
wiIi 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 on
into circulation quickly.
The banks win have to pay for thes
loans, however, as individuals have L
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 1
also provided for. to come out In cas-
of emergency, and which is expects
10 go back into the hands of the gov
eminent when times are norma
These TREASURY notes" win be printe
by the government and issued throug
each regional reserve bank. and wi
bear the guarantee both OF the n
gional bank and OF the government
II the demand for currency in an
section OF the country exceeds tn
supply OF circulating money regions
bank can secure this new none
from the government and put II int
circulation; but a gold reserve Of 4
per cent and commercial paper equi
10 the full value Of the note must /
held ~ a reserve behind each not
issued.
This, provision 10 expected to be II
influence that will drive the ne
money back into retirement when
is no longer needed.
Clearly Explained.
The following analysis presents ii