The Beaver herald. [volume] (Beaver, O.T. [Okla.]) 1895-1923, 1914-01-08
New Money Law DispIaces l22-
Year-0ld Code.
is FAR.REAcHlNe IN SCOPE
Nest Important Law Relating to FL
nance Passed In Many Years-Es-
sentlaI Features Of the Meas
ure Explained In Nonteeh-
nieal Language.

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 Gill;
with a view, therefore, of present
Ing succinctly and in non.technicai
language an epitome Of the salient Tea
tures Of the measure as finally framed,
the following summary is given of the
bill as a whole and Of It's principal de-
tails:
Generally speaking. the first steps
10 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
die 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.
VIII "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 a certain amount Of their
funds upon farm mortgages.
Its chief purpose is to add 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 will 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 designat-
ed cities.
Ia 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 Shey are paid out to meet demands
the banks are left In a precarious con-
dition.
Basic Principle Of Law.
Ths basic principle of the new law
is to get these reserve funds out into
circulation when necessary without
lessening the safety of any bank, and
to provide a place to which local
banks may rush in a crisis and get
cash for the prime commercial pa
per" they hold in their vaults.
This is to be accomplished through
q chain of regional reserve banks, OF
reservoirs of reserves" In which all
banks shall deposit a stated part OF
the money they are required to hold
as reserves.
Under the new system, when 9
financial furry comes the banks car
take commercial paper, such as notes
drafts and bills of exchange, to these
reservoirs" and secure the use o.
their own reserves, or. il necessary
even the reserve Of other banks, by
depositing this security.
The new regional banks will re
ceive about one.half OF the bank re
serves OF the country. They in turI
will be permitted to loan back to thu
banks all but 35 per cent of thes'
reserves, so that in case of emergenc!
millions of cash can be brought ou
into circulation quickly.
The banks will have to pay for thes
loans. however, as individuals have Il
pay fol a loan from any local bank
and this charge is expected to preven
the too free use of the reserves hell
by the regional banks.
New Paper Currency.
A new form of paper currency 4
also provided for to come out In cas-
of emergency, and which is expecte,
to go back into the hands of the gov
ernment when times are normal
These treasury notes" will be printe,
by the government and issued througl
each regional reserve bank, and vii
bear the guarantee both of the re
gional bank and of the government
If the demand for currency in an
section of the country exceeds tn
supply of circulating money regiona
bank can secure this new none
from the government and put It int
circulation; but gold reserve of 4
per cent. and commercial paper equa
to the full value of the note must b
held as a reserve behind each not
issued.
This provision is expected to be tn
influence that will drive the ne'
money back into retirement when
is no longer needed.
Clearly Explained.
The following analysis presents tn
details of the new law without az
herring closely to the technical divisio
Or language OF the measure.
At the head OF the system will stan