The Fairmont West Virginian. (Fairmont, W. Va.) 1904-1914, 1914-11-12
RESERVE BANK
SCOPE Defined.
BOARD GIVES OFT LIST OF COM
OPTIONS WHICH GOVERN
NEW INSTITUTIONS.

WASHING TON. d. G., Nov. L.
'il,c scopc Of the operations of the IL /,
Federal reserve banks, to be opened
Tor business next Monday. was de-
fined for the first few months OF
;hefr existence. IN circular issued
today rs the Federal reserve board,
f,or The present tile banks will no:
exercise all the functions given them
ry Congress. The board, cnncurrinS
with the directors and governors OF
The u in recent conferences here in
dorsed this plan Of operations:
Acceptance Of deposits Of reserves
from member banks.
Discount of bills ot exchange ana
commercial paper.
Acceptance Of deposits Of checks
,;rawn by member banks on amy re-
serve bank or member bank in re-
serve or central reserve city within
lfnctr Federal rescvc districts.
Other powers may be called into
rlay rs the establishment of safe ana
efficient organization permits.
/ In its circular the board gave the
Hong expected dcfirtiou OF CONNER
dial paper, which is to be the life
Ihlood of the new system. the basis for
t,hc new Federal reserve currency and
1.-The means by Which The nations cir
culating medium is expected to meet
1.-THE expansions and contractions OF
trade and industry,
Tile rate of rcdisCOunt was not an
bounced. This step probably will
lmot be taken until Monday. The
rate will not be uniform i'll all the
banks.
Defines Commercial Paper.
Tile definition Of commercial paper
!. broad and relies 10 !; large dcgreC
upon the language of the currency
act. Tile board declined at the pres
mt time to discuss the question Of
double and single name commercial
paper. 1t did make it exceedingly
clear however. that IL had prefer
cucc for the two-name sort, and left
Ino room for the authorities OF the
Tanks Ia tloabt that Il expected care
iul inquiry into one name paper pre-
scented to them for rediscount.
The circular discussed the condi-
it,ons that have arisen here and
Throughout the world through the
var, and gave some insight into the
economic changes which might be
txpectcd as result.
. IN defining commercial paper the
: board announced certain basic prln-
ciplcs. In brief they are:
THAT no bill shall be admitted to
lediscount by reserve bank the pro-
ceeds OF which have been or are to
!; nc applied to a permanent; invest
lncnt. Maturities of discounted bills
1.-The board holds should be well dis
Itributcd so that reserve bank should
be In a position To liquidate one-thfrd
Ter all its investments within 80 days.
Ellis presented for rC.discount should
he essentially self-liquidating,
which the board explained, means
THAT they should represent some dis
ltiuct step in the productive or dis
ltributive process and be Of such char
) acter that 1t is reasonably sure that
they can be c0llectcd At maturity.
Must Be Endorsed.
In addition to these principles the
board requires that such paper he III
lorsed by the member bank offering
IL for re-diScount; that the indorser
bank. waive demand notice and pro-
!, test; that such paper be issued or
Crawn for agricultural industrial or
!, commercial purposes or the proceeds
IF which have been SO used: that II
, ! in the form of acccptanccs they must
/. ibc based on transactions involving