The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1914-11-18


they had placed with their larger and
stronger correspondents.
| Under the new system the federal
reserve notes. which i'm time prob
ably will entirely replace the national
bank notes, now so familiar, will be
issued upon commercial paper aris-
ing out of actual business transac-
tions. 1t seems plain that they will
rise ana fal. in amount as the tides
OF business rise and fall, and that
there will be no plethora of money to
lie idle. They will be obligations of
the United States government, which
national bank notes are not, and will
have back of them a large reserve of
gold in the regional banks. Through
them the reserve banks are expected
to come to the aid Of any needy men,
Der bank which has plenty of good
paper but needs cash. To further in
sure the flow Of money, reserve banks
themselves may be required to redis-
count the discounted paper Of other
reserve banks.
More than $3.50, 10000 Of the new
notes have been ordered by the
comptroller of the currency for the
IL banks. They are in 81, SO, $40,
$50 and 800 denominations and are
to be accepted by all member banks
and for an custom taxes or other
dues. The federal reserve agent Of
every bank in the system, who is the
government representative there, has
these notes I'm custody ready for the
application Of member banks.
Next to the elasticity Of the new
currency, officials value the "mobiliza-
tion,' but no concentration of reserves
which 1t will insure. This, they point
out, does not mean the concentration
of vast sums from country banks in
reserve cities and central reserve
cities as under the national banking
act, but their appearance in large
part on the debit balances Of the II
reserve banks in widely scattered
parts Of the country. These reserves
will be as near as possible to the door
Of the member bank to which they
belong in times Of need and there
can be no refusal from q reserve bank
to return them in case of exigency.
A remnant of the present system
still remains in the provision by which
banks may keep certain proper
ton of their reserves with other MEM
ber banks in cities now kpown as
reserve and central reserve cities. AT
the end Of three years, however, that
will be changd and all reserves will
be held either in a banks own vaults
or with a federal bank. An effort
was made in congress a few weeks
ago to permit member banks to de-
posit all their reserves with this re-
serve bank at once. AS the law stands
their process is to be spread over a
period of 80 months. If it is renewed
successfully neAt winter it will mean
a marked increased in the available
funds Of the reserve banks. AS it
stands the IL banks will start out with
a total cash reserve of about $243,-
900, 900.
Another point not forgotten by ad-
mirers Of the law is the fact that the
different reserve requirements will re-
lease about $464 10000 now tied up
in reserves and will afford far greater
opportunity for borrower to get q
hearing and a loan.
The reserve banks are not to do n
banking business except with member
banks They are empowered, how
ever, to engage in open market trans
actions in the buying or selling of
cable transfers and bankers bills of
acceptances and bills Of exchange.
Other transactions include buying and
selling Of bonds or notes of the United
States paper issued in anticipation of
the collection Of taxes or assured
revenues of any State or political sub
division in the continental United
Sttaes. The banks are to establish,
subject to approval of the reserve
board. rates of discount to be charged
for each class of paper. They may
also, with the boards consent, open
and maintain banking accounts in
foreign countries for the purchase or
collection Of bills of exchange.
| In the future, the clcarings of the
banks of the country are expected to
be nude through these regional banks.
which may i'm time lead to the aboli-
ton Of many clearing house associa-
tions.
Clearings which involve banks in
widely SCperatcd parts of the country