The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-01-06
RESERVE BANKS TO
DEAL IN STATE NOTES
Federal Board Issues Tentative
Regulations for the New
Function.
A WIDE FIELD OUTLINED

wAsuINoroN. Jan. The exercise OF
nm additional function by the Federal
reserve banks was foresradowed to-day
when the Federal Reserve Board issued
tentative regulations for the purchase OF
warrants by the banks.
The banks are authorized by the Fed
eral reserve act to buy aud sell in THIS
country aud abroad the six months ma
turity obligations OF states, II being pro-
vided that such operations shall be gov
crned by regulations To be formulated
by the Federal Reserve Board. Here are
important excerpts from the regulations
"For hrcvity's sake the expression war
rants when used ~ this regulation shaI
be construed to mean: Bills, notes, rev
enue bonds and warrants with maturity
from date Of purchase Of not exceeding
ak months and the expression munich
nality' shall be construed TO mean state
county, district. political subdivision or
municipality Ia the continental United
states. including irrigation drainage anu
reclamation districts
81 4 Federal reserve bank may pur-
chase such warrants as are issued BY
municipality
"(A) In anticipation OF the collection
Of taxes or iu anticipation or the recelpt
OF assured revenues. The taxes or as
rants' have been issued must be due and
payable or or before the date OF maturity
Of such warrants For the purposes or
this regulation taxes shall be considered
as due and payable on the last day which
they may he paid without penalty.
"CBJ As the general obligations OF the
entire municipality II being intended
To exclude as Ineligible for purchase all
such obligations as are payable from To-
cal benefit and special assessment taxes
when the municipality at large Is not
directly or ultimately liable.
"CC) Which has been In existence
for period OF ten years; which FOR a
period of ten years previous to the pur-
chase has not dcfaulted for period eX-
ceeding fifteen days in the payment OF
any mart Of either principal or interest OF
any funded debt authorized to be con-
;racted by II: and 3--whose net funded
Indebtedness docs not exceed 10 per cent
of the valuation Of its taxable property
10 be ascertained by the last preceding
valuation of property for the assessment
OF taxes.
AS A definition of he term net funded
Indebtedness as used In / tC) above
in further explanation Of ! co / and ?
relative TO the term Of existence OF and
uon-detault by the municipality the Fed
eral Reserve Board has adopted in sub
stance the definitions and regulations Of
tne lotl'l W llhsA'N "a ha'N fNoNN' -
inHs system
An iutcrcsting hearing hy the Fedora
Reserve Board is promised for tomorrow
when representatives, OF the Baltimore
bankers will protest against the designa
ton Of Richmond instead OF Baltimore AT
Federal reserve city.
1, became known TO-DAY that as irs
step In their argument the counsel OF th'
Baltimore bankers will seek to have Sec
re,arv McAdou and Comptroller OF tn
Currency Williams excluded from vot
on their protest.
These officials, it will he pointed on,
served as members OF the ORGANIZATION
committee which designated Richmond
the home Of Comptroller Williams, as
reserve city.
The Baltimore protest will advance con
tentlons that the organization committe
i"ugglcd figures to make the designatio
OF Richmond seem plausible ENceptio
will be taken to the statement OF the OF
ganizatiou committee that Richmon
loans more money TO the South than doe
Baltimore.
To Permit RediscOunt Acceptance
An amendment to the Federal resery
banking and currency act which woul
permit reserve banks to rediscount az
ceptances based on exports and import
was favorably reported to-day by u
senate RANKING ana currency Commute
The amendment limits the acceptance
which may he discounted. to those havir
q maturity at the time OF discount OF NJ
more than three months. The acceptance
must also bear the endorsement; OF at lea
one member bank before being redi
counted
II was further provided that at no tin
should the amount OF acceptances so d'
counted exceed ouc-half the paid up az
unimpaired capital and surplus OF q
bank Tor which the redlscounts are ma
except by authority Of the Federal r
serve Board under such general reguI
lions as the board may prescribe.
Tho Federal Reserve Board has mac