The Birmingham age-herald., 1915-05-13

of the federal reserve system must com ply with certain general requirements which now apply to national banks. The minimum capital permitted Is s26.eoo. and this requirement. as 10 capital is raised according to the population of the town in which the bank is located. so that in cities of more than 5eo0a inhabitants the minimum capital allowed will be $2oo.000. State banks becoming members must also conform to the provisions of law govern ing national banks regarding the ilmlta- ton to such banks the prohibition of pur. chases Of. or loans upon their own stocks, the Withdrawal or impairment of capital. and the payment Of unearned dividends The board is not disposed to make any hard and fast rules respecting loans upon real estate or mortgages by state banks who wish to become members It will seek rather to provide reasonable limita- tions. so that loans or investments of this character will not be SD excessive in amount as to endanger the banks liquid condition.
 The important question of examina-
 tigns has been fully considered hy the board. As admission to the system win
 be regarded as evidence of a barit's
 strength, the board must necessarily
 have accurate and reliable infornia- 'tien regarding the condition of an s,p-
 plying bank and the character of it's
 management. Examinations must therefore. he under the direction of the
 beard. but it will as far as possible avoid imposing additional expease
 upon a bank by adopting a method of Joint or supplementary examination iu eo-operation with state banking au-
 thorities. It will use examiners and auditors in the employ of the respes-
 tive federal reserve banks in supple.
 mentng the examination conducted
 ks~ t4A taut, IL ~t,,r T. .f ( t. several states, and in passing upon applications for membership the hoard will appreciate the cooperation of the state banking authorities.
 "The membership of state banking in- stitutions in the federal reserve system differs from that of national banks in being optional and the board has felt from the start that the directors of state
 banks should he given the right to ter minate their banks membership in case they should deem it advantageous to do SO, The board does not believe that state banks after becoming members will wish to withdraw from a system which offers SO many advantages, but at the same time it recognizes the responsibilities attached to tho management of the state banks. and having received ample assurances from high legal authorities as to it's powers it will. think, reach the conclusion that the state bank members may, with req son. able limitations as to the ma ximum with draw wal of capital and reserves during any one year. surrender their membership should they elect to do so. l am sure that the board will define its position in this matter clearly within a very short time.
 Permit me. in closing. to impress upoN you all. the fact that we are living in a critical period of the worlds history.
 The sun never sets upon the lands that are sending troops to engage in the most stupendons conflict of All the ages, and the toll in human lives and in destruction of property is enormous. The money cost of this war. and the indebtedness of the nations party to 1t, are beyond the com prehension of the average mind Nh one can predict the duration of this titanic struggle and it's ultimate outcome nor can we foretell what readjustments of cap ital must be made between the nations after the restoratio of peace. We were able last summer to withstand the shock occa stoned by the outbreak of war by put ting into circulation over S300.oOo0oo of emergency currency, now practically all
 retired or in process of retirement After permit such issues, and such currency ex- panson as may he necessary in future will be in the form of federal reserve notes The federal reserve banks can ul- timately provide. even without the state banks as members an emergency issue
 more than three times as large as the
 ma ximum outstanding last year, but it can
 extend direct aid to member banks only. Those of you who control the destnies of state banks are earnestly invited to bring your institutions under the protecting
 aegs of the federal reserve system, and I
 confidently believe that in doing so. not