Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1917-06-19
FEDERAL RESERVE
ACT STRENGTHENED
Amendments Designed to Open
Doors to State Banks and
Trust Companies.
ALSO TO CONCENTRATE GOLD
Changes Expected to Make FL
nancial System of Country
Almost Impregnable.
ALSO TO CONCENTRATE GOLD
IRy Associated Pro. .

BY Associated Press
WASH iNGToN. June lS-Amend-
mcn,s to tho Federal reserve nc, do
signed TO strengthen tho financial .r.
ten of the country by the concentration
of gold reserve in Federal reserve ba
and to open wide the doors Of tho Fed
cral reserve system to the State banks
ana trust companies. were sen, to the
President to-day for his signature
The Senate finally accepted :, confer
"ncc report previously approved bv the
House.
The first effect of tho changes will
he the shifting of more than $500. 600 :
600 in reserves from the banks of the
country to the Federal reserve banks
where the great store Of gold yill be in
a position to achieve its maximum off
cheney. The effect Of this shift. Off
ciais believe. viii he of incalculable
benefit TO tho financial system OF
country al this time. when the strain
of heavy Withdrawals from the money
markets to meet installmcnts on the
Liberty loan impends.
Under the existing law. the banks
had until next November to divert tina
portion of their reserves with other
banks TO the Federal reserve banke
The amendments advance tho date and
the diversion of this gold to the re-
serve banks is ordered at once
Hundreds Of large trust companies
and state banks are expected to come
in under the amendments
With their addition. officials believe
that the financial system OF tho coun-
try Will be as nearly impregnable as
human ingenuity can make it.
ACCESSION TO BE BROrGHT
ABOUT IN TWO WAYS
Accession OF trust companies and
state banks will be brought about in
two ways--thc institutions may JOIN
the system outright, with the privilege
Of withdrawing at any time. upon a
years noticc--a privilege not granted
them by the unamendcd law-or they
may. by dcpositing portion of their
reserves with Federal reserve bank,
become members OF the Federal reserve
clearance system. the most effective in
the country
The proportion OF the reserves to be
deposited. in the latter case. has yet
10 be determined upon by the board. 1t
il likely that the minimum will be 81
per cent
Officials anticipate landslide of
Stat. banks and trust companies TO
the system within the next few weeks.
The Federal reserve system at pres
ent includes in its membership less
tnan 100 State banks and trust COM
panies. The remaining banks. approxi-
matcly 800 in number. are national
banks. which automatically became
members upon the passage of the re-
serve law. Resources of the system
approximate $4,000. 600 600, or about
one half of the total banking resources
Of the country. 1t is expected that
this figure will be Increased perhaps
as much as so per cent during the
coming year.
FACILITATES ESTABLISHMENT
OF BRANCH BANKS
Another amendment facilitates the
establishment OF branches of Federal
reserve banks by simplifying the or
ganization of the branches and decreas-
ing the expense. 1t is thought that
this amendment viii result in the
establishment, within 81 short time, of
branch banks at Baltimore and other
cities.
The so-called Hardwick amendment
which provided for the legalization
under certain conditions. of collec-
ton charge on checks cashcd by mem
ber banks on out-of-town banks. was
modined so that such a charge cannot
be collected except with the approval
Of the board.
Whether the incoming State banks
Will have to divest themselves Of
directorates interlocking with other
institutions is Il moot question. under
the amended law. Some of the franz
erS of the law believe that such ac-
ton Will not have TO he taken II is
possible that the courts will be called
upon finally to decide this question.
The Federal Reserve Board has ad-
Vocated the passage of these amend
ments for more than year Their
hnal passage is regarded as one Of
the most important steps taken to
strengthen the country's financial sys-
tom since the passage of the act itself
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