New Britain herald., 1918-04-26
RESERVE BANK LAWS
ARE TO Be Changed
Officers Cannot Take Pay for
Getting Loans

Washington, April 26.-Important
changes in the federal reserve bank
laws are pending in the house. They
deal with election of directors, per-
mission for national banks to act as
In iduciary capacities, authority to
issue new denominations of federal
reserve notes, reserve requirements
and other mattefs vitality affecting
banking operations.
All these changes are proposed in
bill based on administration recon-
mendations and have been favorably
reported from the banking and cur
rency committee by Representative
Pnelan, of Massachusetts,. Under the
provision of the bill the present law
is to be modified so as to leave to the
discretion of the Federal Reserve
board the grouping of the member
banks of each district into three gen.
sral groups or divisions without the
present requirement that each group
shall contain as nearly as may be one
third of the aggregate number Of tho
banks of tho district. The purpose of
this modification is to make as secure
az possible q fair and equal repre-
federal reserve banks for each group
of banks, the large, medium-sized and
small banks. ..... .........
1t also proposed to replace the
present ballot method of electing a
district reserve elector, by a provi-
sion permitting each member bank to
authorize it's president or other officer
to cast it's vote in such elections. The
aim is to obtain wider participation
by the banks in the election of fed
cral reserve bank directors.
National banks now act in fiduciary
capacities when not in contravention
of state or local laws. The bill eX-
tends these fiduciary capacities SO as
to include guardian of estates, as
signees receiver, committee of estates
of Iunatics'' and other fiduciary ca
racities permitted to state banks,
trust companies or other corporations
which compete with national banks
under the laws of the states in which
tho particular national bank making
application is located.
Issues of federal reserve notes in
denominations $500, $1,000, $4,000 |
and $4,000 in addition to the denom-
nations under present law, the lars'
est Of which is only 500, is proposed |
by the bill. Banks are constantly |
seeking notes of larger denomlna- |
tons and there are daily Withdrawals |
Sof gold certificates from the federal |
reserve banks. It is asserted that, |
federal reserve notes of large de- |
nominations would serve the purpose !
as we'll as gold certificates and If the |
larger denominations were issued, &C
cording to the currency committee,
the federal reserve banks can pay |
tut such federal reserve notes and by
holding their gold certificates con-
serve their all-important gold supply.
A practice whereby any officer,
director, employee Or attorney of
bank slim pulates for, or receives, q
commission or some other thing Of
value for procuring for someone else
a loan or the purchase or disc cunt
of paper or similar obligation, is to
be prohibited under the bill. The
payment of a greater rate of interest
to any director, officer, attorney or
other employe than to any other de-
positor, is prohibited. The bill en-
bodies penal sections relating to the
overcertification of checks, embezzle-
ment, abstraction or wilful misappli-
cation of moneys, funds or credits of
federal reserve banks by their Off
GERS, agents or employees and to false
entries by them. While this penali-
zation now exists as to national banks,
there are no present laws covering
the subject in federal reserve banks