Daily Kennebec journal., 1918-04-25
[ChANCE IN LAWS
OF Federal Reserve
Banks Is Pending
FavorabIy Reported by House Bank
Ing and Currency Committee
Planned to Simplify and Facilitate
the Actual Working Of the Banks

the Actual working OF the BANKS
Washington, April 24,-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 fiduciary capacities, authority TO
| issue new denominations OF federal
reserve notes, reserve requirements
and other matters vitally 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
repcy Committee by Representative
Phelan CT 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.
eral groups or divisions without the
present requirement that each group
shall contain as nearly as may be one
third Of the aggregate number Of the
banks of the district. The purpose Of
this modification is to make as Sc
cure as possible fair and equal rep
resentation on the directorate Of the
| federal reserve bpnks 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 provision
/ permitting each Tember bank, to au-
thoriZe 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
erai reserve bank directors.
! National banks now act in fidu-
ciary capacities when not in contra
ventiun Of state or local laws. The
bill extends these fiduciary capacities
SO as to include guardian of estates,
assignee, receiver, committee of es-
tates of lunatics' and other fiduciary
capacities permitted to state banks,
trust companies OF other corporations
which compete with national banks
under the laws Of the states in which
the particular national bank making
application is located.
Issue of federal reserve notes in
denominations of $500, $1,000, $4,000
and $4,000 in addition to the denom-
nations under present law, the
largest Of whicn is only $780, is pro-
posed by the bill, Banks are constant
~ seeking notes Of larger denomna-
! tions and there are daily Withdrawals
of gold certificates from the federal
roc hav, = -, e.
eral reserve notes of large denomina-
tions would serve the purpose as we'll
as gold certificates and if the larger
denominations were issued, according
to the currency committee, the fed
eral reserve banks can pay out such
federal reserve notes and by holding
their gold certificates conserve their
all important gold supply.
A practice whereby any officer. di-
rector. employee or attorney of
bank stipulates for or receives. a
commission OF some other thing of
value for procuring for someone else
loan or the purchase or discount of
paper or similar obligation, is to be
prohibited under the bill. The pay
ment Of greater rate Of interest to
any director officer, attorney or other
employee than to any other deposi-
tor, is prohibited. The bill embodies
penal sections relating to the over
certification Of checks, embezzlement,
abstraction or Wilful misapplication
of moneys, funds or credits of fed
eral reserve banks by their officers,
agents or employees and to false en-
tries by them. While this penaliza-
ton now exists as to national banks,
there are no present laws covering
the subject in federal reserve banks.