New-York tribune., 1920-09-20
South A t1ica to Haue
It's OoU7e Reserve Bank
Financial System Modelled After American Plan Will
Be Adopted as Soon Legislation Permits; Re-
strictions Fixed Regarding Business Ventures
Far away in the Antipodes will be

Far away in the Antipodes will be
a reflection OF the Federal Reserve sys-
tenn. Tho Union Of South Africa Is
planning to set up a central banking
system modelled after the American
scheme. The idea behind the Federal
Reserve plan has appealed to financiers
throughout the world, but the South
Africans are the first to carry fattery
to the point Of imitation.
AS soon as the necessary legislation
serve Bank will come into being at
Pretoria, and in its structure and
functions it will resemble the ederal
Reserve Bank at New York, Boston and
tho other regional cities in this coun-
try. But since the Union has only
800, 900 white inhabitants, in addition
to between 100000 and 100000 ma
tives who play an unimportant role in
the country's finances, it will be un-
necessary at first to divide the coun-
try. into regions, as was done in the
bank in each region. At the outset
there will be only one reserve bank,
and consequently there will be no need
OF centralizing board, sponding
to cur Federal Reserve Board, which
was created to obtain the benefits Of
centralized banking, without doing too
much violence to the Democratic
party's traditional antagonism toward
the idea Of q central bank.
essential difference. The stock Of the
Federal Reserve banks in this coun-
try is owned by the member banks,
who subscribed in proportion to their
resources, The original capital stock
OF the bank at Pretoria will be
100000 pounds sterling (nearly S.
100000, figuring exchange at par) and
only 30 per cent of this amount will
be, subscribed at so per cent. The
other so per cent will be offered to the
public, and think Of what alluring pros
nectu1ses 1t would be possible to create,
If illusions are made to the current
earnings OF the American Reserve
banks!
To Establish Branches
Like the regional banks here, the
oank OF Pretoria will be authorized to
establish branches, appoint agents and
correspondents within the Union and.
unllke the American banks, may, with
the consent Of the Treasury, establish
foreign branches. The Federal Reserve
oanks here are not permitted to make
loans or advances against stocks and
bonds except government bonds, but
~ IS 1hhlbltlon will not be imposed on
me. bank at Pretoria, which will be
permitted to engage in the following
business:
First. It may make and issue notes.
Second. 1t may accept money On de-
post on current account and collec.
money for public corporations and
private persons.
a;Ihird.: Third: la) It may buy, soil or re-
discount bills Of exchange, promissory
notes or other commercial papers bear
ing two or more good signatures with
no longer usance than is customary
IN the trade and in no case exceeding
ninety days.
(b) 1t may buy, sell or rediscount
to an amount not exceeding 20 per
cent of the banks total discounts, bills
or promissory notes bearing two or
more good signatures drawn or issued
for agricultural purposes or based on
live stock and having a maturity not
exceeding six months and not to ex-
ceed 20 per cent of the total advances
made by the bank.
..lc) 1t may buy, sell or rediscount
bills of exchange and promissory notes
with maturity not exceeding 90 DAYS,
bearing the Endorsement of a bank is
sued or drawn for the purpose Of car
rying or trading in Union government
securities.
Fourth. It may make loans or ad-