The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1921-04-24

except hat paper that Is issued foi
agricultural purposes or based OF
live stock may have a maturity Oi
siS months from date offered foi
discount.
You viii notice that the board Of
directors Of the federal reserve bank
may limit the amount OF this agri'
cultural paper n live stock paper
TO a percentage OF their assets. An
other beneficent provision OF The act
H. that the federal regerve banks
may issue two kinds Of notes. the
federal reserve notes and the federal
reserve bank notes. The federal re-
botes. drafts. bills OF exchange OF
~Acceptances -rediscounted by h fed
eral reserve banks. and the federal
reserve agent Cwho Ia oue Of tho
directors OF the bank. and " known
by the title Of federal reserve agent
Judge Ramsey being the federal
reserve agent for the Regional bank
auerque are In the Dallas dlstrlct)
shall each day notify the federal re-.
serve board of all issues n With
drnwhls OF federal reserve notes 20
and by the federal bank OF which he
~ accredited. The federal reserve
board may call upon the banks at
any Time for additional security to
~ w - N.NN w NNANhN %
Tho federal cserve notes are by the
statute made obligations Of the Unit
ed States and are legal tender for
all taxes. customs aud other public
dues and are redeemable on demand
Ia gold at h treasury department
III Washington.
Federal reserve bank notes are Sc
cured by United states bonds. No
reserve other Than o per cent re-
demption fund need be maintained
TO protect the federal reserve AMI
notes as these are guaranteed BY tbs
United States bonds, but the federal
reserve notes are protected BY a gold
reserve OF 40 per cent. In other
words. for every $40 Of gold the
10 issued federal reAsrvc notes In
the % OF 500 and when federal
reserve bank notes are issued they
pra tically make clear the intrest
on bonds which have been pledged
to sacure said notes.
You can thus readily understand
why the federal reserve banks can
make enormous profits without
charging a very high rate 81 inter-
est. II the federal reserve banks
wc-e Obliged to depend alone Jpon
tho profits they make of Of their
capital and the reserve funds the
member banks are forced TO Keep
WIN lhfIus IT lh hhuttiNl IT some OF
them would make more than enough
Ia pay IA" g per vent dividend TO
which the stockholders aro entitled.
one Of the provisions OF the fed
eral reserve act Is: Amy member
bank may accept drafts or bills OF
exchange drawn upon IL havins not
more than six months 60 run. eN-
elusive OF days OF grace. which grow
out of transactions involving the inn
I manhattan mr. aWnaWNuNfnw ~ rnaAaa mr.
which grow out OF transactions in
yolying ths domestic shipment OF
goods providing shipment documents
conveying or securing title are at
tached at tho time of acceptance: or
which are secured at the time OF ac-
ccptancc by a warehouse receipt or
other such document conveying or
securing tale covering readily a
ketabie staples. No member bank
shall accept, whether In a foreign or
domestic transaction. for any one
person, company. urn or corpora.
ton 10 any amount equal OF any time
In the aggregate TO more han 10
per cent OF It's paid up and unim.
paired capital stock and surplus I'M
less the bank rs secured either by
attached documents or by some other
nctual security growing out OF the
same transaction al the acceptance
n no bank shall accept such bills
to an amount equal at any time In
the aggregate 20 more than one-half
Of It's paid up and unimpairod capt
tai stock and surplus"
Littlc Aid la Stockmcn.
From the PROVISIONS OF his sec.
ton OF The statute you can readily
see how impossible IL u for tho banks
OF New Mexico having small capital
TO give any substantial aid along the
lines most desired by the cattle and
sheep men,
There is another provision that per-
mits n bank 60 purchase its own ac-
Ceptances but when II does NO these
acceptances are treated az direct
loans 10 The customers and become
subject to the limitations OF section
1900 which limits a loan 10 any one
person, firm or corporation 10 10 per
cent Of tho banks capital ana sur
plus.
have tried Ia show you by n brief
outline of what. tn my opinion, are
tho most important features Of the
federal reserve act, and how perfect
the system Is Tor taking care Of the
commercial needs OF tho country.
The banker ran loan his customer
money to carry on commercial on
torprises and pass the notes he takes
Tor such purposes on 10 tho federal
reserve hank During the crop O
ing periods when largo sums Of
money are needed 10 take rare of
tho demands these notes are dis
counted with tho federal reserve bank
and by them pledged with the federal
rrsorv" agent n p'deral reserve
notes CHAINED and mus tho cur
rency expands.
When the marketing movement IN
over and the need OF funds no long
er exists. the loans are paid of and
Withdrawn and likewise 50 much Of
the federal reserve notes and thus
The currency contracts.
Naturally tho question arises that
" thls h. true, why " money so
acarce7 There In a danger p0lnt
beyond which we cannot 10 or like
the famous Mississippi Bubble" that
almost ruined Franco IN i7i7. We
might expand until We hurst aud IL
Ia for that reason that the brakes
were put on and We were forced 90
slow IN
Wareh0nslng of Wool.
y The Byattm Of storing the wool IN