UL. r
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THE NORTH PLATTE SEMI-WEEKLY TRIDUNE.
s
IM fa
KCilESIN
CURRENCY SYSTEM
New Money Law Displaces 122-Year-Old
Code.
IS FAR-REACHING IN SCOPE
Most Important Law Relating to Fi
nance Passed In Many Years Es
ccntlal Features of the Meas
ure Explained In Nontech
nical Language.
Washington, Dec. 23. Tho now bill
affecting tho currency, banking and
finances of tho country Is ono of tho
most far-reaching measures relating to
finance that have- been enacted In
many years.
Tho magnitude of the subject, tho
diversity of Interests affected and tho
Ijprgth of the debates In both branches
of congress 1ms to follow tho changes
and grasp the essentials of this highly
technical measu'ro In Us Important
bearings on money, finance, banking
and the entire range of fiscal subjects,
public and private, which It affects.
Summary of tho Bill.
With 'a view, therefore, of present
ing succinctly and In non-technical
language an epitome of tho salient fea
tures of tho measure as finally framed,
tho following summary b given of the
bill as a whole and of Its principal de
tails: CJeneiUlly speaking, tho first steps
to bo taken to bring Into operation the
nation's now financial system will bo
through an organization committee
consisting of tho secretary of the
treasury, secretary of agriculture and
controller of the currency.'
yanks have CO days within which to
Die their applications for membership
In the hew system, and one year's
time Is allowed before tho government
will compel the dissolution of any na
tional bank that refuses to Join.
Will "Take Up tho Slack."
The now law will make llttlo direct
change In tho operation of tho pres
ent national banks, except to allow
them to loan a certain amount of their
funds upon farm mortgages.
Its chief purpose Is to add a new
plscu of machinery to the banking
system that will "take up the slack"
during the changing business condi
tions off each year; that wUl give tho
banks a place to quickly convert their
assets into cash in time of need, and
that will bring out new federal cur
rency when It is needed, and retlro it
when money becomes "cheap."
Banks are now required to keep a
cortnin percentage of their deposits as
"reserves," part in cash In their own
aults and part of which may bo ro
deposlted in the banks of New York,
Chicago, St. Louis and other designat
ed cities.
In times- of sudden financial de
mands, yhen banks have loaned up to
tho full limit of their resources, these
reserves furnish little relief, because
if they are paid out to meet demands
tho banks are left in a precarious con
dition. Basic Principle of Law.
Tho basic principle of tho now law
Is to get these reserve funds out Into
circulation when necessary without
lensenlng the safety of any bank, and
to provide a place to which local
banks may rush in a crisis and get
cash for the "prime commercial pa
per" they hold In their vaults.
This is to bo accomplished through
ft chain of regional reserve banks, or
"reservoirs of reserves," in which all
banks ehall deposit a stated part of
the money they are required to hold
ns reserves.
Under tho new uystom, when a
financial flurry comes theTbanks can
take commercial paper, such as notes,
drafts and bills of exchange to these
"reservoirs," and secure tho ueo of
tholr own reserves, or, if necessary,
oven the reserve of other banks, by
depositing this security.
Tho new regional banks will ro
ceho about one-half of tho bank ro
Berves of the country. They In turn
will bo permitted to loan back to tho
banks all but 35 per cent, of thoso
reserves, bo that In case of emergency
millions of cash can bo brought out
into circulation quickly.
The banks will have to pay for these
loans, however, as individuals have to
pay for a loan from any local bank,
and this charge is expected to provent
the too free use of the reserves held
by the regional banks.
New Paper Currency.
A now form of paper currency Is
alsti, provided for, to como out In caso
of emergency, and which Is oxpectcd
to gj back Into tho hands of tho gov
ernment when times are normal.
These "treasury notes" will bo printed
by tbo government and Issued through
each regional reserve bank, and will
boar tho guarantee both of tho re
gional bank and of tho government.
If tho demand for currency In any
section of tho country exceeds tho
tfupply of circulating money a roglonal
bank can secure this now money
from tha government and put It Into
circulation; but a gold reserve of 40
per cent, and commercial paper equal
to tho full valuo of tho noto must bo
held as a reservo bohind each note
issued.
This provision is expected to bo tho
influence that will drive tho now
money back into retirement when It
1b no longer needed.
Clearly Explained.
The following analysis presents tho
detnili) of tho now law without ad
hering closely to tho technical djvlslon
or langunge of tho"measure:
At the head of tho system will stand
a federal rcsoiro board it Washing
ton, appointed by tho president, and
to consist of tho secretary Af tho
treasury, tho controller of tho curren
cy and flvo othor members. Two of
thoso shall bo export bankers, but
nono shall havo banking affiliations or
own bank stock during their service.
This board will cxerclso general con
trol over tho entire system.
Tho temporary "organization com
mittee," or tho federal reservo board,
will solcct from eight to twelvo cltlea
whoro regional reservo banks shall bo
located and will dlvldo tho entire
country geographically with these
cities ns tho centers of districts. All
national banks In a district will bo
required to subscrlbo for tho stock of
the regional reservo bank In that dis
trict and to keep a portion of their
reservos thero.
Known as "Member Banks."
Local banks will be known ns "mem
ber banks" because they will own the
stock of tho regional resorvo bank
oMhelr district. Each member bank
will bo required to tako capital stock,
of the regional reserve bank, equal to
C per cent, of tho member bank's capi
tal and surplus. Tho capital of tho ro
glonal bank will lncreaso or decreaso
so that It always represents 6 per
cent, of the combined capital and sur
plus of all the banks of tho district
that have Joined tho system.
National banks nro compelled to
Join and stato banks are permitted to
If thoy bring their reservo require
ments up to tho standard set for na
tional banks and submit to national
examinations.
Public Can Buy Stock.
Public ownership of tho stock of tho
regional reservo banks Is permitted
only In caso enough banks do not Join
in any district to provide a capital
stock of $4,000,000. In such event the
public may purchase tho stock In
quantities limited to $25,000 for each
individual, but tho voting of this stock
will bo placed in tho hands of govern
ment representatives on tho board of
directors of tho regional reserve bank.
Tho regional reservo banks may do
business only with tholr member
banks, not with the public, except that
certain "open market operations" such
as tho purchase and snlo of gold, gov
ernment, or municipal bonds, and cer
tain forms of bills of exchange are
permitted. These banks will make
their earnings from tho loans made to
member banks, and from tho purchase
and sale of bonds and forolgn bills of
exchange
Must Put Up Cash.
Member banks will bo compelled to
put up in cash only one-half of their
subscription to tho cnpUal of tho now
banks, the rest can be called for if
needed by tho regional bank. Divi
dends of G per cent, will bo paid on
this stock to the member banks, and
tho stock will bo non-taxable.
After theso dividends are paid one
half of the surplus not earnings goes
to create a regional surplus fund, and
when this has reached 40 per cent, of
tho regional bank's paid in capital
theso earnings aro to go into the
United States treasury. Tho balances
of tho net earnings are to bo paid to
the United States as a franchise tax.
With tho machinery thus created
for a new banking system that is sup
plementary to tho commercial banks
of the country, tho law provides for a
gradual transfer of part of the bank
resorves to theso new "reservoir"
banks.
In order not to disturb business con
ditions, or to withdraw too suddenly
tho heavy deposits of country banks in
tho largo cities, tho law provides that
threo years may bo consumed in shift
ing theso balances and that, if neces
sary, part of the reservos transferred
to tho regional banks may consist of
commercial paper.
HOW DISPUTED POINTS WERE ADJUSTED
The following changes nffectlng points at difference between tho
senato and house were made in conference:
Comptroller of currency and secretary of ngriculturo retained as
members, of organization committee.
Comptroller of currency mndo ex-offlclo member of federal rosorvo
board and total membership retained at seven and tho term of office fixed
at ten years.
Alaska excluded from provisions of act.
After fedoral reservo districts aro established, national banking asso
ciations shall havo 30 days In which to subscrlbo for capital stock of re
servo banks.
Individuals may purchaso up to $25,000 stock in federal reserve bank
instead of $10,000, as provided in houso bill.
Stock not held by member banks shall not bo entitled to any voting
power whatover.
Number of regional reservo banks to bo "not less than eight nor more
than twelve,1" as provided by tho senato.
Tho minimum capital of roglonal reserve banks fixed at $4,000,000.
No senator or representative can bo an officer of a federal reserve
bank.
No director of Class C directors of federal reserve board shall bo an
officer, director, employe or stockholder of any bank.
Each member bank is permitted to nominate" ono candidate for Class
A and ono for Class B directors.
Subscription of member banks 6 por cont. of capital and surplus of
subscribing bank.
Sonato provision for tho guaranteo of national bank doposlts elim
inated. Uso of federal reservo notes as part of resorves of member banks
stricken out.
At least one-third of tho reserves of tho country banks must bo hold
in tho vaults of local banks.
House provision for collections at par practically restored, banks to
bo pormltted to collect only actual expenses.
Retirement of 2 per cont. bonds aggregating $300,000,000 within 20
years provided for ns against retirement of $125,000,000 In senato bill.
Gold reservo behind tho notes remains nt 40 por cent., with n gradu
ated tax against any depletion.
Salary of members of tho federal board Increased from $10,000 to
$12,000.
Mombers of reservo board shall servo two, four, six, olght and ton
years Instead of ono to flvo years.
Reservo board can llquldato or reorganizo reservo banks.
Compensations for directors, officers and employes of federal resorvo
banks shall bo subject to tho approval of tho federal resorvo board.
Recess appointments to reservo board shall expire 30 days after tho
following session of congress opons.
Net balanco of amounts duo to and from other banks Hhnll bo taken
us tho basis for ascertaining tho deposits against which reserves shall bo
determined.
Th amount of resorvo required
from every bank under tho now law,
and tho placo whoro it must bo kept,
are ns follows:
Country banks Total reservo requir
ed, 12 psr cent, of domand deposits
and 5 per cent, of tlmo doposlts. Fivo
twolfths must bo hold In tho bank's
own vnults for two years and four
twelfths after that. For tho first year
two-twelfths must bo kept In tho ro
glonal bank, increasing one-twelfth
each six months thereafter until It
reachos five-twelfths of tho total re
serve For threo years tho unallotted
part of tho resorvo may bo kept In
tho banks of reserve cltleB. After
that .lmo It must bo kopt cither In
tho country banks and vaults or In tho
regional reservo bank.
Reservo city banks Total reservo
required, 15 por cent, of demand and
5 per cont of tlmo deposits. Six-fifteenths
must bo kept in tho bank's
vaults for tho first two years and flvo
fifteenths after that time. Threo-flf-teeuths
must bo kept In tho regional
reBervo bank for tho first yenr, In
creasing one-fifteenth every six
months thereafter until it reaches six
fifteenths. For 'threo years tho un
allotted portion of tho rosorvo may bo
kept in other banks, In its own
vaults, or in tho regional bank; after
that tlmo in ono of tho "latter two
places.
Centrnl resorvo city banks (New
York, Chicago and St. Louis) Total
resorvo required, 18 per cent, of de
mand and 5 percent, of time depos
its. Seven-eighteenths in tho regional
resorvo banks nnd tho remaining flvo
eighteenths In cither placo tho bank
may chooso.
Regional Reserve Banks.
Theso Immense fundB of reserves
from "member banks," together with
government m6noys, will mako up the
deposits of tho regional reservo banks.
Each of those banks will bo adminis
tered by a board of nino directors, six
of whom will bo elected by tho banks,
and threo appointed by tho federal re
serve board. -
Tho regional reserye banks mayre
district that is, buy at a discount
from its member banks "prime com
mercial paper" when tho member
banks desire to convert theso assets
Into money.
Character of Paper.
Tho exact terms of this important
provision as to the character of paper
upon which the regional reservo banks
may furnish cash aro as follows:
"Upon tho indorsement of any of its
member banks, with a waiver of de
mand notice and protest by such
banks, nnd federal (roglonal) reservo
bank may discount notes, drafts, and
bills of exchange arising out of act
ual commercial transactions; that Is,
notes, drafts, and bills of exchange is
sued or drawn for agricultural, Indus
trial or commercial purposes, or tho
proceeds of which have been used, or
nro to bo used, for such purposes, tho
federal reservo board to havo tho
right to determine or define tho char
acter of tho paper thus ellglblo for
discount, within the meaning of thlB
act.
Eligible for Discount.
Nothing in this act contained shall
bo construed to prohibit such notes,
drafts and bills of exchange, secured
by staple agricultural products, or oth
or goods, wares, or merchandise, from
being eligible for such discount; but
such definition shall not Include notes,
drafts, or bills covering merely invest
ments or issued or drawn for tho
purposo of carrying or trading In
stocks, bonds or other investment se
curities, except bonds and notes of tho
government of tho United States.
"Notes, drafts and bills admitted to
discount undor tho terms of tho para
graph must havo a maturity at tho
tlmo of discount of not moro than 90
FIVE FUNDAMENTALS "
OF THE CURRENCY BILL
Issue of currency, guaranteed by
the government, based upon notes
and bills representing commercial
transactions and backed by a gold
reserve. Tho new currency Is ox
pected to contract and expand to
meet the varied demands of trade.
Concentration of the bank re
serves of the country In regional
Institutions capitalized by tho
banks of tho country and con
trolled by directors elected by the
banks.
Creation of a market for the ne
gotiable commercial paper which
form 8 the bulk of the assets of the
banks, where, In time of stress,
those assets may be easily and
without loss transformed Into cash.
Establishment of from eight to
twelve great regional banks
throughout the country, which will
Issue currency, rediscount paper
and centralize and mobilize the re
serves of the local banks.
Creation of a federal reserve
board of seven members appointed
by the president, with final powers
of control and supervision over the
entire system.
days; provided, that notes, drafts and
bills drawn or issued for agricultural
purposes or based on llvo stock aud
having a maturity not exceeding six
months may bo discounted in nn
amount to bo limited to a porcontago
of tho capital of tho federal (regional)
resorvo bank, to bo ascertained and
fixed by tho federal resorvo board."
The "Elastic" Element.
Tho now treasury notes, which aro
to furnish tho "elastic" clement in tho
currency system, and to add to tho
country's circulating money In tlmo of
need, will como Into ubo In tho follow
ing way:
Tho notes will bo printed by the gov
ernment, with a dlstlnctlvo stylo for
each regional reservo bank. One of
tho three directors named by tho fed
eral reservo board for each regional
bank will bo known ns tho "federal re
serve agent" for thnt bank, and a sup
ply of the notes will bo placed In his
custody.
Should a regional bank desire to
pay out moro money than Its cash re
sources will permit, tho law provides
that it may pursomo of its rediscount
cd commercial paper Into tho hands
of tho "federal roserve agent," and re
ceived in return tho ucw treasury
notes.
For ench noto that it puts out Into
circulation, tho regional reserve bank
must set aside In gold 40 per cent, of
tho valuo of tho noto as a guaranteo
for Its redemption. This gold, with
tho commercial paper hold by tho
"federal reserve agent," is tho pro
tection behind tho now money; but
theso notes will also bo guaranteed by
tho government and may bo redeem
ed in gold in the United States treas
ury. Reserve Required.
Each regional bank, undor tho act,
muBt keep a reservo of 35 por cent, of
tho doposlts it has received, besides
tho 40 per cont. gold reservo bohind
tho treasury notes It Ibbuos. If tho
gold reserve behind tho notes falls be
low 40 per cent, a heavy tax Is im
posed on tho bank, which In turn adds
tho tax to tho rato it charges member
banks for rediscounts. This was de
signed to stop an over-expansion of
currency. In times of sudden stress
tho federal reservo board can suspend
thoso resorvo provisions, In order to
furnish quick relief to any commu
nity. Ono regional bank cannot again pay
out tho notes of another, except under
a heavy tax. These notes aro expect
ed to return to tho regional banks and
bo withdrawn from circulation whea
the need of tffelr use passcB.
Take Up Bonds.
Nono of tho existing forms of cur
rency except tho national bank notes
will bo disturbed by tho now law. Tho
United States bonds, now used to se
cure tho issue of national bank notes,
nro to bo tukon up nt tho rato zl $25,
000,000 a year by tho regional ro
servo banks and new treasury notes
or short term threo por cent, bonds
will tako their place National bank
currency is expected gradually to ro
tire Tho fedoral reservo board will exer
clso final control over tho entire op
eration of the system. It can compel
ono regional bank to loan to another
.in time of need; can suspend all re
strictions surrounding tho reserves
which regional banks must hold, and
can remove directors of regional re
servo banks whenever It Is believed
necessary.
Banks In Control.
While tho banks retain control of
tho boards of tho regional reserve
banks, their connection with tho fed
eral resorvo board Is only "through
nn advisory council, mado up of ono
representative from each fedoral re
servo district. This council will meot
In Washington to confor with tho fed
eral resorvo board "on general busi
ness conditions" nnd to mako recom
mendations and suggestions concern
ing discount rates, noto Issues, and re
servo conditions.
An Important change in national
banking methods embraced in the new
low will permit all national banks ex
cept thoso in Now York, Chicago and
St. Louis to mako direct loans on llvo
year farm mortgages up to 25 per cent,
of their capital aud surplus, or up to
one-third of their tlmo deposits.
Another provision in tho law per
mits national banks having a capital
of $1,000,000 or more to opon foreign
branches. Similar authority Is glvon
to tho regional resorvo banks, tho pur
poso being to fncllltato tho develop
ment of American trado abroad.
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CR0Y DUCHESS "NOT
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Kl E?tJ 19 FJ1 rJ ffl Imn Xm wn HA D Hff HA I Hi HI HI Hf tm LK' HI IHi Hi HffTi
1M1IWU PW
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gngomont Inst April tho mntch was
disapproved at n family council, called by tho dowager duchess of Croy, tho
duko's mother, or mcmborH of all tho branches of tho Croys In Belgium, Prus
sin, Franco and Hungary. Lntor tho Association of High Gormnn Nobility,
nt a mooting at Frnnkfort-on-Mnlu, nltso opposed alio marriage
BACK TO
Ho swung his Bwivol chair nround
from tho flat desk on which docuinonts
of all klnd3 woro arranged In ordorly
'fashion and arose to greet tho visitor
who entered this comfortnblo but
'sovorely plain office Slightly bolow
'medium height ho was, hair whitened
isomowhnt by a llfetimo of hard Berv
ico, cheeks ruddy with health, bluo
I eyes sparkling with flro a man of
sixty, clean cut, full of energy tho
heart nnd mainspring directing forco
of tho Now York Centrnl systorn,
which means boss of 10,000 miles of
railways. Forty years and four has
William C. Brown boon in railroad
work; flvo has ho spent as prosldent
of tho Now York Central. And now '
ho lias handed in his resignation to
to tako effect January 1.
"Yes," ho said, In nnswor to a ques
tion. "I romember very well when I
.commenced work as a railroader. It
Jwas In tho latter part of Juno, 1869,
and n mighty hot Juno day at that. I
wns sixteen years old then, plowing corn on a farm out In northern Iowa. It
was a big flold to plow tho sun bent down with broiling rays, and tho horses
(sweated their way between tho long rows as I guided thom and boro down on
tho plow.
"At ono end tho big flold ran up closo ngalnst tho railroad and when I
,got thero I stopped to lot tho horses rest nnd to catch a breath of air for
myself. Outsldo, on tho rails, was n Bcction foroman, A. J. Leach, and his
gnng at work. Ho looked up and saw mo wiping my forehead. After a single
glunco ho Bald:
" 'Young man, how would you like to go to railroading?'
" 'I'd llko It mighty woll,' I ropllod.
" 'All right,' suld Loach. 'Report for work next Monday morning and'
Btart In.' t
"I did roport tho following Monday morning, and went to work," Mr.i
Tlrntvn rontlnnnil with n. nmlln. "I'vo hnnn rlcht nt It ntrni- ulnnn" I
PANCH0 VILLA,
whon It
artlllrry
is considored that it was dono
taken from tho enomy's far
Ropresontatlvo William P. Borland.
,who not long ago gained inmo uy
Ibrinp.lng a baby homo under each arm
with which to surprlso his wife nnd
augment his household, was seized
by another whim on his recent trip to
Panama and brought homo a monkoy.
Sho was n beauty, as monkoys go,
(and whllo Mr. Borland docs not know
tho Technical namo of tho species, ho
affirms that sho had a whlto faco and
was Just about tho cunnlngcst nnd rar-
,est 1hing In tho monkoy lino ho ovor
saw In fact, sho wnH moro beautiful
thnn good and seemed wholly lacking
in appreciation.
Instead of grovUHng nt his feet in
grrtitudo for being transported from
tho Jungles of Panama right into tho
very arms of u mombor of congress,
sho grow moroflo ovor tho matter, got
to bo n regular man hator, and found
her only Folacn whon bedded on tho
nlco soft muff ol Mrs. Borland. Mr.
Borland tried to win her heart, but
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MR. BORLAND'S LATEST PET
three bites now mar his beauty. Tho monkoy? Well, aho 1b out at tho Na
tional zoo nt Washington, whoro sport tho wild animalB corralled by Theodoroi
Roosevelt in tho wildB of Africa and Yollowstono park; tho collection of
possumfl sont to President Tnft nnd President WilBon, and the parrots and
things brought back by othor mombors of congress on tholr various trlpa to
Panama.
EQUAL OF HUSBAND"
Tho 1914 edition of tho Almannch do,
(lotha, which has Just appeared In)
llorlin, categorically nnnouncos thntl
tho marrlagq of Miss Nancy LelBhniniit
and tho duko of Croy "Is not' a mar-i
rlngo of equal birth."
It 1b understood In royal circles that;
this phraseology, which 1b unusunl in
tho Almannch, is printed nt tho insti
gation of tho Prussian royal horald'o
office and Is lntondod ob notlco to tho
duko thnt his wlfo is not entitled to;
tho privileges of tho kaiser's court or'
tho other royal courts of Gormany.
When tho duko of Croy nnd Mlssi
Nnncy Lolshmnn wero married at
Geneva on October 2S thero was a,
Btrong presumption that tho bride
would not bo acknowledged as thoj
duchess of Croy in Gormany. The
marrlngo took placo without tho con
sont of tho kaiser aud with tho disap
proval of tho family of tho duko.
Upon tho announcement of tho on-
THE FARM
SOLDIER OF LUCK
No man In any of Mexico's countless,
rebellions and rovolts has gono
through a' moro comploto chango of
circumstance than has Pancho Villa
in tho laBt flvo months, and to fow
men has thoro over boon glvon a moro
kaleidoscopic career in a llto time
than this desporado diplomatist has
Jammed into tho last flvo years of his
oxlstcnco.
Escaping from United States bordori
patrols and Mexlcnn federal Infantry,
nnd cavalry last March, Villa took tho
flold with a slnglo horso, which had
boon "borrowed," two sacks of flourl
and nino men. Last month ho re-1
turned with upward of 10,000 follow-i
ors, mostly woll armed, quick moving1
cavalrymen, 38 largo flold pieces, 60i
rapid flro mnchlno guns, a tralnload of
ammunition, othor tralnloads of sup-i
piles for his troopB and moro thnnj
$5,000,000 in Moxlcan monoy.
Villa's record of triumphs In tho,
last year Ib all tho moro wonderful
almost entirely with ammunition and)
stronger forco.
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A