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The Commoner
14
VOL.. 13, NO. 32
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Currency Bill Reaches the Senate
After nearly three months of pre
liminary work, the committee on
banl'dng and curroncy submitted
throe currency bills to the somite on
November 22. Tho original Glass
Owen bill went to tho calendar on
Chairman Owen's request, but with
out recommendation.
Tho debate on the curroncy ques
tion was opened in a speech delivered
by Senator Owen, November 24, on
bohalf of the administration forces,
and on Tuesday, November 25, Sen
ator Hitchcock spoke against the ad
ministration bill in a speech setting
forth tho position of tho republican
members of tho banking and cur
roncy committee.
COMPARISON 01? THE BILLS
Following is a comparison- of tho
administration house bill, tho ad
ministration senate bill and tho
Hitchcock-republican bill, as pub
lished in tho Philadelphia Public
Lodger:
ADMINISTRATION HOUSE BILL
Creates 12 regional banks, -capitalized
at $100,000,000. Stock, which
is to bo subscribed by individual
banks, represents 20 per cent of their
combined capital; national banks are
compelled to join, but state banks
and trust companies may join.
Tho federal reserve banks shall bo
banks of issue and rediscount and
shall be the fiscal agents of the
United States government.
Stock shall be subscribed by the
national banks. One-fourth shall be
paid for in cash, one-fourth in 60
days and the remaining-one-half sub
joct to call.
Division of Earnings
Stock to pay 5 per cent, Addi
tional earnings to be divided as fol
lows: ( One-half to create a sinking
fund of 20 per cent. Above that net
earnings shall be distributed 60 per
cent to the government and 40 per
,cent to member banks in the ratio
of their average balances with the
reserve bank.
" Regional Bank Officers
Nine directors shall conduct each
regional bank, six to be chosen by
the banks and three by the federal
resoVve board. One-half of those
. named by the banks shall represent
the financial and commercial inter
ests of the district.
Federal Reserve Board
Shall consist of seven members, in
cluding the secretary of the treasury,
secretary of agriculture and con
troller of tho currency. Four shall
be named by the president with due
regard to tho geographical divisions
of the country. Salaries $10,000
and term of office eight years.
Rediscounts
i
Rediscount privilege shall bo ro-
ptricted to member banks and limited
to commercial paper maturing with
in three months. Four months paper
may be redlscounted, however, when
reserve. bank has one-third cash re
eorvo. Reserve banks shall receive de-
Dosits of money, checks and drafts
for collection and bills of exchange.
They shall also receive all govern
ment ' funds above the necessary
working balance in the treasury.
Foreign Branches
Any national bank with $1,000,000
capital may establish, a branch
abroad.
, Savings Department
National banks may segregate 20
er cent of their capital stock and
. operate a savings bank department.
i 'Reserves Against-Deposits ;-
Country banks shall maintain a 12
'.. iev'cont reserve, of which 5 per cent
! shall bo in their own vaults in law
ful money.
For 14 months 3 per cent and
thereafter 5 per cent of its reserves
shall be maintained with the reserve
bank. Tho romainder may bo left
on deposit with reserve city banks.
Noto Issues
Thp federal reserve notes are to be
issued at the discretion of tho fed
eral reserve board. They shall be
redeemable in gold or lawful money.
Notes shall be issued on collateral
security of equal amount. They shall
bo secured by a reserve of 38 1-3 per
cent in gold or lawful money.
Redemption Fund
A 5 per cent redemrtion fund in
gold shall bo maintained at the treas
ury. Collections
Rosorve banks thall receive at par
checks and drafts upon any of its de
positors, making no charge for col
lection. Bond Redemption
Any national bank may apply to
the secretary of the treasury in any
one year for the refund of 5 per cent
of its 2 per cent bonds bearing the
circulation privilege and shall re
ceive 3 per cent 20-year bonds with
out their circulation privilege.
At the end of 20 years all twos
shall be refunded and the outstand
ing circulation canceled.
ADMINISTRATION SENATE BILL
Creates eight regional reserve
banks, to bo capitalized at $106,000,
000, equal to 6 per cent of tho com
bined capital and surplus of member
banks.
Membership of national banks is
made compulsory and of state banks
permissive.
If the stock is not subscribed by
tho banks it shall bo offered to the
public, and that not absorbed shall be
taken by the government. No person
or corporation except a member bank
shall securo more, than $10,000 of
stock.
Division of Earnings
Stock shall pay 6 per cent divi
dend. Tho surplus earnings shall
first go to create a 20 per cent sur
plus fund and after that to the
United States as a franchise tax. The
government's earnings shall be ap
plied to reducing its bonded indebt
edness.
Regional Bank Officers
The affairs of
bank shall be
board of nine
classes: Class
chosen by the
each federal reserve
administered by a
directors of three
A Three members
banks. Class B
Three members chosen by the banks'
representatives from the agricultural,
industrial and commercial world.
Class C Three members selected by
the federal reserve board.
Federal Reserve Board
Supervision of the whole system is
lodged in a federal reserve board of
seven members, including the secre
tary of the treasury and six members
named by the president.
The directors shall be chosen with
due rejard to a fair representation
of the "financial, commercial and
geographical divisions of the coun
try." They shall serve for six years
and receive $10,000 per annum.
Rediscounts
Reserve banks may rediscount the
direct obligations of member banks,
secured by "satisfactory securities."
Tho amount loaned shall not exceed
three-fourths the value of these
securities.
Discount of bills receivable or
foreign bills and acceptances shall be
subject to regulations imposed by
tho federal, reserve board.
Foreign Branches
Any member bank with $1,000,000
capital and surplus may establish a
foreign branch.
Savings Department
Stricken out of the bill.
Reserve Against Deposits
Federal reserve banks shall main
tain a 35 per cent reserve in gold or
lawful money against its deposits and
note issues in circulation. Its gold
reserve in its own vaults and with
the treasury for redemption shall be
33 1-3 per cent of notes outstanding.
County banks shall maintain a 12
per cent reserve against their de
mand liabilities and 5 per cent of
their time deposits.
The disposition of these reserves
varies after 14 months, and again
after 36 months.
Collections
A federal reserve bank shall col
lect checks and drafts for its mem
ber banks or other reserve banks,
but a reasonable charge may be made
by the member bank making the. col
lection, subject to the approval of
the federal reserve board.
Bond Redemption
Any member bank may surrender
its 2 per cent bonds to the secretary
of the treasury, who shall assume re
sponsibility for the outstanding Vank
note issues thus secured.
At the option of the federa.1 re
serve board these bonds may be con
verted into 3 per cent bonds, or as
one year treasury notes renewable
for 20 years and bearing 3 per cent
interest.
The limit of redemption shall be
$36,000,000 annually. The circulat
ing notes thus retired shall be re
deemed out of funds furnished the
secretary of the treasury by the fed
eral reserve bank making the applica
tion. The federal reserve board
shall, in turn, deliver to the regional
reserve bank an equal amount of
federal reserve notes. The treasury
shall hold tho bonds as security for
such notes.
HITCHCOCK REPUBLICAN
SENATE BILL
Creates four regional reserve
banks, capitalized at $106,000,000,
representing 6 per cent of the com
bined capital and surplus of the
banks.
Four additional reserve Tianks may
be created by federal . reserve board
after two years.
Stock shall be subscribed by tho
public, but underwritten by tho
banks, payment to bo made in gold
or gold certificates, one-third in cash,
one-third within thirty days and one
third within sixty days.
Division of Earnings
Stock to, pay 5 per cent. Addi
tional earnings shall bo divided as
follows: .One-fourth to creato a sur
plus fund o,f 20 per cent, then 37 1-2
per. cent to create a depositors' in
surance fund. All above that goes to
the govornment.
Regional Bank Officers
Nine directors shall operate the
regional reserve bank. Five shall bo
chosen by the federal reserve board
and four by tho member banks.
Federal Reservo Board
Shall consist of nino members, in
cluding the secretary of tho treasury.
The president shall name eight mem
bers for eight-year terms. They shall
receivo $12,000 annually.
Rediscounts
Paper for rediscounts shall bo ac
cepted from member banks at three
fourths of its faco value.
Each member bank, "as a matter
of right," may discount up to an
amount equal to us capital stock. On
per cent moro rediscounts it shall
pay an additional tax of X per cent
and on an additional 50 per cent 2
per cent additional. Tho limit is
made twico the bank's capital stock.
Foreign Branches
Any member bank with $5,000,000
capital may establish a foreign
branch.
Savings Department
Stricken out of tho bill.
Reserves Against Deposits
Country banks shall maintain a 12
per cent reserve against deposits 1
per cent in its own vaults, 1 per cent
to bo deposited each six months in
a reserve bank until 4 per cent is so
deposited, and 4 per cent either in its
own vaults or with tho reservo bank.
Noto Issues
Federal reserve notes shall be
issues under authority of the federal
reserve board. They shall be redeem
able in gold alone.
Reserves
Notes shall be issued to reserve
banks in amount equal to the secur
ity deposited and secured by reserves
of 45 per cent of gold or gold cer
tificates. Reduction in the. gold reserve be
low 45 per cent is permitted down to
30 per cent on penalty of a 1 per
cent tax for each 2 1-2 per cent de
crease. Redemption Fund
A gold redemption fund of 5 per
cent shall be maintained at the treas
ury, to be increase.d to 10 per cent
at the discretion of the secretary of
tho treasury.
Collections
Reserve banks, shall receive checks
and drafts for collection, but mem
ber banks may mako a reasonable
charge for collecting and remitting
funds subject to the approval of the
reservo board.
BOOKS RECEIVED
ou
Causes and Cures of Crime. By
Thomas Speed Mosby, member of the
American bar. C. V. Mosby company,
St. Louis, Mo. Price $2.00.
The Future of the Working Class.
Economic facts for employers and
wage earners. By Roger W. Bal on,
president of the Babson statistical
organization, Wellesley Hills station,
Boston, Mass. Based on certain lec
tures delivered by the author at Lon
don and Paris in March and April,
1913. Babson's Statistical Organiza
tion, Wellesley Hills Station, Boston,
Mass. Price 50 cents.
Markets for the People. The con
sumer's part. By J. W. Sullivan. The
Macmillan company, New York. Price
$1.25.
The Mountains- About Williams
town. By George Lansing Raymond,
L. H. D. With an introduction by
Marion Mills Miller, litt. D.. G. V.
Putnam's Sons, New York and Lon
don. Price $2.00, net.
Jim's Western Gems. By J. J
Somers. Prices (postpaid), paper
cover, $1.00; embossed ripple flnisn.
$1.50. Address orders for this book
to J. J. Somers, 417 Fifth Ave., &.
Minneapolis, Minn. Care of The Iron
Trail Co.
Old Fogy. His musical opinions
and grotesques. With an introduc
tion and edited by James Huneite.
Theodore Pressor Co, 1712 Chcstnat
St., Philadelphia, Pa.
Labor and Administration. By
John Tt. Commons, professor of pon . -cal
economy, University of Wiscon
sin, formerly director of the .u.
waukee bureau of economy and e i ,
ciency and member of the dustiml
commission of Wisconsin. The Mac
millan company, New York. Pi ice
$1.60.
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