The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-12-02
CREDIT AID NOW, SAYS
NATIONAL CITY BANK
Officers in Monthly Letter Dis
cuss Advantages Gained
Through Reserve System.

The monthly letter Of the National City
Bank for December IL largely devoted to
the details of the setting In operation OF
the new Federal Reserve system, the re-
serves OF the country released under the
new banking act and the financial situation
in this country and abroad by reason of
the war. The banks officers look upon
the Inauguration OF the new system as the
most important event of the month In
the business world" and say that now the
system has taken tangible form 1t can be
measured up against its responsibilities.
The effectiveness OF the reserve banks"
the circular goes on, will he shown in
their ability to promptly concentrate sup
port at any point OF weakness before
alarm becomes general and confidence is
also inspired by the fact that In any real
emergency their ability to rediscount may
be used practically without limit as the
Federal Reserve Board has the power TO
suspend all reserve requirements.
The reserve banks have another re-
source which has not as yet been placed
at their disposal, and that is the Treasury
deposits. The Secretary OF the Treasury
may deposit all moneys Of the general fund
with them and make all Government pay
ments by drawing on them. At the pres
cut time the amount OF lawful money in
the general fund is about $3.50 900 600.
Perhaps the most notable feature Of
the first statement is the showing of re-
serves released in the member banks.
New York coming TO the front with a
surplus OF sl37,00O.00o. 1t is. OF course.
true that with the rediscounting pr!vi-
leges now available II will be unneces-
sary for the member banks to carry as
large reserves as formerly. but IL is obv'-
Gus that herein lies provision for credit
expansion on very large scale.
These reserves have been released for
use. in the discretion OF the bankers. and
IL may be assumed that ultimately they
will come into use. but II clearly de-
sirable that they shall not be used freely
Ut present. Such a degree Of expansion
suddenly made--would b. abnormal
and unhealthy at any time. and In the
early operations OF the reserve banks
might bring embarrassment to them.
The credit situation in the United
! states is enormously improved by having
the reserve banks in operation. bur the
gold resources of these banks are not yet
so large that they can view adverse for
eign balances with Indifference We are
still weak In our international relations
by reason OF the fact that so large a part
OF our gold stock is scattered in $4,000
banks and in circulation. while demands
for export in the future as heretofore will
fall on New York
1T would be highly desirable. IL prac-
! ticabe that these released reserves OF
the member banks were turned over to the
| reserve banks to he held and used by
| them for the support Of the general situa-
J tiou until the financial conditions super
| induced by the war had become more
settled since this is impracticable there
| remains nu.hiug To- say except that II Is
! the duty OF every banker. whether in the
new system or out of II. to cooperate
| with that system and do his part 10 make
| its policies elective"