The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1914-09-18
predict MONEY
Will BE EASIER
Federal Reserve Board Mem.
bers Say New System VIII
Stir Business.
SENATE BILL DISCUSSED
Warburg Says Currency Is Plentiful.
Having Been Hoarded in Banks
by Lack of Confidence.

That financial conditions in the United
States VIII be eased considerably and
business activities quickened upon the
establishment Of the new Federal re-
serve system on or about October Is, was
the substance Of a statement made yes
terday before the House Committee on
Banking and Currency by Paul NJ. War
burg and three other members OF the
Federal Reserve Board
Messrs. Warburg and his associates
appeared before the committee primarily
to discuss the Senate bill that proposes
that State banks be permitted to issue
emergency currency upon terms Of equal
ity with national banks. The members
OF the reserve board dlsapproved the
Senate measures and took occasion in
the course OF their testimony to talk in
an optimistic manner about the imme-
date future OF financial and CONNER
cial conditions in the United States.
Currency HOarded by Ranks.
Mr.. warburg made the statement that
additional issues of emergency currency
as proposed by the Senate bill are IN
necessary. would do no good. and pos
sibly damage by imitation. He testified
further that there Is an abundance of
currency in the country, but that through
lack OF confidence 1t has been boarded by
the banks and by individuals.
This boarding always takes place In
times OF Distress said Mr.. Warburg
1T Is due to lack OF confidence or faith.
In my opinion an abundance of cur
rency to meet all demands will be imme-
diately forthcoming following the In
auguration Of the new Federal reserve
system"
understand that the new system will
be in operation about the middle OF
October.
W. p. @. Harding, a member Of the
Federal Reserve Board, told the COM
mittee that the new system would be
installed as soon as the board had Sc
lected the three government directors for
each of the twelve regional banks. For
some months there has been a suspicion
abroad that the board withheld installing
the new system owing to a fear that IT
might seriously disturb business condi-
tons by decentrelizing the reserves OF
the country. Fears on this score ap-
parently have disappeared. According to
Messrs. Warburg, Harding and the other
members OF the board. the Federal re-
serve system will be established just as
soon as the class directors OF the
twelve banks are chosen and the neces-
sary work Of organization completed.
Three Amendments Recommended.
Three important amendments to the re-
serve act were recommended by the
board members at yesterdays hearing
OF the House committee. One Of them
provides that 'the Federal Reserve
Board shall have power to permit MEM
Der banks to carry in the Federal re-
serve banks any portion of their reserves
now required by section - OF the act to
be held in their own banks"
Section 10 prescribes that member banks
shall keep in their vaults certain per-
centages OF their reserves. 1t Is proposed
to waive this requirement by permitting
members to transfer all OF their reserves
to Federal reserve banks. 1t is estimated
that this would result in an increase Of
credit to an amount approximating dc,-
900, COO.
The second amendment authorizes the
Secretary OF the Treasury ito devise and
put into operation a system Of clearances
Of national bank notes between the
Treasury. Federal reserve banks, and for
that purpose to designate Federal re-
serve banks as agents of the United
States"
The Federal Reserve Board also recon-
mended a change in the Jaw that will
permit national banks to issue notes on
commercial paper to not exceeding Is per