The star-independent. [volume] (Harrisburg, Pa.) 1904-1917, 1914-11-16
Sec'y McAdoo Signs
Formal Order To-day
and Great Financial
System Is Launched
1851 BANKS IN
THE MEMBERSHIP
They Have an Authorized Capital of
SOC, s95, 900 and one-sixth Of That
Amount Has Been Called in and
Placed in Their Vaults

By Associated Press.
Washington, Nov. 16.-Seeretary
NeAdoo early to-day signed the formal
order announcing that the twelve Fed
eral reserve banks were established and
ready for business 1t was the final
step required to set in motion the ma
tion s new currency system and found
the regional banNs ready for operation.
The Secretary sent the following tele-
gram of congratulations to the Federal
reserve agent and governor of each of
the Federal reserve banks:
Please accept MY cordial congrat-
ulatioRs upon the opening of the Fed
eral Reserve bauk of your district and
my sincere commendstion upon the ef-
feetive work YOU have done in prepar-
ing the bank for business in the short
time allowed ,or the opening. l am
sure that the Federal Reserve banks
will serve q great aud beneiceht pur-
pose in the future of our country, and
| am sure that this department and the
Federal Reserve Board may count upon
your loyal cooperation in the. important
work and duties which have been con-
ided to you. My hearty good wishes
for your success.
Regional Bank Centess
The regional hanks which will serve
as centers to provide for the CONNER.
eial requirements of the country have
been established in New York, Boston,
Philadeiphia, Cleveland. Chicago, Min
neapolis, ST. Louis. Kansas City, Allan
20 Rfah l-tl nj M
co. Their operations for the next few
months will consist largely of the re-
diseountiIg of notes. drafts and bills or
exchange. Later their field will be ex-
tended to permit them TO exercise the
remaining functions defined by the cur
reney law.
In the new system are 1851 mem,
her banks, with an authorized capital
placed at Sl06.795. 900. One-Sixth Of
that amount has been called in and
placed in their vaults. Cash reserves
in the Twelve regional banks is eSti-
mated at nearly s250,000,000, drawn
under the currency law from present re
serve agents of the member banks.
opportune Time For New System
Members of the Federal Reserve
Board felt to-day they had establish
ed the system Just when conditions
presented excellent opportunity to test
its value. Ability of the reserve banks
to rediscount commercial paper has
looked 10 as means of providing
financial machinery for the movement
of corps ana meeting general business
needs.
Asserting that the opening of the
banks marked a new era in the history
of the L. s, Secretary McAdoo added:
1t is believed that they will put
IN end to the annual anxiety from
which the country has suffered for the
past generation about insufficient
money and credit TO move the crops
each year and will give such stabil-
ity TO banking business that the ex-
treme fluctuations in interest rates and
available credits which have charac-
terized banking in the past will be
destroyed permanently.
Elasticity to Paper Currency
The chief attraction and value Of
the new system, according to its in
terpeters, are to be found in the elias
tieity it will give TO recognized paper
currency. The Federal Reserve notes,
which probobly will replace the fam
iliar national bank notes, will be is
sued on commercial paper arising out
of actual business transactions. 1t
is designed that they will rise and fall
in amount, according to the flow in
the tide of business. They will be
government obligations, having back
OF them large gold reserve in the
regional banks.
Paul NJ. WarbuFg, possibly tine most
experienced banker on the Federal Re
serve Board, to-day declared that Me-
vember 16 might be considered the
Fourth of July in the economic life
of the United States marking the foun-
dation of the nation s financial emanci-
patton.
May Become World Power
The new banking system wisely
administered said Mr.. Warburg,
will prove to be tine means, not of
imitation, but Of safety, Independence
and gradual, healthy expansion. How
soon we may become world power,
equal in strength and independence to
those on whom We have had to lean
until now, will depend upon our abil-
ity to avail ourselves of the opportdn-
ity now open to us.
''We are starting out to-day ambi-
tious OF attaining this end, but we
are still far removed from our goal
With spirit prevailing of unselfish
moderation and mutual helpfulness
with careful planning and singleness
of purpose we are certain to overcome
the obstacles that still block our way
both within and without"
Largest Bank Opens for Business
New York, Nov. 16.-The Federal
Reserve Bank of New York at So Ce-
dar street. largest of the twelve region
al institutions to operate under the new
financial system of the United States,
opened for business to-day.
Long before the opening hour mem
Der banks bgan transferring their re-
serves to the new institution, whose de-
posits, it was believed, would approx
mate $100,000,00e at the outset of its
career. Practically all the deposits
made to-day were in gold or gold GER
tifcates. Some of the larger banks
have announced their intention of de-
posting with the Reserve bank more
than the minimum proportion of re-