The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-11-16
A Prospectus Of Business Recovery.

A Prospectus Of Business Recovery.
To-day the twelve Federal reserve
banks will open for business. II Is
impossible now to tell what this means
in the way of relief from the fearful
strains thrown on the worlds economic
structure by the catastrophe war
abroad. hut THE SUN Is satisfied that
the new financial facilities will make
20 the recovery and progress OF Ameri-
can enterprise under the circumstances
of war and afterward.
We are all the more persuaded Of
this by the general regulations which
the Federal Reserve Board has pro-
mulgated for the guidance OF the re-
serve banks in the operations which
they are about to undertake. They
constitute the first rules OF any conse-
quence dealing with the actual business
of the new banking system, and the
practical Interpretation given to the
Federal reserve law shows that wisdom
and experience are going to govern In
reserve bank affairs.
There Is nowhere in the regulations
I'm question a trace Of the political
prejudces and suspicious which i'm
parted faint to the Federal reserve
act itself The whole document Is ut
terly sound and broad gagged in its
view of the financial field and the
functions of the new banking machin-
cry and adds to the growing reasons
for confidence in the country's ability
to Withstand the stresses Of the Euro
pcan conflict.
After all the winds Of financial delu-
sion which have been blown from
Washington lately. especially from the
Treasury Department. the Federal Re
serve Boards regulations come as
refreshing breeze of sanity. This aspect
of the rulings Is worth commenting
upon. for they are remarkable. consider
Ing the extent TO which Treasury in
fuences might have been expected TO
dominate the board. The banking and
business community cannot fail to be
vastly encouraged by the manifestation
Of independence from the ideas which
have been controlling the Treasury adj
ministration.
The regulations deal chiefly with the
process Of rediscounting commercial
paper at the Federal reserve banks.
Every effort is made to construe the
statutes in such a way as TO accom-
plish the transfer from the old to the
new banking system with q minimum Of
disturbance. and for that reason the
board proposes temporarily 10 mako re-
discounting little easier and the
scrutiny Of paper a little less rigid
than will ultimately be the cnse
Moreover, the definition OF paper eligl-
BILE for rediscount Is now made very
broad. but It Is evident all through
that the future policy Of the Federal
Reserve Board will be to Insure an IN.
creasingly high quality Of commercial
paper circulating In the country's bank
ing channels.
What has been called commercial
paper In the United States would not
be recognized as such in any country
whose banking and currency system
was scientifically based in sound prin-
Ciple. Financial reformation here Is
bound 10 go 10 the eventual length Of
Transforming American commercial
paper from mere promssory notes, Is.
sued on general statement Of the
borrowers condition, TO real CONNER
cial bills covering stages Of the ex-
change OF goods and commodities and
bearing their own evidence OF the fact
The assets Of the new banks are to he
quick and liquid. AS the paper redis-
counted is to be part of the cover for
the Federal reserve bank notes which
will ultimately form the bulk OF the
country's currency. 1t Is Interesting to
compare the Federal Reserve Boards
rulings with the notions which the
Treasury has inculcated in It's discus
slons OF emergency circulation. In this
as In other respects the Urea Sury De.
partment has not succeeded In making
the Federal Reserve Board a mere
auxiliary apparatus
The board expects the retirement of
emergency currency, which Mr.. MCApoo
mas always seemed 10 regard as n mag
zeal Instrument for promoting pros
p"r!'y, !, Issues 4 most eini,iIati,
warning against the dangers which in
here In making credit facilities too
cheaply available, and points out that
the immense uncertainties OF the war
abroad call for the exercise Of tho
strictest prudence compatible with the
prevention OF unnecessary monetary
stringency wherever abnormal condl.
tons have created unmistakable ext.
Ucncy.
However, a. these regulations have
oesD Vr0mugated ~ tie whsls board