The Washington times., 1914-11-16
At OFFICES Early.

Secretary McAdoo and the members
Of the Federal reserve board We're at
their offices early today to sign orders
setting IN motion the ma chinerv nf tlie
new banking system. After all the
documents Were signed. Secreta7y No
Adoo sent the following telegram Of
congratulations to the Federal reserve
agent and governor of each of the Fed
eral reserve banks:
Please accept nv cordial congrat,I-
lations upon the opening OF the Federal
reserve bank of Your district, and .DN
sincere cCmmendat ton upon the effective
work YOU have done in preparing the
bank for business in the short time al
lowed for the opening. ] am sure that
The Federal reserve banks will serve
great and beneficent purpose in the fu-
lure of our country, and / am sure that
his department and the Federal reserve
board may count upon your loyal &C
operation in the important work and
duties which have been contided 10 you.
Ny hearty good wishes for your sue
cess.'
One Of the first messages received BY
Secretary McAdoo announcing the open
~ OF any Of the banks, came from
Richmond, which is the regional re-
serve city for Washington. II was a
telegram from George J. SCay, gorerno-
of the Richmond bank. and WAS as FOL
lows:
We have the honor to announce that.
iu obedience TO your telegram. the Fed
0ral Reserve Bank of Richmond has
opened its doors for business.
Resources Are Ready.
The twelve banks will act as unit,
20 co-ordinated is the system of credits
consequently the entire resources OF the
country will be ready on demand 10
help any needy section
The new banking and currency act
rsplaces the old national banking sys-
tenn. inaugurated toward the close of
The civil war. Under the old system
the national bank note currency was
nsscd upon Government bonds deposit
cd in the Treasury. The plan was
evolved. not only to nationalize and
unify the currency, but TO create as
VOL market for United States bonds.
and thus sustain their HalUe. In tie
latter purpose ii Rss successful. but Il
outUore its usefulness as banking
system because Of its lack of elasticity.
Al national banks and many State
hanks are members OF the Federal re-
serve system. The largest district
hicsgo-has so member banks. while
tn Observation-Disclosures % member
ha nks Each bank has obtained men,
"ership by subscribing 10 the Federal
reserve bank in its district an amount
"qusl TO per cent OF it's paid-,,p Ca pital
stock and surplus.
Is Bank of Banks"
The reserve bank does not do busi-
ness directly with the public In the
manner in which banks usually do. but
is rather bank OF banks" serving
AZ depository for a certain propor-
lion or the reserve OF all the member
banks and acting, in addition. az de-
posito1y for Government funds
One OF the most important functions
Of the Federal Reserve Bank is as a
nank Of issue ana redemption j. may
procure from the Treasury notes known
as Federal Reserve noies. which il is
authorized to issue against commercial
paper. with q minimum gold reserve of
20 per cent Furthermore, Federal Re
serve banks are granted certain powers
in the open market, such as the pur-
"hase OF commercial paper. foreign eX-
change, and serving as z clearing house
for the member bank
Each of the reserve banks has nine
directors. three of whom represent the
member banks. three represent COM
fnercial. agricultural or other Industrial
pursuits. and three Government direc-
tors chosen by the Federal Reserve
Board.
Washington Is Center
The latter body. having supervision
over the entire system. is located n
Washington and is composed of Secrc-
tsry of the Treasury McAdoo and
Comptroller OF the Currency Williams.
setting ex-offcio and five other men,
bers appointed by the President and
approved by the Senate. The latter are
charles 8. Hamlin, governor; Frederick
- Deiano. vice eevsfnor; Paul N War