Tulsa daily world. [volume] (Tulsa, Indian Territory [Okla.]) 1905-1919, 1914-11-12
FEDERAL BANKS TO BE LIN.
TIED FOR A FEW
MONTHS.
WILL open ON MONDAY
Reserve Board Defines CONNER.
cial Paper Offered for
Rediscount.

w ASiINdToN Nov 1.-The
w scope Of the operations Of tho
2 federal reserve banks, to be opened
for business ncNt Monday was de-
lined for the first few months Of their
existence, in circular issued today
by the federal reserve board. For the
present the banks will not exercise
all the functions given them by con-
groS. The board. concurring with
the directors and governors Of the l.
IN recent conference here indorsed
TINS plan Of operations:
Plan of Action.
Acceptance Of deposits Of reserves
from member banks
Discount Of bills Of exchange and
commercial paper.
Acceptance OF deposits OF checks
drawn by member banks on any re-
serve bank or member bank In re-
serve or central reserve city within
their federal reserve districts
other powers may be called into
play AS the establishment Of safe and
efficient organization permits
DcIinc commercial Paper.
In its circular the board gave ths
long expected definition Of commercial
paper, which Is 10 be life blood OF the
rev system, the basis for the new
federal reserve currency and the
means by which the nations clrculat-
ing medium Is expected to meet the
expansions and ContraCtlOns OF trade
ana industry
The rate Of rediscount was not an
nounced. This step probably will not
he taken until Monday The rate viii
not be uniform In all the banks.
The definition of commercial paper
Is broad and relies to a large degree
upon the language of the currency
act The board declined at the pres
ent time 10 discuss the question OF
double and single name commercial
paper IL did make II exceedingly
clear however, that It had prefer
ence FOR the two name sort ana left
no room for the authorities OF the
banks 10 doubt that II expected care
IuI inquiry into one name paper pre-
scented 10 them for rcdscount
The circular dicusscd the conditions
that have arisen here and throughout
the world through war and gave some
insight into the economic changes
which might be expected as a result.
Note of Warning.
ut should be borne in hind that"
II said, although our exports are
showing a gratifying Increase. there is
stlll a large cash balance due to Eu-
ropcan countries for which gold may
be demanded and that large guam
tlty Of American securities held
abroad may be returned to the United
states, while on the other hand more
than three hundred million dollars Of
emergency currency must be grad
ually retired. No one can estimate
tho duration Of the war or predict
what viii be the financial or CONNER
cial conditions when peace shall be
restored. our own Industrial devel-
opmcnt has been greatly facilitated
by foreign capital. and we have been
accustomed 10 borrow large sums an
nually In Europe and 10 sell Amer
lean securities there. which attracted
foreigners because Of their higher
rate Of return compared with Euro
pean Investments II is probable that
at the end Of the war interest rates
In Europe will be higher than they
haVc been I'm the past. and greater
investment returns viii be yielded.
The tremendous destruction of prop
crty and waste Of capital will not only
check the flow of Furopean savings
to tn" United states but may dispose
foreign investors TO return the seclr-
itles they now hold. Lower money
rates In this country would be likely
to accCutuate this tendency while. on
the other hand. higher interest rates
and larger Investment returns on our
side would check it
Must Meet Crisis.
THE function of the federal re-
serve banks. therefore. is Of "a two
fold character They should extend
credit facilities particularly where the
abnormal conditions now prevailing
have created emergencies demanding
prompt accommodations and on the
other hand, they must protect the
Eold holdings Of this country In order
that such holdings may remain ade-
quate 10 meet the demands that may
be made upon them While credit
facilities should he ubcrllh extended
in some parts ~ the country it would
appear advisable o. proceed with cau-
tion In districts not Ia need OF immcd-
late relief and 10 await the effect ot
the release II reserves and OF the
changes which the credit fechanism
OF the country is about to experience
before establishing a definite discount
policy
While the most acute stage of the
recent emergency appears 20 have
passed, the conditions in other coun-
tries make II necessary that the
United states should. to the utmost
degree OF efficiency. organize and