Aberdeen herald. [volume] (Aberdeen, Chehalis County, W.T.) 1886-1917, 1914-03-17
new LAW WILL
AID BUSINESS
Financial Experts are Optic
mistic About Working Of
the Currency Law
EVERY BANKER BENEFITS
Conference of Western Ece-
nomic Society Praises New
Currency System

CH1CAGO, March. 1O.-OpIiutAsiV
views of the probable operation Of the
federal reserve act were expressed
Friday by financial experts gathered
here for the conference of the Wes-
tern Economic society
Expansion Of general commercial
credits, limitation of stock speculation
and a general increase of confidence
in the stability of bank reserves were
expressed.
The only fear was that limited ps-
riod of uncertainty might occur during
the readjustment of relations between
the banks and their new reserve cen
ters.
"The United States has adopted the
policy already recognized and estab-
lished elsewhere" George e. Roberts
director of the United States MINT
said. The system will be of advan-
tage to every banker in the country.
whether he is a member or not.
"It has provided a central, official
control of the banking reserves of the
country. to be exercised through the
discount rate, and supplemented by
the power of note issue. 1t is appar-
ent that the more completely all re-
serves are brought into the system
the more complete and effective the
control will be-"
Advantage to Every Banker.
He declared that the system had
been established for the common good
and besides would be of protection
and advantage to every banker. whs-
ther he joined it or not, through So
curity and stability.
There is nothing in the plan thaE
will release large amounts of gold for
expectation. or even give it early pro-
bability," continued Mr.. Roberts.
ut is true that the system can he
operated with less gold than is re-
quired for our very costly gold certi-
ficate currency. The truth is that We
are approaching extravaganza, not to
say wastefulness, in our gold reserves
But the old system has worked under
fixed conditions without direction or
elasticity or adoption to changing
conditions. The new system will be
a living agency, with powers of ini-
tfative and self-help, and will make
it possible to issue additional cur
rency without increasing the reserves.
Liquidation of corporate bond hold
ings by national banks and a period
of adjustment to new credit systems
will follow the going into operation
of the federal reserve act it was pre-
dicted by Jacob H. Hollander of Johns
Hopkins university.
Bearing in mind the adaptability OF
the American business character and
the fundamentalness of the measure,
there is every reason for anticipating
salutary effects from It's operation"
said Mr.. Hollander.
VIII Check Speculative Buying.
Considering the position in which
the banks find themselves, he COR
tinued:
Involving, as it does, radical
change in the methods of conducting
business some time is likely to elapsa
before the prevailing system of open
credits and cash discounts will be re,
placed by system Of domestic bills
and bank acceptances. Even there
after it is not certain that paper Of
this class will be available in sufi-
cent volume to meet the demands
of banks.
Moreover, we must face the fact
that banks buy bonds not only for in
come but to profit by prospective
rise and to parcipate in modern cor
porate financing. In so far as the mo-
tive Of such investment is speculative,
it is indefensible. This prevailing
practice is likely to be checked rather
than stopped. This consideration, in
deed, justifles the contemplation OF
legislation restrictive on the freedom
OF banks to make bond purchases.
"The same influences, however,
which are likely to check further
bond buying may encourage liquida-
ton of the present holdings. On the
whole, the new measure promises cor
rection of certain unwholesome ten
dencies in bank investments and car
ries no menace to the owners of
banks"