The Washington times., 1914-06-05
PERFECTING BANKING
SYSTEM.

the new Federal reserve banking
system will be ready for business.
There remains yet the appointment
of two members of the reserve
board to take places left vacant by
the declinations OF men first ap-
pointed by the President; and after
that, the conclusive details of for
nation of the twelve regional banks.
1t is believed all this can be accom-
plished by August /, so that by the
time the fall crop-moving season is
in full swing the new system should
be ready to demonstrate what it can
do for business.
For the present, not unlikely for
a considerable time to come, the
Federal reserve system will not un-
likely have an experience parallel
ing that which followed the enact
ment of the Aldrich emergency cur
rency measure. That law has on
the whole served the country excel
lently. 1t provided for the issuance
of additional circulation in condi-
tions Of emergency and passing
need. Not a dollar of that author
lied issue has ever been put out.
Yet few will deny that the mere fact
that the measure stood on the stat
ute books, and that business inter
ests knew that appeal could be made
to it in event of need, probably
saved the necessity of making that
appeal. 1t was purely psychology
cal. Being assured that it could
command measures Of relief when it
needed them, business promptly ad-
justed itself and didn't need them.
Confidence, it has been said often
enough to be thoroughly trite, is a
large part of the basis of soundness
in business. The danger that finan-
cial conditions might some day run
to the verge of a precipice of liqui-
dation and be unable to draw back,
was a chief cause of the panics of
1893 and 1907. There was not SO
great danger of that calamity after
the Aldrich measure was placed on
the books. So it turns ont that q
law whose provisions were never in
voked is given credit for a great
and most useful service to the coun-
try.
The new banking law is likely to
have somewhat similar experience
for a time. The banks have a good
deal of money in them at present
and while there will be Increasing
application to the new instrumental
tiles to move funds from one place
TO another in order to meet Local
needs as they may arise, yet it is
not probable that anything like
emergency demands will be made or
the new system for long time. II
stands as an insurance policy. There
will likely be more difficulty finding
things for it to do, TO earn its ex.
penses and a modest return on the
capital the national banks will have
invested in it, than in making il
serve the pressing needs that viii
be presented to it. That il will be
ready for business so early in the
season is a matter of congratula
ton to the business community. The
bankers have given most cordial co
operation and support in the efforts
TO perfect details, and it is very evi
dent that their sentiments are nov
well-nigh unanimous in the Gesire u
give the new system the fullest
fairest trial possible.
Doubtless there will be amend
ments and notifications from tim'
to time. That is inevitable, and i
is desirable; for the new system /!
commonly looked upon as a begin
ming. Out of it will come, in al
human probability, an Institution
that will frankly proclaim itself {
great Bank of the United States
That is the ideal Of an increasing
number of students of fiscal ant
monetary problems. 1t vii! require
yet more time to wear away ancien
prejudices against such a system
but the successful operation of tn
reserve project, while it will con
stantly remind people of the Contra
Banks greater simplicity and feast
bility, will do much to break dow
the ancient Iprejudices.