East Oregonian : E.O. (Pendleton, OR) 1888-current, 1914-11-16

tenn, inaugurated towards the end OF
the civil war. Under the old system,
the national bank note currency was
based upon government bonds de-
posted In the treasury and the cur
rency thus issued has been classed by
economists as bonds secured cur
rency. This plan was evolved. not
totally to natlonalize and to unity the
currency--which had heretofore con-
sisted OF notes issued by state banks
but as well 10 create market for
United States bonds, and In this way
to sustain their value. II was success
ful entirely in the latter purpose, but
II outwore It's usefulness az a banking
system because OF It's entire lack OF
elasticity.
Every national bank is a member
OF the federal reserve bank system
and many state banks took adyant-
age OF the opportunity 10 become
members. The largest district. the
Chicago district, has 952 members
banks. and the smallest district, At
Ianta has 372 member banks Each
member bank has obtained its mem
bership by subscribing 10 the federal
reserve bank OF its district in the am
cunt equal to six per cent OF its paid
up capital stock and surplus. The
federal reserve bank does not do bus
mess with the public in the sense
that banks usually do; II may better
be described as a bank OF banks" II
Is a depository for a certain proper
tion OF the reserve OF all the member
banks, and in addition may also be
a depository for government funds.
One OF its most important functions
Is as a bank OF issue and redemption !
OF currency for II may secure from |
the treasury government notes known |
as federal reserve notes. which II is |
authorized 10 issue against CONNER
cial paper with a minimum gold re-
serve Of forty per cent. Besides this
federal reserve banks are granted |
certin powers in the matter OF oper-
ations in the open market, such as the |
purchase OF commercial paper for
eign exchange. and in a general way
are expected to perform important |
functions as clearing houses between
their member banks. For instance:
San Francisco owes Atlanta a million
dollars on some commercial paper:
owes Boston a similar amount,
and Boston owes San Francisco a
million. BY having the board act as
A clearing house. these indepted-
nesses and inter-relationships can be
just as the clearing house
In New York slmplifies the drawing
Df checks between New York banks.
Each federal reserve bank has nine
directors three OF whom represent
he member banks. three represent
agricultural or other in
iustrial pursuit (these six being chos-
IN by the member bangs) and three
government directors chosen by the
'ederal reserve board The whole
iystem is under the supervision Of
central board in Washington-the
Federal Reserve Board-consisting OF
Secretary OF the Treasurer McAdoo
Ind Comptroller OF the Currency VIII
Jams, acting ex-officio. and five
'ther members appointed by the
president and approved by the senate,
namely: Charles S. Hamlin. COVER
Tor; Frederic A. Delano, vice-gover-
Tor; Paul NJ. warburg. W. p. G.
and A. c. Miller.
With the opening Of the federal
'eserve banking system today. it is es-
imated that nearly $500, 600. 900 OF
'eserve funds. no longer required
lnder the new law was released. The
ImOunt released by districts was:
Boston. $4,000, 900; New York. sss-
100000: Philadelphia. $4,000. 900;
'leveland, s5s.OO0,OOO: Richmond,
21,000,OOO Atlanta, $4,000. 900;
sss,OOO,OOO: st. Louis. slS.-
10000; Minneapolis. $4,000. 900;
Kansas City. $4,000, 900; Dallas, SEA-
10000; San Francisco. $4,000, 900.