South Bend news-times. (South Bend, Ind.) 1913-1938, 1914-11-18
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4 WHAT THE PAPERS SAY y
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THE NEW BANKING SYSTEM
Br.lsINS.


The new banking and currency SyS-
tenn went into enect yesterday. Its
great claim to confidence is that il is
not a one-sided. partisan structure.
but an organization in the making OF
which the expert bankers had an I'M
pOrtant and deserved influence. 1t
AFFORDS q practical method of meeting
the great difficulties with which the
business of this country has had to
cOntend-an inelaStic currency, an in
ability TO protect the nations gold
reserves as they should be protected,
and lack of an effective machinery
for meeting unusual conditions.
Bankers, business men and officials
of the new system, of course, under
stand exactly what it means. 1t is
probable, however, that il will take
some time for its exact position to be
realized by the nation at large. There
will be. it may be assumed, a natural
pressure from all parts of the country
for funds for purposes not strictly
commercial, but having an investment
or speculative character. The lovers
of imitation, who are not by any means
extinct, will be disappointed if higher
prices do not result. 1t will be the
part of the directors 10 keep their
way, uninfiuenced by such pressure
No financial machine can be devised
so perfect mat the personal eque.e4VL
is not vastly important. The new
system is no exception TO the rule.
On the ability and discretion of those
in charge will depend whether the
new financial machine will discharge
its important functions in the most
useful manner. There is every reason
TO think it will, not only because the
interests of the banking community
all lie on the side of successful man
agement. but also because a great
oil toll V1f hos
been successfully associated with the
conduct of the system.
That the men in charge appreciate
their responsibilities as well as their
power and intend to proceed along
safe lines is illustrated by the COM
nonsense statement issued by the re-
serve board in Washington. 1t re-
minds the country that the interna-
tional situation is not yet fully re-
lieved, that large quantities of foreign
securities held abroad may be return
ed 10 the United States, and, further
more, that more than $500, 900. 600 Of
emergency currency must be retired.
The moral is for business to proceed
sensibly and soberly. 1t adds:
The function of the federal reserve
banks is therefore of a twofold char
acter. They should extend credit ia
cilities. particularly where the abnor-
NAL conditions now prevailing have
created emergencies demanding
prompt accommodation; and, on the
other hand. they must protect that
such holdings of this country in order
that such holdings may remain ade-
uuate TO meet demands that may be
made upon them. While the credit
facilities should be literally extended
in some parts of the country, it would
appear advisable TO proceed with eau
ton IN districts not in need of imme-
date relief.
The establishment of the system, in
the much Overworked phrase, begins
a new era in the financial system of
this country. 1t represents the fruits
of years of painful experience and II
also represents a practical cOmpro-
mise between two financial ideas that
have figured largely in our history
the government central bank idea and
the Independent treasury idea. n gov
eminent bank in form, seems TO have
been repugnant to the traditions of
too many Americans. An entirely in
dependent treasury, in fact has been
belied by frequent interpOsition of the
treasury in important crises. The
new system appears 10 give the unity
and efficiency Of the one and TO pre-
serve to some extent the form of the
other-Chicago Herald.