The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-11-16
RESERVEBANKS
OPEN T0-DAYT0
AID BUSINESS
Panic Dangers Will Not DC.
cur Under New System,
Officials Believe.
END OF CROP MOVING
STRINGENCY EXPECTED

WASHINGTON. Nov. 15.-Msrk!ng a new
o., In the financial history OF the United
states, the twelve Federal reserve banks
~ the new currency system will open their
doors tomorrow morning. IL is the belief
n, the authorities that the new banking
system will instii confidence in business
and have large influence In restoring
good times.
The new system permits the expansion
ard contraction OF the money supply OF
the country IN keeping with the actual
needs % business. whereas the old system
maintained the same amount of the cir
culatlng medium for all seasons and all
financial situations. Ii authorizes the is
,uance Of currency upon the security OF
commercial paper. with a generously broad
defri;lon fixed for this collateral.
Z. provides twelve reserve banks around
witch the banks OF the country are
grouped. with a central directing authority
vesIed IN "A governmental body at Wash
irg:oH the Federal Reserve Board, which
can mobilize the resources OF any or all
O. the individual districts TO meet any
extraordinary need for tho circulating
medium in any ono district No adequate
method OF mobilization was provided by
the Oh system. 1t releases automatically.
~ decreased reserve requiremests more
;hau 1900. 000. 0O0 cash and credit reserves
gained system. according 20 officials IN
Washington, will be to prevent panics.
Its meaning as interpreted by students OF
economic history IL that the United states
after many bitter experiences with panics
has al last learned the lesson Of these DIS
sstcrs and provided against ,her repe,l-
ton.
Presiden: Wilson signed the Federal
reserve act. which ne called the "Consti-
tuition OF Peace for Business" nearly n
year ago. but sufficient progress has not
been yet made by the organization for the
system 20 permit the twelve reserve banks
g. mis- time 10 undertake the exercise OF
all the functions vested in them by this
act. Because of the extraordinary hnan-
cia. situation in this country which has re-
suited from the European war. tho Federal
Reserve Board thought (; best that all
possible haste should be made In opening
the reser.e banks for a limited exercise
o. 'hc'f functions.
The operations Of the banks at the out
&C.; therefore. will De limited to the fol-
loViuf:
! Acceptance Of deposits OF reserves
payable IN lawful money.
:. D!scounting OF bills OF exchange and
commercial paper.
.. Acceptance OF deposit. Of checks
dawn by member banks on any Federal
reserve banks or member banks in re-
'.fve and central reserve cities within
their respective districts
The Federal Reserve Board IN rrepara-
ton for the opening OF the banks under
-" foregoing limitations has fixed rates
' -elIscount for the twelve banks, de-
fired commercial paper. fixed general 70.
d'coun; policy. drafted bylaws for the
hanks and attended to other pressing
matters Of detail incident 10 the opening.
Secretary Of the Treasury McAdoo, ex
ofhclo head Of the new system. issued
tn.s statement tonight;
Secretary McAdoo will formally an
nounce Tomorrow. Monday morning. No
venoer Is. the establishment OF the Fed
efal reserve banks in the twelve Federal
reserve cities. These banks are locate
IN the cities OF Boston. New York. Phiia-
telph.a. Cleveland. Richmond. Atlanta,
Chicago, -. Louis. Minneapolis. Kansas
City Dallas and san Francisco.
The opening OF these banks marks a
new era In the history OF business and
finance In this country. II Is believed
that they will put an end TO the annual
anxiety from which the country has suf-
fered for the past generation about in
suAicient money and credit 10 move tho
crops each year and will give such sta
bil!ty TO the banking business that the ex-
'renre fluctuations I'm interest rates and
available credits which have character
.led banking in the past will be destroyed
permanently
The Federal reserve banks provide for
. system OF credits based upon CONNER
cial paper. thus AT last securing TO the
coUat-y an adequate supply OF the nee
esssry credits TO meet the legitimate de-
nands OF business they develop. The
supply will be absolutely responsive 70
The demand. and thus business VIII DO
freed from restrictions. limitations and
Injuries from which IL has suffered IN tho
pas because 81 has not been able TO
receive AT the time when most needed
n. credit facilities which we're essential
10 IS regular and proper development
The Secretary said that he wished
n take advantage OF the opportunity TO
COZ graduate his associates on the FEDERAL
Reserve Board upon the great patience
Intelligence. patriotism and loyalty with
watch thev had taken hold or the great
task which has confronted them since
'hei- Induction into office on the loth
~ August last and 10 which IL due tho
successful opening of the Federal reserve
banks"
His statement was accompanied by the
following tat'e giving data concerning
NHn a tnta