The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1914-10-15
PRESIDENT REYNOLDS
SPEAKS ON RESERVE ACT
Criticizcs Various Points In New
Ranking Law in Annual
Address.
20 INDUCEMENTS 10 DEPOSIT

=
Objects 10 Arbitrary Powers Con-
ferrcd OH Secretary OF Treasury in
Deposit of Government Funds as
undcmOcratic and UnbusinessIikc.
The continued growth and usefulness
OF the American Bankers Association
10 It's own members and to the entire
nation Is one or the striking indica-
tiona that its inception was grounded
In correct principles. and that Its poll.
cies are lnlisting popular support, de-
clarod President Arthur Reynolds yes
tcrdas morning. delivering his annual
address before the convention In the
Jefferson Hotel auditorium. The total
membership of the association Is now
approximately 5000, but President
Reynolds said: 1T is not only aucs-
nom OF members. but,tinorc that of
purpose and character of those who
JoinFtogether I'm a single body for com
NJ! those banks which have joined
are giving the system their hearty sun
port" said THE. president. but only the
wisdom OF management by the directors
and tofIicials OF the various rcserye
banks, and OF the Federal Reserve
. Board. can Insure the success of tho
experiment"
DISCUSSES OBJECTS
OF RESERVE BANKS
In his discussion OF the situation
PRESIDENT Reynolds said I'm partY
was asserted during tile discus
sion preceding the enactment of tho
Jaw mat the withdrawal from the chan
ncis or trade OF the large sum ncces-
sary to capitalize the Federal reserve
nanks. as we'll as the reserve required
20 De deposited with them. would work
nlsastrous contraction of credit
On the other band. Il was pointed
out that the privilege the member
banks had of rediscounting with the
reserve banks would at once relieve the
situation. and hence no contraction or
credit WAC to be anticipated
Tho principal object i'm view by tho
orlSinators. OF the plan was to add sta
unity or our banking by devising
system that would alleviate the pcriodi-
cal stringcncics to which business in
this country was subjected. ANY opcra-
ton TO prevent contraction by redis-
counting would Impair the ability OF
me reserve banks to relieve any
stringency. IL theac banks are TO be
always In condition to ward off dis
aster, We Will. at the beginning. he
compelled TO submit ourselves TO some
contraction
MUST MAINTAIN RESOURCES
For TIME OF NEED
Reasoning from the fact that the
Federal reserve banks will not enter
mo competition for the commercial
business of the country, ana for the
reason that they will be Obliged to
quote a rate OF discount at least as
nigh, IL not higher, than commercial
rates. In order TO maintain the re-
sources necessary TO enable them to
extend help In time of need 1 believe
the. conclusion is warranted that in the
iuturc. as In the past. rates OF interest
VIII be governed by the law of supply
and demand.
The Federal reserve banks have no
way OF Increasing the supply OF actual
money In existence: II they had. they
might reduce ratcs. Their most cn-
ctrhtH help In that connection may NJ
times rcsul, from raising rates 10
tabiltzc conditions
IT must always he kept In mind that
10 realize the chief object which Con
gross had in View. the Federal reserve
banks must always be ready to extend
help; they cannot maintain this posi-
tion u the member banks Keep them
times.
SHOULD INVEST SURPLUS
IN FOREIGN Hills
III the Federal reserve banks will.
IN ordinary times, invest q large Durt
OF their surplus funds in foreign bills
instead OF solely In rcdiscounts to do
nestle banks. II will. first. aid in main
tanning our gold reserve. which is the
foundation of credit extension, as for
ciSn countries cannot call upon JUS for
that metal IL we force the sale of such
bills upon their markets: second the
resources of the reserve banks. by
reason OF the greater liquidity Of for
ciSn bills, VIII be at all times more
ready TO respond to business needs
: Such policy would at the same time
furnish a source of profit to these
banks. Had our financial relations
with other countries been established
upon such basis, and our foreign
exchange been massed and controlled
by n single agency, we would have
been In position to check the recent
outflow of gold. Instead, we were
obliged TO close our exchanges and
practically refuse payment
ARBITRARY POWERS OF
SECRETARY OF TREASURY
ut has been popularity supposed that
with the opening OF the reserve banks
government funds would be deposited
In them. and the Independent treasury
system and Its consequent expense
both to tho government and the bust
ness Of the country would be "A thing
OF the past. Careful reading of the
law discloscs that Its authors had no
such Intention. IL government funds
are deposited in these banks, or if they
are appointed fiscal agents of the gov
crnment 1t will be at the discretion Of
the Secretary OF Treasury alone. 1t
la n Just criticism Of the measure to
say that IT does not take the govern
Inent out of the banking business, and
that it confcrS upon one of our gov
eminent officials extraordinary
power and discretion .unwarrautcd by
tho spirit of our institutions and re-