The Miller press. [volume] (Miller, S.D.) 190?-current, 1914-11-19
RESERVE BANKS NOW OPEN FOR
BUSINESS AFTER YEAR
OF PLANNING BY AD-
MiNISTRATioN.
TOTAL CASH RESERVE Is
$243, 600, 600 TO START
Main Aim Is to Give Great Elastic.
ity to Money Market of Country
In Order That Panics Such
as That Of 1907 May Be
Impossible.

opening OF the Twelve Ieueral reserve
banks, the nation has begun actual op-
Grafton of its new currency system
designed to provide an elastic circula;
ton medium, based upon modern ideas
of finance and economics.
Year for Details.
1t has taken the reserve banks or.
ganization committee and the federal
reserve board almost twelve months
to work out details Of organization to
the point where an opening date was
chosen. Notwithstanding the careful
deliberations which preceded every
preliminary step, the twelve banks
will not for many weeks take up and
exercise all the functions bestowed
upon them by congress.
Such evolution as will result from
an old national banking system Of
necessity will in most respects be
slow. The reserve board, the guidihg
spirit of the new system, is itself feel
ing its way over strange ground and
the men in charge of the twelve banks
probably will feel the same desire to
work slowly and with rem rather
than be venturesome.
Really a Compromise.
The new system is generally con-
coded to be a compromise between
a central bank and the present sys-
tenn with It's thousands of units, scat
tered reserves and fixed limits of cur
rency. Its chief attraction and value.
those who interpret it find in the elias
ITCHY 1t will give to recognized paper
currency.
Under the present law national
bank currency is almost a fixed guam.
tity, based upon national bank capital,
issued upon United States bonds and
unresponsive to the chill of hard
times or the exultation of boom days.
It's use led, the experts say, to unre
stricted loans and speculation in the
days when money was easy and to a
boarding of resources and a tighten
ing of the purse strings OF credit when
they were hard. IT is said to have
bred the panic of 1907 when solvent
banks with large credits IN reserve.
and central reserve cities, we're help.
COS ohu u SCI bdIh W lutiT OWH
counters none of the millions they had
placed with their larger and stronger
correspondents.
The New System.
Under the new system the federal
reserve notes, which, in time, prob
ably will entirely replace the national
bank notes, o SO familiar. will be
issued upon commercial paper, arts.
ing out of actual business transac.
tons. 1t seems plain that they will
rise and fall in amount as the tides OF
business rise and fall, and that there
will be no plethora Of money to lie
idle: They will be obligations of the
United States government, which ma.
tional bank notes are not, and will
have back of them a large reserve of
gold in the regional banks. Through
them the reserve banks are expected
to come to the aid of any needy mem
Der bank which has plenty of good
paper. but needs cash. To further In.
sure the flow of money, reserve banks
themselves may be required to redis-
count the discounted paper OF other
reserve banks.
More than $3.50, 00O, 900 of the new
notes have been ordered by the comp
troller OF the currency for the twelve
banks. They are in 50, so, $40; $50
and 800 denominations, and are to be
accepted by all member banks and for
all customs taxes or other dues. Tho
federal reserve agent of every bank
In the system, who is the governments
representative there, has these notes
in custody ready for the application
of member banks.
Reserve of SPAS, 000, 0O0.
AS It stands, the twelve banks start
out with a total cash reserve of about
$243, 600, 900.
The reserve banks are not to do a
banking business, except with mem.
Der banks. They are empowered, how.
ever, to engage in open market tran.
sactions in the buying or selling of
cable transfers and bankers bills of
acceptance and bills of exchange.
In the future, the c~learings of the
banks of the country are expected to
be made through these regional banks.