Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1914-11-20
I III X s K N TIN Ell
ROCKVILLE, MD
Friday Morning November 20. 1914.
NEW FINANCE ERA.

Marking new era in the financial his
tory Of the country. the twelve Federal
Reserve banks of the new currency system
opened their doors for business on Monday
morning last. With the opening of these
banks the United States will take its place
with the other great Powers of the world
as having currency system sound and
adaptable to the needs of modern bust
ness 1t was the last Of these nations to
cast aside the inadequate machinery of an
antique system, which hindered rather
than helped the development of domestic
and International commerce, and to sub
stitute a system in which the best thought
OF the economic world was given recogni-
ton.
The new system permits the expansion
and contraction of the money supply of
the country in keeping with the actual
needs of business, whereas the old system
maintained the same amount of the circu-
latine medium for all seasons and all fnan-
cial situations. 1t authorizes the issuance
OF currency upon the security Of CONNER
cial paper, with generously broad defini-
ton fixed for this collateral.
1t provides twelve reserve banks around
which the banks of the country are grouped.
with central directing authority vested
In governmental body at Washington,
the Federal Reserve Board. which can
mobilize the resources Of any or all of
the individual districts to meet an extra
ordinary need for the circulating medium
in any one district, whereas no adequate
method Of mobilization was provided by
the old system. 1t automatically releases
by decreased reserve requirements more
than $400.000.O0O of cash and credit re-
serves.
THE opening of these banks" said Sec
rotary McAdoo. marks new era in the
history Of business and finance in this
country. 1t is believed they will put an
end to the annual anxiety from which the
country has suffered for the past genera
ton about insufficient money and credit to
move crops each year. They will give such
stability to the banking business that the
extreme fluctuations in interest rates and
available credits which have characterized
banking in the past will be permanently
destroyed. The Federal reserve banks pro-
vide for system Of credits based upon
commercial paper, thus at least securing
to the country adequate supply Of the nee
essary credits to meet the legitimate de-
mands Of business as they develop.
The supply will be absolutely respon-
sive to the demand. and business will be
freed from the restrictions. limitations and
injuries from which it has suffered in the
past, because it has not been able to re-
ceive at the time when most needed the
credit facilities which were essential to its
regular and proper development. The whole
country is to be congratulated upon this
final step in an achievement which prom
Uses such incalculable benefits to the Ameri-
can people"
The twelve banks. designed to take care
of the commercial needs of the entire ma
ton. are located in Boston, New York
Philadelphia, Richmond, Atlanta, Cleve-
land. Chicago, Minneapolis, St. Louis, Kan
sas City, Dallas and San Francisco. Their
authorized capital is $l06,795, 800. of
which one-sixth has been called and is in
their vaults. The exact figures for the
cash reserves in all twelve banks has not
been accurately computed. but the esti-
mate puts the amount at close to $780,
100000. drawn under the law from 1871
member banks, representing population
of 89,045,616.
Third assistant Postmaster General Dock
cry has sent circular letter to all State
banks and trust companies holding postal
savings deposits. advising them that, start
ing Monday, when the Federal reserve
system became operative, postal savings
funds will be deposited only in member
banks. However. he advises the banks
and trust companies that postal savings
of the funds already on deposit with them
will be allowed to remain on deposit for
the present, and that no Withdrawals of
such funds will be made until after ade-
quate notice.
1t is apparent that the Post Office De-
partment, in permitting postal savings
funds to remain in State banks and trust
companies for the present, does not intend
to take the chance Of disturbing the finan-
cial situation by Withdrawing funds at this