The Sunday telegram. [volume] (Clarksburg, W. Va.) 1914-1927, 1914-12-13

me one signal act OF the Wood
row Wilson administration which is
sure to go down in future history is
the establishment of federal re-
serve banking system. This new
bank. which has just opened It's
doors In number OF cities, is yet
IN the experimental stage, but its
nackcrs have great hope for It's fu-
ture success in preventing panics, in
Changing the basis OF foreign ex-
change, in establishing u better sys-
TEN OF credits. and in putting money
where 1t is needed at the right time
While the great mass of people
can understand tho workings of the
tarin, the peace policy of the Presi-
!, dent and other acts of his admin
1stration. the question of finances is
one to battle the average mind.
Some way the people have hopes
that the new bank system will help
the country. They can't tell how,
but they still have hopes. The es-
tablishment of the reserve banks Is
the most daring thing done by any
Congress along the banking line in
half century. Tie people Are
used to having Congress dicker with
the tariff. They halfway under
stand the workings of the tariff
laws. They know when the duties
are cut down that imports can be
sold more cheaply. They also have
learned that while the Democratic
Congress reduced the tariff some
what yet the reduction was not SO
great but that we still have to main
tain customs officers in the ports
to collect duties, which tourists re-
turning to this. country consider ex-
cessive.
But finance is different. 1t re-
minds men unschooled In money
matters Of the days when they stud
led bank discount and all the other
tntricacies of money matters in the
arithmetic.
whether the new currency scheme
will work out remains to be seen.
The aim. however, is good. Tho
purpose OF the measure is to extend
credit everywhere where. there is
something worth lending money on.
Under the old system, or, rather.
under the system which has not vet,
passed away, the man withta wild
cat scheme can get more credit than
farmer with his barns bursting
with grain or q manufacturer with
his warehouses full of valuable
3 goods. The new system is a step
toward basing the issue of money on
all commodities. A farmer with
wheat has a good chance to borrow
money on the. wheat, even though
he lives hundreds of miles from
Wall street.
William Nice. Martin. one of the
federal reserve bank chairmen. in a
recent statement declared Central
Credit Bureau at Washington would
be established to prevent big fail
ures.
BUREAU WOULD KEEP
TAB ON COMMERCIAL PAPER.
This bureau could keep close tab
on all the commercial paper redis-
counted by federal reserve banks.
and thus could know whether any
certain individual or corporation is
too far extended in credits" Mar
tin said. 1.-THE bureau would be part
of the federal reserve system,
Besides this eye which would
chiefly watch the larger business
houses. to prevent them from TAX
ing chances by borrowing too much
money. there would be a closer
scrutiny of the stores of country
towns. The burden of cycling these
sto-es would be shifted largely from
the shoulders of city credit men to
the shoulders of local country
bankers. Business house failures
should become almost obsolete, with
bankers to prevent the concerns
from taking dangerous financial
steps.
Drafts are likely to prove tho
death of open accounts. When a
wholesale house sells to Little
Rock concern hereafter, 1t is APT
to draw draft on the buyer for
the amount Of the bill instead of
entering the amount on its books
and carrying it there for sixty days.
The wholesale house will take
the draft to Its bank and have II
discounted. Then the house can
have the proceeds for immediate
use in its business. The bank will
send the draft to the federal re-
serve bank to be rediscounted.
Another pleasant way of selling
goods will be to receive cash, in
stead Of a request for credit on the
books. The Little Rock merchant
will so to his bank and borrow
5000 for sixty or ninety days 70
buy goods. just as under the draft
plan. and the burden of watching
the business methods OF the Little
Rock concern will be shifted from
the wholesaler to the Little Rock
banker.
Even IL the Little Rock bank Is
down to the dead line on It's reserves
and is short Of cash for counter
purposes. it can quickly obtain tho
$4,000 for its customer. It need
only send the customers note to the
federal reserve bank. with a state
ment showing 1t has arisen out of
an actual business transaction, and
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