The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1914-11-18
RESERVE BANK SYSTEM OPENS
NEW FEDERAL LAWS GO INTO
EFFECT TO-DAY.
inauguration Of Government Banking
System Will be Most Radical Change
In Business Opcration-Twclvc Re-
serve Ranks I'm Country.

Washington, Nov. 15.-After months
of preparations by the federal reserve
board and the country's bankers, the
IL federal reserve banks will open
tomorrow for banking business, mark
ing the greatest change in the bank
ing system Of this country in the
last SO years.
The IL banks. designed to take
care Of the commercial needs of the
entire nation. are located in tine fol-
lowing cities: Boston, New York.
Philadelphia. Richmond. Atlanta,
Cleveland. Chicago. Minneapolis, St.
Louis, Kansas City. Dallas and San
Francisco.
For the present their operations will
be limited largely to rediscounting
OF notes. drafts and bills of exchange.
hut as experience Is gained. steps to
have them exercise their other func-
tons under the currency act will be
taken. The directors of all the banks
have been elected. the board has
named Its representatives for each,
and suitable quarters have been se-
cured In all the IL cities.
Officials here will watch progress
Of the system with utmost interest.
II starts with 1871 member banks,
with authorized capital of S106,795,-
600. Of. which one-sixth is i'm their
vaults. The exact amount Of the cash
reserves In all IL banks has not been
accurately computed. but Is estimated
at close to $3.50. 900. 900.
The reserve hanks begin operations
at time when members of the board
feel there Is an excellent opportunity
to test out the system. Their ability
to rediscount commercial paper has
been counted upon to loosen the purse
strings Of banks. provide machinery
for taking care Of crops and generally
meet business needs.
The formal call for the opening will
be sent out tomorrow by Secretary
McAdoo. In speaking OF the open
ing Secretary McAdoo said tonight:
The opening Of these banks marks
new era In the history Of business
and finance In this country. 1t is
believed that they will put an end to
hn tot, 4,
country has suffered for the past gen.
GRAFTON about insufficient money and
credit to move the crops each year
and will give. such stability to the
banking business that the extreme
fluctuations in interest rates and avail
able credits which have characterized
banking In the past will be destroyed
permanently. The federal reserve
hanks provide for a system of credits
based upon commercial paper, thus
at least securing to the country an
adequate supply OF the necessary
credits to meet the legitimate de-
mands Of business as they develop.
The supply will be absolutely respon-
sive to the demand and thus business
will be freed from restrictions, lin
itatlons and injuries from which it
has suffered In the past. because 1t
has not been able to receive at the
time when most needed the credit ia
cilities which were essential to Its reg
ular and proper development. The
whole country is to be congratulated"
The secretary says he was gratifed
with the prompt and cheerful re-
sponse TO his suggestion that the banks
be- ready for business tomorrow. In
every district, he said. the member
banks had Joined in an earnest ef-
fort TO open the system under the most
auspicious circumstances.
II has taken the reserve bank or
ganization committee and the feder-
to work out details of organization to
the uoint where an opening date was
chosen. Notwithstanding careful de-
liberations which preceded every pre-
liminary step. the 2 banks will not for
many weeks take up and exercise all
the functions bestowed upon them
by congress. Such evolution as will
result from the old natioral banking
system of necessity will i'm most re-
spects be SLOW. The reserve board,
the guiding spirit of the new system,
Is itself feeling its way over strange
ground and the men In charge Of the
12 banks probably will feel the same
desire To work slowly and with sure
ness rather than be venturcsOmc.
The new system is generally conccd-
ed To be IA compromise between cen
trail bank and the present system with
It's thousands Of units. scattered re-
serves and fixed limits of currency