Norwich bulletin., 1914-11-12
Functions of
 Reserve Banks
DEFINED BY FEDERAL RESERVE
 BOARD.
EXTEND CREDIT SYSTEM
Where Abnormal Conditions Have Created Enersenciss-Must Protect Gold Holdings of This Country.

washington. Nov. 1.-The scopa oi Ine operations of the F federal re- serve banks to be opened for business eAI x- AIonoay was defined for the first asM as.S. months Of their existence in a cir. cular issued today by the federal r. serve board For the present the hsnJcs WiII s, not exercise ali the functions Efver, them by congress. The board con. curing with the directors and ,o1,- ernors Of the 12 banks in recent co7,- erations: |-'-N VI "S-
 Acceptance of deposits of rese-za. from member banks, 'e@
 Discount of bills of exchan1A ana commercial paper.
 Acceptance of deposits of checks uraWn oy member banks on any re serve bank or member bank in . ra serve or central reserve city within theSr federal reserve districts
 tuner powers may be called tnro pay as the establishment of safe and eInclenr organization permits.
 Definition of Commercial Papsr
 In its circular the board gave the long expected definition of co7nn,es- ctai H paper, which is to be the lifebIood oI the new system, the basis for the new reserve federal currency and means by which the nations cIrc7,Ist- Ing medium Is expected to meet tle expansions and contractions of trade and industry.
 The rates of re- discount was not an, nounced. This step probabIy vii ,-n. pc taken until Monday. The ra.te viii not be uniform in all the banks. the definition of commercial xaner IS broad and relies to a large de9roa Ipon the language of the currency aot Ine board declined to discuss at pres- ent The question of double and singEa name commercial paper. It did make it clear, however, that it had a I,ref erence for the two name sort, and that it expected careful inquiry into one name paper presented for re-dis-
 War Conditions Discussed
 The circular discussed the conditions mat nave arisen throughout the world because Of the war and gave some in- slgn1 into the economic changes which might be expected as a result. should be Sorne in nina" fe s51d, that although our exports ara showing a gratifying increase, there Is StiH a large cash balance que to En- ropean countries for which gold nav De demanded and that a large ulian- tfty Of American securities held abroad may be retu ed to the United States while op the other hand more thsn s3OO. O.oo0,90o of emergency currencv must be gradually retired No one can estimate the duration of tho war or. predict what win be the financial or. when De2CB shall be restored.
 Extend Credit Facilities The function, of the federal reserve bank is, therefore, of a twosfoId char acter- They should extend credit fa.- cilihes, particularly where the abnor- pla1 conditions now prevailing have created emergencies, demanding prompt accommodations and on the other hand, they must protect the gold holdings of this country in order that such holdings may remain adequate to meet demands that may be made upon them. While credit facilities should be liberally extended in some parts of the country. it would appear advisable to proceed with caution fn districts not in need of immediate re- lief and to await the effect of the re- lease of reserves and of the changes which the credit mechanism of t4fe country is about to experience before establishing definite discount policy.
 Acute Financial Stage Passed
 While the most acute stage of inc recent financial mergency. appears to have passed, the conditions in other. countries make it necessary that the United States should to the utmost degree Of efficiency, organize and make available it's own resources in order that 1t may provide for its own needs and replace the facilities suddenly de-, stroyed by the closing of so many of the accustomed channels of credit and fra dan