The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1914-10-16
GAVE new BANK
PLAN HIS mark
Head Of the American Society
Approves the Scheme
REYNOLDS TALKS TODAY
Delivered An Address at the
Opening Of Session,
Richmond, Va.
REYNOLDS TALKS TODAY
TAssocIated Press Dispatch.l

Associated Press Dispatchl
Richmond, Va, October 14.-The
fortieth annual convention of the
American Bankers association which
met here today brought the American
bankers together in large numbers
for the first time since the federal
reserve act was passed by congress.
Arthur Reynolds of Des Moines,
president of the association, devot-
ed the greater part of this opening
address to the federal reserve
scheme. He gave assurances that
the country might rely upon the
bankers to do their part toward
making the system a success, not
withstanding their opposition to 1t
i'm just the form adopted. He noted
some of its fine points and It's
weaknesses, and advised bankers
how to adjust themselves to the
charge.
National bankers had submerged
their opinions, he said, and were
cordially coming to the support Of
the federal reserve banks, as re-
quired by the act, and a limited
number OF banks and trust CON-
panies organized under state laws
had come into the system, but not
TO the extent necessary to warrant
the anticipation Of that complete
unification of our entire banking
system so long desired
Safety First" Rule.
The rule OF the banker must be
safety first" he said, in consider
ing the ANTIQUITIES the federal re-
serve banks would have in keeping
impounded all the means necessary
to relieve sudden distress, and at
the same time to rediscount freely
enough to avert contraction Of cred
it. at win require rare wisdom, in,
deed" he said, ito meet so con.
Trajectory a, situation"
IL there were any assurance that
the federal reserve banks would
hold large deposits aside from those
fixed by provisions of the act, he
thought there might be a workable
margin, but he saw no inducement
for member banks to keep active
accounts with the federal reserve
banks beyond the amount Of the
required reserve. Their commercial
relations with the other banks OF
the country will always be more
productive and at the same time
conform with the natural trend OF
business" he said.
Plan Is Admitted.
Mr.. Reynolds continued: with the
probability of the plan admitted
the question that mutually propounds
itself to those engaged in banking
is, how will its operation affect the
profits Of their business. Reasoning
from the fact that the federal re-
serve banks will not enter into COM
petition for the commercial business
OF the country and for the. reason
that they will be obliged to quote
a rate of discount at least as high,
IL not higher, than commercial rates
In order to maintain the resources
necessary to enable them to extend
help In need, / believe the conclu-
sion is warranted that in the future,
as In the past rates of interest will
be governed by the law of supply and
demand.
THE federal reserve banks have
no way OF increasing the supply of
actual money I'm existence; II they
had, they might reduce rates. Their
most efficient help in that connec-
ton may at times result from rails
ing rates to stabilize conditions.
Has Prevented Panics.
at is only necessary to cite the
fact that In those countries which
depend upon central banks to main
tain the stability Of conditions which
in their experience has prevented
those panics to which we have been
subjected, we find those central
banks maintaining a discount rate
always higher than the commercial
rate In the same country.
THE benefits OF the new system
viii become apparent with the lapse
OF time. The change will be gradual
and should be regarded as an evo-
luton in the banking business, dur.
Ing which the bankers themselves
must rely upon their own resources
and conservation should be the
watchword. Any effort to utilize the
rediscounting privilege primarily for
profit should be discouraged.
at must always be kept in mind
that to realize the chief object which
congress had In view the federal
reserve banks must always be ready
to extend help; they cannot main
tain this position II the member
banks keep them drained OF their re.
sources In ordinary times"
Sees Great Advantages.
He saw great advantage from
the new act in the maintainance OF
Continued on PAGE Two