Bisbee daily review., 1914-11-15
RESERVE BANKS TO
 OPEN UP NATIONS
 CURRENCY CHANNELS
Modern Methods Based on Mod ern Ideas and Economics Will Be Introduced in Attempt to Make System More Elastic.

WASHINGTON. Nov. 14.-Wth the opening Monday of the twelve Feder al Reserve banks. the nation will ! begin actual operation of its new eur. rency system designed to provide an elastic circulating edium based upon ! modern ideas Of finance and econom. ics.
 It has taken the Reserve Bank Or 1 ganization Committee and the Feeder.
 al Reserve Board almost twelve
 months to work out details of organ ization to the point where an opening
 date was chosen. Notwithstanding careful deliberations which preceded ! every preliminary step, the twelve banks will not for many weeks take
 up and exercise all the functions be-
 slowed upon them by Congress. Such
 evolution as will result from the old national banking system of necessity
 will in most respects be slow. The
 Reserve Board, the guiding spirit of
 the new system. is itself feeling it's
 way over strange grounds and the
 men in charge of the twelve banks
 probably will feel the same desire
 10 work slowly and with sureness
 rather than be venturesome.
 The new system is generally con-
 ceded to be a compromise between
 central bank and the present system
 with its thousands of units, scattered reserves and fixed limits Of currency.
 Its chief attraction and value, those
 who interpret 1t find in the elasticity
 it will give to recognized paper cur
 rency Under the present law nation
 al bank currency is almost a fixed
 quantity based upon national bank
 capital, issued upon United States
 bonds and unresponsive to the chill
 of hard times O rthe exultation of
 boom days Its use led, the experts
 say, to unrestricted loans and specu- lation. in the days when money was easy and to a hoarding of resources and tightening of the purse strings of credit when they were hard. lt is said to have bred the panic of 1907 when solvent banks with large cred
 its in reserve. and central reserve cities, were helpless and could get back to their own countries none of the millions they had placed with their larger and stronger correspond cnts
 Under the new system the federal reserve notes, which, in time, prob ably will entirely replace the national bank notes. now so familiar, will be issued upon commercial paper arising l out of actual business transactions. l !. seems plain that they will rise and :. fall and that there will be no pie | thora of money to lie idle. They will be obligations of the United ! States government, which national bank notes are not and will have back | of them a large reserve Of gold in the | regional banks. Through them the reserve banks are expected to come to the aid of any needy member bank which has plenty of good paper but needs cash. To further insure the flow of money, Reserve banks them. selves may be required to rediscount he discounted paper of other reserve banks
 More than S25O,OOO,OOO of the new totes have been ordered by the Comp. rcllef fthe Currency for the twelve 1 ,anks. They are in $4, S1O, S2O, $50 md S1OO denominations. and are to ,e accepted by all member banks and or all customs taxes or other dues. The Federal Reserve Agent of every ,ank in the system, who is the gov .rnment representative there, has hese notes in custody ready for the publication of member banks.
 Next to the elasticity of the new urrency officials value the "mobil- lation' but no concentration of re- , serves which it will 'insure. This, ley point out, does not mean the com of vast sums from country | anks in reserve cities and central re- i erye cities as under the national Il anking act. but their appearance in n ,rge part on the debit balances of il be telve reserve banks in widely ( catered parts of the country. Ihese [ sserves will be as near as possible [ D the door of the member bank to C mich they belong in times of need b nd there can be no refusal from re- n srye bank to return them in cases of r xigency l
 A remnant of the present system n tin remains in the provision by q hich banks may keep a certain pro ortion of their reserves with other S .ember banks in cities now known | reserve an dcentral reserve cities. ( the en O fthree years, however. at win b changed and an reserves q ill be held either in a banks own s iults or with a Federal bank An 1T fort was made in Congress a few ], eeks ago to permit member banks il
 deposit an their reserves with this il