The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1914-11-14

to be opened for business next Mon
day was defined for the first few
months OF their existence In a circu-
lar issued today by the federal reserve
board. For the present the banks
will not eA> rcise all the functions Civ
en- them by congress. The board
concurring with bank directors and
governors. indorsed this plan:
Acceptance of deposits of reserve
from member banks.
Discount Of bills of exchange and
commercial papers.
Acceptance of deposits of checks
drawn by member banks on any re
serve bank or member bank in a re-
serve or central reserve city within
their federal reserve district
Other powers may be called into
play as the establishment of safe and
efficient organization permits.
In its circular the board gave the
long expected definition Of CONNER
cial paper. which Is to be the basis for
the new federal reserve currency. and
the means through which the nations
circulating medium Is expected to
meet the expansion and contractions
Of trade and industry.
The rate Of discount was not an
nounced and probably will not be un-
ill Monday. 1t will be uniform in all
banks.
The definition of commercial paper
Is broad and relies to a large degree
upon tn lnguage of the currency act.
The board declined az the present time
to discuss the question of double and
single name commercial. paper. 1t
did make II clear. however, that 1t
had preference for the two name
sort. and left no room for banks to
doubt that II expected careful inquiry
into one name paper presented for
rediscount.
The circular discussed the conditions
that have arisen here through war
and gave some insight into the eco
nomic changes which might be ex-
pected to result.
1T should be borne i'm mind it
said. that although our exports are
showing gratifying Increase there Is
still large cash balance due to Euro
pean countries for which gold may be
demanded. and that n large quantity
OF American securities held abroad
may be returned to the United States,
while on the other hand more than
s3oo.o00.o0o Of emergency currency
must be gradually retired.
mo one can estimate the duration
OF the war or predict what it's effect
will be on financial or commercial
conditions. when peace shall be re-
stored. Our own industrial develop
ment should be greatly facilitated by
foreign capital.
1T Is probable that at the end of
the war interest rates I'm Europe will
be higher than they have i'm the past
and great investment returns will be
yielded. The tremendous destruction
of property and waste of capital will
not only check the flow of Europe s
savings to the United States but may
dispose foreign investors to return
the securities they now hold.
Lower money rates i'm this coun-
try would be likely to accentuate this
tendency. while. on the other hand,
higher interest rates and large invest
ment returns on our side would
check IL.
The function Of the federal re-
serve backg IL. therefore. of n two
fold character. They should extend
credit facilities. particularly where
the abnormal conditions now prevail
ing have created emergencies de-
manding prompt accomra odations and
on the other hand they must protect
order that such holdings may remain
adequate To meet demands that may
bo made upon them.
"W'Sile credit facilities should be
literally extended i'm some parts oi
the country, II would appear advisable
To proceed with caution in district,
not In need Of immediate relief and
To- await the effect of the release oI
reserves and OF - changes which
the credit mechanism of the coun.
try In able To- experience before
establishing n definite discount policy
While the most acute stage of tn,
recent financial emergency appears tC
have passed. the conditions i'm Other
countries make IL necessary that tn,
United States should. to the utmos
degree Of efficiency. organize an,
make available its own resources il
order that IL may provide for its owr