The Ely miner., 1914-11-20
RESERVE BANKS NOW OPEN FOR
BUSINESS AFTER YEAR
OF PLANNING BY AD-
MiNISTRATION.
TOTAL CASH RESERVE is
S243, 100000 TO START
Main Aim Is to Give Great Elastic
ity to Money Market of Country
in Order That Pancs Such
as That of 1907 May Be
Impossible.

Washington, Nov. 17.-With the
opening of the twelve federal reserve
banks, the nation has begun actual op-
Grafton Of its new currency system
designed to provide an elastic eircula-
ton medium, based upon modern ideas
of finance and economics.
Year for Details.
1t has taken the reserve banks or
ganization committee and the federal
reserve board almost twelve months
to work out details of organization to
the point where an opening date was
| chosen. Notwithstanding the careful
deliberations which preceded every
preliminary step, the twelve banks
will not for many weeks take up and
exercise all the functions bestowed
upon them by congress.
Such evolution as will result from
an old national banking system of
necessity will in most respects be
slow. The reserve board, the guiding
spirit of the new system, is itself feel
ing it's way over strange ground and
the men in charge of the twelve banks
probably will feel the same desire to
work slowly and with sureness rather
than be venturesome.
Really Compromise.
The new system is generally con-
| ceded to be a compromise between
| a central bank and the present sys-
tenn with its thousands of units, scat
tered reserves and fixed limits of cur
inf of
those who interpret it find in the elas-
ITCHY it will give to recognized paper
currency.
Under the present law national
| bank currency is almost a fixed guam.
| tity, based upon national bank capital,
issued upon United States bonds and
unresponsive to the chill of hard
times or the exultation of boom days.
Its use led, the experts say, to unre-
strfcted loans and speculation in the
days when money was easy and to a
boarding of resources and a tighten
| ing of the purse strings of credit when
| they were hard. 1t is said to have
bred the panic of 1907 when solvent
banks with large credits in reserve,
less and could get back to their own
counters none of the millions they had
placed with their larger and stronger
correspondents.
The New System.
Under the new system the federal
reserve notes, which, in time, prob
ably will entirely replace the national
hon fo,
issued upon commercial paper, aris-
| ing out of actual business transac-
tions. 1t seems plain that they will
rise and fall in amount as the tides of
business rise and fall, and that there
will be no plethora of money to lie
idle. They will be obligations Of the
United States government, which ma.
tional 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 men,
Der bank which has plenty of good
paper, but needs cash. To further in
sure the flow of money, reserve banks
themselves may be required to redis-
count the discounted paper of other
reserve banks.
More than $250,GO0 900 of the new
notes have been ordered by the comp
troller OF the currency for the twelve
banks. They are in 81, $40, $50, $50
and 500 denominations, and are to be
accepted by all member banks and for
all customs taxes or other dues. The
federal reserve agent of every bank
in the system, who is the governments
representative there, has these notes
in custody ready for the application
of member banks.
Reserve of $243 100000.
AS it stands, the twelve banks start
out with a total cash reserve of about
s243, 900, 900.
The reserve banks are not to do a
banking business, except with mem
Der banks. They are empowered, how
ever, to engage in open market tran
sactions in the buying or selling of
cable transfers and bankers bills cs
acceptance and bills of exchange.
In the future, the clearings of the
banks of the country are expected to
be made through these regional banks.