Brownsville herald. [volume] (Brownsville, Tex.) 1910-current, 1914-10-14
American FinancierS Are Brought To-
gether Tor First Time Since Federal Re-
serve Act Was Passed BY Congress, and
Act is Generally Discussed.
PRESIDENTS ADDRESS DEVOTED
TO FEDERAL RESERVE SCHEME
Gives Assurance that Country May Rely
UnOn Bankers TO DO Part Toward Max
inn System a Success Notwithstanding
Some Existing Opposition.

AAAAhhNN ~ 49, ~
Bankers Association which met here 10
day brought the American Bankers to
gcthrr ia large numbers for the first
time since the Federal Reserve Act was
PASSED by Congress.
Arthur Reynolds Of DcS MoincS. prcsi
dent of the Association. devoted the
greater part of his opening address Ia
the Federal Reserve scheme. lie gave
assurances that the country might rely
upon the bankers 90 do the part toward
making the system 4 success. notwith
standing their opposition Ia il in just
the form adopted. lie noted some Of it,
fine points and its Weaknesses. and adj
viscd bankers how to adjust themselves
10 the change.
National bankers had submerged their
opinions. he said. and were cordially com
ing a. the support Of the Federal Re
serve Ranks. ~ required Nv the act and
4 limited nrmhrr II banks and trust
companies organized under state laws
had come into the system but not To the
extent necessary to warrant the anticipa-
iion of that complete unifcation of our
entire banking system 81 long desired"
The rule of the banker must H. safe
n first" h. said in considering the dini
%culticS the Federal Reserve Banks would
have in keeping %impounded all the
means necessary 10 relieve sudden dis
treSS. and ~ the same time 10 rcdiScount
freely enough Ia avert contraction of
credit. 1t will require rare wisdom.
indeed" he said. TO meet 50 contradic-
tory u situation"
VI there were any assurance that the
Federal Reserve Banks would hold large
deposits aside from those fixed by pro
visions of the act. h. thought there
might be a workable margin. hut he saw
no induccmcnt for member banks To keep
active accounts with the Federal Re
serve banks bcvond the amount of the
required reserve. Their commercial re-
%latinns with the other banks Of the coun
try will always IT, more productive. and
M The same time conform with the nat
ural trend If business. he said.
lie continued:
With the practiCabilitv of the plan
admitted the question that naturally
%propounds itself To those engaged i'm
banking il. how viii its operation affect
the profits of their business. Reasoning
from the fact that the Federal Reserve
Banks will not cnier into competition
for the commercial business If the cnun-
try. aud for the reason that they will bc
obliged 90 quote a rate Of discount a.
least rs high. if not higher. than com
mcrcial rates in order To maintain the
resources necessary Ia enable them t.
extend help i'm need | believe the conclu
sion is warranted that in the future. ~
ia the past rates ~ interest will he GOV
crncdhy the law 81 supply and demand.
The Federal Reserve Ranks have 10
way Of increasing the supply ~ actual
money ia existence: If they had. they
might reduce rates. Their most efficient
help in that connection may M times re.
suit from raising rates Ia stabilize con
ditionS.
1T IL only necessary to cite the fact
that IN those countries which depend up
on central banks a. maintain the Stahil
ity of conditions which ia their expert
cncc has prevented those panirS 10 which
W. have been subjected. We find those
central banks maintaining a discount
rate always higher than the commercial
rate in the same country.
The benefits If the new system will
hr'ronc apparent with the lapse 81 time.
The change will be gradual and should
~ regarded a. an evolution ia the bank
ing business. during which the bankers
themselves must rely upon their own re
sources and conservation should be- the
w~atchword. ANY effort to utilize the
rcdiscouniing privilege primarily for
profit should b. discouraged.
~lt must ALWAYS ~ kept III mind that
~ realize the chief Oh cct which congress
had in view the Federal Reserve hanks
must ALWAYS he ready 10 extend help:
they cannot maintain this position if the
member banks keen them drained of their
resources i'm ordinary times"
He saw q great advantage from the new
net III the maintenance ~ a foreign eN
change market. aud thought the Federal
Reserve Banks should invest IN Foreign
Bills. instead ~ solely in rc'lisrountS t.
domestic banks. ID WAS this class If
business. he said. that was sought bv the
bankers Of Great Britain and its ram
ificationS extending all over the world
had made London its financial center.
Tie said il was a popular ~mi~cnnccn
tion HAT with the opening ~ the Fed
Reserve Ranks. government funds
would he henoSitrh in those banks. and
the indcncndcnt treasury system If the
United States and its consequent expense
60 the government. and 10 the business
of the country. would heroine = thing of
fhc past. a careful reading Of the law
hn said. "diScloSes the fact that it, an
fhorS had No such intention. and thar IL
the government funds are deposited III
IhoSa banks II win w. ~ the discretion
If The secretary ~ the treasury alone
1t i = inst criticism ~ tho measure
he continued. ito say that IL does not
take the government ont Of the banking
business. and that il confers upon one
OF orr government officials an exfraord