The Goldfield news and weekly tribune. [volume] (Goldfield, Nev.) 1911-1947, 1915-01-30
FEDERAL RESERVE BOARD SENDS
ITS FIRST REPORT TO congress

first report of the federal reserve
board covering the developments
which preceded the opening of the
twelve regional reserve banks last
November and the two months in
which they have been in actual oper-
alton. was sent to congress today. 1t
that noteworthy results
already have been accomplished and
that the system now cannot be re-
garded as experimental in the sense
that there is any uncertainty as TO
the outcome" No legislation is ask
ed for. the board devoting its report
chiefly to an outline of how the new
system has strengthened the nations
financial situation.
LESS than five months have
elapsed" says the report, "since the
introduction into our financial sys-
TEN of the most far-reaching change
that has been made in the field of
American banking since the passage
of the national banking act. Less
than two months have gone by since
IL e federal reserve banks actually
opened for business. The system,
however, is in operation and has al
ready produced results of the most
noteworthy character.
There is much yet to be done, but
the work cannot be regarded as ex-
detrimental in the sense that there is
any uncertainty as to the outcome.
1 he only question is as to how rapid
ly it will be possible to develop the
full capabilities and resources of the
federal reserve system. Its poten-
tribute UNNECESSARILY in the future
to the solidity, stability and 1exibil-
ity of the American credit systems.
The question, however, naturally
suggests itself and must be frankly
faced: What is the proper place and
function of the federal reserve banks
in our banking and credit system?
On the one hand, it is represented
that they are merely emergency
banks to be resOrted to for assistance
only in time of abnormal stress;
while on the other it should COM
pete with the member banks, espec-
tally with those of the greatest
power. The function of a reserve
bank is not to be identified with
either of these extremes, although
occasions may arise when either of
such courses may be imperative. It's
duty plainly is not to await emer-
gencies, but by anticipation to do
what it can to prevent them.
80 also if, at any time, COM
merce, industry or agriculture are,
in the opinion of the federal reserve
board, burdened unduly with excess
sive interest charges, it will be the
clear and imperative duty of the re-
serve board acting through the dis
count rate and open market powers
to secure a wider diffusion of credit
facilities at reasonable rates.
THE federal reserve banks are
the holders of a large part of the
banking reserves of the nation, the
foundation of it's banking structure.
Nothing should be permitted in the
operation of the reserve banks which
would weaken this foundation. The
of a reserve bank, to be
useful for it's particular purposes,
should always be readily available.
1t follows, therefore, that they
should be mainly invested in such
short-term liquid investments as can
be easily converted into cash as oc-
casion may require.
The ready availability of it's re-
sources is of supreme Importance in
the conduct of a reserve bank. Only
then will it constantly Dairy the
promise of being able to protect bus
mess against the harmful stimulus
and consequences of ill-advised ex-
p%ansions of credit on the n hand,
or against the ena of unnatural
restrictions and unnecessary con-
fractions on the other, with eXOrbi-
tant rates. 1t should at all times be
a steady influence, leading when
and where leadership is requisite,
but never allowing itself to become
an instrument for the promotion of
the selfish interests of any private or
sectional group, be their aims and
methods ofen or disguised.
THE more complete adaptation of
the credit mechanism and facilities
of the country to the needs of in
dustry, commerce and agriculture
with all their seasonal fluctuations
and contingencies should be the
constant aim of a reserve banks
management.
Time and experience will show
what the seasonal variations in the
credit demands and facilities In
each of the reserve banks of the sew
cral districts will be and when and
to what extent a reserve bank may,
without violating it's special func-
ton as a guardian of banking re-
serves, engage in banking and
credit ODeratiOnS.