Arizona republican., 1915-01-28

terest charges. it will be the clear and imperative duty of the reserve board i acting through the discount rate and open market powers to secure a wider diffusion of credit facilities at rea- sOnable rates.
 "The Federal Reserve banks are the holders of large part of the bank ing reserves of the nation. the founda- tion of it's banking structure Nothing should be permitted in the operation of the Reserve Banks, to be used for it's peculiar purposes. should always be readily available. It follows, there fore, that they should be mainly in vested in such short term liquid in vestments as can be easily converted into cash as occasion may require
 "The ready availability of it's re- sources is of supreme importance in the conduct of reserve bank. Only then will it constantly carry the pro-. mise of being able to protect business against the harmful stimulus and con- sequences of ill-advised expansions of credit on the one hand. or against the menace of unnatural restrictions and unnecessary contractions on the other, with exhorbitant rates of interest and artificial stringencies It should at all times be a steadying influence. leading when and where leadership is requisite. but never allowing itself to become an instrument for the promo ton of the selfish interests of any private or sectional group, be their lot I fJi
 "The more complete adaptation of the credit mechanism and facilities of the country to the needs of industry. commerce, and agriculture-with all their seasonal fluctuations and con- tingencies 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 several districts will be and when and to what extent a reserve bank may, without violating it's special function as
 guardian of banking reserves. engage
 in banking and credit operations.
 There will be times when the great
 weight of their influence and resources
 should be exerted to secure a free ex-
 tension of credit and an easing of
 rates in order that the borrowing
 community shall be able to obtain ac-
 commodation at the lowest rates war
 ranted by existing conditions and be
 adequately protected against exorbit
 ant rates of interest. There will just
 as certainly, however, be other times
 when prudence and a proper regard
 for the common good will require that
 an opposite course should be pursued
 and accommodations curtailed. Nor
 mally, therefore, considerable pro-
 portion of its resources should always be kept invested by reserve bank in
 order that the release or withdrawal
 from active employment of it's bank
 ing funds may always exercise a bene-
 ficial influence
 'The vast and complex structure of
 modern banking and credit system is
 one of extreme delicacy of balance
 and adjustments and it must never be
 overlooked that it is highly sensitive
 to all manner of disturbances. as re-
 cent events have painfully demonstrat-
 
 nations are closely related to one an-
 other, and financial distress or col
 lapse at one point quickly permits
 shock to all others. Safety for us
 in critical times will depend on the
 confidence our system commands, the
 strength of it's reserves, and it's pow
 CT to bring them into action promptly and effectively if needed.
 Tn dealing with new districts and
 entirely changed banking methods
 time and experience alone can supply the data necessary for charting the course to be pursued This considera- tion. if nothing else. would suggest the greatest Datience and prudence even if the European horizon were less clouded than it is today. None the less the board realizes that where extra aordinary conditions warrant ex- traordinary measures. it is the fore most duty of the board and the banks to act promptly and boldly
 The board refers briefly to open market operations. of the reserve banks and announces that regulations governing the purchase of acceptances will soon be made public. With the issue of these regulations. the report says. there will be ample employment for all funds of these banks, which experience demonstrates they may safely and properly invest at times when such funds are not absorbed in responding to the demands of com merce. industry and agriculture. In reference to the collection and clearing of checks, the board reports: Tt was the general opinion of the serve banks. expressed at their con- ference held just before the opening of these banks. that transit and clear ing operations should be restricted to easily manageable proportions in the beginning Since the opening of accordance with authority granted them by the board, have in greater or { less degree widened the scope of their clearing activities At this time the whole matter is still to be regarded as in a condition of development, but with sufficient experimentation going on to materially assist the board in reaching sound conclusions"
 The board points out that another pressing problem, that of admissions Of state banks and trust companies to the system. is receiving considera ton and that at least a tentative solution of the problems at issue may