The daily telegram. [volume] (Clarksburg, W. Va.) 1901-1926, 1915-01-27
new CURRENCY
ACT O.LONGER
ANEXPER||MENT
Gays First Report Of the Fed.
eral Reserve Board to
CONGRESS.

which they have been in actual oper-
alton, was sent to Congress today. It
announces that noteworthy results al
ready 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 asked
for, the board devoting Its report
chiefly to an outline of how the new
system has strengthened the nations
financial situation.
Noteworthy Results.
LESS ) than five months have
elapsed" says the report. "since the
introduction into our financial system
of the most far-reaching change that
has been made in the field Of Ameri-
can banking since the passage OF the
National Banking Act. Less than
two months have gone by since the
Federal Reserve Bank actually opened
for business. The system, howv-I
er, is in operation and has already
produced results Of the most note
worthy character.
There is much TO be done, but the
work cannot be regarded as experi-
uncertainty as to the outcome. The
only question is as to how rapidly it
will be possible to develop the fulfil
capabilities and resources OF the Fed
Ieral Reserve System. Its potential
tiles are vast and should contribute
UNNECESSARILY in the future to the
|solidity, stability and hexibility Of the
American credit system.
1.-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 sys-
ten? On the other hand, 1t Is rep
resented that they are merely emer-
gency banks to be resorted to for as
sistance only in time of abnormal
stress: while on the other 1t isl
Iclaimed that they are in essence sins
lply additional banks which should
compete with the member banks es-
power. The function Of reserve
bank is not to be identified with
either Of these extremes, although oc-
lcasions may arise when either OF such
courses may be imperative. Its duty
plainly is not to await emergencies
but by anticipation to do what il can
to prevent them.
$50 also If. at any time, commerce.
industry or agriculture are,. in the
opinion of the Federal Reserve Board,
burdened unduly with excessive in
terest charges, it will be the clear and
imperative duty of the reserve board
acting through the discount rate and
open market powers to secure wider
diffusion of credit facilities at reason
able rates.
Steadying Influence.
1.-The ready availability of its re-
sources is of supreme importance in
the conduct Of reserve bank. Only
. then will 1t constantly carry the pom
Use Of being able to protect business
, against the harmful stimulus and con-
sequences of ill-adyised expansions
of credit on the one hand, or against
the menace Of unnatural restrictions
and unnecessary contractions on the
, other, with exhorbitant rates Of inter-
est and artificial strlngencies. It
should at all times be steadying in
ifluence, leading when and where lead
ership is requisite but never allowing
itself to become on instrument for the.
promotion, of the selfish interests Of
any private or sectional group, be
their aims and methods open or dis
guised.
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 its special function
as guardian Of banking reserves, en-
gage in banking and credit opera
lions.
1.-THE vast and complex structure
OF modern banking and credit sys-
tens is one of extreme dehcacy OIL
balance and adjustments, and it must
never BIO overlooked that 1t is highly
sensitive to all manner of disturb
! ances as recent events have pain
fully demonstrated. The banking sys-
: TENS OF the larger nations are closely
/ related to one another, and financial
Z distress or collapse at one point
. Safety for us in critical times will
Il uCPV1l0 vi tliS SOAhuOhSS OuA
j, commands, the strength of its re-
a serves. and its power to bring them
!, into action promptly and effectively If
i needed.
r "1n dealing with new districts and
i entirely changed banking methods,
time and experience alone can supply
the data necessary for charting the
course to be pursued. This consider.
OFT ole Ind oncf
the greatest patience and prudence
even II the European horizon were
less clouded than it is today. None
. the elss, the board realizes that where
extraordinary conditions warrant ex-
traordnary measures, 1t is the fore
most duty of the board and the banks
to act promptly and boldly"
r The board refers briefly to open
{ market operations OF the reserve
banks and announces that regulations
J governing the purchase OF accept