The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1915-06-29
A COORDINATE BANKING SYSTEM
address of William 1ngle, Chairman Federal Reserve
Bank, Richmond, Va, delivered before the North
Carolina Bankers Association, June 1917

MI ct pt"SS WIN ANoSiA CAA1 Il liz l
world. Notwithstanding the presence
of the usual great Indebtedness ow-
ing for its seasonal needs. What
uattered it with cotton selling at II
cents a pound INT with prospects Of a |
bountiful crop of the staple ON every |
side? The W situations "a been |
complimentary for SO many years that
NO one dreamed that fate could be
SO cruel as SO seriously to disturb a
usual balance a. to result in any real
disturbance or Inconvenience. On
August 1st, and progressively on i'm
mediately following dates, other emo
,ions were finding expression. War
in Europe, the significance Of which
was promptly appreciated, was re-
sponsible almost over night for a
change from a feeling of economic
contentment to one of nervous appre-
hension. Credits heretofore easy and
mobile instantly became fixed and
relatively unobtainable. With expe-
riences of 1907, and other crisis in
mind, it is not strange that bank Of
fcers and business men owned dis
trust of the uture Promptly it was
decided not only to apply remedies
useful in the past, but to call into
action the provisions Of the Aldrich-
Vreeland act, a measure as yet I'M
tried. Fortunate indeed was it for
the country that the law vas yet alive
on the State books: as without it's aid
it might very well be doubted that
the first shock and the later continued
strain could have been met. While
the law prevented a currency panic
and serious credit disturbances, it
COMO got nullify the law of supply
and demand in its relation to COM
nU6ities. IN Il inme-
djatcly owing to h Stoppage of ex-
ports. The price of cotton rapidly de
clined 10 soy Z cents a pound, when
- related indebtedness became d real
burden and menace IN the presence
Of conditions for which there nae
never been any precedent.
The Federal Reserve Act intended
not only to supplant the emergency
currency law but to bestow other ben.
etts upon banking and general bust
ness. including farming, while en-
acted into law, was not yet effective
Many people honestly felt that i
would be foolhardy to attempt tn
revolutionizing of the banking system
at a time of world vic disturbance
preferring rather to trust the futur'
in following paths before trodden ever
if somewhat thorny. Others believed
that if it were possible promptly t
establish the reserve banks and de
clare the law effective, it's manifol
possibilities for good would as prompt
ly be realized. Fortunately the coun
sci of these latter prevailed, with tn
result that on November 16, 1914, tn
country witnessed a real revolutio
in banking, and thanks both to tn
well considered plans of the ReserV
Board and the hearty and unStinte
cooperation of the member bank;
the occasion caused not a ripple
added disQuiet. On the contrary, tn
moment it was realized that we ha
with us a law really responsive to GU
~ an1 orn1t< voodc oon6itiav
shove pronounced improvement
Not only could credit now be obtaine
but it was extended at diminiShiT
rates, ell before the reserve banks hs
loaned a dollar of the SQUIRE whil
they had accumulated. Faith,
more properly a most reasonable &c
tainty Of the possibilities of the r
serve act once it was established, hs
done its perfect work. The rest al
is now history.
As the reserve banks gradually r
dueed rates, it became increasing
easier both to arrange to shift loa
of long standing or overdue at reser
c%enters, and to obtain fresh cred
for the ultimate use OF the farme
and merchants, permitting them DO
TO liquidate Ole debts and to unde
take fresh operations. Gradua
ocean carrying conditions lmprOvt
permitting generous export movenel
until in the absence Of the usual il
port trade, the country finds its
with more money at it's comma
than ever before in its history. c
ViOusly, while the war is responsil
for most serious disturbances in ma
lines. it is fairer to associate eHe
with real causes than to attrib'
such rOubles to changes in tariff a
other national laws.
1t is probably the case that !
where else in the country was !
more seriously the shock experient
by its industries than in the Carolin
Constant shortage of capital in
country of great actual and poten'
resources has tempted an extraVag
Overuse, yes, abuse of credit. Pos
bly, the greater share Of this ere
represents borrowings for perman
capital account, and in being ba
NDOR land machinery and the like