The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-01-22
M'ADOO MAY HELP
THE SOUTHERN BANKS
Federal Reserve Board Seeks the
Retirement Of Emergency
Currency.
DISCOUNT RATES LOWER

wAsHiNGroN. Jan q The Federal
Reserve BOARD issued an important state
ment tonight setting forth it, ideas re-
Earding the procedure to be followed by
the hanks OF the South boo retiring the
s5O,oo0,oo0 OF emergency currency now
outstanding
II is with the purpose Of facilitating the
withdrawal Of this currency before June
30. when the Alirch-Nrcciuud act under
which It IL issued expires. that the board
has authorized rcdscouut rates beginning
at per cent ou short time paper for
the reserve banks OF the South
The statement of the board indicates
an expectation that the extent II rcdis-
count operations which will accompany
the retirement OF this currency VIII make
the Southern reserve banks resort to
reserve Institutions ia other sections Of
the country for loans uu rCdisCuunted
commercial paper.
1t II pointed out. however, that should
IL DO found iuadvlsuuiu that tAt reserve
banks conduct extensive rcdisUouut opera
tons among one another the Secretary Of
the Treasury ~ prepared to accommodate
the Southern banks with dcspOsits OF GOv-
Cgnment funds
The Issuance Of this statement is tho
first evidence given the public that the
secretary ~ the Treasury had conferred
with tho reserve board regarding the
exercise TO be made OF the preiogativa
vested ia him by the Federal reserve
act OF depositinE the general fund Of the
Treasury according to his own d.sCre-
t.oiL
Reports were circulated several week
ago that Mr. McAdoo had decided to de
post the bulk OF the Governments funds
with tho Southern banks and that this
decision gave promise OF causing q seri.
Gus split IN the board.
Here is the boards statement:
Tho Federal Reserve Board AT ITS
meeting yesterday authorized lowe. de-
count rates IN the Southern districts
The Authenticated act ne amended tN-
pres by limitation ON June 90 leNt. ~
which date all currency Issued under The
provisions of that act must be reti ed.
There are stll about S5O.ovo.uJJ ot
this additional currency out-'andug in
the Southern districts and the board
deems II wise that lower discount rates
lie esta hllshed m the South so as 20 en-
able the banks Of that section boy avail
ing themselves OF the rcdlscount pgNi-
eges offered by their Federal reserve
banks TO retire their additional CUT
rency without inconyenIeuca to them
selves. and without disturbing credit
conditions.
There is now plethora 81 money in
many of the Federal reserve districts and
II seems an lnopportunc tim" Tor most
Of the Federal reserve banks ga try 10 force
their funds into Use through discount
operations iu their own districts.
Under the Federal reserve system L
ia possible by means Of rcdi-couut opera
dons be ,we,n Federal reserve banks for
reserve money to flow from districts where
it cannot be employed into those where
il can be used to advantage.
1t is, therefore practicable for the
Southern Federal reserve banks 10 dis
count for their members as literally IS
may he consistent with prudence as "a
large idle reserve carried in other districts
can ne employed iu ivtiius,its.
Soon conditions arise which would
make it undesirable for Federal re
serve banks In some districts To avail
themselves of the opportunity for invest
ing funds In redscounts In other districts,
or should II be desirable FOR them 10 dis
continu such operations after Cngag-
ing In them the Federal re'er.e banks In
the borrowing districts can stlll be KEEP
in a comfortable position, az the Score
tary OF the Treasury has indicated his
willingness to cooperate in that case by
making deposits