Pine Bluff daily graphic., 1915-01-28
Attributes Quick Recovery from Financial Chaos to
 New Banking System.
M 4 EE.3 HIj91TEsY CHEAP
aIFSt Annual Report cf Federal Bank. ing Beard jai.Cs Optimistic View of Reserve i'aniss' Achieve
 mentS,

Optimistic view Of the federal reserve
 banks achievements. in the few
 mouths of their existence, and of the position they are to hold i'll American commercial life. II described the
 quick recovery from the financial chaos caused by the utbreak of the war .ts due to the ne'v banking sys' tenn.
 In outlining tho financial emergen- Cy of the country when the members cf the board took the o2th Of office August 10 last, the report says the sit uati0n demonstrated to a striking de- gree thc dependence of tue American banking system upon the Call-lOan market because of the large propor- ton of the ccuntry's banking reserves invested in call-loans protected by stock exchange colIaterala
 The cnening of the new banking system was hurried e. account of war emergencies. the report states, but events have since shown that the opening of the insti'.utions WAS wisely. ,timed to svpthrCniZo with the restora ton of activity in our export trade The federal reserve banks were able 10 begin business with substantially the whole of their deposits in gold and without pressure on the general business or credit conditions.
 The change in reserve requirements on the establishment of the new sys~ 1 fem released throughout the country' the report notes a very conslderable 1 amount of funds which previously had had to be held idle by the banks | Precisely how much was released probably cannot be told, says the board but the release of actual cash and the increase of lending power l were very large. Rates or. commercial paper in New York fell from above six per cent to 3 F to f per ceft, within two weeks after the ne" banks op' ened on November l6.
 The beard believes, however, that the reduction in interest rates was largely due to the basis clements o1 confidence inspired in addition to the actual release of reserves.
 The report describes the operations Of the gold exchange fund and the eotton loan fund. Of the latter ii says that it's formation rendered ma terial service by restoring confidence thus stabilizing values and establish ing basis for extension of credit on i cotton as collateral. The board asks itself the question:: What is the proper place and function of the fed- eral reserve banks?" and answers as 1 fellows:
 On the enc hand, it is represented thai they are merely emergency banks | +, occiStonCG only in time of abnormal stress: while on the ether, it is claimed that they are 1 in essence simply additional banks which should compete With the mem her banks, especially with those Of the greatest power The function or reserve bank is not to be ldentlflec with either of these extremes, althcuSh occasions may arise when either o1 such courses may be imperative. It's duty plainly is not to await emergen- cies but by anticipation to do what if can to prevent them. So also, II al any time, commerce, industry or ag- riculture. are, in the opinion Ct the federal reserve board, burdened un- duly with excessive interest charges. if will be the clear and imperative duty of the reserve board acting thrCugh the discount rate and open market powers, to secure a wider diff fusion of credit facilities at reason able rates. The federal reserve banks are the holders Jf a large part ol the banking reserHes of the nation, the foundation Csf it's DanFing structure Nothing should be permitted ln the oneraticn cf the reserve banks which wouId weaken this foundation. The resources of a reserve bank, to be useful for it's peculiar purposes, l should always be readily available. It follows. therefore, that they should oe
 mainly invested in such short-1erm ]inuid investments as can be easily converted into cash as occasion may
 renuire. This conception Of d re- serye hank, moreover, implies that its ;nvestments shorid be marshaled to 1, steady succession of maturltles, so tbst if may at all times as nearly as nossib]e prove equal to the situation.
 Salaries Small,
 wasbinaton, Jan. 27,-ln an appen- dix to it's first report to congress to- day. the federal reserve board TOT the first time makes public the annuai salaries approved for federal reserve !, agents and governors Of the l2 banks
 The salaries of the agents follow:
 postcn, Philadelphia, Cleveland Richnond, Chicago, St. Louis. slO'ooo; New York, s16,00o; San Francisco SIP, eco; Minneapolis and Kansas Clty s7.5OC; Atlanta and Dallas, s60oo, Governors: New York, $3o,ooo ; , Philadelphia, Chicago and St. it uisr $40 ,oo0; Cleveland, Sl6,ooo; bcs,on' Minneapolis and San ffahclseo' sio', o , ooo. Dallas, $12,o0O; Richmond, Sl0,s :, o0O: @ Atlanta, 5000, and Kansas City The board also approved directors fee of s2O and of $1o for these attend ing meeting of the executive commit tee Directors living more than ?. elmiles from reserve banks will De al- 2 lowed a per diem fee of Slo TOT e.sr, v V e..>~,, 6nn1a jnVliVe0 III