Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1915-01-27

lower the abnormally nigh rate OF IN
terest."
Successive discount rate reductions were
made, until the low point was reached
December %, and AZ per cent. for 30-day
activities, approved for the Federal re-
serve bank of New York.
In regard to the gold exchange fund
the report says:
FOREIGN EXCHANGE.
zone Of the earliest and most trying
consequences of the war was the de-
velopment of a highly abnormal and
artificial condition in the foreign ex-
change market"
The board called conference of rep
resentatives of clearing houses of all re-
serve cities on September l.
"The investigation undertaken by the
Federal Reserve Board and the confer
ence above mentioned disclosed the opin-
ion that the current Indebtedness of the
United States to foreign countries was to
be stated at approximately $500, 100000 q
sum the maturity OF which was spread
over period OF months.
A committee of bankers appointed at
this conference subsequently recommend
ed plan for the formation of a gold
fund of S10O00O,00O. which was approved
by the board on September 10, and let
ter was sent to the presidents of the
clearing house associations throughout
the country under date of September q,
1914, in which subscriptions aggregating
this sum were asked. The Federal Re-
serve Board had been requested to allot
the pro rata of the contributions to be
made to each clearing house district, and
such allotment was made. Action upon
these allotments was prompt and effec-
tive, and total Of
subscribed"
THE COTTON SITUATION.
AT the end of September the cotton
market was still completely disorganized.
"As is well known. about 60 per cent.
of the total cotton production of the
United States is annually sent abroad.
An unusually large acreage had been
planted, the season had been favorable,
and very large crop was approach
Ing maturity. These circumstances would
In any event have depressed the price
of cotton"
New York city banks agreed to pledge
SoOOOO,OOO to cotton loan fund, provided
that an equal amount re raised through
the clearing houses in other than cotton
producing States. The plan provided that
to the 500, ,0O0,O 900 thus to be raised should
be added further sum of $35, 100000 to
be contributed by banks in the cotton
producing States, provided that the $780,
100000 should be called for in proportion
az the SS5, 200 should be subscribed
and paid in"
The board sactioned this plan on October
"a. The new banks were thus able to
open In full confidence that they would |
be relieved of undue strain.
CLEARING HOUSE CERTIFICATES.
An immpniata DF
issue in many cities of clearing house
certificates. and large volume of emer-
sency currency was issued by the Secre
tary of the Treasury
The total amount of the emergency |
currency Issued aggregated about $3.50, ,OOO,-
~ ~ Inc channels of circulation were thus
niled before the end of the summer
The emergency currency Is being ran |
idly retired by natural process.
Some 100000 have already been |
thus leaving in circulation |
less than SlOO,O0O.OOO at the date of this
report. 1t is expected that with the lower
rates OF discount now prevailing at the
federal Reserve Banks and with the con-
tinued increase In the rate of taxation
TO which emergency currency is made
subject, there will be a gradual conyer-
sion OF such currency into Federal re-
serve notes so far as the existing notes
are not redundant
Had the Federal Reserve Banks been
in operation at the beginning of August
hey would naturally have supplied the
great volume of currency which was
;alled for, and they would have derived
the profit for the service rendered"
Wider open market operations will
Ihortly be provided for, to give ''ample
employment for all funds which exper-
ence may demonstrate the Federal re-
erve banks can safely and properly
invest"
The report says that the question,
What is the proper place and function
Of the Federal Reserve Banks in our
banking and credit system?" naturally
uggests itself. Are they merely emer-
sency banks" TO help in times of stress:
l.. simply additional banks which should
with the member banks. espe-
,ially with those OF the greatest power?"
They are identified with neither ex-
RENE. A reserve banks duty ''plainIy Is
ot TO wait emergencies but by antici-