Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1915-10-01

cchtcrs OF cXpe!iinE gold later on to
countries able and willing TO offer more
for it.
one of the great purposes Of the
Federal Reserve Act was TO give sta
! bil!ty 10 interest rates the country over
and 10 prevent them from going
either too hiHn or too low
LOW INTEREST HATES
| PRODUCE INFLATION
Excessive low !nteres, rates de-
inoralize the entire banking system
and are higaly favorable to. and all
most inevitably produce. speculation
and imitation, and imitation inevitably
| causes restriction OF credit. Increased
difficulty Of obtaining credit. and here
icfore has always been followed by
credit collaps cmOrc or less severe
In the great money ccutcrs in
terest rates. particularly on demand
loans ana on shor, time loans, are
lower than they nave ever been IN
the history OF the country This si,ua-
/ ton has always been conducive TO
/ speculation. and enormous sums Of
bank credit nave become involved
under sgch conditions ia speculative
enterprises Of all kinds. There are
vide differences in money rates at this
! time over this very large country.
1t IS q characteristic OF such times
of supcrabundant bank credit that
l
great money ccnters.'
Mr.. Seay argues that this country
, viii DC compelled TO take long time
in advance OF the necessary steps TO
safeguard itseif against the financial
necessities OF other countries which
have been and will continue TO be
brought about by the war. He sums up:
The following benefits may be
reasonably expected TO follow from
putting the act In complete operation
Il l. viii insure the accomplish
ment OF the reserve provisions, which
( Viii be endangered by delay.
- ~ eliminating q huge amount
OF legal, but fictitious, reserves it viii
be using the most effective means at
command 10 safeguard against undue
Expansion which all previous experience
mas taught us is likely 10 occur.
. It VIII give the Reserve system
a better control over the credi: silua :
/ ton Of che country Control OF the
surplus gives control OF the whole.
a II Will benefit member banks by
stcadying interest rates, and will 80
| far TO insure profitable, but always
reasonable rates. Cheap credit and
( excessively low rates have an element
( OF danger.
- BY eliminating an unreal sur
plus ii will insure 10 the reserve
banks a better income by creating a
, more active rediscount demand
80. II viii aid more than any other
factor in solving the collection prob
lem OF the reserve banks.
-. By having better contro! over in
tercst rates, and with = we'll developed
! collection system. the power to draw
State banks into the system will he
/ greatly increased.
IS The greater strength OF The re-
/ serve banks will give them increased
control over the gold supply.
| 80 To put the act into full force
! 1T once will remove source OF unset
Element which the frequent changes
I can hardly fail TO cause. and will tend
to quiet the disposition to criticisc
and amend ii. 1t will also lead TO a
quicker and more comprehensive APP
/ probation of its aims and purposes.
and promote better understanding
OF sound credit and banking. II Will
! put 10 rest the frequent accusation
I that the act is the cause of infla ton.
! II it is not done. the accusation may
! become true one"