Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1915-01-28
RESERVE BOARD
TELLS Of GREAT
PROGRESS MADE
Development Of New Banking
System Is Described in First
Report Made by Central
Governing Body,
nv Hoss,na ,ooss.l s,se,.. $3.50 WIN

my MORNING. JOURNAL SPECIAL taAsHo ~irrl
Washington. Jan. 27-The first re-
port OF the federal reserve board COW
ering the developments which preeeu.
ed the opening OF the twelve reglonai
reserve hanks last November ana tne
two months in which they nave peeh
in actual operation, was sent 10 con
gress today. Il announces thal h"''-
worthy results already have heen ac-
complished and that the system now
cannot be regarded as experimental
in the sense that there Is any uhcer-
talntv as to the outcome No legis-
Iation h asked for, the board devoting
its report chiefly 10 an outline OF now
the new system has STRENGTHENED the
nations financial situation.
LESS than five months have
elapsed,r says the report, since the
Introduction into our financial sys-
TEN OF the most far-reaching change
that has been made In the field Of
American banking since the passage
of the national banking act. Less
than two months have gone by since
tho federal reserve banks actually
opened for business The system,
however, is in operation and has al
ready produced results Of the most
noteworthy character.
No Longer an Experiment.
There Is much vet 10 be done but
the work cannot be regarded az ex-
perimental in the sense that there is
any uncertainty MS TO the outcome.
The only question is as to how rap
idly It will be possible to develop the
fun capabilities and resources of the
federal reserve system. It's potential
tiles are vast and should contribute
UNNECESSARILY in the future to the
solidity stability and flexibiIity of the
American credit systems.
The question, however. naturally
suggests itself and must be frankly
faced: What is the proper place and
function of the federal reserve banks
in our banking and credit system? On
the one hand, Il is represented that
they are merely emergency banks TO
he resorted to for assistance only in
time of stress. while on the other II is
claimed that they are in essence sim
ply additional banks which should
compete with the member banks, es-
pecially with those of greatest power
The function of a reserve bank is not 10
be identified with either of these ex-
tremes, although occasions may arise
when either of such courses may be
AAAARNf thAANfs It's Nhhg pldlniA - iOl W
await emergencies but by anticipa-
ton to do what It can to prevent
them.
SO also If, at any time. commerce,
industry or agriculture are, in the
opinion of the federal reserve board,
burdened unduly with excessive inter-
est charges, it will he the clear and
imperative duty Of the reserve board
acting through the discount rate and
open market powers to secure a wild
er diffusion of credit facilities at
reasonable rates.
Steadying Influence.
The ready availability of its re-
sources is of supreme importance in
the conduct of a reserve bank. Only
then will ii constantly carry the
promise of being able to protect bust
ness against the harmful stimulus and
consequences of ill-advised expan-
sions of credit on the one hand, or
against the menace of unnatural re-
strictions and unnecessary contrac-
lions on the other, with exorbitant
rates of interest and artificial strn-
gencies 1t should at all times be
steadying influence, leading when
and where leadership is requisite but
never allowing itself to become an in
strument for the promotion of the
selfish interests of any private or sec
tional group, be their aims and meth
DDS open or disguised.
Time and experience Will show
what the seasonal variations in the
credit demands and facilities in each
Of the reserve banks of the several
districts will be and when and to
what extent reserve bank may,
without violating its special function
as a guardian of banking reserves, en-
gage in banking and credit operations.
THE vast and complex structure
of modern banking and credit systems
is one of extreme delicacy of balance
and adjustments, and it must never
be overlooked that it is highly sensi-
tive to all manner Of disturbances as
recent events have painfully demon
strated The banking systems OF tne
larger nations are closly related to
one another, and financial distress or
collapse at one point quickly permits
shock to all others. safety for US In
critical times will depend on the con-
fidence our system commands, the
strength of its resources, and It's pow
or to bring them into action promptly
and effectively II needed.
In dealing with new districts and
entirely changed banking methods,
tllne and experience alone can sup
ply the data necessary for charting
me course to be pursued. This con-
slderation, If nothing else, would sug-
gest the greatest patience and pru-
dence even If the European horizon
were less clouded than it is today
None the less, the board realiZes that