New Britain herald., 1915-01-27
NOTEWORTHY RESULTS
 OF RESERVE SYSTEM
Presented to Congress in Federal
 Boards First Report.


 ceded opening of the twelve region al reserve banks last November and the two months in which they have been in actual operation, was sent to congress today. It announces that noteworthy results already have been accomplished and that system now cannot be regarded as experimental in the sense that there is any uncer- tainty as to the outcome" No 1egis- lation is asked for the board devotine it's report chiefly to an outline of how the new system has strengthened thu nations financial situation.
 Less than five months have elapsed" says the report, since the introduction into our financial system of the most far-reaching change that has been made in the field of Amerl- can banking since the passage or the national banking act. Less than two months have gone by since the Feder- al Reserve banks actually opened for business. The system however, Is in operation and has already produced results of the most noteworthy char acter.
 Much To Be Done.
 "Th ere Is much yet to be done, but the work cannot be regarded as ex- perrin ental in the sense that there i1 any uncertainty as to the outcome. The only question is as to how rapid 1y it will be possible to develop the full capabilities and resources of the federal reserve system. Its potential ities are vast and should contribute immeasurably in the future to the solidity, stability and flexibility 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 other hand, 1t is represented that they are m aerely em ergency banks to be resorted to for assistance only in time of abnormal stress; while on the other it is claimed that they are in essence simply additional banks which should compete with the member banks cs- pecially with those of greatest power The function of a reserve bank is not to be identified with either of these extremes, although occasions may arise when either of such courses may be imperative. Its duty plainly is not to await emergencies but by an- ticipation to do what 1t can to prevent | them.
 Wider Diffusion of Facilities. l 50 also if, at any time, commerce, | industry or agriculture are, in the | opinion of the federal reserve board l burdened unduly with excessive in- | terest charges, it will be the clear and | imperative duty of the reserve board | acting through the discount rate and open market powers to secure a wider diffusion of credit facilities at reason able rates.
 "The ready availability of it's re- | sources is of supreme importance fir | the conduct of a reserve bank. Only then will it constantly carry the | promise of being able to protect bus l mess against the harmful stimulus | and consequences of ill-advised- expan. | sions of credit on one hand, or against 1 the menace of unnatural restrictions | and unnecessary contractions on tho 1 other, with exhorbitant rates of inter 1 est and artificial stringencies. II | should at all times be a steadying in- | flucnce. leading when and whe | lowing itself to become an instrument | lowing itslf to become an instrum ent | for the promotion, of the selfish in- l terests of any private or sectional | group, be thu cir aims and meth ods op- | en or disguised.
 Seasonal Variations. Time and experience will show | what the seasonal variations in the 1 credit demands and facilities in each of the reserve banks of the several dis l tricts will be and when and to what | extent reserve bank may, without violating its special function as a .lxf | 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 bo overlooked that it is highly sensitive to all manner of disturbances as re- cent events have painfully demon strated. The banking systems of the larger nations are closely related to on 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 comands, the strength of its reserves and it's power to bring them into action promptly and effectively if needed
 Time and Experience.
 Tn dealing with the new districts and entirely changed banking meth ods. time and experience alone can supply the data necessary for charting the course to be pursued. This con- sidration. if nothing else would sug- gest the greater patience and prud- ence even if the European horizon were less clouded than today. None the less, the board realizes that where extraordinary conditions warrant ex- traordnary measures, it is the fore most duty of the board and the banks to act promptly and boldly"
 The board refers briefly to open market operations of the reserve