Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1915-01-28
FEDERAL RESERVE BANKS
ALREADY PROVE SUCCESS
System Not Experimental in Sense
That There Is Any Uncertainty
as to Outcome.
HOARD MAKES FIRST REPORT
Asks for No Legislation, but Outlines
Achievements Of New Institutions,
and Shows How They Have
strengthened Financial Situation.

strengthened Financial Situation.
WASHINGTON, January 27-Thc
FIRST report of the Federal Reserve
Board covering the developments
twelve regional reserve banks last No
rcnber and tho two months In which
they have been In actual operation.
was sent to Congress to-day. 1T an
nounccs that noteworthy results al
ready have been accomplished. and
mat the system now cannot be re-
garded as experimental In the sense
that there lis any uncertainty as to tho
outcome" No Legislation is asked for.
the board devoting It's report chiefly
10 an outline Of how the new system
las streng thened The nations financial
situation,
Less than lvc months have elapsed"
says the report. since the introduce
pon into our financial system OF the
most far reaching change that has
been made In the field of American
banking since the passage OF the ma
lonal banking act. Less than two
inonths have gone by since the Federal
reserve banks actually opened for bust
ness. Tho system, however. is in oper-
alton. and has already produced re-
sulta OF tho most noteworthy char
actor.
There Is much yet to BIO done, but
Tho work cannot be regarded as e1-
detrimental in the sense that there Is
any uncertainty as TO the outcome.
Tho only question is as to how rapidly
u Will be possible to develop tho full
capabilities and resources OF the Fed
70 to ykl.
arc vast and should contribute i'm
'nensurabIy In tho future to the solid
Ky stability and ,nc1ibili;y OF the
American credit systems
WHAT IS PROPER PLACE
OF RESERVE BANKS!
Tho question. however, naturally
suggests itself and must be frankly
faced: what Is the proper place and
Junction OF the Feredal reserve banks
In our banking and credit system?
On tho one hand. II is represented that
they are merely emergency banka to
he rcsorted to for assistance only in
time OF abnormal stress; while on tho
other. II Is claimed that they are in
cssence simply additional banks. which
should compete with the member banks
especially with those OF the greatest
power. The function of reserve bank
IL not TO he Identified with either OF
these extremes. although occasions NAV
arise whom either OF such courses may
ne Imperative. It's duty plainly ia not
10 await emergencies but by anticipa-
tion. TO do what II can TO prevent them.
so also u. ut any time. commerce.
industry or agriculture are. in the opin-
ION or the Federal Reserve Board, bur
dened unduly with excessive interest
Inn .
pera,ive 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
Tho ready availability OF It's re-
sources Is OF supreme Importance in
the conduct of a reserve bank Only
then VIII II constantly carry the
promise OF being able to protect busi-
ness against the harmful stimulus and
consequences OF ill-advised expansions
or credit. on the one hand, or against
the menace Of unnatural restrictions
and unnecessary contractions, on the
other. with erhorbitant rates of inter
est and artificial str!ngcncies II
should at all times be steadyinR in
huence. leading when and where
leadership is requisite, but never al
lowing Itself to become an Instrument
for the promotion OF the selfish In
terests OF any private or sectional
group. be their aims and methods open
or disguised.
SEASONAL VARIATIONS
IN CREDIT DEMANDS
Time and experience will show what
tho seasonal variations in tho credit
demands and facilities !n each OF the
reserve banks OF the several districts
VIII be. and when and to what extent
reserve bank may, without violating
It's special function n. a guardian of
banking reserves engage In banking
and credit operations
The vast and complex structure ~
modern banking and credit systens Ia
one or extreme dclicacy Of balance and
adjustments. and II must never be over
looked that It IS highly sensitive 10
all manner OF disturbances, as recent
events have painfully demonstrated
The banking systems OF the larger ma
lions are closely related to one an
ether, and financial distress or coll
lapse at one point quickly pcrmIts
shock TO all others. Safety for US In
critical times Will depend on the con-
hdence our system commands. the
strength of Its reserves, and its power
70 bring them into action promptly
and effectively II needed
in dealing with the new districts
and entirely changed banking methods
time and experience alone can supply
the data necessary for charting the
course to be pursued. This considcra-
ton. II nothing else. would sug-
Eest the greatest patience and pru-
dence. even II the European horizon
were less cloudcd than 1t Is to-day.
None the less. the board realizes that
where extraordinary conditions war
rant extraordinary measures, 1T Is the
foremost duty of the board and the
banks to act promptly and boldly"
The board refers briefly to omen