The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1915-01-29
Federal Reserve Institutions
Are Given Great Praise
RESULTS JUSTIFIED SCHEME
They Have Been in Operation But
Little Over Two Months and Won
Their Place
Associated Press pIspateh.l


Washington. January 2T.-The first
report of the federal reserve board
covering the Developments which pre-.
coded the opening OF the twelve re.
iOnal reserve banks last November
and the two months I'm which they
have been In actual operation. was
sent TO congress today. II announces
that noteworthy results already have
been accomplished and that the sys-
tenn now cannot be regarded as OK.
perimental i'm the sense that there Is
any uncertainty as to the outcome"
No legislation is asked for. the board
deyOting its report chiefly to an
outline OF how the new system has
strengthened the nations financial
situation.
Less than five months have
elapsed" 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
the federal reserve banks actually
opened for business. The system,
however, is in operation and has al.
ready produced results OF the most
noteworthy character.
Much Yet TO Be Done.
There Is much yet TO be done, but
the work cannot be regarded as OK.
perimental in the sense that there
is any uncertainty as TO the outcome.
The only question is as TO how
rapidly 1t will be possible to de
velop the full capabilities and re.
sources OF the federal. reserve sys-
tenn. Its potentialities are vast and
should contribute UNNECESSARILY In
the future to. the solidity, stability
and flexibility of the American credit
systems.
The question. however. naturally
suggests Itself and must be frunklyI
faced: what Is the proper place and
function of the federal reserve banks
in our banking and credit system?
On the other hand, IL Is represented
that they are merely emergency
banks to be resorted to for assistance
only in time of abnormal stress;
while, on the other IL Is claimed
that they are I'm essence simply all.
ditional banks which should com.
pete with the member banks especial.
~ with those OF the greatest power.
The function OF reserve bank is
not TO be identified with either of
these extremes. although occasions
may arise when either of such COURSES
may DC imperative. It's duty plainly
is not TO await emergencies but by
anticipation TO do what il can to pre-
vent them.
Interest at Reasonable Rate.
SO also II, at any time. commerce,
industry or agriculture are. in the
opinion OF the federal reserve board.
burdened unduly with excessive in.
terest charges, II will bc the clear
anu imperative duty Of the reserve
board acting through the discount
tate and open market powers TO Sc
cure wider diffusion of credit
facilities at reasonable rates.
The ready availability Of its re.
gOurces Is OF supreme Importance In
the conduct OF n reserve bank. Only
then will II constantly carry the
promise Of being able to protest
business against the harmful stimu.
lUs and consequences OF III advised
expansions Of credit OH the one hand,
or against the menace of unnatural
restrictions and unnecessary contrac-
tions on the other. with exhorbitant
rates OF interest and artificial strin-
gencies. II should at all times be IA
steadying influence. leading when and,
where leadership is requisite but
never allowing itself to become an
instrument for the promotion. of the
selfish interests OF any private or
sectional group. be their aims and
methods 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,
engage In banking and credit opera.
lions.
Vast and Complex Structure.
"The vast and complex structure
OF modern banking and credit system
Is one OF extreme delicacy of bal.
ance and adjustments, and 1t must
never be. overlooked that 1t Is high
ly sensitive to all manner of disturb
ances as recent events have pain.
fully demonstrated. The banking sys.
TENS of the larger nations are closely
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
!spend on the confidence our sys-