Bisbee daily review., 1915-01-29
SYSTEM MAKES FIRST REPORT ON
 BANKS
Duty of Reserve Institutions is not to Await Emergencies but Prevent Them by An ticipating the Causes

WASHINGTON. Jan. 28-The first report of the Federal Reserve Board covering the developments which pre- ceded the opening of the twelve re- cioual reserve banks last November and the two months in which they have been in actual operation. win be sent to Congress tomorrow. It an-| nounces that noteworthy results al- ready have been accomplished and that the system now cannot be re- garded as experiments in the sense that there is an uncertainty as to the outcome" No legislation Is asked for, the Board devoting 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- tenn of the most far-reaching change ! that has been made in th eheld of American banking since the passage | of the National Banking Act. Less | than two months have gone by since l The Federal Reserve Banks actually opened for business The system l however. is in operation and has al- ! ready produced results of the most notworthy character
 There is much yet to be done, but i the work cannot be regarded as ex- perimental in the sense that there is any uncertainty as to the outcome.
 The only question is as Co how rap idly it will be possible 10 develop the ] full capabilities and resources of the ! federal reserve system. Its potenti- alities are vast and should contribute immeasurably in the future to the solidity stability and nexibility of the American credit systems.
 "The question however. naturally IsuEEests itself and must be frankly faced What is the proper place and
 function O fhe Federal Reserve Banks in our banking and credit sys- tenn On the one hand. it is repre- sented that they are merely emer- gencv banks to be resorted to for assistance only in time of abnormal stress: while on the other. it should compete with the member banks es- pocially with those of the greatest power The function Of a reserve bank
 is not Co 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 anticipation to do what it can to pre- vent them.
 "So also if at any time, commerce,
 industry or agriculture are. in the
 opinion of the Federal Reserve Board l burdened undu'y with the Reserve Board acting through the discount rate and ouen market powers to se-
 cure a wider diffusion Of credit fa- Icilities at reasonable rates
 "The Federal Reserve banks are the holders of a large part of the banking
 reserves fo the nation, the founda-
 ton of it's banking structure Moth
 ing should be permitted in the op. eration of the Reserve Bank which
 would weaken this foundation The resources of a Reserve Bank to be useful for its peculiar purposes, should
 always be readily available. It fol lows, therefore. that they should be
 mainly invested in such shortterm If.
 Quid investments as can be easily con
 verted into cash as occasion may re
 Quire.
 a "The ready availability of its re- r sources is of supreme importance in l, the conduct of a Reserve Bank. Only e then win it constantly carry the prom
 ise of being able to protect business h against the harmful stimulus and con '- sequences of ill-advised expansions of a credit on the one hand, or against the e menace of unnatural restriction and - unnecessary artificial stringeneies. lt
 should at an times be a steadying in If flucnce leading when and where lead l- ership is requisite but never allowing itself to become an instrument fol ], the promotion O fthe selfish interests D of any private or sectional group, bt B. more willingly give part of his time ,f and cooperation to this beneficial l- undertaking than the waFe-earner
 Healthy, substantial and permanent c payrolls are what we must have i e we want 10 prosper and we canno
 have them at the present time with 5- out the assistance of outside capital 't which we cannot hope to obtain i l- not treated fairly, If the ictizens O
 Arizona those interested in the vel
 fare of the state. SO desire, they can
 through the Ariona Chapter of tho
 American Mining Congress, create ai
 organization through which most 1
 not an the disastrous, hurtful influ
 ences from which the state has sui
 fered in the past, can be removed.