The Leon reporter. (Leon, Iowa) 1887-1930, 1915-01-21

FEDERAL BANK BUSINESS AID.
liz. T.. Meredith, Iowa Director, Says
Institution Helped Lower In
terest Rates.
That the federal reserve banks
have had great hand in restoring
business conditions in the country
Twas the statement made by E, T.
Meredith, Iowa director in the Chi
lcago bank, to a Register and Leader
reporter. Mr.. Meredith added that
the new banking system is partly re-
|sponsible for lower interest rates and
has already shown that it will insure
the country against panics.
"The opening of the federal re-
serve SYSTEM" said Mr.. Meredith,
"has had a great influence upon the
business of the country. The great
est effects resulting from the opening
of the banks would hardly be notice
able to other than bankers. This
was in the reduction of reserve. The
new reserve requirements for the en-
tire United States are some $780,
100000 less than the old require
ments.
Lower Reserves an Aid.
'In other words, the bankers
could use an additional sum OF $3OO,-
100000 either for loans or for tax
ing up the emergency currency, and
still be within their legal reserves
The reduction of the reserve did
much to relieve the bankers, and,
easing matters with them, aided
them to do that much more for their
customers.
Coming as it did, just at the crop
movement period and during the
stress due to the war, and at the
heighth of the foot and mouth dis
ease and the resultant cattle quaran-
tine, this feature of the system did
much to relieve the situation
"The rediscount feature OF the
system as yet has not been taken ad-
vantage of by the banks to great
extent, and yet the Chicago bank has
made rediscounts to the amount OF
S6,OO0,OOO, and has served one bank
out of every ten for the entire dis
| trict covered 1t was never planned
that the rediscount feature should be
made large use of, except in times
of unusual stress, although the re-
discounting is the big feature of the
system 1t puts back of every bank
and every business man the assur-
ance that there is place to which
they can turn to be accommodated,
when they cannot receive accommo-.
dations elsewhere.
Confidence. to Business.
1T has never been popular with
banks to rediscount, and this will be
matter of growth, but the fact that
the banks can avail themselves OF
this privilege is feature that gives
them and business generally conf
dence.
''No effort has been made to slim
ulate the rediscounting. In fact, 1t is
not the purpose at any time to stimu-
late rediscounting and thereby tend
to an expansion of credits.
''There has been considerable re-
duction in the interest rates during
the last sixty days, or since the open
ing of the banks. This is partly due
TO the easier situation, due to the re-
luction of the reserves, and the fact
that crops have been marketed. But
it is also due, somewhat, to the fact
that the federal reserve board at
Washington fixes the interest rate
>"It has gradually reduced the rate
from time to time.
"The federal reserve system can
not absolutely assure prosperity, put
It. can and does insure the country
against panics such as in 1907, or
against the necessity of issuing clear
ing house certificates. In other words,
it is something to rely upon in times
of stress, and this gives the country
confidence to go forward and general
activity throughout the country
means prosperity.
'The banks are not to be large
money making institutions as they
do not expect and will make no effort
to take the place of the regular banks
in the loaning of money to business
men. The banks have been investing
in. some government bonds, some
municipal warrants and other secur-
tiles aside from such rediscounting
as has been applied for, and the Chi
.aeo bank is earning at this time
anorah in the way of interest to pay
paying basis. The governor esti-
mates that at the present rate the
bank will be ina position to pay 6
pei CSllC OA ltIlc oLOAN OO-
sides all running expenses, and more
than this is not entirely desirable.
Has Strong Sta!i.
"The Chicago bank has had the
benefit of the most experienced men
in the country in the way of advisers
ii. getting the actual operations OF
the bank under way. Many of these
men have been experts borrowed
from the banks of Chicago. The bank
is completely organized and has "a
staff the equal of any institution of
the kind in Chicago in so far as capa-
bility is concerned.
Zone of the features that is ex-
pected to be put into operation grad
tally is the matter of clearing checks
and making drafts by the different
member banks. and possibiy, checks
nv the denOsitOrS in those hanks mar