The Birmingham age-herald., 1915-05-12
NO MORE MONET ARY PANICS WELL Lo0RN TELLS THE BANKERS
Director of Atlanta Reserve Bank Discusses New Sys- tem-Presents Figures
 of This District

Il
 Stating that there never would be an other financial panic in the United States like the one in 1907 and that the federal reserve banxjhg system had saved the country from just such a panic and prob ably a much worse one during the present year. the address of Nj. B. Wellborn, chairman of the board of directors of the regional reserve bank of this district located at Atlanta, was one of the main features of yesterdays sessions of the Alabama Bankers association convention. MT, Wellborn spoke in part as follows: No More Panics
 This country will never again witness another panic like we experienced in 1907 which is no doubt still fresh in the mem ory of the majority of you--when the banks throughout the nation were forced to limit payments to depostors in draw ing against their balances, the effect of which brought nearly all business to a complete stsndstil.
 At that serious crisis, when one fail ure was followed by anothN in New York, the chief reserve city of the United States, the banks throughout the country were unable to secure shipment to themselves of their own reserves. During this alarm ing time, no banker knew where to turn to get currency to meet the demands of frightened depositors. and there was noth- ing else to do but bear the tortures of fear and uncertainty. Under the federal reserve system fear is now turned into confidence, for at the very incipiency of panic the reserve banks have the power l to issue, in federal reserve notes the enor- nous amount of 1862 100000, to loan out 1 to the member banks; this amount can l be still further increased by the deposits of gold by the government which will enable the reserve banks to issue $2500,00t ! in federal reserve notes
 Tn the district of the federal reserve | bank of Atlanta our agricultural products are harvested at different seasons of ths year, and thus our bank can take cart of them in regular progression.
 i "For instance, the great demand fol money to handle and market the cottor crop comes in the late summer and early autumn; then, in January, February anc March we can come to the aid of tho sugar interests in Louisiana, and the to- l bacco growers in Tennessee, southerf l Georgia and western Florida: and. whei ] this is over, in the late spring and early ] summer, we can handle the grain crops l throughout the district. the largest vol
 ume of which is in Tennessee.
 l An Elastic Currency
 If we are to have sound and elas tie currency. as contemplated under thu l act it is absolutely essential that th' l member banks should offer for redis i count only the class of paper provided b, Iktr tlA fada
 board; and it should be self-liquldating | in order to maintain an elastic currency l "At every bankers convention for tn 1 past 20 years the cry has been for al elastic currency--a demand to do ava! l with the present bond-secured currency on account of it's inelasticity. and hav' a currency that would expand and con tract with the ebh and flow of commerce ] a currency that could be issued prompt. when needed in an emergency, to nov l crops, etc. and which would be auto matically retired when it had served 1t usefulness. We have at last reached partial trial of an elastic currency. unde 1 the federal reserve system, expanding an' contracting in accordance with the need | of commerce and trade, in a most favor able and practical manner.
 1 "Take, for instance, the agricultufa interests of our section largely en l saged in the production of our prin 1 cipal marketable crop-cotton-and II l the growing of rice, sugar, wheat, oats tobacco and trucking; under the new system the producer can borrow none, on his note secured by these agricul lral products; and in turn the loca bank can present these notes to tn federal reserve bank of Atlanta flo
 edscounts: and we issue federal rc l gcrve notes in the amount of the note
 so offered. After these federal reserv l notes have served their purpose of aid
 dg the producer to hold his produc Ter favorable market and meet hi
 obligations they will eventually fin, 1 their way into the local bank and Il
 time to the federal reserve bank u
 Atlanta. and will be held in its vault
 10 be called forth again when neede
 to aid in commerce and trade. or fo
 any emergency that may arise.
 There is no corner on money m W '.or can there ever be. as the law Q
 supply and demand will govern the in
 tcrest rates in like manner as
 does commodities. The natural law
 of business governing interest rate
 IS a worldwide proposition and no ar tificial conditions prevalent in any on
 country can create interest rates ou
 of harmony with the money rates c
 the world. The influences, however, q
 the federal reserve bank will at al
 times, tend to preserve rates at leve
 which is fair, reasonable and just, an
 to equalize interest rates through3u
 the whole country.
 "The federal reserve bank of -Nt lanta has discounted for it's memle hanks, their customers notes, i amount of $12,201. .6s3.29 during ih
 five and one-half months of it's eAis
 tence being distributed throughout tn
 territory comprising the sixth fedora
 district as follows:
 Il Alabama, 641,65111, Florida, Si,
 TIP, 7Os52: Georgia, s4.4O5, ,sss25; Louis
 i.ina. $1s4.65674; Mississippi. s4iS,
 s6e 46; Tennessee $3.S07,761.21
 "The largest single paper discount
 cd was, in amount. s61.000. and th
 smallest paper. in amount Sll tn average rate of discount being 4.9 pc
 cent. One hundred and seventy-f.v
 member banks have discounted pape
 with us. not quite onehalf of ol
 membership. We have discounted fiji
 more for the country banks-that i in the number of notes discounted than for the city banks; and con siderable amount of these discount have been based on collateral such q ! cottcn warehouse receipts, tobacc warehouse receipts and products of til farm in general.
 : Benefits of Reserve Banks While the individual--the farme wage earner or business man-may nt be able to point to any direct persons ! | advantage accruing to him through u ts' ablishment of the federal reser, system, yet it is nevertheless true tn.
 they have, in an indirect way, receive
 their share of its benefits.