The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1916-11-28
FEDERAL RESERVE
Continued From First PageO


anart from the important reserve loan
ing power Of The federal reserve banks.
IN these circumstances The board
feels that member banks should nur'
SUE Il policy Of keeping themselves II,
Guild: of not loaning down 10 the iega!
limit. but OF maintaining an excess OF
rese.vcS-nOt with reserve agents,
where their balances are loaned out
and constitute no actual reserve. but III
their own vaults. or preferably with
their Federal reserve banks. me
board believes that at this time banks
should proceed with much caution IN
locking up their funds in long-term OBJ
lICati lions or in investments which are
Shurt-term in form or name. hut which.
either by contract or through force OF
circumstances. may in the aggregate
have 10 be renewed until normal con-
djtionS return.
The board does not undertake 10
forecast probabilities or to specify CIR
culnStaucrS which may become import
ami factors in determining future con.
ditious. It's concern and responsibility
lies primarily with the banking Silua-
ton. Il is our banking institutions
which have TO intervene because for
piyn securities are offered faster than
they can be absorbed by investors
that is, their dcpoSitors-an element
would be introduced into the situation
which. if nor kept under control. would
tend toward instability and ultimate IN.
Jury 10 The economic development OF
this country.
Is Very Attractive.
"The natural absorbing power OF the
investment market supplies an import
ant regulator of the volume oil our
sales 10 foreign countries in excess oil
the goods that they send us. The form
which the most recent borrowing IS
taking, apart from reference 10 lis IN
trinsic merits. makes it appear partlc-
ularlv attractive as Il banking invest
ment. The board, as Il matter or TACT.
understands that II is eXpectc0 10
place it primarily with banks. In facl
If would appear so attractive That I'M
less broader and national point Of
view be adopted, individual banks
might easily be tempted 10 invest IN
II 10 such an extent that the banking
resources of this country employed IL
this manner might run into many hun
dreds Of millions of dollars.
while the loans may he short IN
form and Severally. may be COLLECTED
AT maturity, the object Of the Dor
rover must be 10 attempt 10 renew
them collectively, with the result lhat
the aggregate amount placed here vii!
remain until SUCH fine as il may be
adyanta gcouSly converted inln Ions
term obligation. IL would. therefore,
seem as Il consequence that liquid
funds of our banks, which should be-
available for short credit facilities 10
our merchants. manufacturers and
farmers, would be exposed to The
danger Of being absorbed for other
purposes to n disproportlnnate degree.
especlally in view Of the fact that
many Of our banks and trust con-
panies are already carrying SuhStAn-
tial amounts Of foreign obligations
and of aCceptanCnS which they are
under agreement to renew.
Duty To Caution.
"The board deems i, therefore, its
duty to caution the member banks
thai il does not regard i, in tho inter
est Of this country Al this Time that
they invest in foreign treasury bills
OF this character.
"The board does not consider that
it is called upon to advise private in
vestors, but as the United States l.
fast becoming me banker OF foreign
countries in all parts OF IN" world. it
takes occasion 10 suggest That the in.
weston should receiv" full and author
itative data-parlicularly in Ihr ca"
OF unsecured lOanS--in order thai ne
may judge the iutur" inefficient" in
the light Of present condition.; ami II
conjunction With the economic d"vcl-
opments nf The pHSt.
1.-THE United States has now Il rn$i.
ton Of wealth and Of international
financial power. which. in IL. natural
Of t.ntgiI >