South Bend news-times. (South Bend, Ind.) 1913-1938, 1916-05-27
Federal Reserve
System Gives L.
S. Neto Stabilitu

A Washington dispatch to the
Kew York Journal OF Commerce
says:
In view OF the critical situation
which is just at present facing the
United States in the international
way. considerable speculation is be
ing INDUCED n here in reference TO
the probable effect a declaration of
war would have on the financial con-
ditions of this country.
1t is evident from observations
made here that the officials of the
administration are placing much
confidence in the federal reserve
bank system. During the past year
or more there has been a decided
movement of gold 10 the United
States and at the present time the
gold supplies are greater than ever
before. At the same time il is doubt
ed whether the United States was
in less actual need of the yellow
metal. This latter situation has been
brought about largely through the
Inauguration Of the federal reserve
system. Under this system of COM
bined bank reserves held under gov
eminent supervision the banking sit
uation is less dependent upon its
gold reserve because the reserve
banks can come 10 their aid indi-
vidually with their note issues.
Banking Strength Increases.
Ever since the war in Europe
started the banking situation has
shown a tendency toward greater
strength. The American institutions
are now attempting foreign financial
operatios on a greater scale than
ever attempted before. These opera
tons have tended to increase the
friendliness of the neutral nations
Of the world for the United States.
This friendship would be of great
value should this country suddenly
find itself drawn into the world
wide strife A declaration of war
from Germany or the beginning of
war with Mexico as a matter of fact
is at the present time. doubtless,
looked upon as a less fearful even
tuality by American bankers than
they have ever before viewed the
HIOSptLl VI a y dAs II 80 bNA4NfNN
that such a crisis could be passed
by the banking community without
the least signs of a financial panic,
and this means much when panics
have been so common to the finan-
cial structure of the United states.
Money in the United States is
deemed plentiful for all our needs.
This was we'll shown in the last re-
port of condition of the national
banks issued by the controller of the
currency. The surplus of money
which is being held in the vaults
oc the member bank could easily
be drawn upon for the aid of the
government in case Of war. This
would result In mutual benefit to the
government and the banks.
Better Prepared.
On the other hand, it is held that
the United States is better prepared
financially to enter the war than ever
before. even without considering the
federal reserve system. When the
European war suddenly broke, Eng
land was woefully unprepared-
Nevertheless England has adopted
precautions which tided her over the
first shock, and she has now reached
point where the financial outlook
- fairly accurately calculated. Dur
ing this time, however, the Amer
lean finances have been signally
cleaned of foreign entanglements.
We could not expect a sudden dump
ing of American securities on the
market. we could not expect any
sudden change in the trend of for
eign commerce as a result of en-
tering the war. Inasmuch as the
economic situation could be altered
hut little. the finances of the United
States are looked upon as signally
strong.