The Chickasha daily express. (Chickasha, Indian Territory [Okla.]) 1899-current, 1916-09-27
Federal Reserve Bank Furnishes Useful
Purpose and Becomes Firm Basis for
Note Issue in Case Of Panic
GOLD WILL FLOW OUT
OF US. AFTER BIG WAR
President Lynch Of American Bankers As.
sOciaIiOn Speaks Of Probable Con-
diiiOn Soon TO Be Confronted
By United Press.

BY United Press.
Kansas City Sept President
James K. Lynch Of San Francisco. ad.
dressing the American Bankers asso.
ciation congratulated the association
on the substantial progress made dur
ing the past year. both in membership.
which has now reached total of fC..
Ol6 banks, and in its numerous actis.
tiles which have exercised profound.
ly beneficial influence on the banks
Of the country.
The most important subject before
the bankers Of America today, said
President Lynch. is the Federal Re-
serve Act and the operation Of the
twelve reserve banks, Criticism nf
the reserve banks had come from diff
ferent sources; from the banks in the
financial centers. which objected to
the absorption by the reserve banks
Of the supply Of bank acceptances;
from the small banks In the more re,
mote districts, which complained that
the requirements for eligible paper
are too strict; and from the member
banks generally, protesting against an
enforced investment which carries no
immediate prospect Of dividends and
on reserve deposits on which no later.
est is paid. 10 all these objectors he
pointed out that conditions for Two
years past have been abnormal and
furnished no evidence Of what the re-
serve system could do, but that much
had already been accomplished. Bank
acceptances for the first time have
been made possible as credit instru-
ments in connection with the import
and export Of merchandise, the dollar
credit is making its way in South
America and in the Orient and our ma
tional banks are opening branches in
foreign countries. On the question OF
reserves Mr. Lynch said:
'The federal reserve banks are grad
ually concentrating the stock OF gold
which heretofore has been almost use
less, because scattered. In the hands
OF those banks it win be a firm basis
for note issue which will take care
Of any demands for currency that pan
ic conditions may produce. We all
know how futile it has been to attempt
to meet extraordinary demands by pay
ing out gold, and we know how banks
have competed with each other to Sc
cure gold drawing it from centers
where 1t would be Of some use to out
posts where it was yalueless. It is
obvious that we have overworked the
word reserve Gold is the only true
reserve, for it pays debts in any civil
lied country and under any conditions.
Under ordinary circumstances, balanc-
es carried with corresponding banks
form convenient method Of paying
our debts to depositors, SO such bal
ances have been called reserves,
though they cannot properly be so des-
ignated. Balances with the federal re-
serve banks are now legally entitled
to be called reserves and yet they fall
short in the final availability in
an countries and at all times"
Touching upon the European war,
the great flotations Of foreign loans
here and the enormous inflow Of gold.
Mr.. Lynch said;
"We may expect that as soon as the
Var is over and the normal imports Of
are resumed the excess OF
Sold will leave us, and this win be BY
no means an evil. The surplusage Of
gold and the loaning power set free by
he Federal Reserve Act together are
likely to cause credit expansion
which will need careful supervision by
our bankers. to the end that the cor
contraction does not find
as unprepared The control OF both
the export and the import Of gold
should be guided by the Federal Re
serve Board. which was intended to
perform this function and which has
the power necessary TO stabilize ex-
change through this means"