New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-01-04

l
ming has already been made by certain
Of the bank1 ir writing OIL lhclr or
ganizatiou expenses. proportion there
81 being included q. current Thus
three of tho Reserve banks which have
been situated iu a territory with a nor
NAL demand for funds have not only
covered current and organization e>p
rcuscs, hut have shown their capacity
to earn dividends and surplus.
Release Of Funds.
The reduction Of reserve require
mcnts which had been made IN the
/ Federal Reserve act coincidcnt with
/ thc establishment Of the new banks rc-
leased large funds, which could be
loaned at the will Of their holders.
Added 20 this was the great increase In
loaring power produced by the organl-
zation Of tho Federal Reserve system
itself, the combined banking resources
Of tho nation making a great aggregate
of fluid means. which placed the coun-
/ try i'm better position 70 accommo-
date borrowers than perhaps ever be
| fore.
Just emerging from the disturbed
/ conditions which resulted from the
opening Of the war; the nation eight
months ago found business In many
sections depressed and lacking in
initiative. II was the part Of wisdom
for Federal Reserve banks not 10 at
tempt TO force their great volume OF
resources into use, and thereby 10 add
! 70 the extreme ease Of money which
existed throughout the United States.
I Tho individual member banks, how
ever cautiously they might be handled,
would be prone TO follow this policy
themselves; and Il was, therefore, seen
- be the wiser plan that the Reserve
institutions should conserve their
strength against time when a change
Of conditions would come upon them.
Such a change is now rapidly making
itcclf evident.
Banking Leadership.
The nation has entered upon a new
phase Of the financial situation which
will call for new methods and now
! leadership. A. the beginning Of the
struggle Europe took our goods and
paid us by cancelling our floating in
dcbteduess on open account; later our
goods we're taken and were paid for
b. the shipment Of American securi-
ties, which were converted into means
OF payment through sales in the United
States.
At length there has set in a period
in which Europe still desires 10 obtain
our goods, but would do so upon =
basis Of credit accounts with the
United States. The situation ia one
that presents unusual and perple1ing
problems of policy, and suggests DIFF
hculties in commerce, trade and indus
try that may cause hardship If not
courageously and skilfully dealt with.
An important part in the direction OF
the banking policy Of tho nation will
rest with the Reserve banks and their
management
The new system must conserve the
ultimate banking resources of the
country for the liquid commercial
transactions whose financing Il was
originally designed 10 carry. II must
be prepared TO supply accommodation
At every point where possible friction
or difficulty may occur. and 10 this end
IL must cooperate actively with mem
hcr banks in redlscounting paper OF
suitable kinds wherever such action is
necessary i'm order 20 meet a general
public demand. Il must, likewise, en-
deavor to encourage the member banks
IN the policy Of conservative develop
mcut and OF caution with respect 10
unfamiliar operations. as has been out
lined. J.: must endeavor TO safeguard
with peculiar care the interests Of the
productive communities Of the United
States.
Tho Federal Reserve banks ere fire.
qucntly spoken Of. and correctly, AZ
bankers banks. but they are bankers
banks on the public and not the pr-
waite side. They are bankers banks IN
20 far a. the bankers perform public
service; they are not bankers banks
- so far A. bankers are IN search pri-
marily Of their own profit. They are
bankers banks in the sense that they
work through bankers for the purpose
OF equalizing supplies Of capital and
rates Of interest, and they are public
u that they aid I'm conveying 20 the
public manufacturers, merchants and
farmers all those benefits that result
from united and uniform financial!