The daily telegram. [volume] (Clarksburg, W. Va.) 1901-1926, 1916-02-14
TROOPS ARE MORE AC Tive IN THE BAL F[ANS NOW
six AMENDMENTS
ARE WANTED NOW

will be discounted by federal reserve
banks. and must be regarded as falls
| ing within the legitimate sphere OF
their operations. The federal re-
serve act makes no provision for coli
lateral bond or stock loans or for the
purchase Of foreign governments
obligations by reserve Institutions.
I Neither such obligations. therefore.
nor loans to member banks based
thereon. are eligible as Investments
for federal reserve banks.
"The operation of the reserve sys-
/ TEN Is n r,atter OF business to be con-
ducted In accordance with the terms
Of the reserve act and the regulations
OF the board. II Is not the province
of the board to deal with problems
involving International relationships
OF the United States, either for the
purpose OF restricting or extending
expectations In ono direction or In
another. The eligibility OF paper for
reserve banks Is determined by the
considerations which care as valid
under one set OF international rela-
tionships as another; the function OF
passing upon and dealing In such pa
per under these regulations belongs
to the several reserve banks The
board, however. believes that the A.
nancing of tho country's export trade
is at the present time ono OF the most
important financial problems with
which the nation has to deal; and It
Is of the opinion that Federal Reserve
banks cannot, even II they would,
avoid the responsibility OF assisting
in this process OF financing what To-
ultimately and properly devolyes upon
them"
The board expresses regret that In
some states suits have been instituted
to test the validity Of the proyisiona
of the federal reserce act
by which II may grant certain fidu-
ciary powers 10 national banks, an
nounces Its intention to have It's couri-
sci intervene In these cases and says
that every effort will be madeto have
the question settled by the supreme
court at an early date. II is pointed
out that only thirty-two state banks
have been admitted to the system and
eighty-four others have come In by
conversion into national banks.
ut Is regrettable,' continues the \
report. that In not a few states re-
serve requirements for. state banks
and trust companies have been ma
teflally lowered by Legislative enact
ment since the adoption OF the fed
eral reserve act. The only jlistitica-
tion for the reduction Of thereserve
requirements for national banks Isl
the fact that the national banks are
members Of the federal reserve sys
TEN and that the federal reserve
banks hold part OF the consolidate re-
serve OF the national banks and are
therefore In position to come imme-
tllately with all OF their resources to
the support Of national banks In case
Of necessity or emergency"
On the otherha 1t is state, state
banks have reduced their reserve re-
quirements without the support Of the
reserve system, "This,v says the re- 4
port, "is an element OF danger In our
banking system, because the weaken
Ing OF the reserve OF the state banks
and trust companies makes them more
vulnerable in times Of emergency and
1t is conceivable that q situation
might arise In the affairs Of such state
banks and trust companies where they
might have to call upon the credit
structure Of tho national banks and
the federal reserve system for sup
port when they would not be entitled
to II because they had not contribute
ed to the strength of the federal re-
serve system by taking membership
in 1t. The board Is giving seri6ns,
thought to this question and TO the
action that may be taken to guard
against the consequences OF this sit
uation.' Z
This part Of The report Is conclud-
ed with an expression Of opinion that
the credit resources Of the country
would be greatly enlarged and
strengthened with corresponding beneA
fit to business and the people Il state
banks and trust companies were to
enter the system.
iH'-N Fa' fiia -ft Itt2| iA w. w 4. I