Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1916-02-15
RESERVE BOARD
ASKS AMENDMENTS
Six Changes in Banking Act Asked
in First Annual Report 10
Congress.
PROVIDES FOREIGN BRANCHES

amendments TO the federal reserve
act we're recommended to congress
today in the report OF the Federal
Reserve board for the first full year
of operation of the new banking
system.
"A years experience In the OPP
Grafton of the Federal Reserve act,
says the report, has confirmed the
board in its profound conviction
that the act has been one OF the
most beneficial pieces of legislation
ever adopted by congress Not only
have its fundamental principals
been fully indicated. but in most
details the working of the measure
has been successful"
Provisions Of Amendments.
The amendments recommended would
Permit national banks 10 subscribe and
hold stock in banks organized for the
special purpose Of doing q banking bust
ness In foreign countries,
Permit. with The approval OF the board.
the issue OF Federal Reserve notes 10
Federal Reserve banks either against the
deposit OF commercial paper or gold. pro-
vided that the gold so deposited shall
count as part Of the required reserve
OF the bank.
Extend the acceptance system 10 the
domestic trade 30 far Ps Il relates TO
documentary acceptance secured by ship
ping documents or warehouse receipts.
covering readily marketable commodities
-
sold.
Permit national banks 20 establish
branch offices within the city or county
in which thcy are located.
Permit advances TO member banks
against the member banks secured prom
issory notes or against tho deposit OF
pledge Of United States government
bonds.
Authorize a wide discretion ia the maxi
ing OF farm loans by national banks. so
that Federal Reserve bank might make
loans OF this kind within radius OF 100
miles OF its place OF business. whether in
It's district or another district.
IT is bellevod.I says the report that
the enactment Of these amendments will.
besides eniarging the usefulness OF the
national banks. result in greatly strength
ening the operation Of the Federal Re-
serve act. and more completely realize
the purposes OF its trainers"
The board announces that II does not
consider that II can direct the business
operations Of Federal Reserve banks IN
respect 60 foreign loans. but that its
function IL TO oversee these banks. A
plea IL made In the report FOR the en-
trance into the system Of more state
banks and trust companies.
Loans 20 Foreigners.
In speaking Of foreign borrowing tho
United States the board polnta ous that
Il has received many inquiries on this
subject. and has siven them careful at
tention- II has reached the conclusion.
u says. SUPPORTED BY competent legal adj
vicc. that the purpose for which goods
are sold or exported. or the use 90 which
such goods arc ultimately put" does not
fall within Its province or Jurisdiction.
The board expresses regret that IN some
states suits have been instituted to test
the validity OF the provisions OF the re-
serve act by which II may grant certain
fiduciary powers 10 national banks. an.
nounces It's intention % have Ito counsel
intervene in these cases and says that
every effort win be made 10 have the
question settled by the supreme court ~
an early date. II IL pointed out that only
thiFty-two state hanks have been ad-
mitted TO Che system ana elEhty-four
others nave como IN BY conversion into
national banks.
Money Market Easy All Year.
The report declares that condition OF
temerl,Aeis ease was the outstanding fea-
t';re OK the countrys money market dur
ing the year. II says that the nations
export trade has reached high water
mark. that manufacturing IN nearly ali
lines II active and that Il has been the
part OF wisdom for reserve banks 20 con-
serve their resources .'and hold them
selves In readiness to meet any unsx.
pected Developments In the situation.
An increase OF almost a billion dollars in
the combined loans Of national banks In
tho year and an increase OF deposits Of
reariy H'oooooo.ooo are pointed to as
pertinent In considering the situation.
These facts" the report says, would
seem 70 indicate that Il is prudent 20 be
prepared for time when the reserve
resources Of the country will be subjected
70 a severe test and when the leadership
aud operations OF the Federal Reserve
banks VIII become correspondingly more
influential"
Discount Policy Works Well.
The discount policy Of the board dur
ing the last year Is declared 70 have been
the proper one under the existing cir
eumstances. but e Is pointed out that
- time goes on there will be disposition
70 make these rates as nearly equal IN
all parts OF the country as Is possible.
The reserve banks have not been greatly
encouraged TO indulge in such CONNER
cial banking operations as the Law, per
mits. open market operations as the act
terms them. the board says. because
thereby the danger OF Initiation might
have been increased and money rates
further depressed. More active mar.
ticiration IN such transactions by reserve
Ranks may be expected IN the future.
The board. the report announces, IL
considering the establishment OF branch
agencies Of reserve banks In cities other
than those where such banks are located
and for the present does not expect "a
approve the establishment or branch re
serve banks. The clearing operations Of
the banks. Il says have proved success
but too few OF the hanks have taken ad.
vantage Of this function