The Birmingham age-herald., 1917-07-02

the sum which experience shows should be maintained for daily transactions. With the reserves exclusively main tained hereafter in the federal reserve
 banks every depositor can feel sure that his deposits are amply protected and that if any crisis occurs in the affairs of his bank his deposits are secured In some parts of the country clearing house associations have permitted banks to make settlements of their debts to the clearing house through the use of na- tional bank notes. This custom has long prevailed in some parts of tho west and throughout the south, but it was not tol- erated in New York, Boston or Phila- delphia. The clearing house associations of those cities and of some others would
 recognize nothing but legal tender or gold as money qualified for payment of
 debts to the clearing house.
 In some parts of the west and it is
 understood in many parts of the south banks were accustomed to count tiona1 bank notes on hand as a part ts.
 their reserve and this practice was not confined to those sections. It was~
 adopted by a number of banks of New York, although explanation was given of that practice by stating that 1t was physically impracticable, almost impos- sible, to separate and isolate national
 bank notes from other paper money of the kind which could lawfully be counted as part of the reserve.
 Some of those who nave had long ex- perience and who have gained fine repu-
 tation for ability, which represented born courage and conservatism in the man.
 agement of a bank, regard this new law as one of the most important features
 of the national reserve banking law It will serve to inspire confidence every
 where. No longer can careless or ven- 1 turesome bankers make use of any kind of money for the reserve requirements excepting the money which is designated by law as good for that purpose. Fur thermore, each national reserve bank will constantly watch the reserve kept with it by the banks which are under it's Jurisdiction, and will instantly notify a bank that it must make good it's re- serve should it happen that the reserve has fallen below the requirements. The new law will make quite a shift in some banking operations. The reserve
 kept in the federal reserve bank stands as a credit to the national bank which I.took the money from it's own vaults and placed it with the federal reserve bank
 The operation of the new law it's likely to result in an increase in bank surplus. The federal reserve bank of New York,
 in addition to the taking over of the re- serves of the national banks. of this dis
 trict, also added the gold Of it's own re-
 sources which was formerly controlled by the federal reserve agent. In that
 way it raised it's cash about 100 per cent
 to a little over $500,0 100000. Against this
 gold the federal reserve bank was able
 to report that it had issued $203 000,000
 federal reserve notes, whereas only a
 few days before the total was s6000,000.
 This new law will serve considerably
 to facilitate some of the great financing
 which is now under way and which is
 sure to be continued at least for another
 year. It adds another element of safety
 as well as adaptability, which were
 among the principal effects sought by
 those who drafted the federal reserve
 bank law, and, as was said above, 1t
 will serve to make all depositors in the
 national banks confident that deposits are we'll protected.