Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1917-11-29
Our Three Billion
Dollar Bank Upho1ds
Nation During War

New York, Nov. 2S.-Ine lhiPoi '"i'Ss
Of legislation which created the federal
reserve bank as the preserving force OF
the national financial system is clearly
shown in the following editorial in the
New York Times:
The following table shows the d.
mansions to which our federal reserve
banking system has grown and, with
out which this billion dollar country
could not so easily float its multibillion
loans:
:. RESOURCES 49,.
Total gold reserve ....... 81 ,5S4, S2S'VUV
Legal tenders. silver etc.. 52,525,000
Bills discounted and
bought in market ..... 6Sl,Il9,Vuu
Investments . 24S,1I9,00O
Total resources lnclud!nS
minor items) .........- SVIZ4Vo'oVV
LIABILITIES.
Canitol 66.69l, OCO
Gross daposits " 1904, coo
Qncluding government
deposits s1.21S,SS7 G0O,and
due to members reserve
count $1.4SO,49S.000,
etc, less deductions.)
Federal reserve notes in
circulation ...... ...... 972,5S5, 900
Federal reserve bank notes S,OV0,VVo
Total liabilities Qncludlns
miner itemS) ...... .... 3,Ol2.4oo,ooo
The gold held is half OF the liaoll
ties. The capital is small, but is enough
to secure operations whose solidity Is
indicated by the character OF the as
sets. The smallness of the lookup is
indicated by the fact that the invest
ments-long term short, term. and city
warrants included-are less than the
commercial bills. The degree OF IL
quidity indicated would be appreciated
if 1t could be contrasted with the Ike
entries for eevn commercial banks in
the old days, and even now with wan
street institutions which adhere TO
their preference for collateral loans.
despite the repeated demonstrations
that theE are least available under
condt ions of greatest necessity. II VIII
be fortunate when our entire banking
system Is made over to some likeness
with our federal system IN this respect.
1t is not the fault CO the Federal Re
serve Bank that the bills discontinued
are less than they might be. That Is
attributable rather to the member
banks. and to their difficulties in IN
ducing their customers 10 substitute
acceptances and the discount market
for the system Of open accounts.
ION the liabilities side the note Is
sues are shamed by comparison with
the like issues by other banks OF its
class thruout the world. The char
acter Of the notes is even more re-
markable. They are mostly gold GER
tiacates to use the familiar phrase.
rather than bank notes. The great
ajority are issued dollar for dollar on
the currency principle rather than on
the basis Of the banking principle, al
lowing an issue larger than the assets
which secure them. The gold reserve
against note issues is over per cent
and even against deposits Is e. per-
cent. II there is in the world bank
open to the reproach OF being super
fuously strong, our Federal Reserve
system is 1t.
The failure to use fully the resources
available to US is only partly Indicated
by the above statement Of afcts. 1t IN
cludes nothing about the equal re-
sources of gold which lie outside all
banks, being in general circulation, as
well as outside the Federal Bank. On
the first Of this month there was ovaF
three billions Of gold in the country
and 1t is constantly increasing. the
increase, Of gold coin in October was
s22S, 900, 900 or more than double the
in crease Of note issues. The total mone1
Of the country now Is 5.76s.7l1.565. an
increase In a year Of just about
round billion.
These figures would be more agree
able reading at another time, when
money was more wanted than goods
for example. Gold is an embarrass-
ment now in several nations, not few
having erected barriers against 1t py
reducing their offers for it. The ano-
maly OF the situation Is increased by
the fact that the nation which has the
greatest stock ever accumulated in the
worlds history Is erecting barriers
against It's export. The saying that
during war laws are silent is shown TO
have complement in the fact that
during war economic laws fail to con-
troll finance. We are the only nation
irdisputably and entirely on a gold
basis. We must sell goods for paper
We must do business on the terms OF
the rest Of the world SO far as we can
DO it at all, or suffer defeat worse than
bankruptcy No financier ever dreamed
Of such facts until they occurred. 1t
is indeed a new era, in which old argu-
ments are open to reconsideration.