Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1917-11-25
FEDERAL RESERVE
PLAYS LARGE PART
IN FINANCING WAR
Continucd from First Page. J
other than they were

resource would have found 4 way OF
meeting and overcoming tho various
novel difficulties that were offered TO
them, as they had III times Iast. |;
Y is. however, as certain AS anything
humanity can be that the Federal re-
s serve system did in fact afford this
means OF uniting the financial re-
sources of the country, OF insu ing sup
port TO institutions which stood III need
4, OF II. and OF providing tho new and
p Indispensable methods and mechanism
without which our increasing rTodnc-
ton and trade. necessary as these were
+. have been financed.
PREVENTS FAILURES:
tBOLISuE:S FRICTION
The low rates for money which pre-
= vailed throughout these years. the abb
scncc OF any serious banking disturb
anccs or failures, the continuous and
efficient supplying of the nccos OF the
agricultural districts thereby cna-
bling them to move their crops with
out friction or difficulty. arc perhaps
the most important. il tho least SNOWY
of til. services rendered BY ;hc ne"
, banking system up 10 date. During
tho years in question. moreover. Amer
lean banks for the first time began TO
establish branches abroad. undertook
the inauguration OF the system OF
bankers acccptarccs. essential to the
growth OF foreign trade. which had
so long been employed by leading Eu
ropcan nations. and took oVc" IN no
small degree tho functions Of a gen
cral financial market, formerly per-
formed by Great Britain, but now nee
cssari,y transferred in part ~ The
United States.
1t was an important feature OF tho
? work OF these years that those who
wcrc charged with tho direction Of the
Federal reserve system fully rccog-
niacd the possibility of = sudden and
severe strain upon our resources which
might make itself felt practically a.;
any moment. and cndcaNorcd through
out the carly years OF the system to
shape its policy i'll such a way as 10
preserve and increase it's banking
strength. Governor Harding. of the
Federal Reserve Board. in "A statement
reviewing tho work OF the system in
connection with the war. described the
elimination OF this policy as follows:
During tho month prior TO the entry
OF tho United States into the European
war, the Federal Reserve Hoard. rec
oSnizinE the unsettled and disturbed
condition OF foreign affairs and tho
unusual influences 10 which domestic
and financial conditions were subject,
devoted special attention 10 the prob
lem OF Immediately placing and OF
maintaining the Federal reserve banks
in strong and liquid condition. To
this end the reserve banks were en-
couraEed TO refrain from making more
than very moderate investments in Sc
curities. Even with respect TO the pur-
chase of commercial paper they were
couascled TO observe a policy of con-
scrvation. As "A result OF the adoption
Of this plan of acton. the entry of the
United States into the war as an active
participant found the Federal reserve
banks and. in consequence, the banking
system Of the whole country, in an cX-
trcmcly satisfactory and strong posi-
ton. On the 30th OF March the re-
serve banks held against deposits re-
serve OF SCI per cent, while the COM
hncd national banks OF the country
held, on March 5. >Sl3.o2so0o OF vault
reserve. an excess o. reserves over legal
requirements CT s::c7 ,sGl.oO0.
PROVIDES MEDIUM
FOR QUICK DESTRUCTION
In another way the Federal reserve
System has cndcavorcd TO make OK
ccptiouRlly careful preparation for any
possible demands that might be
brought TO bear upon il. The opening
OF the year had found IL with n large
stock OF Federal reserve notes on hand.
but II was deemed a measure Of pru.
denco almos; 10 treble the available
supply, S.Sl 600, 600. Of now notes being
ordered. Moreover. in order 10 render
;hese notes easily ava LA bic. they wer.
distributed throughout tho country at
tho various minis and subtrcasurics
where they We're held subject 10 re-
lease by telegraph from Washington
upou application Of tho Federal re-
serve bank nearest situated. Not only
note currency. hut a ready means OF
distributing that currency without do
lay ia the points where il was most
needed. was thus provided for"
Tho opening of the war however.
brought its own special problems. and
almost Immediately il became nccca-
sarE 20 decide upon and put into opera
t'on d financial organization for the
purpose of performing the actual work
OF placing the new bonds. Many prob
lens or general nature had 10 be dis
posed Of. and an immense amount Of
detail work must be quickly and Of
hciontiy accomplished. The British
way mission 10 the United states had
included in its membership distin-
cui:h"d financial representative in tho
r"rson Fl Lord Cunliftc, governor OF
the Bank OF England
During the stay % Lord Cunlifrc :,
TIC United states. many problems O;
International Nnancc were discussed
both with him and the Secretary OF
the Treasury. and with the Federal Re
serve board az ( whole. Lord Cunli0e
''sitod number OF tho Federal re-
serve banks. and many conferences 90.
Cured with q yicw 10 better r,u.us,
understanding Of the work TO he con.
from the international point az yj,,
Tines" preliminary discussions. anu
conversation were followed hy III.
visit OF party, headed by the Score
iAry Of tn" Treasury. and lnclud,rr
r Governor Harding. Of She Federal Re.
, serve Board, To many OF the Federal
reserve banks. a. We'll az other places
This visit laid the foundation for RIO
general co-"pc'htion II the financial,
community IN tn" great operation which
Was to be undertaken .gr -, o.