The Washington times., 1918-01-22
FEDERAL RESERVE
PROVES NATIONS
.HNAL LBU[WARK

The Federal Reserve System has
passed safely, through its baptism
Of nre"- and IN the fourth annual re-
port presented to Congress today by
the Federal Reserve Board, the ma
tion's banking system is revealed as
the ultimate resource OF the business
and financial community.
The report provides a review OF the
conditions which brought this coun-
try suddenly from q debtor 10
creditor nation, and the systems
power of expedIents Is shown In the
gradual readjustment of the country's
finances. including the issuance OF
$4,000, ,0o0,0 in long term Liberty
bonds without creating at any time
a disturbance of the money market
Other essential features to which
the board has called attention include
the provision Of a large supply OF
Federal Reserve notes stored early
In 1917; development of numerous
measures for conservation Of the gold
supply; and the application OF amend
rnents OF June 21, 1o17. to the Fed
eral reserve act for expansion or
lending power OF the several banks.
Tells OF 1917 Activity.
AHC DO1Eo NAS ANHNAN -
enumerating the feverish and unpre-
cedented activity early in 1917: and
passes quickly to the proposal for
adoption OF a policy of maintenance
of liquid character of the assets OF
the reserve banks, and so strong was
the position OF the system at the de-
clsration OF war on April that gold
In the Federal Reserve banks and
-
ed to $943.55 ,0O0
The report calls attention to the
Liberty loan of 1917. in which the Sec
retary OF the Treasury announced
that each Federal Reserve bank
would act as q central agency for
the bond campaign in it's district. The
Issuing of the short time certificates
OF Indebtedness Is shown as one OF
the salient features enabling invest
ors. banks and Individuals to antici-
pate their payments on account OF
Liberty loan subscriptions, and other
taxes.
The board suggests further early con-
sideration by Congress Of the problem
OF corporate financing. In the belief that
no satisfactory solution Of the general
corporate and credit problem will be
found that does not involve some degree
shown by the war Is the enlarged
reserve power OF the reserve banks. The !
gross earnings are given as sl5.S00.0o0. |
and the net earnings as $11.20,000 The !
dividends declared during the year are |
approximately IS. 10000 Six OF the banks |
have paid their dividends completely up /
TO the end Of the year 1917: four have |
paid up until June 90. 1917. and the re-
two have paid to the end Of the \
year 1916.
Earnings VIII he Large.
While the banks are not operated for
profit, the board points out that their /
earnings during the coming year will be !
large. promising a substan- I
tial franchise tax out Of excess earnings.
The amount paid this year to the Gov
ernment is $1,l34.2SL The events OF the \
year have done much to bring into /
closer relationship the several elements /
Of the Federal reserve system, the re-
port shows. -'a
Among other activities are included |
further extension OF the clearing and
present method OF electing directors as
work under the Clayton act, permits for !
service as director having been granted .
In 12 cases. Applications for fduciary /.
powers have been granted In Il2 cases
The expense OF conducting the work OF |
the board during the year has been lit
tie less than S2s0.OOo. including all sal
aries. the cC Of the gold settlement fund !
for the year aas been about $500
Among a number Of minor changes
suggested to Congress Is that OF the /
present method OF clearing directors as ]
onls-a minority OF banks entitled TO vote
are taking an active part in the selec- .
ton. Another change is sought in the
Of the Federal reserve
notes intended to permit The issue Of ,
large bills. and the board asks amend ]
ment to section 8 to provide for incor-