The independent. [volume] (Elizabeth City, N.C.) 1908-1936, 1920-06-25

of a money panic, according TO n
Elizabeth City bankers and any g
one who is feeling blue about the
tightness of money can get his /
hopes revived-even if he can't
get his paper discounted = by
talking to the officers Of our
banks.
IF YOU happened to drop into the FIrst
& Citizens National Bank for instance
and said something about panic, you
would be instantly taken in tow by Mar
shall H Jones, assistant cashier and
arch optimist of that institution Jones
would start off by telling you that Car
ter Glass ought to be made President
of the United States 'and will be II the
Democrats nominate him." because Car
fer Glass was the father of the Fed
eral banking act And because we have
| tbe Federal Reserve system with us
thanks to Carter Glass and Billy Me- ,,
! Adoo-there'H be no panic.
Jones will tell you that the Federal
Reserve system is responsible for the
present money tightness and guaran-
tee that there will always be plenty OF
money for the country's needs and never
too much for the countrys good. Jones
would tell it to you about like this He
would assure you that the Tightening
up of credit all along the line is sys-
tematic endeavor to discourage unnec-
essary borrowing and to relieve the
country of too much legal tender. There
4 has been altogether too much paper
money flying around and money has been
getting too cheap. Money has been so
easy to get that everybody has been
tempted to put out too much money.
Before the Federal Reserve system
came into being the money center
the country was Wall Street and Wall
Street absolutely controlled the money
supply of the country. There never
l was too much money and now and then
there was altogether too little-and
panic.
l. And then the government established
the Federal Reserve System with twelve
= regional banks in twelve strategic cen
y tiers. These regional banks have the
: peculiar power of making money avail
able wherever money is neededs They
work about like this
How The System Works
The First & Citizens National Bank o.
u this city. for instance, is member of the
4 Federal Reserve Bank at Richmond
Il You want to borrow say~$1O,O 600 ano
@ your note properly indorsed-is good fol
$4,000 at this bank. The bank lends
e you $4,000 on your note.
u But that bank needs that $4,000, 81
the bank shoots your note up to the reg
E ional reserve bank at Richmond and get
T. $4,000 worth of FederaleReserve BAN
: Notes for it. 1T puts these Federal Re
Is serve bank notes in its tills and ha
ct $4,000 to lend to the next fellow VIII
~ comes along.
at. Take the paper money out of you
~ pocket and look at it. Chances are, mos
III of the bills are Federal Reserve Ban
&c Notes: You are in the habit of thlnkin
ne that for every paper dollar you have
at M your booklet Uncle Sam has big silve
Ill dollar or little gold dollar tucked ava
in a mysterious vault somewhere in th
IS. big. treasury building in Washington
ee Some of the bills you used to spend d
.ef carry statement TO something like thu
De effect. But that doesn't hold in the cas-
'es of your Federal Reserve Bank Not
cn When you hold Federal Reserve Bar
ne Note the only thing on deposit to back
les up is a mortgage on something. M
el- Jones wouldn't put it that way. t.
er- would say: ga Federal Reserve Bar
Ire Note is backed only by gilt edge not
elr which in the final analysis represent tt
ent real basis for the physical materi
De wealth of the country" Which is b
lis, | onafbor of SAVING thn thin
by only it doesn't sound so raw.
will Amusing me system
of You can readily see how such a syste
md can be abused. John Smith carries
md note to the bank and gets $4,000. t
tbo bank trades his note for $4,000 wor
ION of paper money and lends this mon
INC to Tom Brown, taking Tom Browns NO
r+b And Tom Browns note goes up to Ric
I'M, mond in exchange for another 500
ov worthSof paper money which is loaned
Tn, some one else. The thing can go on Ii
=, an endless chain and the country
flooded with paper money that pap
money would presently be as cheap
cigarette paper. But it doesn't go
because the trainers of the Federal RI
erve Act anticipated something like tt
and gave the Federal Reserve. Ban
the power to recall this excess of par
| money at any time. The Federal Reser
Banks will not lend for a period long
than 90 days and in 80 days they can C
in enough loans to restore the bala1
of things. if necessary. That is what I
Federal Reserve Banks have been dol
these past six months. Altogether
much paper money, too many Fede
!. Reserve Bank Notes, had gotten il
circulation, threatening the thrift E
sanity of the nation. And so the F
eral Reserve Banks began to tighten
and all the banks dependent upon
Federal Reserve system had to tigh
e up along with them.
The Federal Reserve Banks print
presses are still in perfect running
der and can turn out millions of pa
dollars as fast as needed whenever t
are actually needed; but for a season