The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1920-01-02
RESERVE BOARD
WATCHING TREATY

! New York January 1.-(Special)-
No individual or no corporation, great
or small, is watching with more OBJ
servant eyes the attitude of the Senate
toward the Leageu of Nations cove
nant with restrictions and the treaty
of peace than is the federal reserve
board Indications are plentiful
eral reserve bank of New York dis
trict that there appears to be some
concern, perhaps little apprehension,
in the federal reserve board due to the
present day situation, which is some
thing which is entirely beyond the field
og partisan politics.
The public does not appear to have
as good an understanding of the prin-
cipal features associated with the pres
emit day situation as do those who rep
resent the federal reserve board and
who are the executives in the federal
reserve banks. So also some of the
ablest men of finance have clear I'M
Outstanding of the situation as it now
is and, like the federal reserve board,
the necessity of speedy action ii the
situation is to be mastered.
The federal reserve banking system
was created in part for the purpose OF
providing currency whenever there was
a special need of it, and also with
the power of Withdrawing that cur
rency when the opportune moment
came for doing that. This service was
admirably performed while the Euro
pean war was in progress. 1t made it
possible to meet not only the abnormal
demands for currency due in part to
y, 1arfs oNfivifina hrrf
also the absorbing by the people of no
small part of the liberty loans In
fact, the last of these loans, known as
the Victory loan, was floated chiefly
through the utilization of the facilities
Yof the federal reserve system. For
many thousands who bought the bonds
were able to do that by means of the
extension Of credit to them by the
banks which in turn were aided by
the federal reserve banks
THE DAY OF WARNING
A day of warning came early in No
vember, when the action of the fed
eral reserve board made it necessary
to call loans, and this resulted in a
temporary panic occurred in the secur-
tiles market, due to the high rate
charged for the use of money. The
federal reserve banks were compelled
to take this action not chiefly because
the desire is strong to put a check to
speculation, but because the fed
eral reserve bank or system had
reached the limit of it's ability to issue
currency.
while the temporary panic in the
securities market was speedily ended,
nevertheless it, has become apparent
that the federal reserve banks are now
practically unable to issue any more
currency. They do not possess gold
enough to meet the requirements Of
the law representing reserve. There
fore they are unable to issue more cur
rency. The chance is very slight that
any freshtor new accumulation of gold
will be secured by the federal reserve
system excepting that which comes in
installments. so to speak, from our
own gold mines and those OF Alaska.
So it happens that although the re-
sources of the United States are enor-
nous. nevertheless it Is not possible
adequately and specially to mobilize
them or to develop those which are un-
exploited so that advantage could be
taken Of these resources to relieve the
situation.
TAPER THE WORLDS CURRENCY
As it is in the United states. where
the limit of the issuing OF paper cur