The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1920-12-10
Farmers Conferences are Touched Up
on in Statement Made BY Chicago
Financial Institu-
ton.
DISCUSSION OF RESERVE
Bank Tells What Must be Done to
Every One to Help Bring
About Liquidation of
Debts

cago has sent out letters to all Iows
bankers concerning conferences
which have been held between the
farmers and the bankers, and out
lining the financial situation as the
federal reserve bank sees it
i The statement issued by the fed
eral reserve bank has to do with
bank reserves, and is given here
with:
During the month OF October a
series of farmer-banker conferences
was held in the state Of Iowa, in
which this bank was invited to par
! ticipaIe. Each of these gathering
was conducted as an open parliament,
and discussion OF the problems OF
the day was frank and free. Each
interest present carried away much
clearer impression OF the view point
Of others than existed before and
great benefit should result from these
conferences, because of this mutual
understanding. This Institution great.
ly appreciates the respectful atten-
ton and the Uniform courtesy ex-
tended to it's representatives attend
ant at these gatherings.
The present seems az opportune
time to emphasize a few cardinal
principles which control the opera
ton of the federal reserve banks,
from the standpoint Of sound bust
ness as well as of legal requirement
The reserve of bank consists OF
a certain proportion OF its deposits,
the minimum amount of which is
usually fixed by law. and which must
be in actual cash or in the form Of
balances in other banks convertible
into cash on demand.
The member bank must carry its
entire legal reserve as a deposit
with the federal reserve bank IN
which it is a stakeholder
1t is apparent that the reserve
bank, which holds all the lawful re.
! serves Of its members, must keep
those reserves constantly available,
and its ability to Tediscount for its
members is measured by the full
maintenance Of reserve deposits by
its members. 1t is therefore apparent
that such rediscourts as it carries
must be repaid more rapidly than the
reserves themselves can be called
| for.
| Must Grant EouitabIy.
! THE law entities each member
bank TO reasonable rediscount privi
leges, but il obligates the federal re-
serve bank to be prepared to grant
rediscounts equitabiy, to each and
every member bank, even though all
apply for such accommodations at
| the same time The federal reserve
bank may grant and has willingly
granted more than ordinary lines to
some institutions in certain local.,
hr+ fSv on
farpred should assume that once
granted. these extraordinary accom-,
modaticns may be carried Indefinite,
ly. dependent for their liquidation
solely upon the pleasure Of the orig
NAL borrower
The payment OF deposits, and the
granting of seasonal demands yet to
come. IS dependent primarily upon
the liquidation or reduction of loans
now held by banks. To urge com
plete liquidation Immediately is as
unwise as it Is imposs ible- But be
! ginning OF the process at once is Inn
| peFative, and upon its gradual and
orderly continuance is dependent the
! future welfare Of the banker, the de.
positor, the merchant and the farmer
alike.
Not Farmers Alone.
! AT the farner-banker conference
the opinion was frequently express ed
! that the farmer alone is feeling the
force Of the aftervar adjustment
now in progress. Conditions in
other lines of business indicate that
this opinion is not well founded. II
must by this time be, evident to all
fair observers that the reimbursement
process is in evidence in practically
all lines of commerce and industry
and the balance sheets Of January
Ist next will undoubtedly be convinc
ing proof of that fact
! we believe the American farmer
| is a good citizen, and that when he
can be shown the inter-dependence
of his industry and all others, and
the need of team work all along the
line 20 bring order out of uncertainty
he will do his full share.
! "Iowa's banks, members and non
members alike, are under an enor
NOUS burden of credit at this time
Relief can come. If the banker will
take his customer into his confidence
and ask him to help. A beginning
of liquidation, and a gradual and
orderly continu ance win hasten the
time when the basic Law of supply
and demand will arain begin to omar.