Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-05-13
ADDRESS ON FEDERAL RESERVE
FEATURES ROTARY CLUB MEETING

banks, sew. I hundred in number in
each district, are subordinate and
tributary. The reserve system thus
consists 6" h central Reserve Yard
at the hea . the IL Federal Reserve
Banks. and the 10000 member banks
divided into districts, the banks in
each district being under the super
' lion Of tNleral Reserve Bar :
Gated in that district; the banks of thu
greater part Of New England, for in
stance, being assigned to the Reserve
Bank located at Boston. The Federal
Reserve Board located at Washington
consists of seven members of whom
the secretary of the treasury and the
comptroller Of the currency are ex-
ofticio always to be two The five
other members are appointed by the
president at his discretion. except that
two shall be persons experienced in
banking or finance" and, by a pro-
vision of the present Congress. that
one shall represent the agricultural
interests of the country.
But the vital point in the whole
reserve system, the one from which
1t takes its name, and the one that
was the chief motive inspiring tho
organization. is this: Every mem.
Der bank is required to keep with its
Federal Reserve Bank an amount OF
cash which bears a certain proper
ton to the amount of deposits it has
received from it's customers, and is
not less, in the case of any bank
than seven per cent. Of it's demand
deposits and three per cent. of its
time deposits. This is it's reserve
which, formerly kept in its OWE
vaults and under it's own hand, is now
entrusted to the keeping of its Fed
cral Reserve Bank. This is the banks
safety fund, kept for emergencies
crises, special demands, or panics
Each OF the twelve Federal Reserve
Banks thus holds in it's control the
entire reserve fund of all the member
banks IN its district, and it has the
power to use any part of it or the
whole of it to help any one of the
banks in its district that may be in
Trouble. In case of financial con-
migration breaking out at any one
point and attacking any one particul
ar pank, that bank has the right tC
appeal to its Federal Reserve Bank tc
come 20 the rescue: Thus the entir,
resources of the whole national bank.
Ing system can be pooled for the pro.
lection of little member bank ir
the City of Waterville.
Ihat the second object to be secur.
ed by the Federal Reserve system. :
more elastic currency. has been at.
tanned. will not be denied. When the
rush OF business at the height of the
war and afterwards, with the attend
ant rlae in prices. called for a large
addition to the volume of currenc,
the Federal Reserve Banks supplief
: II. II, three years ago, you had cx.
ainlned the bank bills in your pockeI
you would have found a large propor
ton of them bearing the name n
some one of the Federal Reserv,
banks. The volume of currency ax,
randed when called for and it shrunl
I "hen the sail ceased We felt +,
! stlnSehcy in the money market n
fall when the western grain cron wa.
belng moved. The currency to handl,
IL was in hand, and when the banl
notes mad served their purpose the,
! disappeared, going back to the Re-
| serve banks to be DESTROYED or IN "a
/ main in the vaults until anotbe,
emergency should require them.
Inc currency reform contemplated
ho"eEef' Is not in this respect as We
, coi'iplete. as the major part of oul
pank notes still comes from the \,
tiohal banks as before. When. how
ever. the bonds deposited with III.
- - treasury to secure them shall
AZURE, it is the purpose to pay then
OIL IN consequence of which actor
all notes of the National Banks vii
De called in and cancelled, and there
alter the entire currency of the
country ,unleSs the greenback.
sho"ld be retained) will bear I'll.
stamp of the Federal Reserve: and q,
the Federal Reserve banks ara auth.
'iioo 70 issue notes against a reserve
not exceeding 40 per cent. of "goIf
ana lawful money" it is evident tha,
'heif enormous resources enable then
70 supply a bank note currency suf.
iic'eht 10 meet any possible e1pan.
SION or legitimate demand. Indeed
IL was urged in the debate in CON.
gross that a possibility was affordof
OF currency imitation to an exten,
rot dreamed of by the most eytrava
CANT advocates of the greenbacl ,n5
OF the free and unlimited coinage ot
silver a possibility certainly bu,
rot to be seriously regarded as a dan.
ger. va
so far then as the Federal Reserve
system has been tested bv limo ;,
must be admitted to have fully ms.
uled the anticpations of its advo.
Gates and to have disappointed the
lorebodings of it's critics. Wo do
indeed. still hear some croakine
voices, but in a lower tone. CRYING
one party, "Politics." the other
Nall Street." But as the one in.
s'sts that the remedy should be larg-
er government influence. the other
none at all, the two would seem tc
cancel each other.