Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1922-07-30
AMERICAN BANKERS TO
HOLD MEETING IN NJ
Federal Reserve System and
Its Scope to BE Among In
portant Discussions.
SYSTEM SELVES TIMELY NEED
onc-Third Of 10000 banks IN tho
United States Arc Members of tho
Hcscr'c Sysfcm-23,OOO In National
Organization.

United states Arc Members Of tho
Rcscrrc Systcm-23.OOO In NATIONAL
Organization.
NEW YORK. July 2e.--In view OF
the fact that about ono third of tho
$4,000 banks IN the United States
are members OF the Federal reserve
system and that the resources OF
those banks amount to two-thirds OF
tho total banking resources OF the
country. problems OF interest TO tho
members OF the system will occupy
lively part OF the discussion al the
forty-cichth annual convention OF the
American Bankers Association to DO
held in New York, October 10 s..
or the 10000 banks. about $4,000 arc
members OF the association.
Bankers say that tho growth and
scope OF work accomplished by the
Federal reserve system since It's or
SANITATION only Il few years ago give
positive proof that the institution
serves a need at once timely and cs-
scntial.
The plan OF organization which tho
law lays down for tho Federal re-
serve system does two things. It
provides an agency so knit together
that nation-w wide resources may work
as a uni; in a national emergency,
OF be modified 10 meet local need
too severe for local resources TO cope
with.
How Organization 1, Formed.
Federal reserve organization d.
rides the country into twelve dis
tricts, each with Federal reserve
bank In many districts the Federal
reserve banks have one or more
branches for the better service OF
the member banks. Each Federal
reserve bank has It's own stock
holders. directors, officers and clerks
like other banking institutions. The
stockholders arc the member banks.
II has nine directors who are resi-
dents OF the district, some from the
cities and some from the country.
Three are appointed by the Federal
Reserve Board In Washington, and
tho other six are elected by the mem
Der banks, each having one vote. In
voting. the banks are divided into
three groups, each OF which elects
two directors. These groups are com
posed. respectively. or tho smallest
banks. the middle-s sized banks. and
the largest banks. Only three OF the
directors can be officers or directors
OF other banks. At least three and
usually majority, are representative
OF industry. commerce and agricul-
turc. For these are tho interests
which, through the member banks.
tho system is intended particularly
10 serve and protect
These men, drawn from the dis
trict familiar with Its conditions and
having its interests at heart are re-
sponsible for the management and
~ no hny
They elect It's officers, determine the
policies under which II operates. and
establish, subject 20 approval by the
Federal Reserve Board, the rate OF
discount 1t charges. All profits. after.
setting aside the surplus provided In
tho law and after paying the member
banks per cent dividends on their
stock, go to tho United States Treas
ury and are used to reduce the ma
ttonal debt.
Federal Reserve Board.
The twelve Federal reserve banks
could not work consistently together
II there were not some co-ordinat-
Ing body related 10 them all That
co-ordinating body IS the Federal Re-
serve Board In Washington. which
IS made up OF seven members--hve
who are appointed by tho President
and devote their entiro time to tho
work. together with the Secretary of
the Treasury and the Comptroller
of the Currency Through this board
the Federal reserve banks become
country wide system. Without Il
they would he merely separate insti-
buttons
The Federal Reserve Board. how
ever. Is not an operating body Ex-
ctp; FOR It's authority TO require one
Fedora! reserve bank TO lend to an
other Federal reserve bank its pow
ers are almost entirely supervisory
It must approve tho discount rates
established by tho directors Of the
various Federal reserve hanks before
they are put into effect 1t passes
upon the salaries OF their officers and
employees. and under certain condi-
,ions may remove any o. their ON
GERS and directors II defines the
classes OF loans which the law. In
general terms. says the Federal re-
serve banks may make.
But tho board does not pass upon
the individual loans which n Federal
reserve bank makes. nor advise IL;
when, or how much. or how l!ttle Il
shall lend TO & member bank Nor
can the board ObtlEC Federal re-
serve bank 10 lend to a member or
prevent 1t from doing so. Tho board
itse't. O, course, cannot lend money.
because 81 has none 20 lend
over the relations between tncXber
banks and their customers neither
the FEDERAL Reserve Board nor tn.
Fcderal reserve bank has any au-
'hority Whatever \ Federal reserve
ban. cauuo, lend directly 10 mem
he banks customers. and lend 10 the
member barl; only when asked by II,
10 do SO. Furthermore. Il Federal re-
serve bank cannot say What loans n
member bank shall or shall no, make
20 is own CUSTOMERS
All Banks on IIunI Basis.
In their right to borrow AZ q Fed
rral reserve bank all member banks
lar." OF small are equal The law
ssys that Fedora! reserve bank
shall make each Ia"Iuher hank such
loans as may be safely and reason
ably mad" n making such loans
tie Federal reserve bank o. course
'Nerclscs proper banking judgment.