Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-06-20
FEDERAL RESERVE BANKS

ONE of the great achievement:
- of the Wilson administration
was the establishment of the Fed
eral Reserve bank system. Fol-
twenty years prior to the great
revolution in politics that estab'
lished the democratic party II
power, attempts had been made by
the republican party to do some
thing along this line. Senator Aid
rich was chairman Of a committee
that spent millions of dollars try
ing to establish flexible credits
That is to say, a currency that
would expand in time Of need and
contract when the need was over,
Senator Aldrich and the republican
party failed in their effort. When
the democrats came into power in
the White House and in congress
they solved the problem. They put
on the statute books in spite of a
rather solid republican adverse
vote the present Reserve Bank sys'
TEN. 1t has worked SO we'll that
even the republicans have no criti.
cism of it. and although they have
complete control of congress and
a republican president, not a single
word is heard anywhere abou,
changing the system or abolishine
it. It's advantages r too evident
Most of our readers understand
the workings of the Federal Re-
serve bank system. To those who
do not, the following explanation
issued by the Reserve Banks them.
selves, may be of interest. The ex-
PLANTATION is extracted from a
pamphlet we received from a mem
Der bank along with a statement
of the personal account Of the
editor Of this newspaper:
at is usually better to work with
other people than to work alone.
We have clubs, associations, socie-
ties for the purpose of multiplying
the strength or effectiveness or re-
sources of the Individual members.
A regiment Is stronger than the
strength Of all the men who make
it up. An army is stronger than
a mob.
lust so with money. Men work
and save, and deposit in banks their
savings or the ready money needed
for business use. In every bank
there are many deposits, none of
which may be large in itself; but
taken together they become much
more useful than if they had been
kept separately. Taken together
they enable a bank to lend its Gus
toners the money they need for
Carrying on their business. Thus
the money Of many individuals
serves the business needs of city
and town and the farming needs
of the country.
"A Federal Reserve bank does
for banks almost exactly what
banks do for their customers. It
receives money on deposit from
such banks as have become mem-
bers of the Federal Reserve system.
and lends to them. All national
banks are members of the Federal
Reserve system, and many state
banks and trust companies have be-
come members also. Every men,
Der bank is obliged by law to keep
with its Federal Reserve bank an
amount Of money which bears a
certain proportion to the deposits
II has received from its customers.
This is called a reserve and as
the Federal Reserve banks keep
reserves of their members they are
called Reserve Banks At times
members borrow from their Fed
eral Reserve banks just as individ-
uals borrow from their own banks.
individuals cannot deposit money
with a Federal Reserve bank, or
borrow from it; their relation with
it is through their local member
bank.
Before the Federal Reserve sys-
TEN was in operation, each individ-
ual bank stood virtually alone. This
was safe enough as long as things
went we'll in the business world,
but even then the machinery of
banking was so cumbersome that
it often worked badly.
"In order to meet the require
ments of law and to pay depositors,
all banks used to keep large
amounts Of gold and currency on
hand and most Of them also kept
$500 I~--z i'll 49, -