Evening star. [volume] (Washington, D.C.) 1854-1972, 1925-05-13
PRESENT RESERVES
SEENAT MINIMUM
Authority Cites Reductions,
Since 1914 and Urges
Careful Procedure.
BY CHAS. p. SHAEFFER.

by uillllHS lne reserves OIL Two
thirds of the country's banking re-
sources in the Federal Reserve Bank.
some of the dangers arising from our
system of scattered independent banks
are overcome, W. Randolph Burgess,
assistant agent at the New York Fed
eral Reserve Bank of New YORK;
points out in an article released to
day, in which he defends legal reserve
requirements as exacted by Federal
Reserve institutions. The essential
facts" he says, ARE that the legally
required reserves have been reduced
TO minimum, all to be held in the
Reserve banks, and that no require
ments are prescribed for cash in vault
or balance with banks, but these are
left wholly TO the discretion Of the
member banks"
Bank Resources Pooled.
The principle which gives greater
effectiveness to reserves under the
Federal Reserve system is compared
by Mr.. Burgess to the insurance prin-
ciple of distributing the risk. What
the reserve system actually does, he
says, is to pool the reserves of the CO.
operating banks, thus enabling the
system to meet any single members
emergency, provided, of course, the
member has not impaired his borrow
ing power by dishonest or imprudent.
banking methods
The risk is distributed and the vast
resources of all are made available
for any one, the mechanism of the
system being designed for this emer-
gency use. Note issues provide neces-
sary expansion of currency, and the
requirement of the highest type of
liquid security for all loans insures
safety and mobility.
Urges Care in Reductions.
Since the Federal reserve act was
passed in 1914 banks have in one way
or another reduced steadily the
amount of discretionary reserves car
ried in excess of the legally prescribed
minimum. An important fact about
this reduction in reserves is that il
has released some funds for invest
ment or loans, with corresponding
benefit to the earnings of bank. Cen
trail reserve city banks have gained
most from the release of cash, but this
gain has been partly offset by the
loss of some deposits from out-of-
town banks. Country banks have had
little cash released, but have been able
TO reduce the balances maintained
with city correspondents. Reserve
city banks have gained moderately in
both ways.
Mr.. Burgess urges that proposals
for further reductions in reserves
should be carefully weighed.
Capital Traction Strong.
Railway common stock was quiet
this morning with sales of % shares
at 116, but Capital Traction stock, the
other main artery in the contemplated
merger of transportation facilities
here, gave a bullish demonstration of
rather pronounced proportions.
Opening at 95 y, this security defied
the best attributed efforts of traders
to drive it down, the bulk of the 2S5
shares exchanged this morning being
sold at a figure fractionally higher
than the opening. The last sale, how
ever, was made at 95k, but q higher
was bid for it, with 957s asked, as the
session closed.
Lanston Monotype was strong and
conspicuous. two sales, aggregating
$50 shares, being made at So. Wash
ington Gas picked up fractionally to
569s, and National Mortgage and In
vestment preferred brought 99s.
Leaves Anacostia Bank.
Charles V. Etzler. cashier of the
Anacostia Bank, has resigned that
position and will return to the Ma
tional Metropolitan Bank in a junior
capacity on May Is, it was learned
this morning.
Mr.. Etzler first began his profess
sion with the Metropolitan, resigning
as receiving teller about three and,
one-half years ago to become cashier
of the suburban institution
Named Essay Contest Judges.
John B. Larner, president of the
Washington Loan and Trust Co: H Fl
Mckee, president of the National
Capital Bank, and Walter klopfer,
vice president of the Park Saving
Bank, have been named members Of
a committee to adjudge the essay
contest of the local chapter, American
Institute of Banking. Authors of the
three papers which are selected will
be taken to the annual convention of
the local bankers association as
guests of the ASSOCIATION.