The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1929-11-23
A Tribute to the Federal Reserve System


When the federal reserve system was created IN
the wilson administration, it was heraded as device
which would prevent further recurrence of bank
pancs-those crises which at intervals had paralyzed
the financial machinery Of the nation.
Shortly after installation Of the system the World
war came on. A tremendous economic upset accom-
panied it. Had such an upset occurred before the
federal reserve system went into effect it would have
caused wholesale panic. But the nation rode
through
Then followed the war boom and the collapse of
1921 Again the federal reserve system held up.
Later began the rise in Wall Street. which reached
its peak in September. 1929 with collapse in oc-
tober and November by which billions of paper
values we're wiped out. It the greatest shock
in all stock exchange history.
Still the federal reserve system functioned The
crash in Wall Street did not cause an accompanying
bank panic.
Throughout the whole development of the boom,
the federal reserve system the one official voice
of warning The many individual bankers played the
boom game and believed in the fairies OF finance,
the reserve system saw the inevitable and acted with
the only weapons at it's command to check the tide
It repeatedly told the banks industry, and the
public that security loans too high 1t pointed
out that call money offered by private interests
might be withdrawn at any time from Wall Street.
It made clear that on the reserve, in such event.
would fall the burden of providing funds to take
care of such Withdrawals.
It repeatedly used its Weapon, the rediscount rate
increase Whether those increases came rapidly
enough, whether the system quick enough to act
is matter of debate The rediscount increases did
not stop though they did help to check the orgy
of speculaton One thing, however, is certain
they did prepare for the emergency.
When the emergency arrived, the federal reserve
system was in position to supply ten funds necessary
10 replace those Withdrawn by private interests
And therein another bank panic was averted
There has been much criticism of the federal re-
serve system by those caught in the market In the
rush of events little favorable has been said OF the
system.
The Scripps Howard newspapers believe that now
Is the time to give credit where credit Is due. we
desire to suggest further to our readers that they
studv carefully those statements officially issued oy
the federal reserve system and repose in them the
confidence that is warranted by the federal reserve
svstero's record of accomplishment in avertng panK
panic.
After giving the federal reserve board tul creouV
for doing its best within its present powers the 1acC
remains that it could not prevent the speculative
stoc, boom and consequent threat to the nation
business.
rberefore the country is faced with the question:
n What wav can the federal reserve machinery be
mode more effective TO meet the next crises when II
comes? There is no quick and easy answer 6u' 'iie
hest brains of the government, OF the pankS' anu
of business should be concentrating on TINS prop
lem