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Show RESERVE BANKS FINALLY flEAOY FORJSIISS Twelve Big Institutions Will Open Doors in Like Number of Cities Today. ALL UNDER CONTROL OF THE GOVERNMENT New System Marks Greatest Great-est Change in Banking That Has Occurred in Years. WA!ilNuTO.. Xov. i;-. After months of urk on tha .u t of Vac fixierul reserve re-serve bo-irl n:ti yr-. -p.irj.tion by tho banks wl-.ich w'.'A te ;nr:i.ltcrs of the now sjsiem, i:.c twIvp fev!v :al reserve Kinks will opn tlieir floors to t-:ib!itv;-s tomorrow. T h e!r e n l r. yi c e Into t h field of rod i s -eoun t ! 1 r.'.d r k i h ? f. r-1 y r. a t cha npe in tr.e s;a;c:n of t!,Ii: CL-uniry in the List fiuy yens, tinoe the rational l'd:Jc was conceded an-J called into being after tho civil war. The twelve lanky, dcj'cr.e-J to Uke Icare- of ihti cor.'.nitTelal neJs of the entire en-tire nailor arc loeau-d in lhc following citifa: Doiton. New York. FhiUde!phla, nichmcn-J. AtUnu, Cleveland. Chicago. Ilnnearo:!5, if.. Louis, Kansas City, Dallas Dal-las and San Fninc:seo. For the r-"E tlie operations of the banjos w ;I1 te It nil tod Urcely to the re-dlb-ountlng of notes, dr.ifta and billa of exciiar.se, but as experience 1? gain-M, steps to have them exercise their other functions under the currency act will be Uiken. The directors of all the banks liave t-eo:i s-:!ec;ed, the board has r.aratJ its representative for each, and a'.iitab'e uuartera luive ta-n secured in ail the twelve cities. 7571 Member Banks. Officials here will watch the procres of t'.ie &: s:-?m with, the utmost Interest. I: siarx.s en its mission with member mem-ber ti-nks. Their authorised capital Is pjt at 5 V5. Tr ' of ivhi.h one-sixth has bei.n called an-J is In their vaults. The exact figures for the casii reserves in ail twelve banks liave not been accu-; accu-; rateiy computed, but the estimate puts 1 the amount at cloie to J250,,(Km'', drawn i under the Iwx from the present reserve ! agents of n;em':-er banks. I The recr.e banks fce-rln operations at j a time when members of the board feel that there is an excellent opportunity ;o t-st o'.t the alue of the system. Their i ability to rediscount commercial paper has ien counted upon as one of the means to 1-X'sen the purse strings of banks, provide pro-vide n. a hir.try for caring for crops, and gerc rally ir.f-?t business needs. ! The forrrrJ call at opening will be sent S out tomorrow by Secretary of the Treas-i Treas-i urv McAdo--. Kvery step the reserve . boaj-d thought neessarj- preceding the J openinz has been taken, and tho formal j sji'iuil will be larg.-!- a matter of form. i Secretary McAdoo Talks. 1 Eeretarv McAdoo said tonight: ! The uitriii,;; 01 tiiese banks marks 1 a r-w fern in tiv- history of business and finan.-e in li.is country. It is be-li- ed that they will put an end to i tr.e annual anxiety from which the iX'untrv h-is suffered for the past generation gen-eration a. ..out insufficient muney and j credit to move" the crops each year, ! and will give such stability to the ranking business that the extreme fluctuations in interest rates and I ava'iUb&l credits, which have charac-I charac-I tr-rized banking in the past, will be , destroyed permanently. The federal I it-.serve banks nrovidc for a system I of cr.edir. i ased'upon commercial pa-p-r thus at Last securing to the coun-trv'an coun-trv'an adeouatc supply of the nece-o;Lrv nece-o;Lrv rrdits to meet the legitimate il-mands of business as thev develop. The suppiv will be absolutely respon-1 respon-1 five to the demand, and thus business busi-ness Wiu be free from restrictions, limitations and injuries from which it has puifered in the past, because it lias not been able to revive at the time when most needed the credit fa-clliriffe fa-clliriffe which , were essential to Its n nlar and proper development. The whole country is to be congratulated. Greatly Gratified. The aecretarv paid ho was exceedingly rjratifie-j with the prompt and cheerful re-ronse whfn the directors of the several sev-eral banks had made to his sug-rest.on that the banks be ready for business tomorrow6 to-morrow6 in spite of the fact that only thre vcks were allowed in which to nortrrt their several organizations. In K'rvC district, he said, a cheerful and h.-art" response has been given, arid In all parts of the country the member banks ?ave joined with the reserve board and tnV Vcrerary in an earnest and laudable effort to open the system under the most auspicious circumstances. History of Organization. U has" taken the reserve bank organi-r organi-r on omfmittee and the f.Jeral reserve hVnrd almost twelve months to work out dMai'i of organization to tne point where an opening date was chosen. Notwith-?tand?S Notwith-?tand?S careful deliberations which pre-c pre-c J& ""very preliminary step the twelve bVnks will not tor many weeks take up TI Ise all the functions be owed fvJrii hv congresB. Such evolution re7ultom U.e old national bank-J bank-J 7m of n-ee-slty will In most re-'"l- Le slow The reaen-e board the I I I n- spirit of the new system. Is It-1. It-1. ,o-lr... Its wav over Btmnire (rronnd. ' h ?n'n "'rter of tho twelve ?,' ink- probably will feel tho (am. to I,, work lolv n'"1 w'"h "rene-s 'ther The now system is generally corce-leO (rjontinued on Pago Seven.) 12 RESERVE BAfKS ARE TO OPEN TODAY (Continued from Page One.) to bo a compromise between a central bank and the p:e?"iit t.yetnn with its thousands of units, scattered reserves and fixed 11 mil a of currency. Ji s chief attraction at-traction and v lue. t hos-e who Interpret it find in the elasticity K will kdvo to recoi.-niz.od paper currency. Under the present I.iw national bank currencv Is almofi a fixed quantit y based upon national na-tional bank capital Issued upon United States bonds, and unresponsive to tho chill of hard times or tho exultation of boom days. Its use led, the experts sav, to unrestricted loans and .-peculation in the days when money was easy, and to hcardincr of resources and u tlcht'-nm? of the purse strings of credit when thev were P.ard. It is said to have bred the pane of t?i:. when solvent bankn with la re cedlus In reserve, and cent rfi rest-no ctlies were helpless and could pet bark to their. own counters none of tho m'lhons thev had placed with th' ir Jar-.-r and suonirer correspondents. Changes in System. l'nd: r t he nw eystcm the frdi a I reserve re-serve nous, which, In time, probablv will en; !l ely rcpla ce thf na tton.il bank hof-fl. now to fan.ihrtr. will be issued upou com-m.-rvial t-aPcr arising oat of actual bi;si-re'-s tiJiis-iCllons. It f-cma plain that th"y will rise and fail In amount us the tid-s of biiM.if-ss r!s- and tall, and tht t.iere wHi tie no pletiiora of mou'-.v to lie idie. T.ey will be ohha t ions "of the t nired States government, which rational bank notes are not, and will have back of them a large reserve of (,'old in the r( clonal banks. Thvouirh them the r-S'.Tve r-S'.Tve hanks aro expected to come to the aid of any n-dy member bank which hap plenty of cood pHPer. hat netin cash. To further injure .tb.e flow of moicy. reserve re-serve banks themselves ma-,' be require'! to rediscount the discounted paper of other reserve banks. More than Sl.Ovn.OOO of the nw notes have been ordered by the comptroller of the currency tor tho tt. Mvn bank?. Tliev are in , $, f20, $:o and $R"J denominations, denomi-nations, and are to bo accepted by all member banks and for all customs taxes or other dues. The federal reserve agent of every bank in tho system, who is the irowrnment representative there. has these notes in custody ready for tho application ap-plication of member banks. Next to tiie elasticity of tho new currency, cur-rency, officials value the "mobilization" but no concentration of reserves which it will Insure. This, they point out, does not mean the concentration of vast sums from country banks in retervo cities and centraJ re.-erve cities as under the national na-tional banking act, but their appearance In larpe part" on the debit balances of the twelve reserve banks in widely scattered scat-tered parts of the country. These reserves re-serves will be as near as possible to the door of the member bank to which they belon in tluieg of need, and there can no refusal from a reserve bank to return th'-m In case a of exigency. A remnant of the present system still remains in the provision by which banks may keep a certain proportion of their reserves with other member banks in cities now known as reserve and central reserve cities. At the end of three years, however, that w ill be changed, and all reserves will be held either in a bank's own vaults or with a federal bank. An effort wfifl made In congress a few weeks aKo to permi t member banks to deposit all their reserves with the reserve bank at once. As the law stands their process Is to be epread over a period of thirty months. If it ia renewed successfully next winter, it will mean a marked increase in-crease In the available funds of tho reserve re-serve banks. As It stands, tho twelve banks will start out with a total cash reserve of about ?43, 000,000. Another Important Point. Another point not forgotten by admirers ad-mirers of the law, Is the fact that the different reserve requirements; will release re-lease about $-164,000,000 now tied up in reserves, and will afford far greater opportunity op-portunity for a borrower to get a hearing and a loan. The reserve hanks are not. to do a banking business except with member bank. They aro empowered, however, to enrage In open market transactions, in the buying or selling of cable transfers and bankers' hills of acceptance and bills of exchange. Other transactions mcludo buying and selling of bonds or notes of the United States, paper issued In anticipation antici-pation of the colled ion of taxes or assurer! as-surer! revenues of any state or polHicu subdivision In the continental United States The banks are to establish, subject sub-ject to approval of the reserve board, rates of discount to he charged for each class of paper. They may also, with the hoard's consent open find maintain bank-Jmr bank-Jmr amounts in foreign countries for the purchase or collection of bills of ex- C!lfiinthe future the clearings of the banks of the country are expected to he made through these regional banks, which may tn time lead to the abolition of many Hearlnp hotie associations. clearings which involve banks In widely separated narta of the country probably will be made with much greater rapidity through new banks than through ordinary commercial com-mercial channels. It has been estimated that through this saving in tiuio atone, the use of hundreds of millions of dollars dol-lars for many days wilt be -d In time the new system will retire the 2 ner cent United States bonds now used nrlnciDallv as a basis for national hank notes There are more than $700.00000 of those bonds now outstanding, und their retirement is to be spread over a nerlod of twenty years. With their pass-In pass-In f th' national bank circulation based iinon them and not upon the life-bears o' commet-ce. wilt disappear, and unless t'v tbat time congress lias enacted a new - ni-t the nation will have a currency that. I t'hrorv, at. least, responds to the growth ; of crops tiio throb of industrial plants iH-id the progress of tho business world. |
