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A Discussion of the Principles and Operations
of the new Banking Act as originally pub-
lished in The Wall Street Journal

and the Boston News Bureau

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Including a Description of the Financial, Commercial
and Industrial Characteristics of each of the Federal
Reserve Districts and the Federal Reserve Act fully

indexed, with pertinent legislation



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It is with some misgivings that I have consented to have placed in book form these twenty-eight articles discussing the Federal Reserve Act.

Having studied this measure in the embryo of legislation, the principles operative in its formation and the strength and weakness in the minds of its makers, I deemed it my duty to speak the hopeful word in the financial publications with which I am associated, The Wall Street Journal, the Boston News Bureau and the Philadelphia News Bureau.

I had to work quickly, in such hours of the day as I could command apart from my regular labors, to issue these articles every alternate day, beginning Jan. 9, 1914.

I have been surprised at the favor of their reception. Requests for their publication in book form have come from various parts of the country and from abroad. I was surprised also to learn that they were translated as fast as issued for the use of bankers in Europe. I made my statements boldly, avoiding technical terms, and expected the response at least of criticism and controversy. Now I yield to the demand of many readers to put these notes in more enduring form than the columns of financial newspapers.

It is a pleasure and a duty to acknowledge assistance. First I would thank John Perrin, probably one of the most widely known bankers in the United States and recently appointed Federal Reserve Agent for San Francisco. Together we watched the varying phases of debate at the Capitol, discussed banking principles to the "wee small hours," and rejuvenated ourselves by laughing over many phases of the debates as the bill was being put into shape for final enactment. Perrin knows a bank from the messenger right up through the line to the president's desk, and what is more, he knows all the principles underlying credit and is familiar with every financial theory that ever rooted or bloomed on either side of the Atlantic. He won't say this himself. Indeed, he will probably only recognize the fact and then doubt it when he first reads this in print.

To Charles P. Blinn, Jr., of the National Union Bank, Boston, I am indebted for statistical compilations which , while not appearing

in this book, greatly assisted me to give the proper poise and balance when transmuting dry statistics into popular presentations harmonious in principles and practice.

I am indebted to Luther Conant, Jr., formerly United States Commissioner of Corporations, but in the year 1913-14 on the staff of The Wall Street Journal, for most conscientious reading of manuscript and proofs. To his accurate scrutiny of all phrases, figures and balances is probably due the fact that the controversies I so confidently expected have not arisen.

The articles in the latter part of this book by Dr. John F. Crowell of The Wall Street Journal, and formerly of Washington, speak for themselves. Dr. Crowell's life study has been in the line of statistical presentation, as well as in the principles which underlie facts, and out of which all facts arise.

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These twenty-eight essays on the Federal Reserve Act are really Essays on Credit. To the oncoming generation of bankers who are to make this country great and prosperous, if not foremost in the world of finance, I would emphasize that banking is essentially nothing but credit and that the true gold in the world is the gold of credit. It has been a popular impression, handed down from ancient times, that banking is putting money in a box or stocking or in the hand of another for safekeeping. This is banking by an Indian, a Hottentot, or an aborigine, ancient or modern.

Real banking is giving and receiving real credit. The essential gold is the gold of honor,-of promises well based on integrity maintained. The money box holds only the needed change for the Saturday night payroll, enough gold for the exchanges of commerce between · states and nations where credits have not yet full or effective sway, and also enough gold to insure confidence and ability to maintain that confidence by prompt pay.

Modern banking is very young in the world's history and it will take time for the world to realize that real character and real credit are the true gold-here and hereafter.


Nov. 6, 1914.

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