policy. Such was not a time for withdrawing large sums from individual banks. Finally our own entrance into the war and the floating of our huge Liberty loans rendered a transfer of this kind out of the question. In the interest of causing a minimum of disturbance to the money market in the floating of these loans, the Government wisely adopted the policy of keeping the funds widely scattered and to as large an extent as practicable in the banks of the communities where they were received. The result is that in recent times there have been more government funds in individual banks than at any previous period in our history. The deposit of government funds, moreover, is no longer limited to banks that are members of the federal reserve system, since the law under which all government bonds and certificates of indebtedness have been issued since we entered the war provides for the deposit of their proceeds in qualified national banks and state banks and trust companies against certain approved collateral. Numerous nonmember banks therefore have qualified as depositories in connection with our Liberty loans. What will be the Government's policy in this matter after the abnormal conditions resulting from the war have passed, of course, it is impossible to say at this time. As fiscal agents of the Government, the federal reserve banks rendered the nation services of incalculable value after our entrance into the war, services in connection with the issuance of our large Liberty loans and our ad-interim treasury notes, with a minimum disturbance to our money markets. They aided greatly in the conservation of our gold resources, in the regulation of our foreign exchanges, and in general in the centralization and efficient utilization of our financial energies. In this time of great emergency the federal reserve system was a bulwark to our national finance. One shudders when he thinks what might have happened if the war had found us with our former decentralized and antiquated banking system. Think of pouring the crisis of 1914-1918 into bottles that broke with the crisis of 1907! The post-war situation demands in financial matters the maximum of efficiency. If we are to do our part in solving the tremendous financial problems of world reconstruction, we must make every dollar count to the utmost. This means the coordination of all parts of our banking system. It means integration under a responsible central control, and it means administration with sole regard to national welfare. Upon this subject we may conclude this book with the words of President Wilson, made public October 13, 1917. They apply to the period of reconstruction as truly as they did to the period of the war: "It is manifestly imperative that there should be a complete mobilization of the banking reserves of the United States. All who are familiar with financial operations must appreciate the importance of developing to the maximum our banking power and of providing financial machinery adequate for meeting the very great financial requirements imposed upon our country by reason of the war. A vigorous prosecution and satisfactory termination of the war will depend in no small degree upon the ability of the Government not only to finance itself, but also to aid the governments associated with it in the war, which must be kept supplied with munitions, fuel, food, and supplies of all kinds. The banking problem involved is one which concerns all banks alike. Its solution does not depend upon the national banks alone, nor upon the state banks. The burden and the privilege must be shared by every banking institution in the country.. "The extent to which our country can withstand the financial strains for which we must be prepared will depend very largely upon the strength and staying power of the federal reserve banks.. "Many of the largest state banks and trust companies are now becoming members, realizing that to win the war we must conserve all of the physical, financial, and moral resources of our country-that our finances must rest on the firmest possible foundation, and that they must be adequately and completely conserved so as to respond instantly to every legitimate demand. How can this necessary condition be brought about and be made permanently effective better than by the concentration of the banking strength of our country in the federal reserve system? "I believe that cooperation on the part of the banks is a patriotic duty at this time, and that membership in the federal reserve system is a distinct and significant evidence of patriotism." COMBINED BALANCE SHEET OF TWELVE FEDERAL RESERVE BANKS, FEBRUARY 20, 1920, AND BRIEF EXPLANATIONS OF THE VARIOUS ITEMS Resources Gold coin and certificates in vault1..... Gold settlement fund-federal reserve board2 Gold with foreign agencies3. $200,973,000 396,138,000 112,822,000 U. S. Government long-term securities?.... All other earning assets1 11 Total earning assets.. 532,703,000 2,890,227,000 26,838,000 268,610,000 0,000,000 3,185,675,000 |