Reserve

Collier's New Encyclopedia (1921)

in military usage, a body States Treasury, the Comptroller of Currency, ex-officio, and five members who are appointed by the President, subject to the approval of the Senate. The functions of the Board are to so mobilize the finances of the country as to act as a reserve in any part of the country where private banks may be threatened by a panic. The very existence of the system, however, acts as a deterrent any such threat. This is done on through the Secretary of the Treasury, who has the power to place Government gold reserves at the disposal of any of the district centers, where the national realize on their longbanks may quickly kly time securities or investments by borrowing from the reserve banks. Aside from this, any individual bank in temporary difficulties on account of a sudden run of depositors is able to utilize the reserves of other banks, through the district bank, and is in no danger of being tied up with long-time notes or mortgages, on which the loans may be quickly made. Through the reserve banks, also, the practice of REDISCOUNTING (q. v.), so common a practice in European countries, is in this country becoming more common, and banks are able to utilize the capital sunk in negotiable instruments by utilizing them as a form of currency. National banks participating in the plan are also able to issue notes on their gold reserves to the extent of 40 per cent. On Oct. 17, 1919, a report of the Board in Washington showed the financial condition of the Federal Reserve Bank to be as following: $2,128,000,000 Gold reserves Capital paid in 85,000,000 Government deposits 133,000,000 Total gross deposits 2,958,000,000 Total rescurces 6,161,000,000 Federal Reserve Bank notes in circu lation amounted to $2,752,000,000, and notes issued by the participating na tional banks amounted to $249,000,000.