b
System as Whole The federal reserve system has demonstrated such success as to
meet with widespread public endorsement of most of its basic features.
 Its structure and its fundamental powers are well designed to
serve the need of our nation for a reserve banking agency adapted to
our business and financial requirements and to our wide expanse of
territory.

COMMITTEE REPORT

Importance of
Administration

While particular transitory policies have been called into question,
 in the main the administrations of the reserve banks, under the
general supervision of the Federal Reserve Board, have shown capacity
 and skill. The continued devotion of men of ability and influence
 to the affairs of the system as members of its governing bodies
is fully as important for its future welfare as any alteration in structure
 or method of operation. The system is a growing organism. It
must be adapted with care to our country’s needs as those needs actually
 appear. This adaptation may be expected more confidently
from a steady development of skill in administration than from any
legislative overhauling of its powers and methods of operation.
The conception of a system of regional banks of autonomous
character is sound. The idea of a single, highly centralized reserve
bank which was advocated for a while has come to be recognized
as impracticable. Our political traditions, the immense area of the
country, the wide variations in the economic development of its sections,
 and the proved values of the regional system, all lend support
to the rejection of the one central bank idea.
A fundamental necessity for the proper functioning of a central
banking system in this country is the development of a high degree
of cooperation between the reserve institutions and the member
banks. The wholehearted support of the member banks must be had
if for no other reason than that they make the direct contacts with the
business public. A system that is not based upon the principle of coperation
 must fail. The reserve banks, as even our brief history has
shown, must depend upon something more than their own activities
and resources to achieve the needed progress in improving credit
~onditions.

Regional Banks

Dne Central
Bank Rejected

Dependence of
Reserve Banks
on Member
Banks

Regional System
Promotes Close
Relations

The regional system makes the administration of each reserve
bank more amenable to sentiment in its district and thus serves to
emphasize the idea of cooperation. In particular the regional banks
make the actual credit contacts with member banks, two-thirds of
their directors are chosen by members banks, and the member banks
provide all of their stock capital: While the same provisions might
be utilized in the organization of a single central bank, the relationships
 of any one member bank to the central institution would be far
less intimate and complete. If it be argued that a central bank could
make use of branches to establish contacts with member institutions.

[Continued on page 8)