"The Federal Reserve Act became a law as a great, far-reaching constructive measure to bring co-ordination and unity, consolidation and central control, out of our separated commercial banks under individual control," said a Reserve Bank director (Mr. E. L. Johnson) to a group of Iowa bankers after the first year's experience of the operation of the Act. "It does this and more. The Federal Reserve Banking system-forms a financial base on which commercial business may depend in its expansion and extension into new fields. Producers and dealers in commodities need no longer fear an inadequate money market on which to float commercial paper. The new banks created are not supposed to do any business of moment or to initiate anything. All that is left to the public, and all banking is to be done as before through the already existing banks. The new system provides a place, a fund, a means of creating credit, a system of exchanges, designed to be equal to any emergency which the commercial banks of the country will have to face, and to supply all the fair, legitimate needs of commerce now apparent.

"The great object of the Act is to aid business - its regulation of banks is because they are instruments and most important aids of commerce."

Under the Reserve Bank system, the assurance the member banks have is the assurance to the management that they can always cash in their commercial notes and meet their obligations in any emergency; the assurance to the depositor that his money will be paid to him on demand in cash in any emergency; the assurance to their commercial borrowers that they will not be compelled to shut down for lack of funds to buy goods or material, or of currency for their payrolls.