In ordinary times the business of banking goes on very much as before the passage of the new Act, and merchants and citizens can see little difference in conditions. The ordinary banks continue to be independent concerns, receiving deposits and lending money as before. But in exceptional times, as in 1907, a great difference will be visible. In the panic of 1907 the banks would not even allow a depositor to draw out his own money - much less would they make the customary loans on commercial paper, or other approved security, even to their most reliable customers. Thus, at the very time when the banks were most needed to aid and encourage business, they ceased their functions and only magnified and intensified the business troubles that with a better and more elastic system they could have prevented. The first symptom of financial stress led every banker to protect his own reserves, lest he might become the victim of a "run." He lacked the support of a higher financial power, such as is provided by the Federal Reserve Bank system, which promises a complete remedy for such conditions, by supplying the funds to meet emergencies upon the deposit of ordinary commercial paper by the member banks. All the banks are now practically federated for mutual help under the auspices of a central Government board. For the first time our national banking system possesses the real strength that lies in unity.

Below we give a brief outline of the provisions of the new Act and the manner in which the Federal Reserve Bank was brought to the present state of development: