Profiting by an experience of more than a half century, the federal government in 1913 provided for uniting the banking strength of the country without robbing the banking business of its competitive characteristics - that is, provision was made for centralizing banking without establishing a central bank. The bank law of that year - the Federal Reserve Bank Law - created a bank board to sit at Washington which should have general charge of the twelve regional reserve banks, one bank being situated in each of the twelve districts into which the United States is divided. It provided also a board for each of the regional banks, and required every national bank in the country to become a member bank of its regional bank. Furthermore, it permitted state banks to become members, provided they carried on their business according to certain specified requirements laid down in the Reserve Law itself.

We have seen already how this new law has favorably affected the elasticity of the currency. It is an improvement over preceding banking laws in other ways. First, it tends to keep the money of the country from collecting in the New York banks, as was formerly the case, by requiring each of the regional banks to maintain large reserves of gold. Second, it provides that member banks may, by complying with certain requirements, borrow from their respective regional banks. Third, it facilitates the collection of checks drawn on one bank and cashed by another, by providing that regional banks shall be clearing houses. Finally, but not the least important by any means, it reduces the reserves which national banks were formerly compelled to carry for the protection of depositors. From whatever angle we may regard the Federal Reserve Law and its operation, we must conclude that it is by far the best banking legislation the United States has yet enacted.