HARDWOOD RECORD 



25 



same ea 

 in tlie s 



iL-tivity as tlic check currency and go out of existence 

 ,■ wlien its work is done. 



Federal Reserve A'otes 



'I'll!' (leiriaiid for paper money is provided for in the new currency 

 measure. It will be known as Federal Eeserve Notes, and the gov- 

 ernment will be responsible for it. The redemption of the notes as 

 well as their issue is provided for. 



The defects in the old financial system have been long known; those 

 of the new are under discussion, but taken in its entirety, the new- 

 measure is superior to what it replaces. Its strong points are that 

 bank reserves will be mobilized; credit will be made elastic; a redis- 

 count system will be provided; control of the ebb and flow of gold 

 secured; foreign banking facilities provided. 

 Problems Presented 



The problems which the new law presents at this time are not 

 connected with the economic fundamental of scientific banking. They 

 are concerned with the machinery with which results are to be se- 

 cured. Many students consider the scheme provided not the one best, 

 adapted to secure the results required; but on the other hand it is 

 contended that it is the best adapted in view of certain political 

 promises and prejudices. There is an ancient prejudice against 

 central banks. 



Thus handicapped, the problem that presented itself to the law- 

 makers was how- to make a central bank without doing it. They 

 succeeded in solving this enigma by making twelve regional banks 

 and linking them together under the direction and supervision of an 

 uneapitalized, but highly centralized and very powerful Federal 

 Reserve Board. No organization like this Federal Reserve Board has 

 ever been created in this country. It will control absolutely the 

 credit situation of tlie country. Its powers are practically unlimited. 

 It can ruin one section financially for the benefit of another. It 

 could take about all the banking resources New York has and transfer 

 them to California. It could stop the development of the South, and 

 force the development of the North, and if it were considered im- 

 portant that Missouri be carried by the party in power, and stuffing 

 Missouri full of funds could do it, Missouri could be stuffed full. 

 These are fanciful statements. They are made merely to show that 

 no central bank could have as great power as is given this board. 

 Weakened by Dispersion 



The system of twelve regional banks instead of one central, is an 

 element of weakness. The bank reserves will be scattered, and their 

 mobility depends on the action of the board. 



This action may be reasonable or arbitrary; it may be wise, or it 

 may not. The fact is that there is not going to be that perfect 

 mobilization th.it can result only from the action of economic laws 

 on the flow of money, which is the most liquid of commodities. Never- 

 theless, bank reserves will have mobility,' and under the present 

 system, now in operation, they have none. 



It is axiomatic that $50,000,000 of gold in one pile is ten times worth 

 a similar amount in scattered form. This was well illustrated in 1907, 

 when England out of the meagre gold hoard of $150,000,000 saved us 

 by sending us what we needed, when we had ten times as much gold 

 as England had. But over ours we had no control. England con- 

 trolled its by a discount rate. 



Under the new system this country will have a discount rate fixed 

 for each district by the district reserve bank. It will not be the 

 rate which all banks will charge; it will be the rate which all banks 

 must pay if they desire to take advantage of the opportunity to 

 rediscount their holdings. 



The Bill Market 



What is known as the bill market is going to be a great factor in 

 making the new system successful. There is nothing of the kind in 

 the United States now. Commercial paper, the promissory notes of 

 business houses, and the other securities of the commercial world, as 

 distinguished from the investment world, are not live assets under 

 the present system. Under the new one they will, be, because they 

 will be subject to rediscount. 



The undertaking to establish twelve bill markets seems certainly 

 to fail, and then one of two things will happen ; either economic 

 rules will assert themselves and bv common consent, and for the 



common convenience ;ind advantage, one bill market will be established, 

 or the law will be amended. 



Interest Rates 



Some have supposed that the new system will make low interest. 

 The system is not going to control interest rates. That is beyond the 

 power of the Federal Reserve Board. Unless the same economic law 

 fails to operate in this country, we will find that the rediscount rate 

 at the Reserve Bank will always be a little higher than the private 

 rate. 



The benefits which it is believed will result from the operation of 

 the law may be summed up as follows: 



The American people will enjoy immunity from extensive financial panics 

 and serious bank tallures, limiting business suffering to those who have 

 earned it. 



Our business men in ;ill sections of the country will be free from habitu- 

 ally recurring ordinary stringencies in the money market, such as have 

 usually occurred during crop moving. 



More money for legitimate business, and less for speculation, will result 

 by the provisions of the new act, with reference to enabling l)anks to 

 mobilize reserves. 



It will vastly Improve our facilities for international exchange and 

 greatly help us to increase and make more profitable foreign commerce. 



Jack Fruit Tree 



The jack fruit tree (Artocarpus integrifolia) is botanically a mem- 

 ber of the mulberry family (Moraceae), and is related to our common 

 osage orange or bodark {Toxylon pomiferum) . The tree is a native 

 of the East Indies but is of interest to American lumber merchants 

 and wood users, because it was introduced into tropical America as 

 early as 1793 by King George III and has now been thoroughly 

 naturalized. It was first brought here on account of its fruit, which 

 is highly esteemed. The islands of the lesser Antilles and the shores 

 of Central and South America bordering on the Caribbean sea seem 

 to afford congenial localities, but it is in Brazil that its highest de- 

 velopment in the New World is attained. The tree grows sparingly 

 in southern Florida, where the fruit does not ripen successfully. 



The tree attains a height of from sixty to eighty feet, according 

 to soil and climate, having a diameter ranging from one to three 

 feet. The trunk is usually straight, often rising clear from the 

 ground for twenty or thirty feet before it divides into numerous 

 horizontal branches. It is sometimes used in coffee and cocoa planta- 

 tions for shade, and is incidentally gaining importance as a timber 

 producing tree. Under the most favorable situations it attains a 

 height of from eighty to one hundred feet and yields an excellent and 

 valuable timber, yellow when first cut, but afterward changing to 

 various shades of brown, a dull red or mahogany color. When made 

 into furniture and well kept, it attains a polish little inferior to ma- 

 hogany in color and appearance. In India where this tree grows very 

 abundantly the wood is used for house and boat building, and is said 

 to last from twenty-five to seventy-five years. It is used also for 

 musical instruments and ornamental work. The English people in 

 India know it as jack tree, and the wood is imported into England 

 for cabinet making, parquetry work, and likewise for the backs of 

 brushes. The roots of the older trees furnish a dark-colored wood, 

 admirably adapted for picture frames and carving work of all kinds. 



The wood is imported into the English market under the names of 

 jaokwood, jak-wood, kanthul, and orange-wood, from the Malabar 

 coast and Ceylon in the form of large logs over three feet in 

 diameter. In the south and west of Ceylon it grows very fast and 

 the wood is said to be very beautiful. It is yellowish-gray in color, 

 rather soft and light (about forty pounds per cubic foot), strong, 

 resistant, and elastic. It works easily, is fairly durable and seasons 

 readily. A dye of a brilliant yellow is obtained from the heartwood. 



This is the tree which deserves closer attention in tropical America, 

 because it can be made to become of importance in commerce, not 

 only as a dye, but also as a cabinet timber of high repute. It must 

 be understood, however, that it is only the heartwood of this tree 

 which can be employed for such purposes. The sapwood is soft and 

 useless, which is likewise the case -with the tree which furnishes the 

 beautiful letter wood (Brosimum aublettii) of Guiana, which belongs, 

 according to botanical classification, to the same family as the jack 

 fruit tree. 



