New-York tribune., 1907-11-29

your transactions with US remit money in pref
erehce to other things" These means have been
employed in the existing emergency and nave
been supplemented by unwonted exertlons on
the part Of the governor and directors OF the
bank to increase imports OF gold and to rein
force the reserves. There is no evidence that
high bank rate has lost its efficiency In attract
ing gold but there is cumulative proof that
when the reserves are small IN comparison with
the stocks Of foreign treasures and banks the
processes of protecting them against depie-
ton are more artificial and coercive and the dis
turbing effects on international exchange ana
home Industries are immeasurably increased.
While supplies Of bullion have been obtained
for making up the shrinkage caused by exports
to America the Bank Of England has well nigh
exhausted its resources under the per cent
rate. It has secured much assistance from
Paris and Berlin as is available. and has even
negotiated with Russia an arrangement FOR IN
creasing its gold reserves. Possibly some au-
ditionaI help can come from India and EGYPT
but not much bullion be squeezed out OF
the Continental countries which are bent upon
guarding their own reserves so laboriously ac-
c,,nulated The disturbance OF international
credit relations is already so serious that an
advance Of the bank rate 70 > or D per cent
will cause something like CONSERVATION, espe-
cially to the masters Of British industries who
need to have large enterprises and operations
economically financed yet there will be hardly
any alternative IL the outflow Of gold TO Amer
lea continues. Happily optimism IS increasing
this week in consequence Of the RELIEF measures
adonted ly tho President and the Secretary Of
the Treasury, ard the speedy cessation OF the
gold drain Is now confidently anticipated. Yet
tbe crisis has lasted long enough to convince
many conservative fnanciers that the Bank or
England ordinarily carries too small reserve
FOR the present requirements Of commerce ana
international exchange. The tribute eHacteu
from all industries IN grave emergencies TOT tHe
sake Of keeping meagre reserves or bu4lIoh ui-
Unmarried Is heavier than IL would be X there
were larger and moro elastic currency III tho
kingdom with more gold behind H.
Tbts subject is not new one since IT has been
a stock controversy from Mr.. Bagehots ume'
and one Chancellor of the Exchequer after an
other has been drawn into the discussion
considerable proportion Of the banknote circu-
Ia+ion has been based upon consols, ana 1t mas
often been suggested that gold should DC SUD"
stituted for It by government purchase MlillS-
ters have too many legislative schemes TO ildlCe
10 undertake a burden Of this sort, and there Is
also a strong prejudice against the association
Of the Treasur officials with the management
Of the bank The issue department or the Dahk
operates already as O. branch OF the state SER
vice in the reEuL2LlOn OI GuI4S4ACS' bU' NO
Treasury officials have responsibility and the
hank directors no discretion in the adminlstra-
tion Of a self-actng law. The issue OF one
nound notes has also been urged as a popular
expedient for bringing more paper money into
use and increasing the stock Of gold reserved
for its conversion. Mr.. Bagehots own remedy
was a readjustment OF the relations between
the ioint stock banks and the Bank OF Eng
land bv which the reserves OF gold actually II
the kingdom but never in plain sight might
he rnassed through cooperation IN grave eIner-
pencies when the rate OF interest had to be put
uu to check imports. This will probably be the
line on which reforms OF the banking system
arc ultimately adopted. The disturbance caused
bv the present monetary crisis may iEpart
fresh impulse to the movement What used to
he described as the bankers bank" because In
tbe last resort it IS the keeper OF the cash re-
serves of all institutions i'll the country, has
become in the most comprehensive sense the
custodian Of the credit of ali nations and the
regulator of international exchanges. 1t needs
either a larger reserve OF bullion in the issue
denartnoent or facilities for massing In an emer-
eency the gold resources OF the kingdom.
I. y. +.