The Richmond Virginian. (Richmond, Va.) 1910-1920, 1914-09-28
GOLD
FOOL IS UNIQUE IN
AMERICAN FINANCE
PaEcEDENT EsTABIIsHrp ~ or
ACT OPPOSITE. or ACT oF RANK
ERs ~ Isea.

The CONSENT. in body. OF the banks
~ New York. Chicago ana st. Louis TO
subscribe from their own reserves their
prc-rata share In "A fund of SioG. e0o, 600
gold. 10 which saiso pro satab banks ut
All other reserve cities are requested
10 subscribe. raises a number of ex
,reinely interesting questions. The
PURPOSE of this so~callcd gold pooF' is
sell known. II is designed to GuafaY-
Ire the meeting Of the couptry's matur-
Ing dues on the International market.
To insure such payment az export OF
gold should be required BY the condi
tioH Of the international account and
the state of the foreign eSchanges) this
large amount of gold is to be collected
from bank reserves, each Institution
contributing In tho ratio % it's own
present gold holdings to the gold i'm
all the reserve city banks The fund.
ahen collected. is to be administered
hy committee of New York bankers
who shall decide when and 10 " hat ex-
'cnt the gold shall he sent abroad.
Establishing Precedent
This Is most unusual operation. Ex-
sept for the recent guarantee Of aN-
change or gold, by New York ctty's
banks. Il, meet tho city government e.
BS2. 0oG. nee maturing foreign oblisa-
stfons, no concerted action, even remote
~ resembling shis,-Aas been witnessed
IN our financial history. The pledRe
nv the banks and the International
bankers. during the national Govern
ments grave financial crisis in 1898, TO
provide Ss5. coo. 600 gold for the treas
ury's redemption fund. and meantime
TO protect the treasury against loss Of
In own gold through presentation of
Government notes. was quite as unusu-
nj an event. But the bankers of 1895
were undertaking 10 stop gold exports
which were in active progress; they
even promised TO get h" II Of the gold
Tor the treasury from abroad
The bankers of 1914 are doing
almost exactly the opposite. They are
engaging to provide the gold for ex-
port, IL il is needed for that purpose.
and they are doing this when actual
gold exports seemed TO have halted,
Naeir action is approved and the
y general cooperation Of the banks Is
unanimously urged by the new federal
7. iseServe board. - just what In th@ sittge
alton which required such action?
Our foreign credit has TO be main
tanned ~ promptly meeting our ma
turing Indebtedness abroad owing to
the adverse movement of our foreign
trade---.n the eight months ending
with August our exports exceeded i'm
ports by only SAL 900 900. as against
an export excess of S35s 500. 600 ac-
cumuiated in the same months Of
fG12--rse foreign exchanges have
beer moving against the United States,
40 that on the basis of the interna-
ttanal trade balance alone we stand
heavily in Europe's debt. This has
made 1t very difficult for the banks
to meet our maturing Indebtedness
abroad In the usual way through the
remittance of exchange on London.
On the other hand the New York
hanks have objected to surrender gold
I for export. contending that they
could not be expected to finance the
burden of paying the foreign debts
uf the whole country in gold In the
effort, therefore. TO apportion the
burden among a large number VI
banks. instead OF making only a few
Institutions shoulder II, this national
fund has been organized.
Tie national banks Of the United
States reported on June 80 last total
I gold holdings OF $s25, 600. If the
entire s1ee, 100000 gold pool contri-
button should be called, therefore the
national banks alone could provide il
BY surrendering less than one-s.xth
u ~ their total gold holdings But the
l trust companies and State banks also
L are to contribute their quota, go that
!. thr average contribution will be re
I latsve,v small-New York Evening
4 Past