The Washington times., 1914-06-20
NEW LAW WILL HALT
SHIPMENTS OF GOLD

How the new currency law will
check gold exports and strike. by its
operations a balance in the export and
import relations was explained oy
George E. Roberts. Director OF the
Association at Old Point Comfort
Mr.. Roberts. in part. said:
Such is the recognized Importance of
the discount rate as an agency for ron-
trolling the movements of gold that the
Bank of England frequently enters the
competing with the public, in order to
raise the outside rate to the level of
the bank rate.
There is seldom afforded a more
striking comparison Of the. efficiency, Of
two systems than was given at that
time The Treasury Of the United
States held over 500. 900 OF gold, but
IL was held simply as a reserve against
currency in circulation. and was com
pletely effectual for that purpose. No
body questioned the character OF -ur
money in that panic. But the Bank OF
England held less than S2p.Og." OF
gold as a reserve, not only for the sur
rency. but for practically all ihe nan"
deposits and commercial credits of the
United Kingdom. And in the nlted
States from the Atlantic 20 the Pacinc;
cash payments were suspended. ana
London was shipping gold TO New York
Carrying Foreign Bills.
Another method by which central
banking institution may protect its gold
reserve is by carrying ordinarily colt
siderable amount Of foreign bills Wne:l
the exchanges turn unfavoraole. u can
allow these bills to run on. thus re-
pIenishing its foreign balances.
The new system, by creating re-
liz hIe I!scount market in tbs country
is likely n bring our rates on cohnler-
ciaI naocr so nearly to the Level OF the
foreicn market that tho notes OF hrst-
class American -rUs may ma an out-
Ic. on the other side. That is TO say
nsncr ., TIE class which c..n Re readily
marketed through the reserve system
NAV ~ times be an attractive purchase
10 bankers on the other SIDE II wiz
h1ve the efect OF bringing rates nearer
toyethcT The greater the lntermlngllnS
of irynstrn ents, the more completely the
in.aTr,tinnaI money market will he
merged and the smaller the transfers
oc gold will be.
Gold Certificate.
When sold is wanted for bank re-
so-ycs il is not likely that anything
else Will take its place hut when It's
transfer from one country TO another is
simply in settlement Of balances. an IN
tc~nat:onaI bill cf exchange Is an IN
terest- Gearing form OF =o!d cerlln ave
that answers t., purp"'" for a short
neriod and = hich-class bona answers
The purpose OF a long nerIod.
In the past the United states mas
been without any effective agency for
controlling its own credit situation OF
de aIins with the foreign exchanges.
"Our banking system Is to De or
e.,izad and have 2 responsible head.
There is TO be a Centralized control iS Ct
the discount rate. There IS 10 oe IN
teITgent supervision over the credit STU
alton. -
The weakness of Our system IN the
past has been that the reserves az one
sci oF banks were being actHeiy en-
ployed by another set Of banks. snS snSS
nc avaiisble reserves at ~. So tn:
whole theory of this act is that par!
OF our banking reserves shall De SeI
spart, bearing no interest. in responsible
custody. where. with certain addltloi.ai
powers Of note issue. they Will serve az
q geneuIne reserve of credit and cur
reno for the protection ~ the entire
banking situation