The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-08-14
Resumption Of Fairly Active
Dealings in Foreign Ex-
change the Feature.
BANK CHANGES DEBATED
Practical Solution of Pressing
Financial Problem Is APP
parently Being Made.

for releasing gold from national bank re-
serve requirements in order to assist In
discharging American Indebtedness
abroad there were developments In the
money market which suggested that the
need for employing such oxped!ents might
not be immed ite'y urgent even II they
could he justified.
, There is entire accord on IN. point de-
veloped by Mr.. Schlr ia his address at
Yesterdays Chamber OF Commerce meet
ing that American credit must be main
tanned by the payment OF American debts.
and the address was Il satisfactory eN-
precision OF the acute sense OF the rcspon-
siblity which the whole banking COM
munity has felt Ia this respect. Differ
euces of opinion have been only In regard
20 the prospects FOR paying our foreign
debts through resumption ~ the ordi-
nary credit processes Of international
finance and TO what extent gold would
have to be transferred in the settlement
and the amount Of gold which the coun.
try could afford TO devote to this purpose.
The IDEAS which Mr. schiff and other
| speakers e1pounded at mo Chamber OF
Commerce meeting relative to tho main
problem Of the moment. the provision OF
shipping and financial facilities for a
restoration OF international activities an
showed how thoroughly no situation has
been appreciated. At the same time an
optimistic footnote was supplied by some
OF the Indications OF the day that further
progress was being made toward solu-
ton OF the problem. espe, ally on the
| financial side. which might obvlate the
necessity OF recourse TO more doubtful OK
periments than have already been tried
Toward the end OF tho day Il appeared
that the local banking consensus. inspired
somewhat by the encouraging signs Of tho
International money market. but based
largely on sound financial traditions. IA
yored reference o, tho banking uues-
tions which have been raised this week
to the Federal Reserve Board. which ha.
now organized. There was no general
favor for the scheme OF counting national
bank notes as part Of the reserves OF ma
tional banks I'm order 10 release gold for
transfer TO Canada, where Il could be
instantly credited to the Bank OF Eng
land and made available for the liquids-
| ton OF bills in the London discount
market.
The trend OF banking rhought seemed
TO approve the suggestion that official
sanction should he given for liberal use
/ OF bank reserves iu this time OF eIuer-
Ccncy. This would be in keeping W tn
/ the besr banking prccedonts, "a forceful
I illustration Of which In afforded By tho
way IN which the Bank OF England has
I depleted It's reserves IN the last fortnight
in order 10 provide mo great increase OF
| credit accommodation demanded by the
| European war crisis. OF course the Fed
oral Reserve Board would now have
power to suspend the reserve require
mcnts OF national banks only by con
struct!on of the Federal reserve act, but
in various ways IL might Indicate an att e
! tude which would enable the banks 10
meet exigencies by anticipating the formal
action OF the board.
/ Ii might be pointed out moreover. that
there was far from a general Wall Street
assent 10 the contention that any large
amount ~ gold would be needed to facil-
/ tate a resumption 81 fore gn exchange
operations which would allow the bulk
| of our debit balances abroad TO be
settled by transfers OF credits after tho
| normal fashion There was also a sturdy
body OF opr'on that Il would not be
wise 10 let sn extraordinary amount OF
gold go. assuming that our fore rn cred
tors press for gold payments.
! In any case. II was apparently inferen-
/ tisl. from some Of the days occurrences,
that matters were moving in the direction
or pTdCtlCal solution or al the ann
| cultIes under consideration Nor was Il
| obvious from the things referred to that
the interpretation placed In some ciro 81
l on the programmes OF British finance. as
they have been outlined IN the last few
| DAYS was warranted. They had been
| interpreted 10 mean a disposition TO exact
payment in gold OF our pending ohliga-
lions abroad. whereas all that happened
| Yesterday went further to indicate that
British finance had been engaged IN an
| endeavor 20 bring about n resumption OF
the customary workings OF the intcrna-
tional money market. which eliminates
the use OF much gold.
The all important development OF the
financial day was tho establishment here
OF what might he called nm active market
for foreign exchange, French cables
continued In fair supply around $40 az
a result Of the Morgan arrangements with
| Paris but the feature OF the foreign eX-
| change market was tho appearance OF "A
very considerable supply OF sterling bills,
both cables and checks Cables were
dealt In down 70 and below IS. while
checks sold as low az s495, and II was
ps,-ible to buy remittance IN very sub
| stantial amounts.
Arrangements were made to transfer
10 Carada the Guaranty Trust Company :
s. OOO coo Of gold recently returned on
the Kronpr,nzesrn Cecllle, and othor Ca
madam transfers may De eNpttltN, lot u
was Canadian banks which started the
loosening of the foreign exchange mar
ket Tho Bank OF Englands provision to
court gold at Ottawa as part of Ito re-
serve through cable transfers effected n,
about $50 permitted the Canadian ba nks
to offer bills here at good profit against
earmarked reserves which they had main
tanned IN t,ta city. There was also a
fresh supply OF grain bills which sug-
gcsted that tho demand OF exporters FOR
payment here had been met BY the res
toraton Of foreign exchange dealings.
These dealings We're principally the re-
suit OF the resumption az the London dis
count market. fhe Bank OF England re-
ported a gain Of S25, 100000 in IT'S bullion
holdings. but it's ratio Of reserve rose 10
only a little nbove ~ per cent, because
OF a large expansion OF liabilities. The
bank, however, was reported to he doing
an immense dlscountlng business and the
open market quoted 81 to 5la per cent.
for bills OF al maturtie'.
Al this was the outcome ~ the var'-
Gus steps which had been taken by the
bank In cooperation with the Government
the last step being tho Government.
guarantee OF the Bank OF England against
loss on the discount OF foreign or domcs-
tic BINS accepted before August T. whom
tho British moratorium went into effect
How much OF difference all these de
velopments made in the foreign situation
was denoted by the talk ~ an early
reopenlnK OF the London stock Exchange