New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-04-05
No Change Likely Under
Reserve System, Says
Max May.
SUPREMACY IN MONEY
MARKET ASSURED
President Frew Also Hopeful OF
Good Results for New
York Banks.

in the opinion % Max May. vice-presi-
lent and head Of the foreign exchange
department OF the Guaranty Trust Com
many. the supremacy Of the New York
banks in the handling OF foreign exchange
viii not be materially disturbed by the
establishment OF a Federal Reserve bank
here. with it's specified eliminations. No
matter what the reserve organization
committee has done or the Federal Re-
serve Board may do. Mr.. May thinks
that Il will be impossible 20 change the
channels Of business which have been in
use for years.
The function Of the reserve banks.
said Mr.. May yesterday, rs 10 aid, not
compete. with the banks supported by
private capital. They have the right
under the new currency law 10 deal In
foreign acceptances. but it is not likely
that they will do SO. Even II the local
reserve bank should enter into competi-
lion with the other banks for this class
OF business. do not think it would sue
coed"
The limitation Of the New York reserve
hank TO IT'S own state will not result In a
decline in the financial power OF this city
DESPITE efforts to the contrary. asserted
Mr.. May
They cannot take away the supremacy
Of New York as a money market, no mat
ter what they do he said Particularly
is this true with reference to our deal
ings with foreign nations. Here are made
the quotations for foreign exchange, and
here they will remain. Europe would not
shin colo TO any other city. so the other
cities of the country must come TO us
Mr.. MAY told the Federal Reserve Or
Canization Committee al its hearing In the
Chamber of Commerce last January that
a reserve bank 10 control the money mar
ket must control the movements OF gold.
Interest rates so up after a certain
amount OF gold has been exported, he
said which is the only way any gold
movement can be terminated. There
hane been exceptions, however. when
bankers have advanced the call money
rate by agreement and stoppd exports Of
the yellow metal.
The only way in which the new bank
ing law might help TO develop new ousi-
ness in bankers acceptances, Mr. May
asserted. was in the-event Of the recogni-
ton by foreign bankers of each reserve
aank as a complete system.
Commenting on the limitations of the
New York Federal Reserve District 10 the
state Of New York, Walter f. Frew, presi-
dent Of the Corn Exchange Bank. said
yesterday that it was really a blessing in
disguise.
When New York banks begin 10 think
il over" he added, they will find that the
Organization Committee did them bet
ter turn than il realized. at the time. BY
not including in the New York district the
vide territory hoped for, New York City
stands a better chance of retaining its
supremacy in the banking field.
THE reason is plain. II the New York
district embraces New Jersey and Con
necticut. banks situated there would
utilize their balances at the New York
Federal Reserve Bank for renting to
New York They would therefore not
have TO keep balances with New York
banks. Whereas. being affiliated with
Philadelphia or Boston Reserve banks.
thev will have 10 maintain separate bal
gnces here IN New oYrk 10 make pay
uents. Thus the smaller the New York
district the greater are the chances that
interior bank balances viii be retained in
New York City. Under the present align
nent Of the district all that New York
cgty banks will lose are the balances of
.rsfofe hanks"