The Birmingham age-herald., 1914-01-10
1t Was a Failure

This attempt was not very successful
This importation of gold was the only
one that was made, and it was discOc
cred that the fundamental economic law
which governs the operation of foreign
exchange made it inevitable that New
York should continue to be the chief for
eign exchange market. But that was at
time when the recently repealed national
bank and curenrcy act was in force. The
influence of that act was such as ineyi-
tably to make great concentration of re-
sources, and especially the kind available
for buying and discountng foreign bills
at New York city.
In the past 90 years there have been
many examples of the power and infiu-
ence of New York a market where
the foreign exchange business of the
United States concentrates. 1t was the
utilization of foreign exchange which
passed into the hands of New York bank
ers which made it possible to import in
the last year of the past century approx
imately $l00000,OO0 OF gold from Europe
mass of yellow metal which Influenced
vastly the commercial and industrial ac-
tivity which began at about that time.
Some five years earlier New Yorks mas
terry of foreign exchange was of service
to the federal government; at least Prest-
dent Cleveland made public acknowledge
ment of that service. When Mr.. Morgan
replenished the federal treasury at a time
when IL was in dire eXtreliities with some
So, 100000 of gold he also pledged himself
and his associates to protect that gold
and to prevent it's expectation from the
United States. He promised to break
what President Cleveland had called the
endless chain" His plan, which was
afterward followed out, was to furnish
foreign exchange whenever any demand
came from Europe for American gold.
This exchange represents gold in the
banks of London.
Mr.. Morgan and his associates did pro-
vide exchange to meet all demands of
that kind, with single exception, there
having been only one case in New York
city of banker drawing and exporting
gold. The amount was only Sl.O00000.
This transaction was an expensive one.
But it abundantly fulfilled Mr.. Morgan's
pledge to prevent the expectation of gold,
so that he was able to protect the fed
eral terasury. 1t was with foreign tx
change secured by Mr. Morgan that he
met the payment of S2o.O00,c00 in gold
with which certain ocean going steam
ship companies were purchased for the
International Mercantile Marine company.
In 1907 New York bankers on the day
of the cyclonic outbreak of panic con-
Gitions began, in corporation, to utilize
foreign exchange by means of which i'm
portations of gold Immediately began and
were continued until s1O0,0O00O0 was
brought to the United States. This impor-
tation did much to allay the panic.
Under the New Law
Whether the influence of the operating
machinery of the newly written banking
and currency law will tend to impair New
York's prestige as a foreign exchange CEN
ter is a matter concerning which different
opinions are heard. Presumably had the
new law been upon the statute books at
the time when Chicago attempted to be-
come a great foreign exchange center the
influence and authority contained in that
law would have greatly aided Chicago In
that effort There are some bankers who
are inclined to think that the new law will
tend widely to distribute foreign ex-
change markets in the United States. 1t
will serve to prevent that cooperation and
concentration which under the old law
was not only possible, but were. In fact
inevitable, thereby making New York pre-
eminent the foreign exchange center of
the United States. Should this result fol-
low the enactment of the new law, there
will surely be some. and possibly great.
Impairment of New York city's prestige
as a foreign exchange center. There will
be distribution throughout the country OF
this business This distribution may make
1t impossible at a time of great emergency
SO to concentrate and control foreign ex-
change as to provide upon the instant re-
sources by which the emergency could be
ended. But 1t will be a distribution which
will make full and free play of COM
petition possible.