The Richmond Virginian. (Richmond, Va.) 1910-1920, 1914-02-16
MEANING Or COLO
EXPORTS TO PARIS
WALL STREET SPECULATES ON
EFFECTS OF NEW CURREN-
CY SYSTEM.

NEW YORK. Feb. 15--.On Wednes-
day s2.000,000 more gold was shipped
to Paris, making s10,000,000 sent
since the year began. News of the
withdrawal was received complacently
on the markets, whose attitude seem
ed to be that we can spare the gold.
that France needs it. and that relief
out of the Paris situation-the one
troublesome spot in the present A.
nancial horizons of paramount con-
sideration.
The shipments have, however, start
ed some European observers to con-
lectures AS to a possible continuous
flow of gold from the United States
to Europe, when the new banking
and currency bill goes into effect. Mr..
Moreton Frewen, a somewhat erratie
thinker. of the old bimetallist school,
has lately warned us to make up our
minds to lose perhaps $500. 600
or $400. 100000 of gold in the next
two years. Nobody else has made
such fooishIy extravagant predtc-
tions. Sir Felix Schuster, for ex-
ample. simply said OF our new law,
in his recent speech to his bank s
shareholders that sit is too early yet
to say how the general situation as
regards gold will be affected
The question is interesting. though
not because of fear of the export of
gold through currency iniiaton.
which Senator Root predicted That
is abundantly guarded against by the
40 per cent gold reserve required
against outstanding notes. But the
law allows city bank. instead of
the % per cent reserve now required
in cash against its deposits, to keep
only per cent cash reserve on
hand, with the rest of its reserve
(which in future would aggregate IS
per cent?, represented by credits at
a federal reserve bank.
This provision will dispense with
n considerable part of the cash re-
ouirements: for the credits last mem
toned would be obtained by redis-
count Of an individual banks com
mercial paper. Against the deposit
thus created the federal reserve
bank must keep n cash reserve OF at
least 20 per cent Instead OF 20 per
cent. as at present, the total minimum
amount of cash which must be pro-
yided agains a banks deposit la
biiities would therefore be something
like / o per cent.
What would become Of the rest
Of the eash-whether gold or other
lawful money"-which Is al present
held in bank reserves There are
several answers One is. that every
member bank must begin by taking
stock In it's regional district bank. in
the ratio of 10 per cent of the mem :
Der banks capital and surplus. That
would drain off, into the regional bank
reserves, good part of the prese 1t
cash reserves of national banks. When
the issue of notes, under the new law,
is in progress. each regional bank
must keep 40 per cent in gold against
It's outstanding notes, 1t would un-
doubtedly have to draw on the coun-
try's general supply of gold, to pro-
vide for such requirements.
How much gold would be left I'M
employed, after this was done. IS
matter of more or less conjecture.
Surprising very large amount to be
thus left in the hands of individual
banks, in excess Of minimum reserve
requirements against deposits. would
il flow at once TO Europe? Such an
inference would be Just little bold.
II would leave some difficulty about
explaining why the New YORK parks
last June. with surplus Of s4l.0oo,-
900. over required reserves. and with
s3ot, 100000 specie in their vaults.
not only did not send all the unnec-