The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-08-12
FINANCIAL NEWS
AND COMMENT
Bank Of England Takes Lead in
Solving Foreign Exchange
Problem.
WILL NEED HELP or r. s.
Plan to Establish Gold Reserves
in Canada and South
Africa.
WILL NEED HELP or r. s

Altogether me most important develop
mont which finance had to consider yes
terday, the most important indeed since
the European war became a fact was
the announcement that the Bank OF Eng
land contemplated the accumulation Of
gold reserves In Canada and In South
Africa As the news first came out II
was 10 the effect that Bank OF England
branches were TO be set up at colonial
capitals. subsequently 1t appeared that
nothing Of the kind was contemplated and
that what was proposed was simply
that against gold deposited with the
proper colonial officers and held as re-
serve for the Bank OF England the
bank would issue its notes in London.
II is doubtful n there was anything like
general appreciation In Wall Street OF
the significance OF this announcement or
its hopeful promise for the solution OF
the great money market problem Of
the moment In some quarters where
It first received attention It was looked
upon as indicating q programme to use
the power OF credits held against tho
American business and banking COM
munity to force the United States to
give UP gold in liquidation OF Indebted
moss abroad. n this were what was
meant there could DO no doubt that
American finance would offer resistance
to any attempts to coerce gold exports
II Is realized that gold in modern
times has come 10 be conserved for bank.
ing purposes and in the last an
aIysls only for the settlement OF bal
ances II cannot be employed for
any measures OF forced liquida-
ton Its usefulness consists in the
service 1t can render IN furnishing the
basis OF credit and facilitating credit
operations.
For that reason Il was altogether a wis.
decision reached ten days or so ago nv
the bankers here that an end should be
put 10 the miscellaneous and heteroge-
reous scramble for gold FOR export in tn.
discharge Of debts A different situation
Is presented If there is offered a reason
able plan for the intelligent employment.
OF American gold 70 n fair amount to
help In ending the paralysis of tie Inter.
national money market and enabling for.
elgn exchange transactions 10 he resumed
The indications OF the mc1cre news
about the Rank Of Fnglard's scheme are
mat precisely such a plan IL now Of
fered' London is still the world market
Ter money and for capital. and the Ranl,
~ England has apparently taken the lead
10 be expected OF il in solving -ha nroh-
lens with Which bankers here have bee,
struggling for a'most two weeks NI,hru.
coming 10 any agreement. n the inter
national money market. which has lte
centre ~ London, can be freed Of A.,
present blockade the way viii b. paved
Tor financing the international rnovcrn nj
OF goods and commodities, leaving al ,1e
most pressing problem only the provision
or shipping facilities. With these prn-
Nided Tor the way will then he omen
Tor resumption ~ activities In other
directions. Perhaps tho restoration Of
me international exchanges will alone 70
f"r toward bringing nearer than la.
appeared in the last day Or 50 tho datc
TOR the reopening Of the varlouslv gus-
bonded markets, including the security
markets va ~
MI risks ~ trarsoceanir Simmer, n.
gold can he eliminated nv the RAM ~,
england scheme The output or the
lransvaal mines can be deposited 10 I'M.
p"hN account in South Africa. thus
transferring temporarily tho London golr
mdrhet II the neighhorhood OF the sources
or production. Obviously no risk OF loss
VIII attach 10 American gold ssni acros .
Tie Canadian border. nor would tho scn.
timental effect be the same as A shin.
m"nt OF such gold across the Atlantic
especially n II were perceived as seems
HheIy 70 ne the case. that the release or
some or our gold for the Rank Of England.
use IN that fashion would end the dead
lock In the international money market
Yesterday afternoon Il began 10 no seen
~ banking circles that probably the Rant
or England had pointed the wav ont az
Inc vast tanglc OF dinicultios In which
finance has been involved and that Rri,
iSh hnance had been making good use
OF the opportunity afforded by the foreign
nordtoriums To devise NorksbI, ,t,p
Tor the rDNiNnI pf Int.
II cannot be doubted that tho R1nl, NJ
England has designed this project in ruIl
confidence that 1t will promptly rccstab-
hsh the London bill market, and In tina,
event there cannot he any question that
loTelGn exchange would almost forthwith
become available here 10 my reasonably
necessary amount at a reasonable price.
once 1t is accepted as certainty .ha,
the plan is workable, az Il seems 70 no
our bankers cannot hesitate 10 SUNNY
exchange against the credits certain Ia
accrue later through trade cXport. or a,
q result of the additional credits obtaina
Die at London, and II - altogether i'm.
probable that any very large amount n,
gold would have to he sent TO Canada
TO assist In bringing about this very de
tlrahle contamination. The matter wa.
30 now yesterday that no banking con.
sensus could he obtained here and con.
di'ts or prejudice and prepossess'on oh,
scured good deal OF banking Judgment
Fut II would seem very likely that Amer'.
can bankers will not delay long IN co.
operating with the Bank Of England
There Is A sufiic'cncy OF gold here n
spare for the needs Of any Intelligent
programme to terminate the tleup OF in,
tornatonal finance. Refusal by the bank
crs 10 part with II for such a purpose /,
iuconce.vshlc II would he too much alSr
20 the general folly Of gold boarding
Compared with the foregoing develop
mcnts there was nothing IN yesterday,
news Of much consequence. II might b,
noted though that tho wheat market wa,
stronger. although corn was irn on
weather report which was less favorabl,
"a that atanla fh IN n.hrr