Evening star., 1915-09-12

cial center of the world. The war in
Europe has robbed Great Britain of
this distinction. and for the time being
| London yields to the western metrop-
! oils.
The federal reserve act was perhaps
| an excellent thing for the allies and
their financial strength, No thought of
It's provisions resulting in benefit to
foreigners. save through the develop
ment OF American trade. was in the
minds of the lawmakers who framed
and sponsored the act.
Ihe federal reserve act may make for
| too large an expansion of credits, as
some Of it's critics allege but one thing
,, is certain, it has enabled the bankers of
the United States to assist in the
financing of a great war and kept
American factories going to capacity
two functions that would have been
! impossible under the national banking
act.
| 1t is within the proba bilities that one
| central bank might have worked as
well as one central board of control
ana twelve regional ba nks. but the ev-
idence in the case is indicative of the
necessity of some plan to do away with
i the old inelastic currency.
Much of the criticism aimed at the
| measure at Seattle during the past week
was because of the section giving the
right to reserve board to confer trustee
and registrar powers to national banks
"
laws"
That question will probably be set
tied in the courts, the trust COM
panies. jealous of their rights, will
ma kc a test case.
Holding to American Securities.
When the war broke out over year
ago New York expected to h~ deluged
by foreign selling of American securi-
| insisting that as American securities
were the only investments held in the
countries at war that were worth
while the owners would hold to them
to the last. as the most available as
sets for rehabilitation, when that time
should arrive.
Reluctantly Parting.
1t is now easily seen that Europe is
pa rting with our stocks and bonds with
deep regret. The two great allies,
France and Great Britain, have been
buying up our securities for return to
this country, on patriotic appeals to
their owners to exchange for govern
ment notes and bonds, and have been
only partially successful. hence the
necessity for the return of gold.
Enforced selling by European holders,
unable to retain them through ACTON
of fortune, continued Tor some Httle
time. but soon ended.
Commenting on this very matter, the
Wall Street Journal has this to say:
But quantities of our stocks and
bonds, chiefly the latter. remained in
the hands of English banks, insurance
companies, fraternal organizations and
other quasi-public institutions. Such
holders were more or less amenable to
influence, not to say pressure. from OF
fetal sources. 1t is probab bly, such mold
n
this market.
Very likely there are more OF the
same class still to come. In any case,
such holdings cannot be great enough
to cause serious Inconvenience to our
own security markets, even supposlng
that all of them are to be returned to
US. There will remain suostantial
volume of American investments IN the
hands of English, Scotch and French
holders who have so FAR re-
sisted both impulse and influence to put
all their eggs in the European baskets.
Whether these will ever come home is
a question the answer to which is
wrapped up in the duration and the
outcome of the struggle on the contl-
nent.
sound Judgment are correct, the near
! future will see the end of the liqulda-
ton in volume of Americans held
abroad. The comparative strength OF
the bond market recently is taken 10
ton that America has capital to spare
for the relief of distressed Europe in
this manner. Pursuing the same calcu-
lation it follows that the United states
will be put to the business necessity
of taking large British government
loan if it expects to continue to sell
to it's best foreign customers while the
war lasts.
This newspaper adheres to the belief
expressed some weeks ago that the
wisest course for American finance was
to insist that Europe pay us for food
stuffs and war munitions in our own
securities rather than in new war
loans. That is apparently just what
Europe is doing, to the best of its
| ability. The belligerent governments
may shortly find themselves unable to
commander any more of the holdings
of American securities. 1t would not
be at all to our advantage that they
should then resort to payment for our
commodities in gold alone. for we al
ready have an almost embarrassing
and possibly dangerous stock of gold
I T.