The Denison review. [volume] (Denison, Iowa) 1867-current, 1915-09-15
U. s. DOLLAR TO
Be RULING COIN
Federal Reserve Board Takes Step
to Make 1t the International
Medium of Exchange.
70 FOLLOW EUROPEAN PLAN
The American Bank Facilities Can be
Used for Carrying Import 1nd
Export Transactions

vow WI Sas'y'VS ''UHO's SuO
Export Transactions
Washington, Sept 1O-The time has
come in the opinion of the federal re-
serve board when the American dol
lar should take dominating place in
the financial markets of the world and
when American, or dollar exchange.
should become the medium through
which the millions of exports and i'm
ports of the United States are paid.
To open the field for American ex-
change the board today issued revised
regulations governing the rediscount
of bankers acceptances by federal re-
serve banks, providing among other
things that under certain conditions
such acceptances may be renewed.
In explanation of the new regulation
the board issued statement tonight
which said
Domination Position Sought
ut has been the aim OF the board to
do everything in it's power to create
for the American acceptance. that is
dollar exchange, dominating posi-
ton in the world market. Present
conditions offer in this respect great
opportunity. In widening somewhat
the facilities of federal reserve banks
in dealing with American bankers ac-
ceptances the board is attempting to
give the member banks a larger 0DDor-
tunity for developing, their sphere of
usefulness in this respect.
THE United States should now do
what Europe has done for many gener-
atoms for the United States. that is
to say that the bank facilities of the
United States should be used for the
carrying of import and export transac-
tons for foreign countries. just as
much as Europe, up to now, carried
by it's acceptance. the import and ex-
port transactions of the United States.
In order to do this with the exchange
market disorganized it was thought
that it would facilitate foreign trans
fers if liberal conditions should be al
lowed for the renewal of such drafts
so as to- enable these foreign countries
to have ample time to procure the
necessary cover against the accept
ancei drawn by them"
No Connection with Foreign Loan
Members of the board said today
that there is no, connection between
the, revision OF the acceptance regula-
tons and the visit of the Anglo-French
commission to the United States to
take up exchange problems with the
American bankers. 1t was said the
visit of the commission never has been
discussed by the board and the state
ment points out that the revision of
I ho ropIiln finnc
Grafton quite two months or long be-
fore it was known here that the com
was coming"
1t was pointed out tonight that the
new acceptance regulations might fl
cilitate the credit loan sought by the
Anglo. French commission The board
has liberalized conditions so that for
eign and American bankers may use
a part Of the resources OF the federal
reserve system in takdng care of pur-
chases made here for expectation. On
the last day the condition of the twelve
reserve banks was published they had
resources in gold in their
vaults of about 5000 100000. If Amer
lean bankers decided to extend credic
by indorsing or accepting drafts on
Europe they probably could rely on
rediscounting these drafts with fed
eral reserve banks to the value of
many millions.
. No regulation has been made by
the board fixing maximum sum or
up to which reserve banks
may invest in this kind Of paper and
the only declaration of policy in this
respect has been to the effect that
the banks should consider not only
local demands but also requirements
in other districts and that they
should watch carefully the aggregate
of acceptance held from time
to time.
Could Double Working Value.
If the American bankers decided to
extend credit in this W he $780,
300 900 resources of thej we banks
could be more than doubled in work
ing value if the banks or firms which
rcdiscount the acceptances elected to
lake federal reserve notes instead of
book credits. The reserve act requires
only a 40 per cent gold reserve against
federal reserve notes issued. so that
in reality federal reserve notes amount
ing to more than $500 1000, 900 could be
issued against existing federal reserve
bank gold resources. The New York
federal reserve bank alone one week
ago today had gold resources of more
than S11S,0O0,0OO.
1T isn't necessary for our country