The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-02-16
Dollar Exchange.

DOtiut EAVttnttkVs
Altogether the most important rul-
ing the Federal Reserve Board has
yet made is contained in the regula.
lions tentatively framed to permit the
reserve banks to begin dealings In
bills Of exchange payable in dollars
In the United States and based on
the importation or expectation OF
goods. The regulations are tentative,
but only In the sense that they are
designed to provide for the beginnings
OF a great new department of the
money market in this country. As
experience tests the workings OF the
reorganized banking system the Fed
eral Reserve Board proposes to ex-
pand the functions permitted TO the
reserve banks under Its rules.
There Is every reason to believe
that time. and no long time either,
will demonstrate the importance and
success Of this new departure. In our
banking reform one Of the prime oh
jects was to facilitate the establish
ment OF n real bill market, and cir
cumstances have made the provisions
OF the Federal Reserve act In this
regard sincularly propltious.
The European war has conferred
on American business and finance a
tremendous opportunity and n large
responsibility. In less than six months
from the outbreak Of the war 1t was
manifested that New York was In the
way OF becoming the world money
market to which all countries must
turn, for a considerable interval at
leas ST. for the financial accommodation
furnished in the past by London.
Paris and Berlin.
The foreign trade which we have
been doing and the foreign banking
operations in which we are branch
ing out have testified that New York
was becoming the worlds commercial
clearing house, for the time being
anyway. II has been altogether de
sirahle that our bankers and mer-
chants should he equipped with the
facilities for making American re-
sources Of wealth available for tn.
worlds uses.
This precisely is what should he
accomplished by the official sanction
given to the Federal Reserve banks To-
engage in the ~reliscount Of dollar ex-
change bills and IN open market deal
lngs in such bills. \ powerful i'm
petus would seem by this action TO
he generated for the creation of 1
broad discount market. and our com
merce and finance should be enabled
to expand the scope of their opera.
/ tons with other countries at a rate
and on a scale which will be aston.
iSEinG.
Demonstrated success in making 4
market for foreign acccptauccS, which
10y the way will furnish the hest Of
all possible projections for bank
reserves of gold, should prcpar" tho
way FOR permission To member banks
IN the Federal Reserve system "a
accept domestic bills. Nevertheless
this is something which Is not now
obviously needed. The present super
abundant lending power of the do
nestle money market assures ample
satisfaction of all prospective require
ments without reinforcement.
II Is On the foreign side that Amer
lean finance needs assistance to mako
n full use of the opportunity which
the var provides. II Is such assist,
ance that the Federal Reserve banks
can render IN their purchase Of dollar
acceptances, and the help that they
will thus afford should raise dollag
exchange 10 a place in the worlds
esteem rivall'nG that which has been
held ny the sterling bill on London.