The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-02-17
BOARD TO
PROTECT U. S. GOLD
Plans Agencies in Europe to
Buy Exchange Bills
After War.
81. 200. OOO. 900 NOW HERE

w,sHIN1ToN. Feb. 1s.-As a measure
OF preparedness for the protection Of the
abnormal gold supply in the United
| States at the end OF the war the Federal
Reserve Board Is investigating the prac-
ticability Of opening agencies OF Federal
reserve banks in Europe. The investiga-
ton il being made by Gov. strong OF the
Federal reserve bank Of New York. who
is now In England.
GOV. Strong's mission IS the first step
In the unfolding OF the Federal Reserve
Boards policy OF preparing the new cur
r.uCy - stem to meet the stress to which
IL vii he subjected when the nona
lousy favorable conditions created by
the war are changed.
The reserve bank agencies. according
to tentative plans under consideration.
would he opened pr.,na riiy for purchas-
ing p Line OF foreign exchange bills at
the end OF the war. In this way reserve
banks would he In a position to protect
the American gold supply from any sud
der or undesirable drain which might
be threatened by trade tendencies
strong's Real Mission.
1t is a policy OF the Reserve Board TO
take measures Of this sort 10 enable the
new banking system TO influence the rate
of foreign exonange as n means Of pro-
tecting the new nancia structure. The
purpose Of tn. board In calling ON Mr..
strong TO max. the present investigation.
however. relates to the particular object
OF protecting the gold supply rather than
the general policy OF establishing a
strong Influence on eXchs nge rates.
Thu tremendous export trade OF the
United States since the war began has
resulted in the accumulation OF an un-
precedented volume Of gold in this coun-
try. The American gold supply now ex-
ceeds 100000 goo. "A sum greater than
ever held by any two nations In the his
tory of the world
Financial authorities fear that with
the reestabl!shment Of peace and the in
!tiation OF "A fight on the part OF the
belliEerent nations for the reestablish-
ment OF their Industrial independence a
determined effort will be made to reclaim
part of the gold which they ave been
forced to send to the United states. II
is realized that the financial leaders OF
these nations may see NJ soon after peace
Is declared to demand gold payments
even AT a sacrifice OF profit In order to
secure n return OF the medium of ca
change sufficient to the financial needs
Of the respective countries.
To wait for Peace.
The board feel. that the best Insurance
against a sudden drain would be the
purchase OF a volume Of foreign bills by
agencies of the reserve banks. This
would nab American bankers 10 pay
the debts Of American importers with
Out drawing IN the gold supply. The
board. however. does not contemplate
the establishment of the high agencies
until peace is restored. inasmuch as Il
IL felt no threat against the gold supply
can arise 50 long as the war lasts.
Gov. strong has been abroad for two
weeks and probably will not return for
several weeks more, No preliminary
report has heen received from him thus
far.
IL has been reported that another OBJ
ject of Mr.. Strongs mission 10 to discuss
exchange conditions with the British
bankers. especially in relation to their
holdings OF American securities.
II was pointed out to-day that the
liner Adristic. when she locked last
Saturday. had aboard about $40. OO0. 900
in American securities. Financial au-
thorities had assumed that part OF these
securities would be sold In the market
and part used as collateral gains credit
advances for the Allies, There has been
q STEADY lnnuh OF american securities
from abroad since the war started. and
Il il estimated that more than $1,000
600, 900 worth has been absorbed in
the United States.
To Protect American Market.
Saturdays shipment was the first that
had gone since the British Government
undertook to gather in British owned
American securities.
Some bankers have anticipated that
a continuous now Of these securities, as
a result of an organized effort on the
part Of the British Government. might
have an unsettling effect, and it has been
exported that Gov. strong would dis
cuss measures TO avoid subjecting the
American market to a too heavy demand
for the absorption of these securities.
, But II was stated officially to-day that
the Federal Reserve Board has nothing
l., do with this aspect OF Mr.. Strong's
trip,
MOpEENTHAN tn GET 0VATY0N