The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1916-12-26
AMERICAN DOLLAR
To BE STANDARD
FIRST STEP TAKEN
BY u. S. YESTERDAY
Bank of England to BeForeign
Correspondent Under the
Federal Reserve System.

WASHINGTON, Dec. 2o-The gov
ernment today took its first formal
step through the federal reserve board
looking TO the establishment OF finan-
cial connections abroad through which
it hopes to strengthen the position OF
the United States as u world banker
and TO maintain the American dollar
as the standard of exchange.
Under a section OF the federal re-
serve act. the board authorized the
appointment Of the Bank OF England
as a foreign correspondent OF the Fed
eral Reserve Bank Of New York and
announced that the eleven other re-
serve banks might participate in the
agency relations.
Relations with other foreign ogvern-
mental institutions such as the Bank
Of France, is foreshadowed. officials
say, by today's action. The Bank OF
England is the first foreign CORE
spondent whose appointment has been
authorized since the operation OF the
new financial system in this country.
In its statement announcing the ac-
ton. the board said:
The Federal Reserve Board has
authorized the federal Reserve Bank
of New York TO appoint as one OF its
Bank of England of London, England,
under the terms Of the Federal Re-.
serve Act.
Action Permitted
Section Il OF the act permits any
Federal Reserve Bank with the con-
sent OF the Federal Reserve. Board to
upon and maintain banking accounts
in foreign countries. appoint cores
pondents and establish agencies IN
such countries wheresoever it may
deem best for the purpose; OF purchas-
ing. selling and collecting bills OF eX-
change and to buy and sell with or
without its endorsement through Such
correspondents or agencies bills or
exchange arising out OF actual com,
: mercial transactions, so that broad
field OF operations is possible under 1t.
In granting the authority TO estao-
lish this agency the board has author
lied the Federal Reserve Bank OF New
York to maintain accounts either tor
or with the Bank of England SO that
operations both in England and in the
United States are possible.
"Other federal reserve banks may
participate in the agency relationship
with the Bank Of England upon the
same terms and conditions that Will
govern the Federal Reserve Bank OF
In addition to being the first step
by the government toward going alter
foreign business il is understood that
authorization Of this appointment is a
part of the general plans for establish
ing connections that will strengthen
the United States as creditor natlon
in the commercial competition which
probably will result when the war
closes, and 10 provide Il ready means
the foreign bankers to withdraw the
huge supply of gold accumulated here
during the war.
A Radical Departure.
The action marks radical depart
ure from the previous financial policy
of the country irasmuch as it places
the government of the United States
and Great Britain. for the first time,
in direct. continual financial relation
ship. .,,
The first effect, it is thought. will
be noticeable in transactions which
might otherwise involve the eXporta-
ton OF gold from this country. as the
connection with the Bank OF England
will afford channel through which
American banks can readily purchase
British notes and securities 10 meet
any tendency toward gold expectation.
1t also will tend. officials believe, to
bring about Il better feeling Of under
standing between the bankers Of the
two countries. Whether operations
through the connection will be extern
sive officials admit is diffi;ul. 20 fore
cast. They might. be on: tremendous
scale.-.i, was said. and the other
hand. might be compar; ely light IN
volume
The effect of the re- -InShip, prob
badly will be studied -drefully before
similar authorizations are made in the
case Of other government controlled