The Sentinel=record., 1916-12-26
WOULD MAINTAIN AMERICAN
 DOLLAR AS THE STANDARD
Authority Is Granted 10 Establish Ac- counts In England to Facilitate the Operations Both in This Country and Eneland-BanE Of France to Be Included Later.

NdNHlnSioh l)ec. 2J.-I he govern
 ment today took its fi5st step through
 the federal reserve board looking to the establishment of financial con 1 nections abroad. through which it hopes to strengthen the position of the United States as d world banker and to maintain the American dol
 lar as a standard of exchange Under a section of the federal re- serve act the board authorized the ap- pointment 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
 Connections with other foreign gov 1 ernmental institutions, such as the Bank of France, is fOreshadowed, offi- cials say, by today's action. The Bank of England is the first foreign corre- spondent whose appointment has been authorized since the operation of the new financial system in this country.
 In its statement announcing the action the board said.
 "The federal reserve board has au- thorized the federal reserve bank of New York to appoint as one of it's foreign correspondents and agents the Bank Of England, of London, England, under the terms of the fed eral reserve act.
 "Section II of the act permits any federal reserve bank with the con sent of the federal reserve board 10 open and maintain banking accounts in foreign countries, appoint core spondents and establish agencies in such countries wheresoever it may deem best for the purpose of pur- chasing, selling and collecting bills of eXchange@and to buy and sell with or without it's endorsement through such correspondent or agencies, bills of exchange arising out of actual commercial transactions so that a
 broad field of operations is possible under it.
 'In granting the authority to es, tablsh this agency the board has
 authorized the federal reserve bank of New York to maintain accounts
 either for or with the Bank of Eng land so that operations both in Eng land and in the United States arc pos sible.
 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 New York, if they so desire" In addition to being the first step 1 by the government toward going af.- CT foreign business, it is understood
 that authorization of this act is a
 part of general plans for establishing financial connections that will strengthen the United States as
 creditor nation in the commercial competition which probably will re- suit when the war closes and to pro- vide a ready means to offset any ten dency ol the part of the foreign bank CTS to withdraw the huge supply of gold accumulated here during the war The action marks a radical depart ure from the previous financial policy
 of the country inasmuch as it places
 the government of the United States
 and Great Britain for the first time
 in direct continuel financial relation shiq.
 The first effect, it is thought, will be noticeable in transactions which might otherwise involve the exporta- | tion of gold from this country, as ! the connection with the Bank of Eng ! lang will afford channel through which American banks can readily purchase British notes and securities to meet any tendency toward gold
 exportation. It also will tend, off cials believe, to bring about bet ter feeling and Understanding be-
 tween the bankers, of the two coun- tries. Whether operations through the connection will be extensive, off lcials admit. is difficult of forecast