The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1917-01-06

1 No little significance is attached ia
the actlon of the Federal Reserve
Board, announced at the beginning
or the present business week. where
by the Federal Reserve Bank of the
Second, or New York, District is au-
thorized to constitute the Bank of
England it's agent and CORRESPONDENT
In Great Britain 1t is Furthermore
understood that the federal reserve
banks of other districts may if they
SO desire establish similar relation
ships with the Bank of England Tn.
deed, there is some disposition TO
believe that the matter may have
wider application, and that the Bank
VI france. or even German Reichs-
oank, II such an arrangement is prac-
tlcable, may be likewise constituted
agents of the reserve banks of this
country. The step now taken in re-
gard to the Bank Of England is COW
cred by section IA of the law estab-
lishing the federal reserve banking
system, which empowers federal re-
serve banks, with the consent of the
Federal Reserve Board. to open ac-
counts in foreign countries. appoint
correspondents and establish agen-
cies therein for the purpose of buy
Ing. selling and collecting bills of
exchange arising out of commercial
transportation. In granting author
ity under the above section the board
has thus authorized the New York
Federal Reserve Bank to maintain |
accounts either with or for the Bank !
OF England so that operations of an
international nature, both in Great
Britain and the United States, are
rendered possible. |
In some quarters this development
has been regarded as constituting
amends on the part of the Federal
Reserve Board for it's recent warning
against investment by the national
banks Of the United States in the
treasury bills Of England and France,
which action, it will be recalled, caus-
ed the abandonment Of the plan to
place short term obligations Of the
above description with banks In this
country. This. however, Is appar-
emily unfounded. 1t ia understood
that the Reserve Board has had the
matter under consideration for some
time, and that the underlying motive
Is the widening of the field in which
the federal reserve banks at New
York and other centers Of the coun-
try may operate i'm connection with
the country's foreign commerce. The
bills OF exchange which the agent
bank may buy on behalf Of the New
YORK. Reserve Bank must be those
~ 1NrhEible for purchase or redis-
count under the regulations establish
ed by the board; that is they are to
be those created or accepted in con-
nection with purely commercial bus
mess, instruments originating in con-
nectiOn with dealings or investments
| in bonds or stocks, etc., being strier-
ly barred. Intimation is given by the
board that 1t may from time to time
issue further regulations to meet the
conditions which might arise in con-
nection with the large volume Of
exchange business possible of devei-
opment under the new arrangement.
Appreciation is expressed on all
sides of the part which the plan is
capable of playing in connection with
the foreign exchanges of the coun-
try In some quarters it is held
that it will take off the American
market a considerable amount Of
bills against commercial exports from
the United States which are now or
dinarily sold in the New York ,nar-
ket and which constitute weight
upon the foreign exchange situation.
1t Is also argued that when it is put
in operation it will aid materially in
lessening and regulating the heavy
shipments of gold to this country
which England and her allies have
been obliged to make. At the same
time. it is realized that the amount
of such business which is possible Is
limited by the resources Of the New
York Federal Reserve Bank. and that
to render the arrangement fully ef-
fective the reserve banks Of the 9TH
er districts would have to participate.
Moreover, there are practical ques-
tions to be solved in relation to the
amount of eligible bills which will be
available for purchase in the London