Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-02-03
MUST CENTER GOLD /
IN RESERVE BANKS
Federal Board Urges Prep
aration for Probable
After-War Drain
USE HUGE FUND AS LEVER

WASHINGTON, Feb. 3.-The need fos &
placing the twelve Federal Reserve Banks
which constitute the active agencies Of tls>
Federal reserve system in a strong posi-
tion TO withstand the probable drains OF
gold upon the United States at the close
of the European war is emphasized in the
annual report Of the Federal Reserve Board
for the year ended December 81, 1916, sub
mitted 70 the House Of Representatives to-
day.
The Board estimates that the country IN
IN strong position, owing to the huge
balance Of trade amounting to 3,0s9,200.000
in its favor, but that care must be taken
to regulate the handling of the precious
metal now held in the United states lest
its use become dsorganized and militate
TO n national disadvantage.
The Board states that 1t has recommend-
ed TO Congress amendments TO the Federai
Reserve act designed TO concentrate IN the
twelve Federal Reserve Banks heavy Stocks
Of cold which can be utilized as lever
TO govern international movements OF inc
worlds monetary standard
Tbess amendments now are under con-
siderationin Congress
RacklnE up its sensational statement OF
last december warning American banks
| not 20 make too liberal investment In for
elgn securities the board says that IL wouid
he better for the United states to SLOW up
| on export trade and TO permit hrther I'M
| portation Of goods than TO attempt to assim-
| ilate more foreign securities thah AmerieAh
banks can safely carry.
WARNS AGAINST OVEREXPANSION I.
| The board. however. takes occasion to
| warn the country not to permit the accre-
| tions of gold to bring about a condition OF
/ cin nf
to the disadvantage of the present credit
structure in the United States.
The board says that it is anxious to have
| the transfer of reserves from the national
| member banks to the Federal Reserve
| banks which under the Federal Reserve
act are to be made in November, 1917, ad-
vanced. so that no time shall be lost in
| strengthening the gold holdings of the
twelve central monetary reservoirs.
ACCEPTANCE BUSINESS LARGER
The boards report says that while the
| business the American banks have trans
| acted in the acceptance field has not been
sensational so far. marked progress may
| be expected during the next year. The
| board details the circumstances leading UP
to the naming of the Bank of England as
a foreign correspondent of the Federal Re-
serve system through the New York bank,
and hints that further foreign expansion
of this character may be looked Tor.
So far earnings are concerned the
twelve Federal Reserve banks have not
been conspicuously successful. according to
the report A total of $2,750,999 net earn.
ings are reported for 1916. Rediscounts for
the year amounted to s39.561 900, Al
though this business is small. the board
takes the position that the reserve banks
| are not intended to be profitable and will
see their greatest rewards only in time Of
financial stress In such periods theil
earnings appreciably will increase.
| During the year the Federal Reserv,
system received 1870 new members, eighty
seven of which were newly organized ma
tional banks and thirtt-five of which wers
converted State banks. Others were ad-
mitted through restoration to solvency "a
| national banks.