New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-12-18
Peru Proposes to
Turn Credits Here
Into Gold Reserve
Plan Approved by Reserve
Board Would Help Ex.
change Situation

Es.abli shment ~ large gold reset..
fund with the Federal Reserve Ask
Of New York fer The account Of u,
government Of Peru Is provided for u
n plan row under consideration By l.s
South American Republic FOR The ps,.
nose Of improving monetary conditIen
in that country and readjustiag ,hs
abnormal exchange situation now es-
ist-g between Peru and the unikd
states. l. is understood that the plan
has the approval Of the Federal Re-
se-se Board 40 Washington and that
Il +, proves successful other Sosit
American republics, notably Argen,in.
and Brazil, may make similar srrsngs-
ments. For some time past the FED
eral Reserve Board has been endeases-
ING 20 arrange a method Whereby psJ.
nerts could be made 10 South Amerits
without the shipment Of gold.
The legislation under contemplaton
in Peru provides for the issue Of goG
certificates 70 the amount Of S2O,ese-
600. 70 circulate freely with metallic
currency. and has Tor its purpose ths
provision Of an ample circulating M.
dium of sound character and the rsgu.
lation Of exchange, which is being a.
fected by the restrictions placed upeu
the movements Of gold By the belly
erent countries.
Certificates Against Reserves
The aspect in the proposed chang. II
the Peruvian monetary system, vtiet
is interesting bankers here. is the ar
rangement whereby an important part
Of the gold reserve against which the
new certificates will be issued in PEN
will be in the form OF a deposit in the
Federal Reserve Bank OF New Yort
IL the plan / g adopted this deposit will
be built up through payments effected
from time 10 time IN the settlement Of
trade balances in favor OF Peru. Ger
.ifcates Of deposit thus made By CON
mercial firms will be received By ths
Treasury Department Of the Peruvian
government in exchange for gold GER
titicates. and in this manner the aetrsl
transfer Of gold from the United states
10 Peru will be avoided. In Other
words. Peruvian exporters who have
sold goods in the United States will be
paid i'm Peruvian gold certificates Is
sued against gold on deposit TO tkt
credit Of the Peruvian government VIZ
the Federal Reserve Bank Of New fofh
For the payment Of foreign obligatens
Peruvian merchants viii be able 10 CD
tain from the Treasury Of Peru eheeks
against the deposit in the Federal Re
serve Bank Of New York in cNehang'
Tor gold certificates.
Commercial Activities Hampered
4 report made 10 the Peruvian Ma
tional Legislature by the PeruyiaH
Minister Of Finance says:
Restrictions upon the expectation o.
gold imposed previously in Europe snc
now in the United States OF America
have resulted IN a complete Interrupt
ton In the current Of this metal low
ing into Peru, a current that had rs
inception at the time we established
the gold standard, and has been main
tanned practically without intermission
ever since. Though suspended for .
brief period during 1914. this lmpcr'
tation was reestablished before ths
end of 1915 and was Of unusual pro
portions during 1916. During the ilrsi
ten months Of 1917 the imports OF gold
into Peru amounted 20 f2.32Sszl
whereas the reports for 1916 amounted
TO only s94s.s66. Not only will nc
restrictions placed on gold exports D.
the countries Of Europe and Norm
America interfere with the furthei
accumulation Of these gold reserves
but 1t will afTec. the exchange rates
prevailing between Peru and th's'
countries in manner sueh as 70 uls-
courage the transfer 70 Peru OF con
siderable capital resulting legitlmaten
from our favorable trade conditions
and much needed for the iurtner DC.
..N ia