The news scimitar. (Memphis, Tenn.) 1907-1926, 1919-02-08
RESERVE BOARDS
REPORT FOR 1918
SHOWS WAR GAINS
Vast Accomplishments Of Or.
ganization During Conflict
May Give Valuable Help for
Future Decisions.

WARRINGTON, Feb. S.--Willingness
to undertake. development of an inter-
national gold exchange fund to tacil-
tate financial transactions between ma
ttons without actual shipment OF .golo
was expressed today by the federal re-
serve board in its report for 1918, This
arrangement would be similar to that
now maintained by the board to settle
balances between banks within the
United States.
future financial development growing
out OF successful domestic war opera
ton Of the federal reserve system. Re-
ferrinE to the settlement Of trade bal
anoes In this country through the fed
eral reserve clearing channels, the re-
port said:
settlement fund has suggested the pos.
sibility of avoiding shipments Of gold
from one country to another In settle-
ment of balances arising out OF ordl-
nary commercial transactions, ana the
board Is ready, II authorized to DO so,
to undertake negotiations looking to
the establishment Of an international
gold exchange fund. or TO assist In any
way in its power in negotiations. which
may be begun by a government depart
ment looking to that end The board
believes that definite plans can not per-
haps be worked out until a stable peace
has been assured.
Discloses Work.
The report disclosed for the first time
the extensive operations of the federal
reserve boards system of regulating
foreign exchange transactions for the
past year to prevent dealings on enemy
account Total purchases and sales Of
demand and cable exchanges between
dealers in the United States from Feb
20, 1918, when the regulation became
effective, t. Dec 81 were S. 15S, OoO, ,OoG
were "fcr for exchange on Great Britain.
The report told in cryptic financial
terms how the federal reserve system
functioned in cooperation with the
treasury in tremendous war tasks OF
raising Liberty loans, floating certifi-
counting billions Of commercial paper,
assisting in the rationing OF capital and
providing free channel for flow Of
credits to all part4 of the country,
where they were most needed.
"Within few months the country's
war financing will have been com,
pleted," said the report, and the board
can then deal with the problems Incl
dent to bringing out credit structure
and our banking operations back to a
| normal basis" .
"The ability of the country to absorb
| investments has proved to be far great
er than had been anticipated" contin-
| ned the report, land our credit struc.
| ture, although expanded, is mistaken
| We have no currency problems, and
1 conditions are not comparable with
those which existed at the close OF ths
| Civil war. True, the purchasing power
OF money has declined. but this is due
| to the urgent and abnormal demand fol
goods and services and the accompany
| ing expansion Of credit and currency
Credit Extended.
The board predicted that banking
| credits now concentrated in this coun'
try soon would be extended through tn,
world with the development OF for
eign trade.
| tho federal reserve system in connection
with war financing may be gained from
| the report that since the war begal
$31, ,452, 600, 900 of Liberty bonds and Ger
tificates of indebtedness have been sub
scribed for and collected through th'
| IL reserve banks.
Rediscount operations between tn,
reserve banks during. the year wer,
reported as $655, ,63S,000.
Despite the big strain on the reservi
system, the surplus over the requires
reserves have fallen only $17,40o,o0
since the declaration OF war The SO
called free gold or surplus reserves, OF
Dec. 27, 1918, was reported as S52s, 500,
900. Aggregate net earnings OF tn,
banks were $55,446, 900 last year
The federal reserve system now In
cludes 936 state banks and trust com
panies. with aggregate capital and sur
plus OF $3.50, ,0O0, 900, and aggregate re
sources of about s7,339, 900, 900, tn,
board reported The number Of stat
Institutions eligible for admission, in
cluding those now members, is $500
with resources OF about Si3, 500. .000, 900
gate resources of about $780, 90
became members.