Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-02-08
GREAT GOLD POOL
FOR WORLD URGED
International Exch an 6 c
/, Fund Advocated in Fed
eral Reserve Report
TRADE WARNING GIVEN
Neither Contraction Nor Ex-
pansion Safe Till Currency
Is Absorbed
TRADE WARNING GIVEN

. Washinstou, Feb. S.-willingness. to
undertake development OF, an interna-
tional gold exchange fund to facilitate
financial transactions between nations
without actual shipment Of gold was
expressed today by the Federal Reserve
Board In It's report for 1918. This ar
erangement would be similar to that now
maintained by the board TO settle bal
ances between banks within the United
s States
Tho fund might be developed among
the Entente nations and n few leading
neutrals, but It is conceivable that all
civilized countries may eventually be
participants said the board. The GOLD
would be deposited in trust In some gov
ernment bank or banks TO guarantee ex-
change obligations, and 1t was proposed
that the fund should be limited to cur
rent commercial and exchange trans
actions.
Scheme Must wait on Peace
This is one of the suggestions for fu-
ture financial development growing out
OF successful domestic war operation of
the Federal Reserve system. which the
report reviewed in detail. Referring to
the settlement of trade balances in this
country through the Federal Reserve
clearing channels. the report says:
THE successful operation of the gold
settlement fund has suggested the poss-
bility of avoiding shipments OF gold
from one country to another in settle
ment of balances arising out of ordinary
commercial transactions, and the board
In ready, IL authorized to do SO. TO un-
dertake negotiations looking TO the es-
tablishment of an international gold ex-
change fund or to assist In any way in
its power In negotiations which may be
begun by a government department look
ing to that end. The board believes
that definite plans cannot perhaps be
worked out until a stable peace has been
assured
N Saving Would Be Enormous"
Assuming that the leading nations
of the world will be at peace for long
period of years, there seems to be no
reason why an International arrange
ment of this kind should not operate as
efficiently as our own gold settlement
fund.- which has cleared enormous tran
sactions between distant sections of a
country of vast area.
saving Would BE Enormous"
''The saving of loss and expense in
cdent to abrasion and transportation
charges and interest on gold transferred
will be enormous and the advantage to
the commerce of the world will be in
calculable."
..The ability of the country to absorb
Investments has proved to be far great
er than had been anticipated" said the
report, "and our credit structure, al
though expanded. is mistaken. We have
no currency problems, and conditions
are not comparable with those which
existed at the close of the Civil War
True, the purchasing rover of money
has declined. but this is due to the urg-
ent and abnormal demand for goods and
services and the accompanying cxpan'
sion of credit and currency"
Warning against danger In the post
war readjustment, the board says
Drastic contraction would be fol
lowed by results no less disasterous thar
those which would attend undue expan
sion. and the processes of dehator
must, therefore. be permitted to worl
themselves out in a gradual and orderly
manner"