Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1919-02-08
INTERNATIONAL
GOLD EXCHANGE
FUND PROPOSED
Federal Reserve Board Elk.
presses Willingness to
Undertake Work.

Washington, Feb. S.-Willingness
to undertake development of an inter-
national gold exchange fund to ia
cilitate financial transactions between
nations without actual shipment Of
gold, was expressed today by the fed
eral reserve board in it's, report for
1918: This Arrangement would be
similar I that O. maintained by
the board to settle balances between
banks within tho United States.
The >fund might be developed
among the Entente nations and a few
leading neutrals. but it is conceivable
that all civilized countries may event.
ually be participants" said tho board.
Would Deposit In Banks.
The gold would be deposited in
trust in some government bank or
banks to guarantee exchange obliga-
tons. and it was proposed that the
fund should be limited to current
commercial and exchange transac-
tons.
This is one of the suggestions for
future financial development grow
ing out of successful domestic wa
operation of the federal reserve sys-
tenn which the report reviewed in de-
tail:
Assuming that the leading nations
Of the world will be at peace for a
long period of years. there seems to
be no reason why all international ar
rangement Of this kim should not
operate as efficiently as Il own gold
settlement fund which has cleared
enormous transactions between dis
tan sections OF a country of vast
area.
THE saving Of loss and expense
incident to abrasion and transporta-
l11nn rharOoC ana irfo~oct an -r1J
transferred will be enormous and the
advantage to the Of the
world will be in~calculable."
The report disclosed for the first
time extensive operations of the fed
eral reserve boards system of rcgu-
lating foreign exchange transactions
of the last year to prevent dealings
OH enemy account. Agents were
maintained at all cable Offices and
these worked in close cooperation
with other government asc.tu.>.; to
detect enemy transactions.
Total purchases and sales of de-
mand and cable exchanges between
dealers in the United States from
February 20. 1918, when the regula-
ton became effective to December 81
were $5,158,00 900 Of which s3,737,-
100000 or 70 per cen were for OK
change on Great Britain.
Credit Structure Unshakcn.
THE ability of the country to alb
sorb investments has proved to be far
greater than had been anticipated,''
said the report, land our credit struc-
ture. although 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
power of honey has declined. but
this is due to the urgent and abnor-
NAL demand for goods and services
and the accompanying expansion OF
credit n currency"
The board predicted that banking
credits now concentrated in this coun-
the world with the development OF
foreign trade.
Drastic Results.
Warning against danger in the post.
war adjustment, the board said:
Drastic contraction would be fol.
lowed by results no less disastrous
| than those which would attend un.
due expansion In the processes OF
deflation must therefore be permitted
to work themselves out in a gradua
and orderly manner"
The report says that since the wal
began $31,452,O 900. 900 Of Libert,
uOiiuS IL Vel I'll lIlOeUIeuIlcS
have been subscribed for and collect.
ed through the twelve reserve banks
Rediscount operations were report.
ed as s655,63S.0OO
The so-called free gold. or surplu.
of reserves On December 81, 1918
was reported as s52S, SOC, 900. Az.
gresate net earnings of the bank.
were $~55,446,000 for the year.
The federal reserve system nov in
cludes 936 state banks and trust com
panies with aggregate capital and sur.
plus of $3.50, 600. 900 and aggregate
resources of about $780, 600, 900, the
board reported.