New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1919-02-08
Federal Reserve Board Recon-
meldS International Fund
j. s. CREDIT IS UNSHAKEN
Federal Reserve Board, in annual Re-
port, Outlines Plans For Extending
Scope of WOrk-936 Banking
Houses Included.
Houses Included.

Washington, Feb. S.-Willingness
ternational gold exchange fund to ta-
cilitate financial transactions between
nations without actual shipment OF
gold. was expressed today by the ted
eral reserve board in its report lo'
1918. This arrangement Would ne
similar to that now maintained py
the board to settle balances between
banks within the United States.
Might Extend Privilege.
The fund might be developed among
the Entente nations and a few lead
ing neutrals, but it is conceivable
that all civilized countries may event
ually be participants" said the board
The gold would be deposited in trust
in some government bank or banks
= to guarantee exchange ObnSauohS'
and it was proposed that the tund
should be limited to current CONNER
Cial and exchange transactions.
This is one of the suggestions TOT
future financial development growing
out of successful domestic war opef-
alton of the federal reserve system,
which the report fGNl6WGl III hCIehAh'
Saving Would Be Enormous.
Assuming that the leading ma
tions of the world will be at peace
for a long period of years, there
seems to be no reason why an inter
national arrangement of this kind
should not operate as efficiently as
our own gold settlement fund, when
has cleared enormous TRANSACTIONS
between distant sections of country
of Vast area" said the report. Ihe
saving of loss and expense lhciueh'
to abrasion and transportation
charges and interest on gold trans
ferred will be enormous and the ad-
vantage to the commerce or the
world will be incalculablc.
Enemies Closely Watched.
The report disclosed for the first
time extensive operations OF the red
eral reserve boards system Of regu-
latin,g foreign exchange .tEanSactlonS
of the past year taa. a.preyerf"detHillsS sS
on enemy account. Agents were mann
tanned at all cable Offices and these
worked in close cooperation Will
other government agencies to detect
enemy transactions. Total purchases
and sales of demand and cable eX-
changes between dealers in the Unit
cd states from February 20, 1918,
when the regulation became effective,
to December 81 were $5,158, 900, 600
of which $3,737, 100000 or - per
cent were for exchange on Great
Britain.
Great Aid to Treasury.
The report told how the federal re-
serve system in this country tunc-
toned in cooperation with the treas
urv in tremendous war tasks OF rals-
ing Liberty loans, floating certificate
issues, settling trade balances, dis
counting billions of commercial pa
per, assisting in the rationing Of cap
ital and providing a free channel for
flow of credits to all parts of the
country where they were most need
ed.
L. 5. Credit Unshaken.
"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
structure although expanded, is un-
shaken. We have no currency prob
lems and conditions are not compar-
able with those which existed at the
close of the Civil War
The board predicted that banking
credits now concentrated in this coun-
trv soon would be extended through
the world with the development of
foreign trade. Attention was called to
the fact that even during the war
strain tho gold reserve maintained
against federal reserve notes never
fell below go per cent, though only
40 per cent. was required by law.
This was interpreted as indicating a
healthy condition necessary as q pre-
lude to financing of foreign trade.
Help in Liberty Drives.
Tic report stated that since the
war began $31, ASP, 900, 900 Of Liberty
bonds and certificates of Indebtedness
have been subscribed for and collect
ed through the u reserve banks.
Re-discount operations between
the reserve banks during the year
were reported as $655,638, 900
Despite the big strain on the re-
serve system the surplus over the re-
uuired reserves have fallen only $17,-
400. .OOG since the declaration of war
The so-called free gold or surplus of
reserves on December 27, 1913, was
reported as $52S, 100000. Aggregate
net earnings of the banks were $55,-
446, 900 last year.
0S6 Banks Are Included.
The federal reserve system now in
cludes 936 state banks and trust COM
panies, with aggregate capital and
surplus of $3.50, 100000 and aggregate
resources of about $7,339, 900, 900, the
board reported. The number of state
institutions eligible for admission, in
Guiding those now members is $500,
Jwith resources of about $13, 500, ,000,-
600. Last year 6S6 state banks, with
aggregate resources of about $1,000
100000 became members.