The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-01-15
PLANNING s. A. GOLD
SETTLEMENT FUND
United States Is Negotiating
Clearing Project With
Seven Countries.
BASIS NAY BE BOND ISSUE
Object Is to Lay Foundation
for Exchange Between All
Nations Affected.

Natl0nS A1fectcd.
IN connection with the discussion
among financial advisers OF the allied
Governments of the establishment Of a
mutual gold settlement fund of several
hundred million dollars to facilitate for
eisn exchange transactions and TO elimi-
nate tho necessity OF shipping quanti-
ties Of gold. 1t was learned yesterday
that the United States Government hal
negotiated with seven countries In South
America gold clearing project, and that
these countries are about TO affix their
signatures TO the comprehensive scheme
The primary purpose of the agreement
with the South American countries Is TO
make the gold ear marked in the Treas
Try Department the basis for exchange.
not only between the United States and
each Of the seven South American coun-
tries but between those countries them
selves In purely South American deaf
. ings. This is all q part OF the larger
plan TO reestablish international cx-
change markets and to permit free in
tereourse among the nations, even
though the gold over and above the
amounts held in reserve in France and
England should be under control OF the
Federal Reserve Board in the United
states
The subject Of international exchange
and free '..tercourse among tho nations
Is one OF TIE major matters to be decided
upon in the last analysis at the forth
coming peace conference. 1t was sug-
Eested yesterday that the problem may
entail entirely new financial principles
Bankers said that the basis might be a
single international bond issue into
which the national debts OF al, the AL
lies would be converted in a league Of
nations, the debtor countries reserving a
portion for interest payments for term
" years. varying according to their cur
rent strength. At any rate, In the opln-
ion OF bankers something will have to
be done to protect debtor peoples in deal
ilE with creditor nations.
The proposal to establish a gold set
tlement fund as we'll as the clearing ar
Tangeinent being contaminated with the
seven South American countries avak-
ened widespread interest in banking cir
cles yesterday. and in some quarters II
was asserted that the questions are SO
big as to explain ]. p. Morgan's pres
ence in England at this time.
Bankers Withhold Approval.
Bankers asserted yesterday also that
the time Is ripe for the creation OF an
International reserve board, which
should have jurisdiction over the amount
or gold held by nation as reserve
against its demand liabilities to other
nations. no matter whose the physical
possession Of the gold. but they were
inclined to withhold specific approval
of the plans being discussed for gold
settlement fund pending the fruit!on Of
all details in connection with II.
II is admitted that exchange rela-
lions can not go back to the old pre-war
conditions. Without the adoption OF
some International agreement 10 pre-
vent tho transferrence q. gold from one
nation TO another and without the clear
ing agreement with the seven South
American countries Il is easy to see
that gold would soon flow TO the creditor
'atons in South America, whic. in turn
would have to send 1t TO Europe. and
England and France either would boil
:ter their gold reserve or begin to pay
their debts TO US.
Tho plain fact is. bankers point out
that the gold Is OF value merely as the
basis for credit. and Il might as we'll
remain within the physical custody OF
the United States. What is needed, in
their opinion. Is so to earTnark Dor.
t!on or the gold now IN the custody of
the United States Treasury as to re-
serve II for the transactions in interna-
uonaI exchange. As need arose the
gold could be lent to other countries
as basis FOR credit without the physi
cal movement Of pound of the metal.
Ru' such International exchanges, bank
ers say, "an not possibly be solved with
out DEFINITE international agreements 10
De 'onsummated Mt the peace confer
cnce
In tho discussion of these !nterna-
Hora! problems. Albert Breton. vice
President of the Guaranty Trust Com
pa7y, In charge OF its foreign depart
meHt, in the financial issue Of the Spur.
published to-day. says In part:
one of the most. II not the most, i'm
phiant points to-day in considering In
ternatonal finances Is the amount OF
god held by a nation as a reserve
against its demand liabilities to other
uaNons.
The United States possesses to-day
the largest stock of gold and carries also
the largest bank gold reserve against
Fedora! notes in circulation. Again we
are .rst and the advantages which such
a position commands are obvious.
But TO remain the bankers OF the
word when business follows once moro
rs more normal channels and present
war restrictions are more or less lifted,
We may be called upon TO part with
some ~ our gold in favor OF nations we
think entitled 10 such accommodations.
Europe Must BuiIt Up Reserve.
Great Britain. France, Belgium and
Italy will need 1t TO build up their legal
reserves. Others need II badly to comply
with their currency laws and protect
their credit As a matter of fact. will Il
be possible In view of these conditions to
solve this most difficult problem without
n special arrangement between the lead
ing nations pledging among themselves
tie temporary support Of their official or
central banks?
Perhaps there is now an opportunity
20 create an international reserve board
where all the leading official or Govern
ment banks would be represented and
which would be much more practicable
than a foreign Federal Reserve Bank.
AN tho civilized countries of the
world, even those under the gold STAN
lard are clamoring for silver to issue
much needed subsidiary coins. Some
whore and somehow the United States
MI. have TO get enough silver to replace
re amount loaned to foreign Govern
H.srts out OF the stock deposited In the
United states Treasury to secure silver
certificates
"7ba ,,raat r,owars ~ Eiirooe need nj