The Barre daily times. (Barre, Vt.) 1897-1959, 1919-02-08
To Facilitate the Financial
Transactions in Ship
ment of Gold
FEDERAL RESERVE
BOARD RECOMMENDS
Gold Would Be Deposited in
Trust in Some Govern
eminent Bank

Washington, D. G., Feb. S.--Willing-
ness to undertake development of an in
ternational gold exchange fund to facili-
tate financial transactions between ma
tions without actual shipment of gold,
was expressed to-day by the federal re-
serve board in its report for 1918. This
arrangement would be similar to that
balances between banks within the Unit
ed States.
The fund might be developed among
the entente nations and few leading
neutrals, "but it is conceivable that all
civilized countries may eventually be
participated" said the board. The gold
would be deposited in trust in some gov
eminent bank or banks to guarantee ex-
change obligations, and it was proposed
that the fund should be limited to cur
rent commercial and exchange transac-
tions.
This is one of the suggestions for flu
ture financial development growing out
of successful domestic war operation of
the federal reserve SYSTEM which the re-
port reviewed in detail
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 trans
actions between distant sections of a
country of vast area" said the report
THE saving of loss and expense incident
TO abrasion and transportation charges
and interest on gold transferred will be
enormous, and the advantage to the com
merce of the world will be incalculable
The report disclosed for the first time
extensive operations of the federal re-
serve boards system of regulating for
eign exchange transactions of the past
year to prevent dealings on enemy ac-
count. Agents were maintained at all
cable offices and these worked in close
corporation with other government
agencies to detect enemy transactions.
Total purchases and sales of demand and
cable exchanges between dealers in the
United States from February 20. 1918,
when the regulation became effective, to
December 81 were 81, l5S,O 100000, of
which SO ,337 100000 or 70 per cent were
for exchange on Great Britain.
The report told how the federal re-
serve system in this country flnctioned
Incorporation with the treasury in ire
mendous war tasks of raising liberty
loans, floating certificate issues, settling
trade balances, discounting billions of
commercial paper, assisting in the ra-
tioning of capital and providing a free
channel for flow of credits to all parts
of the country where they were most
needed.
The ability of the country to pre-
serve investments has proved to be far
greater than has 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 exist
ed at the close of the Civil war"
The board predicted that banking cred
its now concentrated in this country
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 the gold
reserve maintained against federal re-
serve notes never fell below 60 per cent
though only 40 per cent was required by
law. This was interpreted as indicating
healthy condition necessary as a pre-
Jude to financing of foreign trade.
The report stated that since the war
began S3l 452,OOO,OOO of Liberty bonds
and certificates Of Indebtedness have
been subscribed for and collected through
the II reserve banks.
Re-discount operations between the re-
serve banks during the year were re-
ported as 1865, 63S, 900.
Despite the big strain on the reserve
system the surplus over the required
reserves have fallen only SIT 100000
since the declaration of war. The So
called free gold, or surplus Of reserves
on Dec, p, 1918, was reported as $52S,-
100000, Aggregate net earnings Of the
banks were S55 $4,000 last year
The federal reserve system now in
cIudes 1886 state banks and trust compa.
MES, with aggregate capital and surplus
Of S750,OO0,O00 and aggregate resources