Evening star., 1922-06-25
BY EDWARD NELSON DINGLEY.

BY EDWARD NELSON DINGLEY.
I'm HERE Is something interest
ing, IL not fascinating, about
the wonderful development Of
| modern business methods. Big
business rightly characterizes the
! transactions carried on in the forty
eight states, but few realize how in
vention and genius enter into the
problem to save time and money and
human energy and make business
transactions easier.
Every one knows that since 1879
| the business of the United States has
been conducted on what is known as
| the gold standard-that is. all t..
| different kinds of money and all
| credit transactions are referred to
and measured by a certain number of
| grains of gold called the standard
gold dollar or unit The modern sys-
tenn of credits through checks and
| drafts. so familiar to all as to be
commonplace. has been made practi-
cal and reliable because of the legal
| requirements of gold deposits in the
| Treasury and the banks.
Gold Movements Awkward.
! In domestic trade and business gold
| in the form of coin or bullion was
| shipped from one bank to another,
as the necessities OF trade required.
/ Domestic exchange-that is. the
transfer of credit from one city to
| another or one bank to another
| registered the ebb and flow of bust
ness currents.
This was slow wav of doing busi
ness and often retarded the current
| of trade. Furthermore, it was an ex-
| pensive operation, this shipment of
i the country to another, to settle bal
| ances. and some one had to pay for
| it, also the insurance.
| Soon after the federal reserve sys-
| tenn was established. it was deter
| mined to inaugurate some better
! system to relieve the situation. Each
! federal reserve bank was directed to
; forward to the Treasury or the
nearest subtreasury $1,O00.0OO in
gold. and in addition thereto an
amount at least equal to it's net in
dehtedness to all federal reserve
gated approximately s1s,0o0.o00 as an
what was termed the gold settle
| Gates. which are nothing but receipts
| for gold paid into the Treasury. were
! issued to cover all the gold thus de-
| posted 1t was planned to make all
! gold settlements between the differ
| ont federal reserve banks by credit
ard debit entries in special depart
ment then organized. 1t was nothing
| but bookkeeping. and was first put
into operation May q, 1915.
| Transfers by Wire.
! Thus the slower method of ship
| ping the gold was supplanted by
! what was termed the gold settle
ment fund This fund is transferred
| by wire through a system Of debts
and credits. The plan seemed to
work satisfactorily. since it simpli-
fed the old method of transmitting
checks and bills of exchange and OBJ
T, waited the old, slow moving and ex-
pensive plan of shipping gold and
currency all over the country.
In December. 1921, the gold fund
| was increased to S551,547 ,000-an ap-
parently large sum to remain idle.
but it was not idle, since it was a
credit on the side of the banks legal
reserve. The increase in the fund
was found necessary to keep pace
with the growth of business.
| When this plan of transferring
gold by wire was put into operation
| in 1915 the banks had no wire serv
| ice at all and weekly clearings were
made only. Then came a very long
F; clearings. and a private wire system
!; connecting all banks and branches.
, This was an uo-to-date. in fact, an
; up-to- the minute evolution in the
! modern method of conducting bust
ness This came about July 1. 1918.
i AS originally put into action, each
federal reserve bank at 10 o'clock in
the morning wired the Federal Re-