Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1923-06-28
BOSTON RESERVE
GRANTED RIGHT OF
AGENCY IN CUBA

Washington, June 27-The Federal
Reserve Board late today granted the
application of the Boston Federal
Reserve Bank to establish an agency
in Cuba. At the same time the board
allowed the Atlanta Reserve Bank
the same privileges in order to
compromise differences which had
arisen as result OF protests from
the Atlanta bank against the bos-
ton application.
The action of the board was made
known in a formal statement which
rccounted the difficulties encountered
IN working out a settlement on the
question which for some time has
been in controversy. Half q dozen
hearings were held by the board and
each time representatives of the At
lanta bank were present to protest
against the Boston application. The
New York Reserve Bank also went
on record at one meeting in opposi-
ton to the application made by Gov
ernor Harding of the Boston Insti-
tuition.
Discussing the problem with which
1T has had to deal, the Boards
statement explained that, because of
the provisions of the Plat amend
pent, American financial relations
with Cuba were unique. The situa-
ton was further complicated the
statement said, by the fact that cur
rency of the United States had been
made legal tender in Cuba, vet ade-
quate machinery, never had been set
up there for the redemption and re-
turn to this country of unfit cur
rcncy.
1.-The board has finally decided,
however" the statement continued,
TO approve a plan agreed upon by
the Federal Reserve Bank of Allan
Ia ard Boston by which they are to
open agencies in Havana working
comparatively along certain definite
lines. 1t happens that a consiccr-
able part of the paper currency in
CUBA consists of notes issued by the
Federal Reserve Bank of Atlanta
fand the plan is expected to continue
teese notes in circulation. 1t is eX-
lfcted that currency will be present.
eN to the agencies for the purchase
Of cable transfers and that the cur
rency SO received will be at once
sorted so that the unfit bills can be
sent back to this country for re-
placement by new currency The
New money will then be put into
circulation through the purchase by
the Reserve agencies of bills of ex-
change from the banks operating in
Cuba.
This. it is explained, will result
not only in replacing unfit paper
money with new currency, ! ut will
have tendency to stabilize banking
conditions. Banks operating in Cuba
will be enabled to carry on their
busiress without the necessity of
holding abnormal reserves. and will
be able at any time to obtain cur
rency by selling prime bills of eX-
change originating in import or ex-
port transactions. The boards regu-
lations have undertaken in some de-
tail to safeguard these transactions
1t was on the application of the
Boston Reserve Bank that the mat
ter first came definitely before the
board and it was through agreement
between the Atlanta Reserve Bank
and the Boston bank that it was
worked out in detail. Some changes
in detail may become necessary when
the agencies get into operation, as
the establishment Of such an agency
is an entirely rev thing and the
board has reserved the right to ter
inmate the agencies at any time, if
it deems such action advisable"