Evening star., 1924-05-14
BANKS URGED TO AID
IN WORLDS UPLlFT
Co-Operation Under Dawes Plan
for Economic Stability Suggested
to u. S. Reserve Board.
PROGRAM GIVEN IN DETAIL
Establishing German Bank of Is
sue Is Held Important.

Cooperation as far as possible, In
the program of establishing world
economic stability through operation
of the Dawes recommendations, par
ticularly in establishment of a Ger
man bank of issue, has been urged
upon the Federal Reserve Board by
it's advisory council.
Admitting that neither the board
nor federal reserve system could CO.
operate in fAtation and distribution
of the new German loan, the council
yesterday proposed the board could
render important services in regard
to the operations Of the new note-ls-
suing bank"
Study of Situation Urged.
1t urged "the Federal Reserve
Board to examine very closely into
the powers vested in this respect in
the federal reserve banks and to
study the question how far 1T may pc
desirable to amend existing rulings
and regulations in order to approach
the problem of Europe's financial and
economic reconstruction in the most
helpful spirit.
.fUnless America finds ways and
means to permit her excessive bank
ing strength to benefit other coun-
tries, particularly those striving 10
bring their house in order. II adoeo'
"the dollar cannot MAINTAIN ltS posi-
ton as world standard of exchange
and foreign countrieS-and even
American banking and commerce
will, once more, in the larger degree
become dependent upon and tributary
to the pound sterling, to the greater
exclusion of the dollar.
eft is obvious that our credit power
cannot continue to grow indefinitely
without the danger OF oversatura-
tion. If the stream of gold that nooos
our shores is not stemmed IN time
it is to be feared that, ultimately, we
will not be able to ward off its IN,
fiationary effects And imitation would
only aggravate the economic maiad-
justment already existing, within our
own boundaries; ma maiao,nd'mene sus ent
dangers our trade with other coun-
tries, but which makes our agricul,
turaI situation particular difhcut ana
distressing.
Important Angle of Problem.
But, irrespective Of the danger OF
imitation, the problem ought to pc
angle. It is the question of whether
the world is more likely to regain
the blessings of economic stabiilty
under the sway of several huctuatlns
standards of exchange or by gen
stances may permit. to definite reia-
tions of exchanes to gold as the ulti-
mate measure and regulator.
The. Dawes report leads ,h;s tne rae
gard. 1t provides for German note.
issuing bank on a gold basis, put
leaves the door open to place II on
sterling basis, and it cannot De de-
MED that there is no small proDapillty
of the latter basis being chosen. In
80, int1 nf sooner
Germany can be placed on goid or
gold exchange basis the sooner can
England and other countries also re
turn to an unrestricted soIo sIahu
ard. while, IL Germany were placed
on a sterling basis, England-in re
turning to an unrestricted gold basis
would have to pull not only her
own weight. but that OF Germany
also. 1t is obvious, therefore. that lf
the new German bank is placed on
the sterling exchange basis the world
must prepare itself to remain on
basis Of exchange instability for a
prolonged period, the end or when
cannot be foreseen. while the adop-
ton of the gold (that is. the dollar)
basis would accelerate the return to
world wide stability.
Councils Recommendation.
The council recommended that when
the new German note-issuing bank,
provided in the Dawes plan. is or
eanized, "the federal reserve banks
take the steps necessary. in order to
facilitate the rediscounting in this
country OF properly protected Ger
man gold bills, be it through the
intermediary of American banking
institutions, or through so-calied
agency agreements, or such other ar
rangements as have been concluded
by federal reserve banks with CEN
trail banks of other countries"
The council announced that Charles
A. Morss Of Boston had been des-
ignated by the Boston Federal
Reserve Bank to succeed Alfred
i. Aiken of the Boston district, whose
resignation as member and vice
president of the council was present
ed at todays meeting. Mr.. Morss was
elected a member and vice chairman
of the executive committee and E. +.
Swinney of Kansas City was elected
vice president of the council.