Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-03
by FREDERIC WILLIAM VILE.

~ONFERENCES about interna
tional banking conditions. the
most momentouS in character
~ held since the World War, are
now in progress at New York
The chiefs of the three principal gov
eminent banks of issue in Europe
Montagu c. Norman. governor of the
Bank Of England; NJ. Charles Rist
deputy governor of the Bank OF
France. and DR.. Hjalmar Schacht
president of the German Reichsbank-
have arrived for discussion and nego
tiation with Benjamin Strong. govern.
or of the Federal Reserve Bank of
New York. Upon the result of their
consultations depend matters of direct
END vital import to the whole Ameri.
= can business world. Interest rates.
commodity prices, export and import
conditions. railway tariffs and all the
other issues related to those basic
business factors may be decisively af.
fected by the arrangements made in
the council chamber Of the Federal
Reserve Bank in Liberty street 1t
IS the first time that the rulers of
American, British. French and Ger
man finance have come together for
common purposes. In Europe the re-
suit of their deliberations is awaited
with no less interest than in the
United States.
In Bondage to Europe.
Most Americans labor under the i'm
preston that because we are the rich.
est nation on earth. end up our fiscal
year with a Treasury surplus of
$500, 100000 and have $4,000. 900 900
owing us by European governments
Uncle Sam is utterly independent
financially. That happens not to be
the case. Just because it is not ac-
counts for the get-together of Old
World bank chiefs with the dominant
Federal Reserve Bank in the United
States.
It's difficult to set forth the techni.
cal facts and figures which justify the
statement, but che brutal truth APP
pears to be that the United States
nowadays finds itself in a certain sort
of bondage to Europe. BY the irony
of fate. it is the Bank of France-an
institution representing the country
and government that have not vet ar.
ranged to settle a $4,000 ,000, 900 debt
to America-that has 1t particularly in
its power to disturb vital financial con-
ditions here.
Reserves Put i'm Exchange.
Put as plainly as possible. the situa-
tIoH is something IKE this: Nations
like Great Britain. France and Ger.
many. which maintain their money
systems on the gold standard, are &C.
customed to put parts of their reserves
in foreign exchange: i.e., the securities
OF governments or corporations in
other countries. 1t is estimated at
Washington that more than $1,000.
100000 of the operating reserves" of
foreign banks is in the form of Ameri.
can dollar exchange. The Bank of
France's reserve includes some $780,.
10000 of foreign exchange. Authori. |
ties assert that probably not less than
$500, 100000 of it is dollar exchange.
The Federal Reserve Board official
ly declares that these dollar bal
ances" held abroad are like balances
a man or a firm has on deposit with a
bank. These balances can be with
drawn by check on demand. Now. the |
huge deposits of dollar exchange in |
the reserve vaults of European banks |
of issue are of precisely the same |
character. That is to say, they are
sSseAi:ai sources of demand" upon |
the United States. because the Federal