Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-03
FOREIGN BANK LEADERS
CONFERRINC in NEW YORK
Most Important "Financial" Farley
Since War Underway
Between Chiefs.

Reserve Board considers them part
and parcel of the central banking
reserves" of this country. They have
thus become. the board explains. "a
| factor to be taken into account in de-
| termining the Federal Reserve Sys-
TENS credit policy, with view to
maintaining Americas banking sys-
tenn in a position to meet demands for
gold from abroad without disturbing
| business and credit conditions here at
| home"
Can Control Market.
abled. as far as the United States Is
concerned. to control the money
market by Withdrawing funds from
the market, whenever desirable. by
sale of any part of the 5000. 900
of securities owned by the system.
Just as the Federal Reserve Board ID
at liberty to withdraw funds from
the market" Qn the United States),
France, on her part. can withdraw
funds from the international market
for instance, from her big deposit"
of dollar exchange. The French did
something exactly like this the other
day when the Bank of France trans
ferred from London to New York
some gold acquired by using it's ster-
ling drafts. The operation caused
widespread financial uneasiness in
London. 1t showed that an individual
foreign bank. or a group of such
banks. have 1t in their power to de-
range economic conditions in other
countries on a serious scale. Some
such situation as was produced by
the French action In London would
ensue in this country IL the Bank OF
France were to throw it's dollar eX.
change suddenly onto the market.
A statement just issued by the
WhaleyE Eaton Service, at Washington,
summarizes, apparently with author.
ity, the situation which is said to be
causing American financial leaders
considerable concern.
May Demand Assurances.
The statement says:
1t Is true that the Federal Reserve
System could meet a concerted move.
ment {, foreign central banks, or Of
one of them. by corresponding in
creases of reserve bank credit. Even
so, however. this would drive men,
Der banks to secure additional accom-.
mediation and would deprive them of
many of the advantages they have
enjoyed through gold imports.
In these circumstances, while
America is unlikely to do anything
to prevent the use Of her central bank.
ing reserves as a part of the reserves
against bank credit and currencies in
other countries we understand that
assurances will certainly be required
at the meeting of world central bank.
ers In New York that these foreign dol.
lar balances will not be used in such a
way as to embarrass the American
credit market. What form these as.
surances will take nobody seems to
yet to know. But the price of further
encouragement by the United States
OF the gold exchange standard will be
warranties Of some sort"
The arrival in America of the
British, French and German govern.
ment bank directors is a tribute to
Uncle Sans leadership in the world
of money. 1t is even more significant
In another direction. It is evidence
that no great country nowadays, in
financial sense. can live alone. The
earth has become an interlocking uni.
verse, with interdependence. not indie.
pendence. as the factor which all gov.
ernmentS more and more must take
Into consideration.
fCopyrght 1927