Show BIG RESERVE RESERVE ALARMS TRADE Federal Reserve Gold May Ma Cause Inflation Dollar Steady By fly Standard Examiner Special pc Ia lal i 4 y I Iy Copyright 1924 by The Th Con n Con Con- ed Pass s Pre Association NEW w W J-W YORI TORK Jan 19 13 No 10 No topic ns laa n be-n the tho th topic ct It t more IDore MOn discus Ion eon In financial circles this welt weel I than tho the new method adopted by I the Ill he federal board In it tabulation of ot gold cold holdings The I change chang l first md made In IR the statement state- state mOnt ment of ot the th neck eek ending January 5 t lurther Further new n classifIcatIon gold L with federal reserve agents and andL redemption funds with Unit Unit- United L gold od ed d State Treasury Tra ur arc are combined I Into a total designated Gold held I i e against federal resell rJ e notes This is 1 I In effect a re- re Islon to the th policy polley In effect bc before be- be beI t I fore fere June 1917 1 17 The Tho result I Is that I 1 In the th statement made mad public this eek gold old held hold oly I 1 Rg lt federal reserve notes Is la 2 n- I I UI 79 00 against federal reene notes In actual circulation of ot 2 2 04 OH J In Iu other words worda outstanding 1 ted fed federal to era Hal eral reserve note this way ay o ot of tating the financial condition ot of o the th are ar more than then dollar doll r for dollar byl by l gold rold Meanwhile the th method ot of o 1 Elating the th ratio of ot total reser e a remains QS as before It II I 1 Is calculated calculated on a ft baste basil of ot deposit and nd federal not liabilitieS ll CO- CO com combined and nd stands stand this week forthe for tor fori Ih the stem 8 1 a a whole at 80 1 per perI I i cent almost equal to th the tho highpoint high highpoint highpoint point o ot of 1 2 which In turn Will was the I since 1 17 W W Wre re It i to 10 b be calculated on tho the basis of ot the theL liabilities reser es against deposit depolt L alone the th ratio would be only a about bout 5 per cent TO RESTRICT I this The Th Important thing about more or 1053 l sa technical detail la is whY It has baa been be this chan change was made suggested that the tho object Baa as as to th the stand standing remo e It if possible temptation to credit Inflation which our enormous gold cold surplus continuously present I It If that Is I really relly th the Intention It Is h i doubtful whether It III succeed For Tor one on thing gold continues to pour Into the country and nd the th trend of ot the foreign exchanges Is 1 all In favor tavor of more gold coming rather than effect less ess As to the tho probable upon prices for tor or securities and nd commodities It St Is 1 hazardous to venture a prediction One school ot of f economists economist Insists In that th the nor normal nor nor- nornal mat mal result would woul 1 be tr to advance prices all II along along- th the line One thing Is certain that no matter 14 how these statistics statistic are ar presented credit Is abundant tor for e ery ry legitimate mate mat commercial purpose l On this foundation and with ith no disturbing ny here In tight sight It itcan Itcan can at least be b said that nothing i C could be b more mor Improbable than anyo any o major ajor business depression HOY UY V U S STOCKS ABROM ABROU fl l l- L Th fl The decline In th the exchanges exchange has had another effect to In In- In increase crease cre foreign to reign bu Ing of ot se e securities so- so both bolh bonds and stock tOck i i This In turn accelerates the th tall fali In the What WAat could be more natural than with tho the francL franc l making new low records In TO- TO TOI r r I to doubts as to the tho th ability ot of o to carry on without Ocr Ocr- Oer 1 J man roan reparations and nd with sterling sagging SAs to new low lov lei els that foreign Investor should b be ba anxious to transfer their capital Into se- se expressed In th the on one stable I currency In all the world orld It this this- this theory thory Is 1 reasonable the effect In Our ur markets will be to d ad quotations regardless of ot the th bu busi- busi nes busl-nes 1 nelS outlook Nothing In the tho mar mar- I ets of ot the week has hM d de eloped to contradict this view vl w Bonds he hae ha z been consistently firm and while pe peculate e locks have had some somo setbacks there tho has been no important Import Import- Important ant nt weakness eknes In tho those thosa e of ot real In- In estment merit A It may my b be of ot course cours that th the trend of ot foreign exchanges will b be reversed The Th decision ot of o the French go to increase taxation 20 per cent to Institute Important economies In adminis adminis- administration administration and nd to deter defer such reconstruction recon recon- p as a cannot be b met out ot of the th lie ordinary revenues revenue momentarily ly at least let stayed the th tall fall all In the tho franc which has ha been approach i approach approach- t Ing Ine collapse In panicky ceiling It Is I too early however to assume that these measures will b bo be sue suc- suc uc- uc I cc ce tul tul The outlook Is favorable but thee the e exchange market awaits demon demon- results i STI I Like Liken iso l o In Great Groat Britain until k Ibo Iho labor iro ha has met the test teet of ot re responsibility and nd It I la is reo i-c- re repealed pealed how hon far tar lis lt it leaders pro pro pro- pro pose i Iose to go to on putting their the the- orles cries Into practice th the disturb disturb- disturbance o Once ance In sterling Is likely to con continue con con- continue I All this ha has had on one curious e- e ei ef et- et i feet teet on our own foreign bond market mar mar- ket bonds on UK the announcement of ot the tho meas meas- measures meas-i meas ures adopted by the government government gov- gov In tact fact French rench bonds bondu neer ne'er shared In any degree decree thoo the tho the tho th franc ot of o weakness ot of o ranc the other dollar bonds bonda On hand British dollar bonds bond hao has been heavy heaY which li 11 i certainly 1 il- il illogical logical tor for no one seriously Im- Im imagines I agines that en e th the tho labor govern govern- government rn-nt rn Bill alIt damage tb the credit of Great Britain abroad Investment buying ot of o has haa tono gono on all 11 the th week eek Offer Offer- Offerings Offerings ings ha base bar 0 been well absorbed Banks Banko and In Institutions hae ha ha been In the market em employ employ- employment loy ment for tor surplus funds Th de dc- dc inand mand has been especially good for tor nigh trade grade short term with yields yield of ot from tron f S to 5 l a percent per percent percent cent Investors of ot lar large e moans means are re still bu Ing tax exempt securities securities securities ties oven ven though th the he Mellon tax th through they thy will not plan goes foes need them thra them In puch Buch large blocks |