International trade

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Monograph

Identifikator:: 1758394757

URN:: urn:nbn:de:zbw-retromon-136209

Document type:: Monograph

Author:: Taussig, Frank William http://d-nb.info/gnd/120199459

Title:: International trade

Place of publication:: New York, NY

Publisher:: Macmillan

Year of publication:: 1927

Scope:: XXI, 425 Seiten; graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Problems of verification

Collection:: Economics Books

INTERNATIONAL PAYMENTS 213 We may turn for a moment to another and different case, that of the United States after the establishment of the Federal Reserve System. The features in this system which are important for our purpose are the attenuation of reserves in the ordinary commercial banks; the accumulation of a great reserve of gold in the Federal Reserve Banks; and very flexible conditions for the issue of notes. The credit and money mechanism, one might imagine, thereby was made more sensitive, since the banks as a whole operated with less cash in hand. Yet in fact it was made less so because of the enor- mous store of gold concentrated in the Reserve Banks and the wide flexibility of note issue. The law, as is well known (I assume the reader to be familiar with its main features), prescribes a minimum of 35 per cent against the deposits of the Reserve Banks, 40 per cent against the notes. But it was expected, when the system was established, that substantially more than the minimum would normally be kept — perhaps 50 per cent — at all events some very conservative and amply adequate proportion. While the proportion actually held during the war and for a short period after its close was not greatly above the required minimum, the unexampled post-war conditions soon brought into the United States such an influx of specie that the gold holdings of the Reserve System came to con- stitute a formidable problem, not because they were unduly small, but because they were quite needlessly large. The point important for the present purpose is that the system was designed to regulate in some deliberate and systematic way the international gold flow and the effects of that flow on domestic trade and domestic prices. The system was expected to protect the country’s financial and industrial structure against the impact of international gold movements, while yet it left the situation potentially sensitive, the degree of sensitiveness depending on the principles and policy of the governing official bodies. A great reserve in the Federal Banks obviously can serve as a buffer against external strain. Pressure from an inflowing gold supply may be easily absorbed by it: the Federal Banks can prevent the pressure

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