Full text: Referendum on the report of the Special Federal Reserve Committee

have found it necessary by reason of the provisions of the law to have put its own 
rediscount rate up to 22%, if it had not been able to obtain relief in other directions. 
[ncidents of this sort tend strongly to suggest the desirability of one central banking in- 
stitution under which there could be a rediscount rate uniform throughout the country 
and the formulation of a true rediscount policy such as the interests of the country make 
ippropriate. Such a policy could properly include differing rates for the differing classe 
of paper eligible for rediscount, rather than differing rates for different districts with 
‘he rate in each district, as now, uniform for all classes of eligible paper. 
If there were no other considerations pointing to the desirability in the public 
interest of concentrating the authority for the discount rate in a single institution with 
clear and identifiable responsibility, the unavoidable international relations of the 
United States in financial matters would be sufficient warrant. When the World War 
began in 1914, the United States had less than $2,000,000,000 in gold. At the 
snd of 1918 it had slightly more than $3,000,000,000 in gold. In April, 1927, it held 
its largest amount of gold, $4,609,000,000. The amount drifted downward to $4,109, 
200,000 in June, 1928, and then rose once more, reaching $4,386,000,000 in October, 
Rediscount Policy 
Effect Upon Other 
Such figures suggest the extent in which the United States has brought within its 
borders a large part of the world’s supply of gold. At one time we had about 50% of 
he supply; we now hold approximately 42%. 
This gold has given the United States an inevitable responsibility toward othe: 
countries, whose welfare is affected in fundamental ways by conditions here causing 
rises in their interest rates with effects upon their business situations. As these countries 
afford large markets for our own products, their purchasing power is of direct con 
cern to all of our commodities that enter export trade. Exports of our products in the 
calendar year of 1929 have been at least equal to exports in 1928, when they had a 
value exceeding $5,000,000,000. In 1927, the latest year for which complete data are 
yet available, we furnished more than a quarter of all imports of Australia, Brazil, 
Chile, and Japan, and more than an eighth of all imports of China, Denmark, Ger- 
many, Italy, New Zealand, Norway, Poland, Sweden, South Africa, and the United 
Kingdom. Almost one-half of our exports, measured in value, go to Europe. 
An European point of view was expressed clearly in a study presented by Gustav 
Cassel, of Sweden, to the international financial conference held at Brussels in 1920 
As the following quotation discloses, this study accurately forecast events occurring ir 
the years which have since intervened : 
“The United States having already resumed gold payments, the dollar may be 
raken henceforth to represent gold. The problem of the restoration of a gold standard 
will therefore practically take the form of the problem of stabilizing the dollar ex: 
change at some definite figure. England and some continental countries will certainly 
do their utmost to restore the pre-war parity of their currency with the dollar. Other 
countries with much more depreciated money will have to relinquish this aim and 
choose a new parity with the dollar, concentrating all their energies upon keeping their 
money in that parity for the future. * * * It is now clearly in the interest of 
[Continued on page 23) 
Conditions in Foreign 
Financial Conference 
of 1920 
Restoration of Gold 

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