Volume 2 - ElectricCanadian.com

THE BANK DURING THE WAR 329soon reached Ottawa for the credit of the Bank of England. 1The City of New York notes were retired by an issue of newsecurities taken by a syndicate of which almost all the banksand trust companies of that city were members, and alarge amount of the proceeds of this issue found its way toOttawa in gold. Another considerable sum went to Ottawafrom the United States Treasury, in connection with themeasures taken by the Government of the United States toprovide means for the relief and return to that country of themany thousands of American citizens travelling in Europe atthe outbreak of war, who found their letters of credit andtravellers' cheques useless, as no bank would venture tonegotiate them. One of the steps taken by the United StatesGovernment for this purpose was to send over to Englandabout $6,500,000 in gold, partly government money, partlyfunds provided by bankers in the United States, on two UnitedStates cruisers, the Tennessee and the North Carolina. Athird source of the gold sent to Ottawa was the remittancesmade by the trustees of the "$100,000,000 gold pool," contributedby the banks located in the "reserve" and "centralreserve" 2 cities of the United States for the purpose of relievingthe foreign exchange situation. With the approval of theFederal Reserve Board 3of the United States, the money was*On the authority of Dr. Bonar, formerly Deputy Master of the Ottawa Mint,it may be stated that during the period of the war there was received at Ottawa foraccount of the Imperial Government and the Bank of England, no less a sum than$1,204,355,661.25 in gold. Journal of the Royal Statistical Society, Vol. LXXXIX,Part II (March 1921).*These terms, "reserve" and "central reserve" cities, are derived from the requirementsof the National Bank Act of the United States that all national banksshould keep reserves aggregating a certain percentage of their liabilities in the banksof certain designated cities of that country.'The Federal Reserve Board consists of seven members, including the Secretaryof the Treasury and the Comptroller of the Currency of the United States. Theother five are appointed by the President of the United States, with the advice andconsent of the Senate, for a period of ten years. The Board is the directing head ofthe Federal Reserve System, over which it isgiven large powers of control in mattersof general policy. The Federal Reserve System comprises the twelve regional FederalReserve Banks, which function as central banks, all National banks, and such Statebanks, trust companies and other institutions as work in conjunction with the system.