The Washington times., 1914-07-29
THE SHIPMENTS OF GOLD


The one thing that the warning
nations of Europe will need, the
thing that will be harder to get and
vastly harder to hold than men, mu-
nitions, supplies, in case of great
conflict, will be gold. The United
States has more of it than any 9TH
er country in the world, and is one
of the greatest producers of it. The
United States will be outside the
warning group. Therefore it will be
our part largely to supply the gold.
Europe has the instrumentalities
through which to command our gold.
We owe it to her. She holds our
securities in vast quantities, and can
insist on selling them back to US.
Selling them back, it is true, at re-
duced prices; prices that will repre-
sent a great profit to our people,
but profit that we cannot afford to
cash in. We need for other purposes
the money that will have to be paid
for these securities.
+ For many months past Europe has
been in truth approaching the eli
max that the war threat has sud-
denly precipitated. Next to the ac-
tual fact of war comes, for expense
and economic burden, the business
of maintaining eternal preparedness
for war. Europe has been doing
that for years, and the load has been
getting nearer and nearer to those
proportions that overtest the camel's
back. From the first of the year
down to date, drafts have been con-
stantly made on our supply of gold.
They have been made by the same
process that must always be EN-.
ployed in such cases, of selling to
US our securities or something else,
and insisting on payment in money.
Over 500, 900, 900 of gold has gone
abroad this year, and indications are
that more and more will be demand
ed from this time forth. True, our
foodstuffs will be in increased de-
mand; but in order to take them,
Europe will merely have to trade
back our securities for them. At
the end of the series of transac-
tons we will have the securities, our
foodstuffs will have been shipped
away and consumed, and the gold
will be gone from US.
It has been recognized for many
years that this country's financial
system made poorer use of our gold
reserves than any other great nation
made of stocks of the yellow metal
One Of the reasons for passing the
Owen-Glass currency measure was
to give these reserves larger mobil-
ity; to make it possible to increase
the work that given ounce of gold
might do. So long as the American
ounce Of gold can do only some
thing like half the work that the
French ounce can do. we are at a
great disadvantage, and it is more
important for us to hold our stock
Of gold. Therefore, to the extent
that the new system will make pos
sible for this country to get along
with less gold and yet escape de-
moralization, to that extent it is
supremely important that the new
banking and currency system be put
into operation.
It is highly undesirable that our
currency and banking processes
should be in state of suspension
between an old and new system, at
such a time as this. Financiers can
not rely on the poor processes of the
old system, yet they have not been
supplied with the better ones that
the new system promises. The Fed
eral reserve board has not been or
ganized, the regional banks are not
doing business, the subtreasuries
are still performing all their old
functions.
It is of the utmost Importance that
all proper haste be made in get
ting the new organization perfected
and at work. 1t will give a control
over the rate of discount that will
heir vastly in conserving our store
of gold. 1t will give added utility
to the gold we have. 4 will strength
en- our pull to get the gold back
when the time comes for possible re-