The Washington times., 1915-05-05

and permitted the issuance of none
calling for gold, in quantities vast
greater than the amounts or gold
held. the United states
locked up most OF It's g,riaS g1,d IN hne
and mints, and issued warehouse Ger.
tificates against II in the form or
utterly ineiastic gold certificates.
Nothing Else Like 1t.
A gold certificate was the guarantee
that the actual gold was on deposit.
and could be had on demand. No
other piece of paper money on earth
was such a sure thing. Even the
Bank of England had at times sus-
pended gold payment; put gold GER
tificates Of the United states simply
couldn't be issued unless the gold was
held back of them.
But that system was inelastic; 1t
didn't permit the issue Of notes based
in part on gold and in part on credit.
as the Brapk of France, the Reichsbank,
and other great institutions do. Thus
it happened that so great a share Of
the worlds gold was attracted to the
greatest debtor nation, and that when
the war opened we had about twice as
much gold as any other country. The
new Federal reserve system makes 1t
possible to introduce the new element
of elactisity that our money has so long
needed; and this, in turn, makes it less
important that our huge stock of gold
be held here. 1t would do the world
more good and would promote business
here. II 1t were on the firing line Of
world finance, working for the coun-
tries that are overstraining their credit
in order 10 buy supplies from us.
An ounce of gold locked up in a dark
vault under Greek temple Is 4 fine
thing to corjure with; but an ounce OF
gold hustlng around somewhere. keep
ing couple Of men at work, Is much
more useful.
Without any thought OF letting the
American gold supply be depleted in Q
dangerous way. 1t is the hope Of the
fiscal authorities who are now domi-
try. that imports Of gold may be largely
avoided during the war. We don't need
the gold. We do need the business that
other countries want to give us. But
| they must be permitted to keep gold
enough to insure their gold standard.
Piling Up Stocks.
Since the war opened all the warrins
countries have been piling up Increased
gold stocks. They have strained every
| effort to keep gold. preferring to issu,
obligations instead of sending away tn,
/ yellow stun. Right now 1t Is said tina
England Is negotiating a credit Of $3.50
100000 in this country; that is, tryint
to arrange a financial deal by which
| she may buy our goods up to that poln
| without having to make immediate pay
ment Of her balances in gold. Thi
| trnnsa ction Is going to be viewed Will
| satisfaction by the Governments bank
Ing authorities. because they think It Il
good business to let the other coun
| tries keep their gold. We don't nee'
| 1t; they do. II the world comes through
| the crisis of this war without Eoin
to a paper money basis, 1t will be
magnificent achievement; and 1t will
make quick recovery Of normal condi
| tions. after the war. vastly easier
That can be accomplished II the Unite
| States is willing to help by the exten
sion Of credits, the expansion Of tn
usefulness of its gigantic gold stock
| And 1t is just these things that tn
Federal reserve system Is intended 70
and wishes to accomplish. 1t Is a curl
Gus anomaly. because We have been s
long taught to believe that imports O
gold were an evidence Of our prosper
ity: exports. a testimony that thing
were going ag gainst us. Today 1t !
most desired to make our gold sup
ply really serve business in the larg
est possible way.