New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-10-12
WHY Not Refuse Gold ?
=, the F;nnnc;oI Editor.

One OF Lilc HlOSC Stl lOu9 ~ pD4Niii'
necessitating urgent solution at
present is with reference to the in
flux of gold. We are receiving gold
almost every day, and during the
last twelve months the stock Of gold
has increased from S2,056, 000,0 900 to
S2,625. 100000 1t is not necessary to
refer to the effects of this large in
fiux. as it is too well known to need
a lengthy statement. That some
thing should be done in this connec-
ton is felt by all who are interested
in the welfare of this country. Mr..
Paul Warburg's reference to this
problem at the convention of the
American Bankers Association was
very timely; only the remedy he sug-
gested is not likely to prove the right
solution.
We are told that we are likely to
have an additional $500, 0O,OOO
worth Of gold imports on British and
Allied account. We do not know
where the gold comes from, but as
even the imports that have already
arrived are far from explainable
there is no need to question the truth
of the above statement. What can
we do with all the gold that is to ar
rive? Prices of commodities have
gone up. and the poor in this country
have to pay increased prices even for
bread. The banks are in the midst
of a serious depression, IN spite OF
the large deposits. The National
City Bank, of New York, in Its re-
cent circular said that there was no
prospect of higher money rates IN
the coming season. The widest
speculation on the Stock Exchange is
being rendered possible because OF
this influx. 1t has been the habit OF
most people to look at only one side
and to condemn those who point out
the other phases as Calamity howl
ers." If profits were widely distrlb-
uted. and if the volume of trade that
is at present available is likely to be
maintained for any length of time,
if not permanently, there would be
no harm. But we are on very I'M
certain ground in this respect, and
all the large import Of gold has done
is simply to raise prices and encour-
age speculation.
It is needless to state that excess
of imports of gold are not healthy
and we have the example Of the
countries that have for
all practical purposes, prohibited
further imports of gold, ever since
the beginning Of this year. Sweden,
for instance. is willing to do all the
trade possible, only if commodities
can be exchanged for commodities;
and the only occasion in recent
months when she took gold was when
Holland offered the yellow metal at
3 per cent discount-even then
Sweden taking the gold as a special
favor. At the time when Holland,
Norway and Sweden decided to stop
gold imports by refusing to take gold
except at a discount, the countries
were suffering from very high prices,
although apparently there was more
than enough Of prosperity. During
recent months, it is known, on very
good authority, that internal condi-
tons are much more favorable than
when there was a large influx OF
gold.
Why not follow the Scandinavian
countries, and solve the gold prob
lem? There is no use for even the
total available here. BY taking in
more gold, we are also weakening
our debtors; gold left in England or
France is much more useful to us as
creditors than gold received in this
country. Apart from that, there is
little or no sense in having a sta
tistical prosperity at the expense of
the great majority Of wage earners
and poor people.
Mr.. Warburg referred only to the
gold that is now in the country.
Whether it goes to the Federal Re-
serve banks, or whether it is dis
tributed among the banks and trust
companies, we cannot help being con-
fronted by difficulties. II is not so
much the presence of the gold that
we have as the likelihood of more
coming in that will have a deterrent
influence on money rates and normal
industrial development. As things
are at present, the only course that
pays-and that on paper-is specula-
ton. We are having speculation 10
the fullest extent; and with money
at present rates, il must work itself
out. A few more loans to the Allies,
and if possible TO China and the
South American countries, might
help 10 relieve the situation.
The necessity for stopping add