The sun., 1919-07-21
BIDDING GOODS FOR GOLD,
Great Britain's Chance Thus to Re-
gain World Trade.

gam WOfiu IFhoe.
To THE EDITOR or THE suN-Str; In
your financial article Of Monday. the
18th, occurs the following significant
statement:
The serious decline IN London ep-
change has made extensive purchases
in this country BY foreign buyers ale
most impossible. because TO the de-
creased purchasing power of the Amer
len dollar must be added the high pre-
MUM paid for dollar credits By the
foreign buyer.
The present international situation
with respect to finance Is we'll expressed
in the foregoing quotation. In effect the
decline in sterling exchange is a strong
bid for gold or It's equivalent that mar
ket is willing to pay a materially higher
price in goods for gold than the United
States. This United States, on the other
hand. in maintaining internationally the
dollar at par with gold. gives only par
In deprecated currency for gold. Conse-
quently the United States necessarily re-
pels gold and what is more important to
US just now, the trade that goes with It.
The real question In the matter 10 how
long the United States is going to main
tain internationally the deprecated dol
lar at par with gold by paying gold out {:
First. TO those countries in which the
dollar is at discount, such as South
American countries, and second to those
countries In which the dollar Is at a pre-
MUM, such as England. In either case
premium on gold may be obtained, frst
on dollars, as in South America, and
second in goods. as in England.
Since the dollar Is thus maintained In
ternationally at an artificial value in
terms of gold by the Government, or
rather since gold lie artincially de-
pressed in price by the gold payments of
the Government. IT IL clear that gold must
go out indefinitely to those countries
paying a better price for II in goods or in
dollars, as the case may be. Thus far
the loss has been trivial through the
Government payments. something less
than hundred million. but the circum-
stances being as they are the losses must
continue to go on indefinitely. But the
more important point is that we shah
lose not only gold but trade as we'll, as
before noted.
To meet the present international stu
alton to advantage It is not necessary for
country to possess considerable stores
Of gold. but merely to measure resolutely
the depreciation OF its currency in terms
OF gold to the end that the nation may
give the fairest price in goods for gold
or its equivalent. In the series Of de-
clnes that have taken place in sterling
exchange during the past several months
IT is a question whether the English
market may not be seeking gradually to
measure the depreciation OF its currency
In terms OF gold. though perhaps primar-
lily seeking to draw gold. capital or trade.
With the depreciation of the oountry's
currency unequivocally measured (and II
can be measured in terms OF the artin-
cially supported dollar almost equally
we'll as in terms OF gold) II would be but
a step to establish a free market for
gold. such as It now has for silver Once
a free market for gold were established
the depreciation of the currencies OF the
world would be measured there. and In
that market would be EXCHANGED thA
MONEYS and credits O, the world
The situation with respect 10 the
United States ia the result Of the Gov.
ern-nent,s poIicv OF maintaining interno-
tionally the depreciated dollar Mt mar
with gold. an untrue and wholly arti-
rcial position. The utmost the Govern
mont can do along such lines is TO main.
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