The Washington herald., 1920-02-24

Europe in lieu of gold for export
which proved helpful factor in re-
storing order and confidence.
Accumula tion of Gold Reserve. Prior
to War.
For several years prior to the
declaration of war in Europe the
countries of France, Russia and
Germany especially had been engag-
ed in an eager competitive scramble
! for gold which resulted in the hold
iings of their great state institutions
increasing rapidly. On this ac-
count. at the outbreak of hostilities,
we found them with what was up
, to that time the peak of their gold
! reserve.
The embargo which was univers-
ally adopted clearly demonstrated
the desire of every commercial ma
tion to control and retain it's sup
ply Of gold. AS far as the United
States was concerned. other than the
necessity of obtaining government
permission to export gold in coin or
bars, its circulation in this country
has not been restricted-although
the efforts of banks and individuals
alike have been directed towards
harmoniously cooperating with the
government in concentrating the ma
tion's supply with the Federal Re-
serve Banks.
One of the most curious economic
/ features of the present situation Is
the strong light which it has thrown
Ion the fact that it Is possible to
have too much of a good thing. even
when that thing is gold. This Is
forcefully demonstrated IL we glance
at the financial position of the Scan
dinavian countries, where the law
has been carried so far as to re-
lieve the government banks of the
statutory obligation to buy gold and
coin 1t for all those who bring it in.
This naturally prevented other
countries dealing with Scaudina via
from paying for purchases in gold,
and the barter of commodities was
the only means open for concluding
commercial transactions.
1t has lately been said that the
world is divided into two classes of
countries: those which decline to ac-
cept gold and those which refuse to
part with 1t. Sometimes it Is asked
how anyone can possibly refuse to
take gold in payment, but this is
Explained by the statement that gold
in bars or foreign coins is not legal
tender anywhere. No person in
Scandinavia, for example, could be
made to take gold bars or American
Eagles in reimbursement for goods
to meet a required payment In legal
tender currency of Denmark, Nor
way or Sweden.
Europe to Sustain Gold Standard.
The issue and circulation of paper
credits throughout the leading ma
tions of the world has been pro-
Iportionately far greater than their
holdings Of gold and this state of
AFFAIRS has naturally resulted in in
hation on an alarming scale. The
thought. however, that European ma
tions may possibly repudiate part of
their war debts for the sake of re-
ducing the amount of currency out
standing against government bonds
or notes is obviously superficial. FL
nance has become an international.
rather than a national question and
the monetary history of any coun-
try tends to become more and more
merged with that of the whole civi-
lized world.
International credit is firmly es-
tablished on a gold basis and no
country has any interest in upset.
ting the present standard although
II is contended that notwithstand-
ing great production of new gold,
1t may not necessarily assure uni
versal gold standardism. as 1t would
be q mere Nrop in the bucket for