New-York tribune., 1920-02-19
Sees Danger in
Continued Loss of
u. Gold Reserves
Guaranty Trust Company
Holds Restrictions ON Ex-
port of Metal May Be Nee
essary; Underlying Trade
Factors

The question Of the advisability Of
putting new restrictions on the export
Of gold from the United States Is
raised by the Guaranty Trust Com
pany in survey just made public Of
the international gold situation.
"The gold," the banks statement ex-
plains, (which this country has lost
since the beginning of 1919 has gone
out of the country, partly because Of
our own debts, partly because Of debts
that we have assumed for others. How
far will restriction on gold exports af-
feet our newly acquired position as in
ternational bankers? If we and others
must have certain Oriental products,
and can have them at the low prices
which cheap labor makes possible, will
it be more advantageous to do without
these, or some Of these products, by
holding on to our gold than to have
them and pay the price in the medium
or media-the precious metals-which
the East will accept? Must we. fur
ther, rely on the Fictitious circum
stances Of the outcome Of gold mining
operations and, in addition, subject for
eign exchanges to the effects of the abil-
ity Of gold miners to hold back gold at
any time they see fit, in the hope Of
higher prices later on for their prod
uct?
Questions Raised
"Will it be possible, with safety, to
introduce an element Of elasticity into
the arrangement in the shape of
granting discretionary powers to, say,
the Federal Reserve Board to let out
none other than virgin gold, if circum-
stances warrant? Having taken such a
step, when shall we and under what sorts
OF conditions once more resume free
gold exports? Can we not rely on the
operations Of normal economic forces,
particularly the possibility of increas-
ing exports to and decreasing imports
from the Orient and South America I?
Finally, is it necessary to assume that
the United States should play the role
Of trustee at present, or at some
distant date, for the gold basis coun-
tries of the world, or those that hope
to be?
"The question resolves itself into a
balancing of the immediate and ulti-
phase of it must be studied from these
two points of view. If the immediate
problem is so acute as to challenge
comparison with those Of war times it
may be justifiable to discount future
difficulties at liberal rate and adopt
what is confessedly an expedient in
order to bridge the present gap. Do
present considerations, in other words,
argue for step which for peace times
is contrary to our natural inclination
to let economic forces work themselves
out without legislative interference 2"
In explaining the underlying trade
factors, the survey says: "The trade
export excess of the United States for
1919 was four billion dollars--follow-
ing other huge export excesses in pre-
oeding years, especially since 1914-1915.
In spite of this, the precious metals,
gold and silver, are flowing in q fairly
steady stream from the country. Dur
ing the year 1919 our net exports of
the two metals were respectively 291
and $50 million dollars. In the first
six weeks of the present year fur
ther large amounts Of gold have left
the United States, destined chiefly for
South America and the Orient The
domestic credit stringency has been
reflected in declining reserve ratios
at the Federal Reserve banks and has
been in part caused by absolute losses
of gold in these reserves. The reserve
banks have raised their rediscount rate
to the highest figures since the inaugu-
ration of the Federal reserve system.
AS consequence, credit liquidation
has occurred at the expense Of both
foreign and domestic credits.
"The chief net exports of the metal
during 1919 were to the following coun-
tries in the amounts given Gin millions
of dOilars):