The Washington herald., 1921-05-27
Gold Stocks in. US. Cause
World Stagnation,
Experts Say.
FINANCIERS CALLED
HERE FOR OPINION
Believe American Wealth
Must Again Be Sent
To Europe.
ny ROBERT J. BENDER.

Over one-third of the total goio
supply of the world is now held by
the United States. The unpre-
cedented flow of the precious metal
from all nations to this country
during 1921 has brought our gold
pile up to nearly $1,000. 100000. The
best available estimate of the total
gold in circulation and in treas
uries throughout the world places
the amount at $4,000. 100000,
1t is this condition. among others.
that is making the formation OF the
administration foreign financing
policy a difficult one. In order to
get a concensus of the best finan-
cial opinion in the country on
remedy, President Harding has be-
gun a series of conferences with
kings of finance. the first being
quietly arranged dinner at the
White house Wednesday night.
Briefly the financial situation
confronting the world is this:
Has Heavy Balance.
The United States, urgently need
ing export markets abroad, finds it.
self possessed of a heavy trade bal
ance in her favor and over one
third of the worlds gold supply.
European nations, urgently needing
materials. also need gold with
which to pay for them. With the
gold now concentrated in the United
States, this country is the principal
one to which foreign nations must
turn for money. The United States,
with wartime liabilities to its peo-
pie totalling over s2l. .o00, ,0eO 900, is
loathe to loan further sums to for
eign countries without adequate
measures for funding her own liza
bilities and precautions to insure
payment of the foreign indebted
nesses.
This situation was the main sub
ject of conversation in the White
house conference Wednesday night,
because upon it hinges readjust-
ment of many domestic problems.
The conference was participated in
by Secretaries Hoover and Mellon,
j. P. Morgan, James A. Alexander,
president OF the National Bank OF
Commerce; Paul warburg, Charles
Sabin, president Of the Guaranty
Trust company: C. E. Mitchell, pres
ident of the National City bank;
William Kent, president of the
Bankers Trust company and BEN
jamin Strong, governor OF the New
York federal reserve board, all of
whom are New York financiers, and
n: c. McEldowney, president of the
Pittsburgh Trust company.
Foreign Loans Urged.
PRESIDENT Harding is understood
to have put before his guests a
foreign financing plan contemplat-
ing the floating of foreign loans in
this country with the provision that
proceeds from these loans be di-
verted to payment of American ex-
ports and measures for funding
American liabilities, such as the
liberty bonds. as they fall due.
generally speaking. the financial
leaders assembled are said to have
assured their support of financing
measures the administration might
undertake. but in addition. 1t is un-
oerstood' were almost a unit in urR-
ing that the United States must d.
rectly assist Europe financially IL
economic conditions are to be sta
lllzed with any raptdity.
During the war the balance ~
trade swung so heavily to the side
of the United States because we .r
ported so much more to Europe
than we purchased from her, that
it was necessary that payments for
American goods be made in pold
Vast quantities of this balance M
trade, unpaid for at the close Of
the war. Is yet to be liquidated. but
that which has been paid for during
1913, 1920 and the early months Of
1921, accounts in part for the tre-
nlendous gold accumulation now In
the United States.
Bullion Pours In.
In 1919. for example. s165,ooo, 900
in gold was shipped into the United
states, in 1920 the gold shipments
amounted to $376,00O, 900, and TINS
far this year they have. risen to
such proportions that the United
States finds itself today with the
greatest amount of gold it has pos
sessed in its history.
In the early months of this war
gold reachd the United States from
80 different countries. The difficulty
in the situation rests in the fact
that the gold of the world constf-
tutes practically a single stock held
temporarily in many reservoirs, but
expected to flow freely back and
forth across long trade routes as
exchange rates and other economic
conditions change. But now, with
great bulk of gold concentrated in
the United States, this country nnds
itself possessed of top-heavy
trade balance which, IL It is TO he
corrected, either demands more gold
from foreign buyers, which thew
haven't got unless it is loaned them
by the United States, or tremendous
~ increased imports. which, in turn.