The Barre daily times. (Barre, Vt.) 1897-1959, 1922-02-27
Use for Excess Gold.

Within ten years we have more than
doubled our stock OF gold, and yet the
times are not so good as would have
been expected from such excess of
domestic banking capacity. The rea-
son is thata gold has been degraded
from its natural and best use as a
means Of settling normal balances be-
tween nations trading together. Before
the war mere scores of millions would
settle accounts totaling billions on both
sides. To-day's the world debts to us
alone run into billions, and gold is
called upon for use in payments OF
debts to a total exceeding the total
gold existence. Under such conditions
gold dollar or pound counts for dol
lar or a pound, and not as basis for
acceptable banking credit of several
times its monetary value.
Experience has taught the most
stubborn economic illiterates that ex-
cessive balances of trade are undesir-
able. 1t is perceived that unused gold
is costly property; more charge
against other earnings than itself an
earning asset, and that those who have
more than they can use TO advantage
should part with it for their own
good, as well as for world benefits. The
federal reserve board takes the lead in
teaching this doctrine. In its January
report it remarks that the excessive
supply of loanable funds has not been
followed by speculative excuses, but
that the funds have gone into invest
ments. On other similar occasions
funds released by quietness of trade
have gorged the call money market
and been absorbed in speculation or
security imitation.
The federal reserve board leaves no
doubt what those other uses will be.
its report for February remarks that
our excessive accumulation of gold is
IA false guide in matters Of credit
policy" The flow OF gold between ma
tions has another use besides that of
settling trade balances. Gold is the
regulator of currency ~ well as of
credit, and its import or export is the
surest sign whether a country needs
more or less money. Countries on a
gold basis give hostage against budget
deficits or the printing Of currency, and
face economic exhaustion and crisis If
they do not apply self discipline. There
is an application to ourselves As the
owners Of the largest gold -upply the
the world ever knew we are not forp-
fed impregnably, but rather are on
notice that we shall be called on TO
supply what the world has right to
bid for; and knowledge that gold may
be wanted for export is under all cir
cunstances q deterrent to indefinite
credit expansion" That is the rea-
son why falling discount rates are not
followed by the expected surplus Of
funds for spectators. The export Of
dollar Of gold cancels several dollars
OF credit Our banks arc holding their
resources in reserve for world serviees.
but not in a spirit Of altruism. As the
federal reserve board says; "Consid-
erations Of national interest alone are.
therefore. a sufficient reason for a care
ful weighing Of proposals looking TO a
redisposition Of the gold supplies Of the
world. and involving a return Of some
part OF the gold held by the United
states for use elsewhere"
As the case stands our foreign
friends cannot bid for our gold with
their goods. but Il j. 20 our interest TO
enable them 10 produce more, - as TO
trade with US on more equal terms, and
thus end the unbalanced conditions Of
international trade. u IL better for us
10 trade ON lower levels with foreign
countries than 10 expand our domestic
trade on higher levels Of inflated
uriees. That can conc about only by
the re-estabiishment Of the gold stand
ard. The full restoration of gold as
regulator ~ currenrr. trade. budget
reform. y not q matter Of = dav. u j.
the fret step Which eosts and England
has taken u. u j. cur duty. privilege
and interest % support the party ~
pound ard dollar exchange throlszhput
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