The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1923-03-23
BY r. A. WRAY,
international News Service.

LONDON, March 23.-That a
great stock OF gold is q real danger
to a country, instead OF being q
security, is the belief of Sir Josiah
Stamp, foremost British economist.
Sir Josiah, who framed the eco
nomic clauses of the treaty of Ver-
sailles, was Assistant Secretary of
the Board of Inland Revenue from
1916 to 1919.
Now that the greatest ASSEM-.
hlage OF gold that the world has
ever seen has been deposited in the
vaults OF New York." says Sir JO-
siah, ''far-seeing men and women
on both sides Of the Atlantic are
beginning to realize a remarkable
economic paradox.
This enormous store OF the pre-
cious metal does not make for
wealth or safety. It does not make
lighter the burden Of the people of
the United States: 1t lays them
open to innumerable problems.
Enormous Gold Reserve.
sThe United States Government
today possesses nearly half the to-
tai supply of the worlds gold, ac-
cording to the latest report OF w.
C. Crissinger, the Comptroller Of
Currency. This does not neces-
sarily mean that America is better
clothed, or housed, or fed than we
in Britain. You cannot eat gold
You cannot make 1t into clothes.
You cannot build houses OF It. Gold
is, in fact, almost a useless thing
when it comes to ministering to
4. - -
It's chief function is to serve as
credit and as basis Of value and
exchange.
Ehis gold must either be kept
internally, and have an enormous
effect upon prices. or it must go
out OF the country to purchase
goods.
1.-THE whole economic structure
Of America has been tending to be-
come that of an exporting country,
and, of course. her tariffs are based
in that way against imports, where
as, with the payment Of a debt by
Britain, and also the ACCESSIBILITY
Of exchanging this gold for goods,
she is now almost inviting an influx
of goods, which must go against
her whole economic inclination.
=. It's Use Raises Prices.
s'She will naturally not like send
ing the gold out OF the country to
receive goods in exchange. That
would raise a howl against the
tariff at once. Therefore, she is
driven to keeping it within her
own country. II it leaves her
vaults and goes into general use
it will have the effect of vastly in
creasing prices unless there is an
enormous increase in production.
"But there is an even more in
sidioug danger-that the possession
OF this quantity Of gold may lead
the Federal Reserve Board largely
to initiate currency. When the but
lion il unloaded In harbor il Is car
ried to the vaults for safe keen
ing. and then it remains in reserve.
"Supposing the percentage Of re.
serve under normal conditions in
America TO be 30 per cent, this
means that for every 800 of pur-
chasing power and credit in circu.
lation she has $40 in gold where.
with to- back At. But today, owing
to the enormous quantity of gold
her reserve IN approaching double
that figure, and she is rapidly
reaching the point where every dol.
lar OF purchasing power on the
Continent could be replaced by gold
Of its face value.
"Let us suppose that they sue
cumb to the suggestion. Credit be-
comes more plentiful because the
ratio reserve is lowered. More
paper dollars are available, so that
prices rise, with the result that a
dollar note no longer buys the old
quantity of goods. Imitation sets
in. with the subsequent Nemesis.