The Washington times., 1923-12-06


/ Federal Reserve banks thus re-
ceived some $3.50, 0OO. 900 additional
gold, their actual gold reserves on
November were only SS9. OOO, 900
greater than at the beginning Of
TAG year. Ia
HOARDED ABROAD.
The remaining $191 .0Oo, 900 was
paid out by the banks either to be
used In the arts or to be absorbed
into circulation at home or in those
areas of our dependencies and, In.
Decd abroad, where. curiously
enough American currency Il said
to be Increasingly circulated and
It is likely that monetary his.
toriafls Will hereafter describe our
ten years, from 1914 to 1923, as "a
golden age" On July 1. 1914. the
estimated stock OF monetary gold
coin and bullion in the United
States was $1,871 GIL ,723: on Novera
Der 4, 1928, the corresponding ag.
gregate was Sales, O9i ,621. This
increase greatly exceeded our
growth in numbers: our per CAPITA
stock Of gold In 1914 being sis. 100
and how $37.30. Moreover, whereas
our total stock OF money OF all
kinds. relative to population. has
increased less than one-third since
1914, our supply OF gold by the
same standard has virtually dou-
bled.
Even more sensational has been
our increase as compared with the
rest OF the world. AT the begin.
ming OF 1914 OF b world stock Of
monetary gold Of $S239 500, 900, the
United States held $1,000, 700 900, or
70 per cent. At the beginning OF
1921--the latest date. for which com.
parable aggregates are available. -
of q world stock Of $8,S42. 0OO. 900.
we held $2.942 ,14a, 900, or 35 per
cent. This process has undoubtedly
continued in the last twenty-three
months. so that it is likely that
since the war we haye not only vir-
tually doubled our relative share of
the worlds monetary gold, but are
actually In sight Of owning 'one-ha1f
or the absolute amount.
Gold Centralized.
Finally. 1t Is to be noted that,
although not impounded IN the man.
ner now obtaining in all other coun-
tries, our gold Is nevertheless CEN
tralized. OF our aggregate OF more
than four billions Of gold coin and
bullion, no less than three and q
half billions of gold il held IN the
treasury,
And now that we have this vast
mass Of gold-in evident excess Of
our present or prospective monetary
heeds-wtat purpose Is it to serve?
Have we really enriched ourselves
as a nation to q degree greater than
would have been. the case had wo
taken our payment in commodities
or In credits2 Or have we tolerated
the growth Of a monetary Franken-
stein which may eventually work to
our economic undoing by renewed
initiation or circulation and credits?
Cause Of Initiation.
The latter possibility is no alarm
ing fantasy. Surplus gold reserves
tend to undue expansion OF credit,
which in turn produces inflated
prices and the sequence of events
which made 1920 a fateful year In
American business experience. Al
ready we hear proposals not from
wild-eyed farmer radicals, but from
certain quarters of the money mar
ket itself, that the Federal Reserve
banks should reduce their discount
rate to nominal figure and there
by put to work" part of the $780,
100000 gold that lies idle, buried,
boarded
Fortunately, the prevailing noe
Is different. In releasing for cir
culation its current accretions of
gold and Federal reserve system dis
closes that q finger is on the pulse.
a q mr. i'm,
ports seem the least desirable wav
of liquidating our credit balances.
Like q latter-day Croesus; we have
parted with our wares for flow
of the precious metal-and our
store has become might. But a
nation, as an individual. even
though in a different sense, may be
gold -bricked" Long since past
our domestic needs, monetary o.
Industrial, we have welcomed this
golden stream in the implicit faith
that when the day OF rehabilitation
dawned the world-old monetary
habit would assert itself and Euro
pean currencies would be recon
s;ructed on the old lines. May
at least venture a ,caveat as to the
certainty of this2
Gold STANDARD Return.
Gold standards abroad we shall
doubtless see again. But gold
standards need not be gold CIR
rencies and need not Of necessity
demand vast stocks OF gold, Inn
pounded or current.
It would be a curious duplica-
ton of our Midas-lIke monetary ex-
perience II, having been afflicted
in the last generation with use-
less stock OF silver, we should In
this be burdened with a needless
hoard OF gold.
In any event we may properly
pa use In our present gold accumula-
ton. 1t Is something more than
an open question whether the time
has not come for American bank.
ing sentiment to crystalline con-
structively as to the irnpolity of
continuing gold imports.
n 4 a