Evening star., 1923-04-29
BY SHELDON 8. CLINE.
A BILLION dollars in gold consti-
Y tutes today a serious potential
menace to the continuance Of

A BILLION dollars in gold consti
~ tutes today a serious potential
menace to tho continuance of
American prosperity. In the
view of many high officials of the
government and leading bankers. 1t Is
at present the most ominous cloud
on the financial horizon.
Paradoxical as 1t may seem, while
we would be better off IL we did not
have this billion dollars in gold, it is
because we are in danger of losing
it that it's possession becomes a
menace. Probably never before In
the history of the world did any ma
tion ever have anything like such a
hoard of gold which it was at one
and the same time anxious to be rid
Of and afraid of losing. Because of
the uniqueness Of this billion gold
dollars 1t is interesting to know how
We acquired them, what we are do
ing and may do with them, and why
we are In danger OF losing them.
Came in Last Two Years.
Contrary to natural supposition
the gold that is now troubling us is
mot part Of the billions that flowed
across the Atlantic to help pay for
war materials purchased in this coun
try. When the war was over we had
a good deal more than our share of
the worlds gold, and even then many
authorities believed we had more than
was good for US. But since then,
during the last two years. in fact,
we have drawn in another billion
freakish billion. 1t has come to US
from all parts Of the world in settle
ment of trade balances and its inflow
was so even and constant that it did
not attract any particular attention
until sudden awakening came with
the passing of the billion mark.
Our stock of gold today amounts. in
round figures, approximately to s3,-
1o0, 100000. whereas the legal re-
quirements to cover currency and
credits is only about $1,000, ,o00, 000
Even a 60 per cent reserve, higher
than any nation ever before dreamed
of maintaining. calls for only $2.400,-
900. 900. Treasury officials and other
students of finance are agreed that a
reserve Of $4,000 .0o0.0 900 is sufficient
for all present purposes, with a mar
gin adequate to cover all expansion
| that is either necessary or desirable.
Gold Looking for Work.
If this extra billion dollars could
be left inactive in our bank vaults
1t would do no particular harm and
would be rather a pleasant thing to
have around, though it would be
much better, even from our own
standpoint, to have 1t at work in
other parts of the world where it is
sorely needed. But the difficulty is
that gold is a restless metal and
frets at inactivity. 1t wants to work
and in some way, good, bad or indif-
/ ferent, manages to find employment
Just now, with the country seemingly
entered upon an era Of prosperity and
business men everywhere bitten by
| the bug Of expansion, this extra bill
lion gold dollars is straining at its
! leash, anxious to get into the fray.
Unless 1t can be held in check, the
very dickens is likely to be to pay.
Overexpansion and imitation, with
skyrocketing prices for both goods
and labor, will be the inevitable re-
suit With $4,000. 900. 900 in gold suf-
ficient for all the expansion of credit
! 1t Is healthful for the country to
have, possession Of more than 3,o00,-
900, 900 in gold Is seen to furnish not
only a basis but an almost Irresistible
temptation for disastrous overexpan-
sion.
Might Find 1t Missing.
Overexpansion and imitation. with
their attendant train OF Ills, would
! be bad enough, but that isn't the
only, or even the greatest, danger in
! the present situation. Supposing,
after we had gone ahead and used
this extra billion in gold as the basis
for expanded currency and credits,
we would wake up some morning and
find we no longer had the billion dol
lars in gold?
That not only is a possibility, but
it is a very substantial liability.
It is probable that we will lose the
billion dollars even without overex-
pansion and imitation, but we will lose