Evening star., 1923-04-29
BILLION GOLD DOLLARS
MENACE TO PROSPERITY
Would Be Better Off if We Didn't Have
1t, But Gravest Danger Is in
Chance Of Losing 1t.

1t gradually and without seriously
harmful results. With overexpan-
sion and imitation to the extent of
the billion. It's loss not only would
be certain, but it would be speedy
and disastrous.
Secretary Hoover of the Depart
ment of Commerce foresaw this dan
ger as long ago as last September and
gave warning Of it in his annual re-
port. Since thon developments not
only have justified the warning ne
gave at that time, but have disclosed
the situation as more menacing even
than he pictured it.
Diminishing Trade Balance.
The gold we are talking about
came to us in part payment for mer-
chandise we sold abroad in excess OF
what we bought, the rest Of the bal
ance in our favor being taken care OF
through credits. But because Of
rising prices in this country and the
inability of Europe to buy, the bal
ance Of trade in our favor is rapidly
diminishing one. For the six months
period ended December 81. 1920. the
monthly balance averaged s275, 00o.
Each half-year period since then has
shown a lower monthly average. that
for the period ended last 31st of De
ccmber being only $55 900 900. At the
rate Of decline which has occurred
during the last two years. the day is
near when not only will the inflow OF
gold be stopped but export OF gold
will become necessary IN order 20
settle trade balances against us.
With some revival in the purchas-
ing power of Europe and with pros
pective payments on account Of the
allied debt. export of gold on a large
scale may be avoided and we ma,
keep the menacing billion, provided
ii is not permitted to be made the
basis Of overeXpansion and imitation.
But overexpansion and imitation, with
their soaring prices, would operate in
two ways to make large and early
gold exports certain. Because OF the
high prices, the American market
would become an even more attrac
tive one in which to sell, and the
same high prices would make It an
even more undesirable one in which
to buy. with the result that balance
of trade against US would pile up with
almost geometrical progress.
Not n Pretty Picture.
Then, some fine day we would
awake to find that our balloon had
burst. Before the inevitable crash
came. not only our surplus billion,
but a lot Of other gold would be
gone; we would have an expanded
currency and credit not adequately
safeguarded; our dollar would have
lost its proud eminence in the world,
and our foreign markets simply
would not exist. And our friends
across the water would pretend sor-
row while they felt JOY at our un-
doing.
Now this is not an alarrnist CRY.
for 1t hasn't happened yet. The point
is that it must not be permitted to
happen. What officials of the gov
ernment want-the very highest OF
them-is that both the lenders and
their guard against overexpansion.
Asked to Sit Tight.
They want every banker, every mer-
chant and every manufacturer 10
think not only twice, but many times
before lending or borrowing money
to enlarge stocks or increase plant
capacity. They point out that the
nations plant as a whole now has
capacity to produce more goods than
the railroads have capacity to trans
port and that there can be no increase
in the whole Of national prosperity
by enlarging plant capacity beyond
the capacity of transportation. And
as it is with expansion. so it is with
imitation. A rising scale Of prices is
maximum production Is attained. Be
yond that point high prices become
imitation. adding nothing to the home
market and destroying the market
abroad. So they are sending out
nationwide appeal to sit tight and
keep this menacing billion in mind.
1t is not doing US any particular
good, but 1t can do US a lot Of harm
If we permit it to tempt us into
folly.