The Bozeman courier. (Bozeman, Mont.) 1919-1954, 1924-09-17

NLG NOAIAOA
conference is an ultimate redistribu-
ton Of the worlds gold, states the
Guaranty Survey, published in New
York. While an immediate cessation
OF the flow of gold into the United
States is not probable, any outward
movement or a large scale would nee
essarily have important reactions in
this country, the Survey proceeds.
And the relation of gold to chang
ing conditions of trade will be noted
here with increased interest.
Early Outflow improbable.
Whatever changes may occur in the
cOuntry's trade balance, there will
be no pronounced movement of gold
from the United States, it appears,
until there is a more general return
to an effective gold standard for
European cu~rrencies. Moreover. the
prOmptness of the temperance of a
sustained net outflow Of the metal
in response to expected changes in
other features of the international
account, as well as the rapidity of
movement ono it has begun, will de-
pend largely upon the extent to which
the financing by European interests
will be centered in New York.
1t is well to recognize in the pres
ent abundance of standard money and
easy credit conditions a combination
of influences which may contribute to
an inordinate rise in the average lev
ell of commodity prices. And such a
development, in the absence of cor
responding price changes abroad.
would tend to induce a reversal of the
gold movement. Fortunately, how
ever, initiation does not necessarily
result from such influences, as has
been repeatedly demonstrated by ex-
perience. The opportunity still per-
sists for restoring a better balance
between prices through advances of
those now remaining unduly low-in-
creases which, although raising some
what the average Of all prices, new
ertheless need not result in q general
i~nflationary movement.
The constant growth in the circula-
ton of gold adds to the strength of
this country as a potential exporter
Of the metal. Since this gold repre-
sents in large part a replacement Of
Federal Reserve notes, the reverse
process of substituting notes for gold
may be effected without the deple-
ton of the gold reserves of the fed
eral Reserve banks or material effect
upon the total monetary circulation.
Effect on Federal Reserve.
Important as is the increasing cir
~culatiOn of gold, a more significant
factor is the remarkably large re-
serves of the metal held by the Fed
eral Reserve banks in excess of the
amount required in support of notes
and deposits. Against Federal Re-
serve notes of $1,73S, OOO, 900 and de-
posts of S2,158, 900, OOO-a combined
total Of 1896, 900 ,OOO-the Federal
Reserve Systems gold holdings on
August 20 were 1922, 900 900, the
ratio of gold to notes and deposits
combined being 80.3 per cent.
Any large outflow of gold would
necessarily result in a reduction Of
these reserves, and it is equally GER
tain that a contraction of the reverse
ratio would be regarded by some as
an evidence of initiation of the de-
post and currency circulation. The
fact is, however, that an expectation
OF gold greatly in excess of the
amount recently placed in circulation
could be effected without endanrer-
ing the %sOundness Of the structure Of
bank credit.
Agricultural Conditions.
This year especial interest has at
tached to crop and market report
in view of recent developments which
1t appears will advance in a marked
degree the restoration of the chs
tomary balance between agriculture
and industry, states the current is
sue of the Guaranty Survey, pub
lished in New York.
The latest reports show crop con-
ditions in general to be surprisingly
good, considering the u~nfavorable
weather which was encountered early
IN the season. The most striking
changes, however, and, probably the
most important, have taken place in
the markets for agricultural COM
modities, the Survey says.
Wheat and Corn Situation
The remarkable rise of wheat
prices in recent weeks has been pri-