Evening star., 1925-04-30
BRITISH REVERS|ON
TO GOLD ACCLAIMED
Agreement With U. S. Makes
Nations Financiers
to World.
BY FREDERIC WILLIAM VILE.

BY FREDERIC WILLIAM VILE.
American financiers, official and
| otherwise, freely acclaim the Anglo
| American gold transaction, just an
| nounced by the British chancellor of
| the eXchequer, as the most momentouS
! international deal" since the accept
| ance of the Dawes plan. Its conse-
| quences will make themselves felt
| throughout the world and for many
| months to come.
| Great Britain. through resumption
| of the gold standard and practical
| restoration of pound sterling parity, is
| the immediate beneficiary. But the
! United States is a direct gamer, too
| The principal advantage to us is that
| a method is at length devised for re-
! ducing our so-called 'Elut of gold. :"
| The Treasury holds about $1,000 ,000.-
/ 900 in gold, which represents between
| 40 and so per cent Of the worlds total
| gold supply. American bankers and
| economists long have regarded this
| hoard genuine embarrassment of
| riches. How to prevent our gold from
! choking" America into financial
! paroxysm threatened some day to be
come a real problem. The plan. now
! made public, to establish 5000, 900 900
in gold banking credits for Great Brit.
| ain Is substantial tsep toward solu-
tlon OF that problem.
London Regains Position.
1t is possible to disclose the inside
| history of the epoch making negotia-
tions which practically league the
United States and Great Britain in an
| entente for joint fulfillment of inter
national financial requirements The
war converted New York into the
| worlds money center. that supremacy
| having been wrested from London
which held 1t for centuries. London
| has been making steady strides to-
ward recovering its historic financial
eminence. BY the gold transaction
just effected, ii is restored to "A posi-
| ton at least approXimating equality
with New York. That was one OF
| the goals the British were anxious to
attain when they began negotiations
In America at the end of last year.
1t was to conduct those negotia
! tions that Montagu c. Norman, gov
| ernor of the Bank of England paid
| his mysterious visit TO New York in
January. 1925. His purpose was to
confer with Benjamin Strong, gov
ernnr OF the Federal Reserve Bank in
| New York, regarding sterling eX-
change and correlated questions Mr.
| Norman's business was closely guard
| ed. For long time it was thought
| 10 concern some readjustment of the
British debtfunding scheme Messrs.
Sa Norman and Strong dealt as private
| bankers, and not as government Off
| cials, although both of their banks
| are semi-official institutions
Their dealings were marked bv
strict informality and absence of red
tape. They have achieved one of the
most far-reaching economic agree
ments in international history with
out exchanging anything except ordi-
| nary bank letters In that respect
as in others. the resultant transac
tion is unique.
u. s. Offers Support
Acting with the approval. though
not at the instruction of the Federal
Reserve Board of Washington. Mr.
Strong offered the cooperation of
the New York Federal Reserve Bank
| in maintaining the British gold stand.
ard, if the latter were re-esta blished.
and If such cooperation should be
come necessary. 1t was represented
to the governor of the Bank of Eng
land that American financial authori-
ties believed it would be safe for Lon
don again to become free gold
market as soon as the pound
sterling resumed parity. New York,
in effect, said to London that il would
'ralded' after restoration of the gold
standard, and to prevent such a
calamity New York proffered aid.
This aid, the Bank of England $
representative was informed, would
be rendered by placing American
gold. up to an agreed amount. at the
disposal of the British institution.
This was to be accomplished not in
the form of a gold loan, but of gold
credits, or actual shipments of gold
from New York to Lonodon, if and
as required. Thus, while helping
Britain America saw a means of
helping itself.
Gold Supply Is Burden.
The Federal Reserve Board has
consistently been educating the pub
lie and the banking community to
understand that our $4,000, 900 600 of
gold has become a burdensome treas
ure- 1t has been made plain that
this gold must, in some form or
other, gradually be diverted to some
of its original holders. The offer to
Great Britain provided for the de-
sired outward flow.
1t is not easy for the average per
son to grasp the technical details
of the big gold bargain which Uncle
Sam and John Bull have just struck,
Its true inwardness can be under
stood-namely, that the worlds two
richest nations are now linked in an
unofficial pact based on mutual in
terest. There will henceforward be
species of cooperation between
Wall Street and Threadneedle Street
of unprecedented intimacy. The gold
standard is now advertised to the
world as a currency system behind
which the almighty dollar" and the
sovereign pound stand shoulder to
shoulder. In a way. New York is
now only returning a favor London
before the war often did the Ameri-
can metropolis. On numerous occa-
sions prior to 1914, when incon-
veniently large shipments of gold
from the United States would other
wise have been necessary, they were
prevented by the granting of tempo
rary American credit facilities In
London.
Holland, promptly following the ex-
ample of Great Britain, announces
her return to the gold standard.
Three or four of the other smaller
European nations probably will de
likewise. Thus the Anglo American
gold entente is destined to be an eco
nomic stabilizing influence of world
wide dimensions.
Copyright, 1925l