Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-06-19
BANKERS TO TALK
GOLD DISTRIBUTION
Conference viii Consider
Financial Ills of Europe
and Seek Remedy.
BY GERVILLE REACHE.

PARIS. June 1S.-Europe's financial
troubles and the uneven distribution
of the worlds gold will be put under
the microscope for intensive study
soon by the banking leaders of Amer
lea and three European countries.
The discussions will take place at
the customary meeting of representa-
tives of the four great banks of issue
of the United States, England, Ger
many and France, which will be held
in the next fortnight near New York
on Long Island. NJ. Rist. deputy
governor of the Bank of France, will
be the French delegate.
OF Interest to All.
The questions to be discussed at this
conference are of the greatest interest
to the United States, as well as to
Europe. Problems of imitation or de-
fiation as they may affect America.
because of her huge gold holdings. and
the demoralizing effect of every Euro
mean monetary recovery on the Brit
ish money market will occupy the
ffnanciers.
= Besides the application of the Dawes
plan and the question of Polish credits
for sterilization, Montague Norman,
governor of the Bank of England;
DIR. Schacht, president of the Reichs-
Iank of Germany, and NJ. Rist are
abing to study the manner in which
the gold is to be distributed through
o4t the world.
4 1t has been observed recently that
the gold deposits of the Federal Re-
serve Bank have decreased success
sively by sixty and then forty million
dollars. This gold has been bought
1SHy a 10 nh re Nrnf
The Federal Reserve Bank decided to
set up abroad a new gold deposit of
$60,000,000 to be used as an interna-
tfonal fund, facilitating transfers be-
tween other countries in a manner
similar to the gold compensation fund
Of the Federal Reserve system. Amer
lean f1nanciers very judiciously con-
slider 1t good policy to keep separate
from the reserve itself it's stocks of
precious metal, as these may be
wanted at any moment to return
abroad to avoid temporary imitation
followed by unavoidable deflation.
England Gets Surprise.
London, where such a quantity of
gold is not available, since of the
150,000,000 pounds of the Bank of
Englands reserve, 115, 100000 belong
to certificate holders, was taken by
surprise at a simple request for
100000 pounds of gold on behalf of
the Bank of France. This sum
represented almost tenth of the
Bank of Englands actual reserve.
The rate for money increased from
3i2 to Az per cent and Chancellor |
of the Exchequer Churchill has seen |
despairingly for the budget that in |
terest rates on Treasury bonds rose |
similarly from $50 to 4.33 per cent, |
or higher than they were when the |
discount rate of the Bank of England |
was still per cent.
Explanations have taken place be-
tween Paris and London on this SUBJ
ject, with comprehensive discussions |
considering the weakness of the Stock |
Exchange and the French Bourse. 1t /
was then seen that the increase, un-
usual in June when America had not |
yet started calling back funds to |
finance the harvest. was caused SIM |
ply by the Strengthening of the /
French financial situation, and that |
the French banks gold purchases |
were nothing but an alarm signal on |
account of the exaggerated uses which |
have been made of sterling credits, |
these having been reinvested in the |
London market and used to speculate
OH lnS Use OL the franc.
German Capital Called Back.
The same phenomenon happened in |
the Spring of 1925 when the German |
mark was stabilized. The Germans |
called back to Germany capital which |
had escaped to London during the in |
fiation, to the detriment of the British |
money market.
After Germany. it was Belgium and
then France which Strengthened their
finances, and as London is the clear
ing house for the continent, every
european monetary recovery pro-
duces terrible consequences in the
British market. 1t was then discov-
cred that the key to the whole difficult
situation was New York, for it is
obvious that IL there is SO much float.
ing capital and credit going to En-.
rope without a cover in gold, it is be.
cause there is so much gold in the
United States for which there is no
use.
The problem, therefore, could not
De settled by chasing gold from one
central European bank to another. or
a decrease in world gold prices would
result, which would be detrimental
to the whole world.
The report of Agent General of
Preparations Gilbert announces that