Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-11-23
Gold Stock Control
Seen Natural Result
BY HARDEN COLFAX.

Accumulation by France and the
United States Of over $500, 000, 900 Of
the worlds stock of gold In the last
year has come about as q natural re-
suit Of the course of world commerce
and trade, according to high officials Of
the Treasury Department.
This attitude by American Govern
ment officials is in opposition to the
opinion expressed by many economists
and financiers in Europe. The latter,
especially those IN England, declare
that the shortage of gold in other
countries and the accumulation in
France and America have caused depres-
sion throughout the rest of the world.
American officials hold that the fact
that there was business depression in
the other countries Of the world has led
| to the gathering of these stocks.
English and German flnanciers say
| that business is in state Of depres-
sion because there Is not sufficient gold
| to permit it to increase in volume. They
declare that while there Is enough
| gold in the world to permit business to
| increase, the gathering of stocks by
the United States and France has re-
moved gold from active use and not
enough remains to permit business
sterilization.
American Treasury oficials declare
that the gathering Of gold by this
country and by France has been due TO
lower commodity prices. These low
prices have hit especially those coun"
! tries which are in the main producers
| Of raw materials. Such countries have
| YFPa IN
terial prices and they have not had SUI
flcient manufactured commodity BUSH
ness to Offset this loss. Therefore,
since there was nothing to bring in
| gold, the flow of gold has all been out
ward from these countries and their
exchange has dropped In consequence.
When the exchange Of q country
drops, 1t simply means that the money
Of that country Is worth relatively less
with relation to the value OF the cur
rencies Of other countries. Conse-
Quently, when such countries have to
buy manufactured articles from other
countries, they must pay the d1derential
| in gold, which increases the outward
flow from their Golfers. The United
| States on her part has something to
balance the drop in raw material prices
and has money coming IN and gold
coming in to counterbalance the amount
going out to other countries for goods
bought there.
There is no question that the United
States and France are today the most
prosperous nations in the world. France
has no unemployment and has huge
stocks of gold on hand. Economists
declare that this Is prime example
of what can be done by @ country
which concentrates and specializeS on
manufactured products rather than on
raw material production.
France has such q reserve supply OF
gold that negotiations are now In prog
ress looking to a mutual credit arrange
ment between the Bank Of England and
the Bank of France. This, according
to economists and Iinanciers here, would
enable Great Britain to obtain readily
the gold necessary for the expansion
Of her trade. It is looked upon as a
matter Of self-protection, for If Great
Britain gets hard up" she will be en-
, abled to get gold without disrupting
her trade relations and financial ar
rangements with other countries, espe-
cially with her own dominions. The
arrangement as now outlined would
enable France to put her gold reserve
to work and would enable England to
secure gold to guarantee her note issues
and to take care Of urgent Australian
financing.
The negotiations are not in the form
Of a loan, but Of the establishment Of
mutual credits, much of which Is done
by corresponding banks In the United
States. It would obviate shipments Of
gold in most instances and the fact
that Paris and London are so close
together facilitates the shipment Of
what gold is necessary when the need
arises. It seems to be the general
impression among flnanciers here that
England stands to benefit to q some
what greater extent than does France.
It might even be that the English
credit in the Bank of France might
serve as an assurance to such an extent
that Great Britain might never actually
have to use It.
The flow Of gold to the United States
in the recent past has not drained
Europe's supplies. The now has been
mainly from the Orient and South
America. It Is the countries Of those
geographic divisions which have suf-
fered most from the drop In exchange
rates.
(Copyright 1s30)
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