Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-25
GOLD DISTRIBUTION
TO Be DISCUSSED
Problem of Supply viii Be
ThraShed Out at New
York Shortly.
BY JOHN F. SINCLAIR.
Special Dispatch to The Star.


Reichsbank. meets the heads Of the
Bank of England and the Bank of
France and the Federal Reserve off,
cials in New York shortly, the question
Of gold distribution will cause plenty of
discussion.
The published report of the gold del
egation of the League of Nations is now
out. Its conclusion-that there is a real
possibility of a shortage of new gold
Tor monetary purposes within four years
will be carefully analysed and dis
eussed.
George E. Roberts, vice president of
the National City Bank of New York,
Is the American member of the COM
mittee, which has just concluded its
study.
Can the present gold supply, plus the
annual gold production, take care of
the normal growth in business in the
future? The answer of the committee
IS definitely in the negative, under ex-
isting conditions.
In this gold report the monetary re-
QuirementS are calculated on four dis
tinct assumptions: Cd That a reserve
of only SO per cent is needed and that
the rate of growth of demand is 2 pei
cent per annum; (2) that the reserve
rate is SO per cent, but the rate of
growth is 8 per cent per anrum; CD
that a reserve of 40 per cent is needed,
but the rate of growth is per cent
per annum; (4) that the reserve ratio
is 40 per cent and the rate Of growth
Is per cent per annum.
The League Committee found, except
in the case of the first assumption, that
the supply of new gold available for
monetary purposes will be inadequate
by 1884, unless measures to alleviate the
situation are adopted In time"
World Bank Leaders.
What measures can be taken to meet
the problem? That's the subject, doubt
less, which will interest the world bank
leaders when they meet at the Federal
Reserve Bank of New York.
Two new faces will be seen there
One is that of DR.. Luther, who sue
ceeded DR.. Hjalmar Schacht as preSi-
dent of the Reiehsbank. He has had a
distinguished career. He is a former
chancellor, and has the confidence Of
the business groups to remarkable
degree.
Eugene Meyer, jr., new governor of
the Federal Reserve Board, will be the
othNr new figure. He has had world
of experience, is familiar with Federal
Reserve policies, and has the entire
confidence of the administration.
Montagu Norman, bachelor head OF
the Bank of England, has real job on
his hands. Under the Norman leader
ship in the Bank of England the British
pound was brought back to pre-war par.
It was a very painful process, Tor de-
fiation Is much harder to attain than
imitation. Put it this way: Imitation
is the good time; defiation is the morn
ing after.
The recent condemnation of the gold
standard by the Manchester Chamber OF
Commerce has caused many business
men in England to wonder whether a
new drive against the gold standard Is
about to open.
The French are sitting pretty. Unlike
the English. who debated to bring the
pound back to normal, the French, after
long period Of imitation, refused to de-
fate, but did stabilize the franc at about
one-seventn of its pre-war value. This
resulted In a business expansion that
has been the envy of the world.
But the report Of the Gold Commit
tee of the League Of Nations, plus the
rumblings heard throughout the world
against the gold standard, makes the
coming meeting Of the banking leaders a
world event.
ReparatiOn Bonds.
When Representative McFadden last
April opposed the sale of reparation
bonds in the United States, largely be-
cause, from his viewpoint. it would in
volve the United States N European af-
fairs to dangerous degree in case
threat to amend the treaty of Versailles
were made, he was severely criticized
and challenged in high places. Secre-
tary Mellon said there was no connec-
ton whatsoever between reparation
bonds and debt settlements
SO substantial part Of the reparation
Issue Of 5000 ,000, 900 was sold to Ameri-
can investors in June It go. Yesterday
these bonds we're selling at SO.
Is this first issue of German repara-
ton bonds IN danger Of reputation?
Well, hardly
For Germany, under the Young plan,
has agreed to make, during the next 81
years, annual payments averaging about
$500, 900. AS the total capital value
of the June issue was about 5000, 000,-
600. this represents merely fraction of
what Germany is expected to pay.
ANY reputation by Germany Of this
initial issue would be suicidal-it would
destroy her credit at home and abroad
1t would wreck her whole financial
structure. No one knows it better than
the German leaders.
But, nevertheless, the American peo-
pie should understand clearly that the
more reparatlon bonds sold In the
United States, the more powerful the
incentive will be in the United States
TO maintain the status quo and oppose
any move looking to revision of the
treaty of Versailles.
To minimize Americas position in
this matter would be to underestimate
It's importance In future world affairs.
Western Business.
Business in the Northwest and the
Middle West hit low point in early
September and now is definitely tending
upward" says Edward W. Decker, presi-
dent OF the Northwest Incorporation,
whose banking interests extend from
the Twin Cities to the Coast.
Conditions are not so bad in the
Northwest as pictured, according to MIR.
Decker. He gives two reasons why
the impression has spread that the
Northwest is In bad shape First over
statement in August of the effect of
the drought in Minnesota, South Da-
kota, North Dakota, Iowa, Nebraska,
Washington and Montana, for condi-
tons in these States are much better
than reports have indicated, it is said
The other reason shows up in the
retardation of debt liquidation because
of the reluctance of the farmers to
sell their products at present low prices
What really is happening is that a
great deal of these products are going
into storage, to be sold, it is hoped,
on a higher basis.
But the ultimate debt paying and
purchasing power in these States is
only slightly reduced from last year, "
concluded this Minneapolis banker
copyriEht. 1880. by North American News