Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-06
Gold Flows to America.

II Is announced by the Federal Re-
serve Board that the total monetary
gold stocks in the United States have
reached $4,9es, 900, 900, or about As per
cent Of the $ll 900 100000 world total
Such a situation is doubtless compli-
mentary TO the wealth and industry 0t
this country and to the soundness OF
ita Government. 1t Is not, however,
GOOD business The credit Of the world.
generally speaking, is based on gold
end gold reserves. Obviously, II nearly
half the gold stocks are in one country
and 20 per cent are in anotner,
France, the other nations are in BAD
way when it comes to doing business.
And the United States, the greatest
producing Nation in the world, is han
dicapped enormously under such con-
ditions when 1t come to trading with
the rest of the world. Other nations
simply are not in a position to purchase
American goods
The flight Of gold to the United
States in the last year has been re-
markable. 1t Is due not to the trade
balances so much as to a desire on the
part Of foreign possessors Of gold to
find a safe refuge for their gold. It Is
because the Governments of the United
States and of France have been con-
sidered particularly stable in world
threatened with many revolutions that
the banks OF these two nations have
become the great repositories Of the gold
stocks of the rest Of the world. South
America, with its string of governmental
overthrows. set the pace. The monarchy
In Spain fell. There have been con-
slant threats Of governmental over
throw in Germany. though these have
been greatly minimized IN recent
months by the turn Of affairs in that
country. In Great Britain the Labor
government was tottering, and has
finally given place to coalition gov
upon organized government 1t is not
strange that the owners of wealth in
many Of the countries affected have
sought a haven for their gold.
What the world needs is not a new
monetary system so much as stabilized
governments and confidence in business
There has been little desire by the peo-
pie Of this country to hoard gold when
compared to the frantic efforts Of for
eign poSsessors Of gold stocks to have
them safeguarded in America.
Before the crash came in 1929 in the
stock market of this country and the
depression became world wide the fear
was expressed that the gold stocks of
the world were rapidly becoming insufh-
cient TO meet the needs OF commerce.
Demands were made for a bi-metallic
system. But now that the business of
the world has shrunk greatly, 1t appears
that 1t is not so much the lack of q
suff1cient supply OF monetary gold that
IS at the root of the trouble today as 1t
Is maldistribution of these gold stocks
No matter what monetary and credit
systems might be developed, If the same
conditions OF unrest and fear existed in
many nations OF the world as have ex-
, listed during the last year, the monetary
! stocks would be bound to flow into the
banks Of the nations which appeared
to have the greatest stability.
Fortunately there are evidences that
conditions are making for greater sta
bttty. II had been long understood that
the government of Spain stood on the
brink Of overthrow. The revolution
there has come and gone. Other Euro
pean nations are showing signs Of gath
ering stability and confidence. In South
American nations which have expert
enced changes in government conditions
are becoming more settled. The huge
gold stocks in this country and in
France must eventually find their way
back to the other nations from which
they have fled for safety.