Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-08

Never before has the world been so
eager for new gold strike: never be-
fore has the business and financial
machinery of the world been so badly
in need of fresh supplies OF the precious
metal. An event such as the discovery
of gold at Suttsr's Mill in California, in
the Alaskan Klondike, on the Witwa-
Hill in Australia would electrify the ma
tons from China to Peru and from
Tasmania to Spitzbergen.
The two greatest republics Of the
world-the United States and France
have as much gold, approximately. as
all the other nations of the world COM
bined. The United States has in the
neighborhood of $4,000, 100000, while
France holds about 81, 10000 900. The
Britain with about $3.50, 900, 900. with
Germany following with $530,000, 900.
The difficulty in the situation is that
the United States and France have con-
tinued to attract gold over a consider
able period of time, while other nations
have steadily lost their holdings. This
reimbursement of gold holdings slows
down international trade, throws for
eign exchange out Of line and acts as a
brake on business revival In such a
situation, fresh gold supplies are i'm
peratively needed to fill the gaps In the
worlds financial structure.
Gold is the standard medium of ex-
change throughout the world. Inter-
national trade, in modern times, cannot
be very successfully or profitably car
ried on without employment of gold.
The rate at which gold is flowing to
France and the United States is I'M
precedented for peace times. In the
last year American supplies of monetary
gold have been augmented by some
$500, 100000, while France, in the same
brief period, has added no less than
$3.50, 100000 to her hoard. The two
countries, in single year, have abb
sorbed an amount of gold from the rest
OF the world equal to new mine output
for two years.
Situation Cannot Continue.
Obviously situation in which only
two nations of the world absorb two
years gold output in a single twelve
month cannot continue indefinitely. AL
ready some countries have been forced
of the gold standard through the neces-
others are threatened.
Falling prices of commodities all over
the world, inability of debtor nations to
borrow, and unwillingneSS of creditor
nations to lend have stimulated the con-
centration Of gold In the United States
and France. Both countries have far
more gold than they need to meet their
currency and credit requirements. Al
though the Federal Reserve act requires
a 90 per cent gold reserve, in addition
to the eligible commercial paper security,
behind the dollar, we now have SO much
gold that the gold cover Is creeping up
toward 100 If the trend continues
there will be 500 in actual gold in
Treasury and Federal Reserve Bank
vaults for every 500 in Federal Reserve
paper currency outstanding. France.
too, has more than sufficient gold cover
for her paper currency.
Gold is the regulator of foreign trade.
When a nation buys more than 1t sells
that is, when the international ex-
change of commodities does not balance
the nation must remit in gold. The
unprecedented fall in commodity prices,
especially of Such raw materials as farm
products and the products Of mines, has
meant that much less money has been
due the shipping countries. When rub
Der was selling for a dollar or more a
pound, the rubber-producing countries