Evening star., 1931-12-16
CURRENCY STATUS
IS ON 1918 BASIS
Japan's Removal From Gold
Standard Restores Condi-
tions After World War.
BY FRANK ii. MCCONNELL.
Associated Press Financial Editor.

NEW YORK, December 1s-Re-
moval of Japan from the gold standard
restores the world position of gold-pay-
ing countries to about the same status
that ruled Immediately after the last
gun Eas fired in tie World War bank
ers here recalled.
An atlas of the world would now
show all of Asia of the gold basis:
the larger part of Europe; a big part
OF South, America, and all but few
areas of Africa In effect, the work
OF re-establishing the gold standard
throughout the world is just as huge
a problem today as it was in Decem-
Der, 1918.
One great advantage which is en-
joyed today over the same day 13 years
ago. SO executives Of leading banks
said, is the fact that much of the post
war wreckage has been cleared away.
The world has tried many expedients,
1t was said and has discarded many
| fallacies. 1t now faces its task of re-
habilitation with clearer vision. a bet
| ter understanding and a stronger de-
termination than before, several bank
ers asserted
Campaign For Yen
American banks which have figured
in the underwriting of more than
$500 100000 of Japanese securities in
this market. rave closely followed the
efforts of that country against heavy
odds in its campaign to re-establish
! the japanese ven on a gold basis. First,
like most warning nations. it faced the
postwar debt burden. which proved q
severe strain on its currency; later 1t
was blocked in its campaign because
| of the Japanese earthquake. and when,
| in January, 1880. it returned to TIE
| gold standard, it took its action at al
most the moment when world COM
modify prices began their toboggan and
| the present sweeping depression got
| under way.
| Leading bankers. silk importers, cot
| ton exporters and other American busi-
ness men who deal with Japan do not
expect any unusual difficulties to grow
out of the japanese governments
| latest action. Temporarily. it is rea-
soned, the silk and cotton industries
may face the handicap of rapidly
! shifting prices in terms of the yen. A
| lower price for the yen in foreign ex-
! change markets would make it costlier
| for japanese manufacturers to buy
American cotton. Against that in
! crease they will effect a large saving
| in the form of lower labor costs and a
! correspondingly higher market price
when they sell their goods IN foreign
markets and take down their profits in
terms of the yen. Little effect, several
, Gotten men calculated. would be regis
tered in the cotton trade.
Japanese silk. which has declined
ta re io
tory. may be made still more popular
in this country because of its cheap
ness. large importer said today. Any
decline in the yen would naturally
create higher purchasing power for
the American dollar. this importer ex-
planned, and American buying of silk
might be further stimulated. Silk, it
was pointed out, is the principal jap
anese export to America.
Japan's Record UnbIemished.
While partners of J. P. Morgan &
Co. declined to comment on the Japa-
nese action. It was recalled that
Thomas w. Lamont frequently alluded
to the unusually long record of Japan
in meeting all foreign obligations
without a default. In a period dating
back more than 20 centuries, Japan
had kept its record unblemished.
AL OF JapanS OOnQS IN tnS c0un-
try whether for the national govern
ment or for private corporations, are
in dollar denominations. Fluctuations
in the value of the yen will make no
difference in payment of principal and
interest to holders of these securities,
who are to BE- paid in dollars.
! RumorS that Canada plans officially
to abandon the gold standard have
not been confirmed Bankers here ex-
pressed little interest in the question,
explaining that while the Dominion
! has not been officially off gold basis.
| it technically has been for several
| weeks, as Canadian banks have ar
ranged to prevent exports of gold, and