Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-28
The Gold Crisis.

Life IN Europe today is just one con-
ference after another. Hard on the
heels of last weeks seven-power meet
ing in London to consider ways and
means OF saving Germany from finan-
cial ruin, Paris this week is the scene
of an Anglo French conference on gold.
This time it is Great Britain, not Ger
many, that requires resuscitation.
The Bank of England is suffering from
an acute loss of golden lifeblood Sap
ped within the past fortnight of the
prooigious total of S1sO,OoO,OOO of the
.'ellow metal, which constitutes the
British money standard, negotiations
are now reported in progress at Paris
for the extension of gold credit to the
Old Lady of Threadneedle street. Could
anything more graphically illustrate
how financial supremacy in Europe-for
the moment at least-has crossed the
Channel than the proposal of the Bank
of France to loan the Bank of England
slo0, 100000 to relieve the severe strain
on sterling exchange?
Only experts versed in the tangled
technique Of international high finance
can hope to understand the cause and
effect of a world crisis in gold. The
man in the street must content himself
with grasping a few salient facts and
try to figure out for himself how they
combine to upset the economic equi-
librium in two hemispheres. OF all the
monetary gold in the world, the United
States today possesses roundly one-half.
France holds roundly one-quarter. How
disproportionate such distribution Of
the precious money metal is can be
realized when one pauses to consider
that the two countries which own three
quarters of it represent. between them,
a mere one-eighth of the worlds popu-
lation.
The French. wbase surrent manipula-
ton c: cne market has mainly produced
.Ae pending crisis, are accused in Great
sseIrain of using their gold ruthlessly
for something savoring Of political
blackmail. AS the result of recent move
ments in their direction, the French
today are boarding the unprecedented
pile Of 81, 800, 600, 900 in yellow treasure.
Vast sums of it are on deposit in the
United states and Britain. With
drawal Of any considerable portions can
cause serious disturbance In New York
or London, where such operations can
easily prove disastrous.
French gold Withdrawals from Ger
many are held largely responsible for
rrecipitating the crisis in the Reich.
French gold loans to Poland, Rumania,
Czechoslovakia and Jugoslavia have
solidified the political ties of those
countries with France. Recently, when
the Vienna Creditanstalt was in hot
water, that Austrian bank was offered
100000 of French gold, but on stern
Austrian dealings with Germany for a
tariff union. Vienna refused and got
the money, Internationally, in London.
French willingness to supply fresh
credit, namely, gold, to Germany, is de-
pendent likewise on political collateral
which Berlin will not put up.
What British authorities think of
French gold policy has just been angrily
disclosed by j. L. Garvin, editor of the
Sunday Observer, who commonly speaks
for Downing Street in foreign affairs.
The immense Withdrawals of French
money from the City of London" he
says, "are undoubtedly connected with
the idea of making Britain feel that
unless she conforms to French policy
will conform to that policy. All this
misery and peril in Europe arise because
Premier Laval's government and the
Paris press assume that America and
Britain are virtually powerless to take
separate action. We are utterly con-
WINGED that this misrepresentation will
have to be removed before three months
ere over"
There is plain suggestion here that
Uncle Sam will have to come to the
rescue If John Bulls gold anemia is
not to progress from bad to worse.
Passively, the Federal Reserve System
appears already to be ministering to
Britain's ills. At least it is gratefully
noted in London that little or none of
the gold now fleeing from her shores is
being consigned to the United States.
Fame at present is shifting so fast
that II bac almost tho affact of a 70