Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-16
OUTFLOW OF GOLD
TO EUROPE SMELLS
Net U. S. Loss of $568, 000,.
OOO Laid to Displacement
of British Pound.
ny the Associated Press.

~ the Associated Press.
NEW YORK, october 16.-The tor
rent of monetary gold which has been
flowing from New York into the Golfers
of Europe was swelled by $47,762, 400
yesterday.
This brings the total net loss of gold
to approximately $568.000,000 since
September /, most of which was taken
in the last four weeks, or since the Sus-
pension OF the gold standard in Eng
land sent continental countries scram-
bling for metal to bolster their own
reserves.
In high banking quarters, however,
The movement was viewed with equa-
nimity. In some quarters, 1t was 1elt
that it might cause some 1urtner
tightening Of interest rates, through
further increases in the New York Fed
eral Reserve Bank rate. Nevertheless
it was pointed out that the loss amounts
to a little more than 80 per cent OF the
metal shipped to this country IN the
last two years, and that much more
could be lost without causing any trou-
blesome shrinkage of the credit base.
Bulk Goes 10 France.
OF the gold transfers announced by
the Federal Reserve Bank today, 1t was
notable that the bulk, or S42 ,OOO,
was for France. At the same time wan
Street was interested in the visit TO
the Bank of France, while at almost the
same time 1t was reported from ParS
that w. Randolph Burgess, deputy gov
ernor Of the New York Reserve Bank,
was comforting with Celement Moret,
governor Of the Bank OF France. II
{kn that
visit of Charles FARMER and Robert
Iacour-Gayet, of the Bank OF France,
who arrived in New York yesterday,
was only to discuss mutual problems"
Discussing the fact that dollar ex-
change had been at a discount In some
foreign centerS, notably Paris, mterna-
tional bankers here explained that there
had been considerable bearish specula-
ton abroad in dollars largely resulting
from a misunderstanding OF emergency
measures being taken in this country,
such as the formation OF the huge
credit CORPORATION to aid interior banks.
It was widely predicted that Partisan
SPECTATORS short of the dollar would
get their fingers severely burned.
Trade Balance Not Cause.
Bankers explained that bulk of the
gold shipments from this country nave
not been based upon favorable trade
balances of foreign countries, or profits
made possible by foreign exchange
levels. but rather on a desire OF for
eign central banks to build up their
gold reserves An important aspect OF
the matter is that several foreign banks
have counted holdings of foreign cur
rencies as reserves. and in these hold
ings sterling was an important factor.
When sterling went off the gold basis
there was a rush to replace holdings OF
foreign currencieS with metal.
While some spectators abroad have
been going short of the American dol
lar, international bankers say there also
has been a tendency among timid cap
italiStS to believe that the dollar Is the
strongest currency in the world today
and to hoard 1t. 1t was notable that
of the shipments of gold to France to-
day 81 ,000, 900 was in American $40 gold
pieces. Ordinarily such transactions
are in gold bars. Some bankers esti-
mated that American currency boarded
abroad may total $400,000,000 or more.
Control World Gold.
While latest official figures are sew
eral days old. 1t is now estimated in
Wall Street that the monetary gold
stock in this country is close to $4,500,-
900 900. and that Frances has increased
TO nearly S2,50O 100000. The two coun-
tries control roughly three fifths of the
worlds entire supply, and 1t is felt in
banking quarters here that Franco
American banking discussions in both
Paris and New York may deal with
such policies as the two gold wealthy