Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-03
INCREASED GOLD OUTPUT UR GED
AS MEANS TO STOP DEFLATION
Economist Points Out That Gain IN Re-
serves of Metal Will Result In Better
Prices for Commodities.

ress would doubtless be severely handi-
capped
Original Proposal.
1.-THE original proposal. of the League
Of Nations committee was to lower the
percentage Of reserves, but, as the nor
NAL increase in demand Is 2 per cent,
it is rather obvious that an estimated
requirement of soc, 100000 by 1910
would be somewhat difhcult to secure
If total output was but $275 900, 900,
which must cover many other needs,
not including India.
And 1t should be remembered. also,
that the authors of the Bank for In
ternational Settlements conceived one
of It's functions as q method OF seclr-
ing greater distribution OF gold re-
serves, O conception that appears TO
have been dissipated in the actual OPP
Grafton of that, bank and somewhat
palpably evident in the prevailing dis
tress Of the German banks. AS mat
ter of fact, the League Of Nations
committee has revised its working plans
and has thoughtfully relieved the
3. I. s. of these gold-credit functions.
IT am not criticizing this internal
tional bank in this respect, because /
think II, was expected to perform
financial legerdemain and that Is an
unconservative attitude.
Increased gold production, retention
and even an increase in the gold re.
serves of Germany and other Central
European banks would appear to have
been and to be the most advisable pro-
cedure. II was the suggested policy
last year, but apparently ignored this
year, due to other arrangements.
London Market.
at should be observed that the so.
called open and free gold market OF
London providing gold at less than the
statutory price and obviously INTENDED
to beneflt the British, has not operateo
in that direction for some time. 1t Is
also logical to expect that France, unless
there is a contrary understanding, would
continue. to SECURE this cheap gold
What gold the Bank of England actually
secures is through the acconmo dation
provided by the Federal Reserve Of NsW
YorN and the patriotism Of its own ma
tionals who are gold producers. Even
the bonus of SIS understood to be offered
by the Australian government Is mol
helping this situation, mean the more
legitimate aspects of this London golo
marlSlt, although 1t may or should t;no
to better the gold-credit position Of the
E1uStI 0l1du pdukS uA1O tACaO0AJs =
aside from the doubtful encourage
ment Offered in the London gold mar
ket, and the more evident one is In the
fix q price of $20,67 an ounce in this
country, the definite Improvement in
gold production Is through the decline
In the commodity price level and the
consequent enhancement in the price o
gold. with gold values fixed at $2O.6l
an ounce It's purchasing power has beer
increased nearly 80 per cent since 1925
dueement' but In view Of the demand
and the supreme necessity Of increasing
production, ]. think 1t is fair TO insisi
that gold should not sell und.r its statu'
tory price as In London, but at slighl
premium, andsthis could be arranged
for through an open gold market in Nsv
York City and San Francisco Thest
markets or premiums would not attrac'