The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1931-03-05
ALL COUNTRIES BUT
u. s., FRANCE NEED
QUANTITY OF METAL
MaIadjustment of Precious Met
al Holdings Slows Inter-
national Trade
U. S. HAS $4,5O0,O 900, 900
Situation Where Two Countries
Absorb Most of Gold Can
not Continue
BY J. HASKIN

Washington, D. c., March 5.-Never
before has the world been SO eager
for a new gold strike; neve before
has the business end financial ma
chinery of the world been so badly
in need of fresh supplies Of the
precious metal. An event such as the
discovery of gold in Suffers Mill in
California, in the Alaskan Klondike,
on the Witwatersrand in South Africa
or at Broken Hill in Australia would
electrify the nations from China to
Peru and from Tasmania to Spitz-
bergen.
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
combined. The United States has
in the neighborhood of 81. 500, 600, 900
while France holds about $1,000, 000,-
600. The nation next richest in gold
is Great Britain with about $3.50 ,000.-
600 with Germany following with
$3.50, 0O0, 900.
The difficulty in the situation is
that the United States and France
have continued to attract gold yer a
considerable period of time while
other nations have steadily lost their
holdings. This maladjustment Of
gold holdings slows down interna-
tional trade, throws foreign exchange
out of line, and acts as a brake on
business revival. In such a situation,
fresh gold supplies are imperatively
needed TO fill the gaps in the worlds
financial structure.
Gold is the standard medium of
exchange throughout the world. In
ternational trade, in modern times,
cannot be very successfully or prof.
itably carried on without employ
ment of gold.
The rate at which gold is flowing
to France and the United States is
unprecedented for peace times. In
the last year American supplies OF
monetary gold have been augmented
by some $500, 900 900 while France, in
the same brief period, has added no
less than $3.50, O0O, 900 to her hoard.
The two countries, in a single year,
have absorbed an amount OF gold
from the rest of the world equal to
new mine output for two years.
Situation Cannot Continue
Obviously a situation in which only
two nations of the world absorb two
years gol! output in a single twelve
month cannot continue indefinitely.
Already some countries have been
forced off the gold standard through
the necessity OF giving up their gold
reserves and others are threatened.
Falling prices of commodities all
owe the world. inability of debtor
nations to borrow, and unwillingness
Of creditor nations to lend have slim
ulatcd the concentration Of gold in
the United States and France. Both
countries have far more gold than
they need to meet their currency and
credit requirements. Although the
Federal Reserve Act requires a 40 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 $100 in actual
gold in Treasury and Federal Reserve
bank vaults for every 500 in Federal
Reserve paper currency outstanding.
France, too, has than sufficient
gold cover for her paper currency.
Gold is the regulator of foreign
When a nation buys more
than it sells, that is, when the in
ternational exchange of commodities
does not balance, the nation must
remit in gold. The unprecedented
fall in commodity prices. especially
of such raw material as farm prod
ucts and the products of mines, has
meant that much less money has
been due the shipping countries.
When rubber vas selling for a dol