Evening star., 1932-10-07
BATTLE Of G0LD'
WON BY AMERICA
Hoover's Revelation Of Last
Winters Crisis Recalls
Trying Moments.
BY DAVID LAWRENCE.

President Hoover's revelation OF the
crisis reached last Winter with refer
ence to the gold standard has revived
discussion Of trying moments in which
partisan politics was cast aside and all
clements here worked to prevent a
disaster.
The statement, which came somewhat
as surprise, was that part OF the Des
Moines speech in which Mr.. Hoover
said he had been advised by the Secre-
tary of the Treasury that within two
weeks, unless emergency measures were
put into effect, America might be forced
of the gold standard.
The truth is nobody knew what would
happen II there we're a gold panic, and
while the gold standard is a matter of
legislation and can only be officially
suspended by act Of Congress. neverthe-
less the actual suspension would have
occurred If Americas gold resources
had been drained.
Two Forces Draining Gold.
There were two forces which were
draining gold. One was the hoarder-
the American who put his gold into
hiding and the American who exported
his gold to Switzerland or Holland or
some other country-and the other was
the European speculator or investor who
was selling American securities and de-
manding gold in payment.
At one time the Europeans held
$4,000 100000 worth of American Sc
curities. and this was gradually reduced
by sales to about $1,000, 1000. Euro
peanS were saying they intended to sell
that billion dollars of securities and
demand gold of American banks. The
discussion at the time among New York
banks was whether this should be per-
mitted, and some suggestions were re-
ceived by the Government here from
different sources to the effect that a
gold embargo might be declared which
would forbid exportation OF gold.
But the decision was made suddenly
to get the existing law amended so as
to permit Government bonds to be used
as a basis for issuance of currency in
stead Of eligible commercial paper. and
this increased the amount Of gold avail
able as a base for currency. The Glass
Steagall law was rushed through Con-
gress and saved the situation.
Gold Crisis Long Past.
It Is considered now to be doubtful
whether the Europeans would have sold
a billion dollars worth of securities and
thus forced prices down so low that be-
fore they could sell such an enormous
quantity they might be faced with only
fourth of that sum as possible
proceeds.
The whole episode will for a long
time. no doubt, be subject of academic
study, and while it may never be proved
whether America would or would not
have been forced off the gold standard
the fact remains that it was a tight
place and the Government was able to
survive the crisis and come through in
stronger gold position than any other
nation.
France and other European countries
failed to take into account the fact
that tourist trade would be smaller and
that the normal balance of trade in
favor of the United States would begin
to draw gold back to America. Since
June S275,0000 900 in gold has come
back, and each day records more. The
gold crisis is so long past that it now
can be discussed as one of the big
battles of the depression which turned
into a substantial victory for America.
tCopyrisht. lS32)