Evening star., 1932-06-18
The French Gold Withdrawal.

With the purchase in New York of
s55 100000 of gold by the Banoue de
France, an element Of uncertainty for
the American bankers and the Federal
Reserve has now been removed. Since
last September. the foreign banks OF
issue, and especially the Banque de
France, the Belgian, the Netherland
and the Swiss national banks have been
withdrawing their gold from the United
States. Speculation was rife in Europe
as to when the United States, unable to
stand the pressure of gold withdrawal
would follow Great Britain's example
and go off the gold standard. The
platonic speculation of the European
financial experts was followed by the
actual speculation Of many European
bankers and brokers who, on the as
sumption that the United States would
abandon the gold standard not later
than this Fall. had sold the dollar short
IN the hope of reaping as rich harvest
as in the case Of Great Britain.
The New York bankers and the Fed
eral Reserve Bank, although confident
that the withdrawal of gold from this
country would be ultimately beneficial
to all concerned, were nervous, not be-
ing able to gauge the moral effect on
the people of the United States.
The final liqu,AoHor of the foreign
gold occurred Oh &iI.e Ia Out of some
$4,000, ,OCOoOO OF kSsles money depos-
tied or invested in this country in 1923
only some s7o0,00o,ooo is left This
amount is, however, as good as non
existent, as far as the Federal Reserve
is concerned, because 1t Is all earmarked
for export abroad in the form Of gold
bullion.
Until September, 1881, the pound
sterling was the yardstick which meas
ured all interna xcnal money transac-
tions. When the pound became un-
stable as a consequence Of Britain hav-
ing given up the gold standard, France
had hoped to take her place on the
assumption that America would follow
Britain's example, under the pressure
of the gold withdrawal and its in
ability to Salance the budget by new
taxes on the eve of the presidential
electionL
The reasoning of the European
flnanciers and spectators was wrong;
the foreign gold has been withdrawn In
full, the budget is being balanced. and
the dollar has remained the only stable
currency in the international market.
The effect of the liquidation of
foreign deposits in this country has
been to stabilize the dollar at its exact
value in the foreign money markets; to
ease the credit situation in the United
States, where bankers need no longer
worry over the necessity Of having
liquid money to meet any call from
abroad; to put an end to the world
speculation in foreign currencies, and
to increase the gold reserves OF the
various European banks of issue, thus
enabling them to use their surplus of
gold for the needs of their commerca
and industry.
If the political situation in Europe
improves in the course of this year,
the increased gold deposits will be an
important factor for the revival OF
economic life in Europe. Should the
political sky remain overcast there is
a. serious danger that the private in
vestors will again let their gold emf
CRATE to the United States in spite OF
the desire of the Federal Reserve and
the Wall Street bankers to avoid the
renewal Of such an occurrence.