Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-03-07
CREDIT MOVEMENTS
HAVE BEEN RAPID
Swift Changes in Debt Set.
Elements Have Interfered
With Gold Standard.
BY the Associated Press.

BY the Associated Press.
NEW YORK. February IA means
Of making the gold standard more
workable. In the opinion Of . number
Of banking authorities. should be the
major objective Of the forthcoming
World Economic Conference.
Since the World War. new factors
have developed In the international
workings OF the gold standard. which
have made its operation decidedly less
successful than in nearly q hundred
years before the war.
Perhaps most important among these
factors is the large amount OF liquid
credit which surgeS between various
world banking centers.
Gain in Investments.
Another Is the increase in interna-
tional investments. 1t Is almost 1mpoS-
sible for banking authorities to know
the extent of holdings Of securities OF
foreigners. Nevertheless. they must De
prepared for sudden dumping OF these
securities, or a rush on the part OF
foreigners to convert their funds into
bank balances, followed by taxing
home OF the capital.
The surging about Of large sums OF
liquid capital has been particularly
troublesome in the past two years. In
1881, run developed on Germany, re-
sulting in the moratorium on lntergov.
ornamental debts and the standstiil
agreement on private debts. The run
then shifted to Great Britain, forcing
that great power to suspend gold pay:
ments. Between September. 1881, and
June, 1882, there was huge drain OF
foreign balances in the United states,
resulting in an outflow OF some three
quarters of billion dollars IN gold
Before the war. the gold standard
period OF time. This may have been
due in part to the fact that tnterna-
tional banking was almost wholly con-
centrated In London, where banking
authorities with long experience DOM
mated the situation. Since the war
however. New York has become lead
ing financial center. even surprising
London in some aspects. and Paris has
manifested decided financial ambitions.
Gold, under the ideal workings Of
the standard. was regarded merely as
means Of settling international
balances It was largely an automatic
and self-regulating standard: II a
country had an adverse balance OF
IfaQe, lNdC Is, II us lOTcIku pulCLoSCo
and expenditures exceeded its foreign
sales of goods and services. then 1t ex-
ported gold to make up the difference
But in theory the export Of gold made
money rates 60 up within the country
resulted in a contraction OF credit,
bringing in turn a falling Of prices OF
goods This made that country's goods
more attractive in the foreign markets,
spurred its exports, and tended to
correct the adverse balance Of pay
mentS.
Problem Is Changed.
Now, however. with large reservoir
Of LIQUID credit surging about from
center to center, the whole problem Is
altered.
One Of the most popular suggestions
Of aiding the situation is expansion OF
the activities of the Bank for Interna-
tional Settlements. making it the de-
pository for a large amount Of liquid
credit and placing it in a position to
regulate the now Of international pay
ments. Whether the various countries
could agree upon such control, however.
is regarded by number Of authorizes
with considerable skepticism.