, 1935-03-31
END TO GOLD
BOARDING OF
WORLD seen

(Copyt, less, by the A.. p.
NEW YORK, March 80. A ray
O. hope-bright, or Pickering. de-
ding upon the point Of VIEWS
n In the rift in the gold bloc ma
bns Of Europe.
II may be, according TO the more
pttmistic money experts. that an
Important turning point was mark
FED by the action Of Belgium IN Civ
ing UP the struggle to preserve the
pre-depression parity Of her cur
rency.
II IL possible, they suggest. that
the tension in world monetary af-
fairs 10 about to relax; that serious
EMBELLISHMENTS between principal
currencies are about TO be correct
ed; that the world scramble 70
hoard gold will pass: that the
monetary base Is about TO be put
TO efficient use; that money and
credit viii become plentiful.
international Race Ends?
This frankly presupposes the be-
ginning Of q chain OF constructive
steps.
Il presupposes that an nterna-
tional contest at currency deprecia-
ton will be avoided, that the race
to rearm Is but q passing phase,
and that intense nationalism 50
conspicuous In Germany and else
where win not 60 to further ex-
tremes.
To understand what has hap
pened. it Is perhaps necessary to 20
back to that period between the
1905 and the outbreak Of the
World War. Then. the international
gold standard came into flower,
trade moved with comparative
freedom and international tranSac-
tons were cleared easily and ef-
fectively through the great banking
machinery of London.
The amount Of monetary gold IN
use In those days seems small IN
contrast 10 the vast boards in GEN.
trail bank vaults Of today. But for
the most part 1t was being used ef-
fectively, and commerce was re-
garded as thriving.
The World War tied the machin-
cry into q knot.
After the war came a campaign
10 restore the old conditions.
London, fearful that New York
would take away her prosperous
business as world banker, restored
her currency to the pre-war parity,
despite the serious impairment OF
British economy by the staggering
cost Of the conflict. France and
several continental countries sta
bilized their %currencies at sharply
devalued levels. in recognition Of
the changes in their economy
wrought by the titanic destruction
Of wealth.
Crisis Sweeps Europe
But one way and another. the
gold standard was restored TO pretty
much, its prewar working condition.
Montagu Norman as head OF the
Bank OF England. and the late
BENJAMIN Strong al head Of the
New York Federal Reserve bank.
WCIE cdQSIc III biiC WIN VI hA@AA
tary reconstruction.
But the war had piled UP huge
dabts. Enormous settlements still
to be made between nations.
de channels were shifting. Soon
after the worlds economic structure
began TO rock in 1929, IL appeared
that the regretted financial struc-
ture had not been built strongly
enough. that Embellishments had
not been fully corrected.
The banking crisis which swept
through Central Europe in the
summer OF 1891 exerted so severe a
strain upon London that by Sept
ember, the Bank OF England could
no longer make gold payments.
The chain Of events Is now well
known. The pound Slumped. and as
1t was the currency through which
more than a third Of the worlds
business Is reckoned. il pulled world
price levels down. Two years later.
the American dollar was devalued.
A large portion Of the worlds
c~urrencies by 1888 had been deval-
ued. But continental European ma
tions, led by Francs with their
vivid recollection Of the losses suf-
fered in the extreme devaluation
of their ~currencies after the war,
we're determined TO make no fur
Their adjustments in their currency
levels.
The hopeful monetary experts
now suggest that with the rift in
the gold block. a whole new deal
In currency readJCStments may be
In the making.
With tenable levels for all p1n-
cipal ~currencies restored. they say,
1t lis conceivable that gold will once
more come into free use as a basis
for credit and currency, instead Of