The Daily Alaska empire. [volume] (Juneau, Alaska) 1926-1964, 1937-06-28
THE GOLD PROBLEM

With the u. S. Treasury borrowing anotht
$500 OOO0 00 to be used principally in the purchas
# gold controversy has arisen anew of the probab
utcome. Fear is being expressed in some source
hat currencies have been made too cheap and ths
old may have to be devalued. Alaska, being bi
old producer, watches with keen interest
Elliott v. Bell, writing in the New York Time
eports that four principal methods of solving til
old problem have been suggested and enumeratt
hem as follows:
Cd To restore private ownership of gold,
either through circulation of gold coins or the
establishment of free bullion market there
by relieving the Treasury of part of the cost
of buying gold. Most economists feel that it
is already too late for such remedy. In view
of the uncertainties about the future of gold,
demand for boarding might be small, while
the public has lost the habit of carrying gold
coin and would be unlikely to take to it.
(2) To allow the surplus gold to work its
natural effects upon the economic system by
raising prices and costs, so that eventually
gold production would lose its present advan-
tage and output would decline Such a course,
many hold would carry with it the risks OF
. general initiation and would be like burning
the house to catch rat.
go To reduce the price of gold. This
would be tantamount to upward revalua-
ton of the dollar and might lead to deflation
1t would involve the Treasury in serious losses
A 10 percent reduction would mean book
keeping loss of $1,200000000 on the nearly
$4,000 900 gold now held by the govern
ment Is percent cut would wipe out the
Treasury's Sterilization fund
Furthermore such a course might be wholly
ineffective If Britain refrained from buy
ing gold it is reasonable to suppose she
would, the price of gold in London would
merely fall TO the equivalent OF our new price;
the relationship of the dollar and the pound
would remain unchanged, and all the gold
would continue to come here as before with
merely the saving of 10 or Is percent cut in
price Reduction of the gold price carries with
it the dangers of serious disturbances to our
economy, disruption of whatever sta
bity exists among currencies, and the proba-
bity that for ali this nothing would be
gained
"a A world agreement to curtail gold
production In spite of the obvious diff
cultes, this appears to many econo-
mists to offer the only really promising sou-
ton. 1t would not meet the problem of de-
boarding, but that at any rate, has its limits.
Against the difficulties of obtaining an agree
ment to limit production from all the many
gold producing countries there may be set the
factor of sef-interest, which might compel
agreement to avoid the danger of a lower gold
price. South Africa, the largest producer,
has already shown signs of alarm lest the in
creased production lead to a fall in price; and
Russia, the second largest producer, has
given indications lately that she has the
fear.
1t is, of course possible that this problem,
like the former apparent problem of scar
city of gold" may prove to be purely temper
airy. The countries that still need gold, such
as Germany Brazil and China, may find
ways of acquiring it, to the relief of these
countries now surfeited. Other nations like
Argentina may absorb large amounts of gold
as consequence of their expanding trade
balances thereby easing problem of this
country At the moment however, no change