Evening star., 1938-02-20

flash announcement of q change
n in the Governments gold policy.
s Mr.. Morgenthau says this, MIR.
I Eccles says that; s400,000.0 900 pass across
the front page, and then the radio an
! nounces Charlie Mccarthy again.
81 So what. Mr.. Streetcar Conductor and
! Miss Telephone Operator? What is it all
about? You and cannot count to 400
! 600, to say nothing Of the meaningless bill
1 lions that scintillate in the news like dia-
monds in politicians dreams -Four hun
! dred million dollars!" It's just a great
big number out of our KEN
Is this latest monetary gesture going to
: take something out of our pockets or in
crease our weekly pay envelope? Or is
everything going to remain the same on
Saturday night? You and don't know.
And. what's more, Mr. Morgenthau doesn't
know.
Nobody knows We're just riding great
big. numbering economic bus, subject to
millions Of stresses and strains. The bus
doesn't seem to have enough 60 to it, so
every once in while. some one jumps of
to give 1t a push this way or that. Mr..
Eccles thinks it will make it go better to
add . few billions of high-test gas to the
fuel. Mr.. Morgenthau wants it to chug
along now by itself And then along comes
the Committee for the Nations Senatorial
Friend and says the easiest course of all is
. push downhill
\ Foreigners Bought Dollars.
What was announced on Monday was q
change in the policy toward "sterilized
gold" Not all our gold, just part of it,
Under the original plan of cheapening the
dollar introduced with such vigor in 1898,
foreigners with money found it very much
worthwhile to change their pounds and
francs into American smackers. The sudden
increase in the price of gold from $2067
per ounce to $35 per ounce made the dollar
very cheap to foreigners. But it didn't
greatly affect our moneys purchasing power
at home. So they brought their money here
to invest, brought it in the form of gold.
Thanks to the four-year inrush of Eu-
ropean money, this country's hoard of the
yellow metal swelled enormously In mid
1893 we had "a billion dollars of gold. A
year later, after the mark-up, We had
1910 billions. But. with the heavy inflow
that followed, plus new mine production at
home, our national gold stock has mounted
to nearly 13 billions today.
That is heap of metal. 1t is equal to
more than half of all the monetary gold
mined through the centuries and now held
py all the worlds banks and governments
1fRiA nf A.A
and every one of us. 1t is "the ultimate
tangible security behind our Federal Re-
serve notes and our millions of silver GER
tificates." And all you need to do to get
your hande on bit Of it-that is if you
have some paper dollars to start out with
Is to become an Englishman or a French
man or something. It's against the law
Tor American citizens to hold gold coin
or bullion. 1t may sound cockeved, but
that's the way it is.
Heavy Burden Of Gold.
! Getting back to the matter of last Mob
days Treasury announcement, from the
South African Rand to the Arctic Circle
In Siberia, thousands of persons have been
put to work to find more and still more gold.
The arrival Of that bullion in the United
States by the millions of dollars worth
eventually became cause of concern~to
washington authorities. For. according
to our law and custom, gold turned over to
the Government automatically becomes
money. Not only was the dollars as good
As gold. Gold was oficially declared as
good as dollars. An ounce of gold, once
vas good IS" $2o.67, has since January, 1884,
been made by Congress as good rs $35,
Which Is very nice for you If you have gold
70 sell.
r. Incoming gold in 1894, 1885 and 1896
automatically became money, and money
was spending power for its foreign owners.
During the latter part of 1886 it was evil
dent to financial Washington that some-
thing like boom in securities and commod-
siaes prices was under way here, and that
shis ever-f1owing gold was only adding
more fuel to the flames Now that we had
k managed currency" to leave such a sit
nation entirely unchecked didn't make
eense. So Gov. Eccles and Secretary Nor
eenthau put their heads together and de-
ctded that it would be wise in the future
stE the Treasury to buy up the golden fuel"
80 1t should arrive, and store it safely in
sealed bin, As 1t were. Then, whenever
asereisners should decide they wanted their
a1Aoney back, since the dollar is as good
& ~ gold they should have it in gold. the
= Yery same gold stored In that inactive bin.
Hhe Treasury had word for this new
ssystem. The incoming gold was to be
sterilised." Imitation now had a ceiling
twas hoped.
Under the circumstances, the "steriliza-
I ta1n" move in 1886 was logical one al
though 1t involved certain cost and incon-
sonience to the Treasury. The latter was
9keady running a deficit. To buy the
AAwiy imported gold necessitated additional
6nkrowing. But the end was deemed worth
egtls price. If the move would serve to help
lDp the boom within bounds.
'sSss Beem Gene New.
5a That worry Is no more. Today there is
~ boom. Instead We have had severe
I seflcession." IL There Is thus considerable
1cGic In now relaxing one of the measures
{ soke9 In 1885 to restrain the boom, that
Z 6 the country gives the expected psy-
elogical response to the announcement. :
Qne may ask why the restraint of
ssterilization" was not applied sooner to
thssp6om Of 1886, or why the sterilization
poIfy was not more vigorously reversed in