Evening star., 1939-02-19


81 l,586 100000. and in 1898, 1874, 900 900.
During the great war Germany was
desperately pressed. 1t wanted foreign
materials at any price. Yet Germany
was unable to use all the gold it then
held. Neighboring neutral countries did
not want gold. They would not take it.
They relieved their central banks of the
obligation to buy more gold The only
way Germany had of bringing economic
pressure on these neighboring countries
was to withhold German coal from them!
If another great war engulfs the world.
who will take our gold? Not the gold
producers. Not the neutrals. And the
belligerents will be most anxious for our
foodstuffs, our clothing materials, and
our airplanes But for our gold? Not
a chance. If the belligerents can lay
their hands on any gold, they will send
it here, just as Japan has been doing
lately.
The questionable value of gold as
war chest has led Prof. Gustav Cassel to
suggest the storing of commodities in
stead Of gold, as national war chest"
This recommendation is at present being
followed in England. In 1888 the gov
ernments of Denmark and Switzerland
were authorized to stock up on COM
modities. The central bank of Norway
has been authorized to substitute COM
modities for some Of its gold. The only
reason more gold is not demonetized is
the same reason that delayed the de-
monetization of silver in the last century,
the fear of breaking the market by too
sudden an effort.
Exit Process Seen Begun.
Is gold then ION the way out" as stand
ard of value? This writer believes that it
is, that the slow process has begun. 1t
may take long time, many decades, in
deed. But that does not mean we should
ignore it. No nations stake in gold bull
lion equals our own. South Africa and
Russia may have much gold in under
ground ore. But that gold can be left
there without real loss. Our gold bullion
is bought and paid for.
Silver started on its way OUT in the
last half of the 10th century. Yet
how few people realized it at the time
Even in the late COS, to say nothing of
the 1930s, the silver producing United
States was seeking official ways of pre-
venting the inevitable
The process of silver's demise developed
in the 1860s. May it not be the same with
gold today?
Most Americans cannot contemplate
world without monetary gold. The de-
monetization of gold they would view as
calamitous. In 1892 Alfred de Rothschild
gave the Brussels Monetary Conference
this dire prediction about silver: "'
If this conference were to break up with
out arriving at any definite result there
would be depreciation in the value of
that commodity [silver] which 1t would
be frightful to contemplate =" The
conference did break up without taking
action for silver. But life went on just
the same.
Link Seen ss Fragile.
We need no more gold. If we stopped
buying gold completely there would be no
official American buying price for the
metal. We would not pay anything for
1t. But it would not therefore follow
that commodity prices here would de-
cline to zero.
They need not decline at all. The
volume Of money in circulation would not
be reduced. The monetary value" as
signed by law to our existing gold stock
need not be changed at all. The powers
of the Federal Reserve System need not
be in any way impaired.
All that would be involved would be
that we would stop buying something
we have no need for. Mining interests,
including American gold mining inter-
ests, would lose their fine Government
market. But there is no need to SUD-
sidize our gold miners by gold purchases
forever. We could take care Of them
some other way. until they learned to
produce some other, and more useful,
commodity.