Evening star. [volume] (Washington, D.C.) 1854-1972, 1939-11-12
Questions Merit of
Gold Purchases
BIZ Open L. Scott.

The United States today Is ready to
sell anything to anybody who has the
cash" to make payments and the ships
to transport.
Congress and the country feel secure
in the thought that sales OF goods to
nations at war are to be made in cash
rather than on credit. 1t is comforting
to know that war materials will be ex-
changed only for real dollars, not for
uncertain promises to pay.
There is thought that these real dol
lars will be riches and that these riches
will be Of kind that won't entangle
the United States in the affairs of the
customers, once those customers run out
of money. The hope is that there will
not be repetition of the experience of
the last war, when the American Gov
eminent faced the prospect of forced
choice between a severe depression and
more loans to the allies.
But some interesting questions are be-
ginning to be raised.
One of them is: What are Great Brit
ain and France going to use for money?
Another is: Is the United States really
going to get value received in exchange
for the things 1t sells? A third is: What
will happen If the hard cash dollars of
the European customers run out?
The thing that Britain and France in
tend to use most generously for money
is gold.
The United States has failing for
gold. Its banking system and its Ma
tional Treasury now own two-thirds of
all the monetary gold in the world The
two allied nations own most of what is
left. For each ounce that they hold, this
Government is ready to pay IS good
American dollars. On that basis, Britain
and France can raise about Sc 900 900 900
and have access to an annual production
of $700,000000 more.
Here is an immense amount of cash.
It's expenditure can make the United
States feel quite rich.
The reason for this is that the warning
nations with gold can take that gold to
the bank and get $35 for each ounce
The gold goes into hole in the ground
in Kentucky and the dollars paid for the
gold go into the pockets of the British
and French or other sellers. With those
dollars they can buy American cotton
and clothing and steel and machinery
and can transport those products abroad.
In the process, American workers get
an income and American industry gets a
profit. But, when it is all over, the net
machinery and clothing and other goods,
while the United States has some more
gold hidden in vaults within the care
fully guarded confines of Fort Knox.
Exchanged for real wealth is a metal
that can only be boarded if it is not to
imitation.
The prospect is that, before this pres
ent war ends the United States will have
transported abroad billions Of dollars in
the products of its mines and its farms
end its factories and its labor and will
have received in return more billions of
dollars OF gold of very uncertain future
value.
Henry Morgenthau, jr., Secretary of
the Treasury thinks that this exchange
| will rebound to the benefit of the Nation.
| His idea is that. after the war is over,
gold is going to be the thing that all of
| the world will desire and will become
| the basis for rebuilding the broken econ
! omies.
Just about every other informed Off
| clal in the Government is convinced that
Mr.. Morgenthau is having pipe dream.
Gold, these experts insist, is in great
| demand today only because the United
| States is willing to exchange its real
| wealth for what has become a product
with highly uncertain future on the
basis OF $35 for each ounce of that prod
uct. Once the United States has &C
| quired all Of the gold in the World-as it
well might on the basis of recent ex-
| perience-this Midas hoard may serve
| no other purpose than that of a fatal
| attraction for Congressman with print
ing press money schemes, or idea men
who think that this country should give
away its gold to foreign nations, which
then can repeat the process of syphoning
off American wealth in exchange for the
gold that America already owns.
The gold situation, in fact strikes the
best informed of this Governments ex-
perts as fantastic even today.
Isn't there anything else that the
allies can use for money other than gold
The answer is that there are two
things, both of substantial value.
One of these things is in the form OF
goods from the industry of the purchas-
ing nation. The other is in the form of
securities that represent ownership in
producing industries in this country and
in other countries of this hemisphere.
The real reason why the United States
has accumulated such vast boards of
gold now more than $4,000, 900 900
worth-is that this country has refused
to accept goods from abroad in exchange
for its own goods The American people
through their Congress, have baked at
the idea of improving their standard of
living by taking more British clothing,
more French linen, more of many other
products of foreign industry in payment
for American products that these coun-
tries required.
Gold that can be buried seems much
more desirable to Congressman than
goods that can be enjoyed.
| IN to-. u