Evening star., 1939-10-23

lea virtual monopoly of the world S
gold supply and hence seriously
threaten the worlds subsequent re-
turn to the use Of monetary gold"
1t is not often that an "iSola ton
ist' leader argues in terms of world
economics and eduction in tariffs,
but that is what change in Amer
ica's gold policy at the moment
might involve.
If the present price of $35 an
ounce for gold were reduced, it
would ordinarily mean a curtailment
of the inflow of gold to America S
shores, but since the European coun-
tries simply must buy our products
now because their own sources are
diminished by the war, the result
would be that the same amount of
gold would come in, but the foreign
countries would get less American
goods for their dollars.
Effect on Americans.
Americans, on the other hand,
would have their purchasing power
increased SO that European prices
would be lower and in some in
stances this would be equivalent to
reduction in tariffs. AS for Amer
ican farm prices, there would be no
change now if gold were revalued
because the foodstuffS are so essen
tial and other supply areas are cut
of, but the moment peace came
there would be a far more drastic
drop in farm prices due to the re-
valuation of gold during the war.
But Senator Vandenberg, on the
other hand, intimates that the
change in the gold price might be
for the period of the war only. But
the chances are that effects Gre
ated during the war would carry on
afterward, Also trade arrangements
with neutral countries would be Sc
riously affected, too, if the price of
gold were changed SO that they re-
celved less for their metal now than
heretofore in terms of goods.
Just what the Michigan Senator
may have had in mind with respect
to the British and French pur-
chases is not clear, but since these
two belligerents already have their
gold converted into dollars-they
are supposed to have in the United
States about $500 100000 balances
the revision of gold prices would
not affect them very much. Only
S1,500 100000 they have in American
banks is earmarked in gold.
Remember Silver?
To revalue gold upward would,
OF course, be one way to extort gold
from the belligerents without giving
them as much in return as we give
them in peacetime and in a sense
this is war profiteering with venge-
ance. The inconsistency of those
who advocate a lower price for gold
now though they were willing Just
a few weeks ago to pay higher
price for silver than the Roosevelt
administration was willing to pay is
not readily explained.
incidentally. Congress would have
to pass law revaluing gold so that
there would be more rather than
less gold content in a dollar. The
President has the authority only to
raise the price of gold somewhat,
but not to lower it except within an
extremely narrow range. To put it
another way, he can increase the
gold content from 5904 cents to so
cents but that's equivalent to very
slight rise in the bullion price of
gold and presumably if any substan-
tial change were to be made in the
price it would be by reducing it
from $35 an ounce to $50 and that
means a considerable increase in the
amount of gold for which theo-
retically a paper dollar would be
exchanged.
AS for the return eventually to a
gold standard in the world, whatever
Is in store for us on account of
Americas extraordinary accumu-
lation of yellow metal will happen
anyway because we have an excess
sive share already. The war merely
means the United States will gather
IN whatever gold the world has left
that is not already buried in Ken
lucky. Some day America may as
sist IN the redistribution of gold
throughout the world by a system
Of lending to foreign countries. If
this should be forbidden by laws of
the johnson Act type, it may we'll
be that gold will then fall in price
through non-use and conceivably in
the next decade we may see 25-cent
dollars until world trade revives and
increased gold production gives
foreign countries once more a size
able proportion of the worlds sup
ply to make it usable as a standard.