Evening star., 1939-06-18
America Still Getting
Flood Of Foreign Gold
By OWen L. Scott.

hiSAANotCu Wy q VdoU VI BUlU xIOIu
the treasures and from the mines of the
world.
This flood, as experts see it, is the most
amazing probably the most important
yet the least noted-development of the
period. In 1t is written q record of the
chaos that exists in today's world affairs
and world finances
The record in figures, appears fan
tastic.
In all time, in all Of the world, the
accumulated stock Of gold for monetary
purposes had risen in 1929 to barely
18 billions Of present-value dollars. Yet
today the United States holds more than
Is billions in gold-an increase of more
than billions in one year. The world
in 10 years has added 10 billions to its
stocks of gold, or more than half again as
much as had entered the worlds money
supplies in all history. The total now is
% billions.
This country in other words, is getting
all of the immense quantities Of new
gold being mined in the world and is
getting more, too.
4LC AACdiilAS Vi ILLS!
Simply that the United States, offering
to pay IS good American dollars for each
ounce of gold that the world produces
or possesses, is an Irresistible magnate
for the metal. Foreigners and mine own
ers are scrambling to turn their gold
into dollars. During April and May more
than billion dollars worth of gold
flowed here from abroad. Safety was
the principal attraction that drew much
OF this metal. But the high price paid
for gold in dollars is drawing a steady
stream and growing stream from the
mines Of the world.
The result is an official headache and
major problem.
Gold is OF no practical use to the United
States in the quantities in which 1t Is
being received. There Is about three
times as much gold on hand, measured
in dollar value, as there is currency out
standing. The law requires 4 40 per
cent gold backing. This country sells
more goods abroad than 1t buys from
abroad and has no use for gold as a
means OF paying bills to foreigners. All
the gold does is to clutter up the coun-
trys bank reserves and to present bank
ing offlclals with what looks like an un-
solvable problem, and the Army with the
job OF guarding some buried metal.
Foreigners and mine owners, however,
make good thing out OF the present
situation.
y
The British, facing trouble in Europe.
can count on turning their vast gold
hoard-in monetary metal stocks and in
British-owned mines and British owned
jewelry-into dollars at IS to the ounce.
Then these dollars are useful in buying
American machinery and American farm
commodities and American stocks and
bonds. In exchange, the United States
has more gold to add to its already en-
barrassing hoard.
Cold, In other words may take the
place of loans in financing the next war.
At the end this country would have all
OF the worlds gold and the world would
have some of the riches Of America.
But, it is asked. isn't there something
that can be done with all this gold?
An effort to find an answer to that
question, from those officials who know
most about the practical uses to which
gold may be put, drew the following
observation:
Gold is very good substitute for tin.
but cannot compete with tin in price.
Cold makes very good wire, particu-
larry for special purposes. but cannot
compete with copper and other metals In
price. Gold. of course, is valuable In
dentistry and in the arts. But, as the
experts see it, COLDS chief future use may
be in the field of tableware Silver now
nnds extensive use in that field. There
are relatively few gold dinner services or
even gold-plated dinner services In the
world. tremendous potential demand
exists in that field.
Inquiry drew the estimate that gold.
on commercial basis, might draw a
price of between SIS and $50 an ounce
under existing circumstances. The
United States Treasury is paying s35 an
ounce for the gold it now buys and is
buying at the rate Of about $4,000 900 900
worth year.
Neither President Roosevelt nor
Henry Morgenthau, Secretary of the
treasury, is ready to listen to the thought
that gold as future monetary metal
may be OF rather limited importance.
The reason is that they are told with
great vehemence by foreign governments
and by interested experts that gold sure
ly Will come back into its own. But the
fact remains that governments have
learned new techniques that permit them
TO get along with a relatively small
amount OF gold. Their great interest
now is in keeping open the bottomless
American market so that they can be
assured supply of dollars in time of
trouble.
Why doesn't this Government make
some kind of effort to slow up the gold
flow?
The answer is simple That answer is
that the one sure way to slow this flood
OF gold is to cut the price rather dras-
tlcally. But then, what would happen?
This country owns about AGO 600 600
ounces OF gold. 1t values that gold at
s35 an ounce. For each dollar cut from
the price of the 400 OOO, 900 ounces. this
Government would take . loss of $780,
100000. Cut the price 81 and the loss is
nearly 100000. Cut it SO an
"a d