Evening star., 1939-02-19
Sketch by Sudduth.

The gold problem is still here, only 1t
has grown bigger. 1t would be gratify-
ing If we could forget all about gold for
a while, as some investors forget about
the stock market until they read that
they have been wiped out. But gold
just will not let itself be forgotten for
long.
This Congress must decide whether or
not it wishes to extend the Presidents
present power to raise the price of gold
to $4l34 an ounce. It must also decide
whether to continue the 81 600 900 900
gold stabilization fund, which was cre-
ated in 1894 "out of thin air" when this
country raised the price of gold from
$20!e7 an ounce to $35. But the really
important question-whether to buy any
more gold at all-Congress probably will
be too busy to consider.
In 1898 gold production in the United
States, and in the world as a whole,
reached a new high. Our own mine out
put exceeded 5000 900 ounces, or $l75,-
100000. World production, excluding
Russia, is estimated at almost 80 900 900
ounces, or 81. .120 900 900. The chief factor
in the gold market is the high price
paid for the metal by the United States.
Were the United States to cease buying
gold, . substitute market for all current
offerings at the equivalent of $35 an
ounce could not be found. We would
take a licking" if we tried to sell any
Of our unneeded billions. But we'll take
a bigger licking If we keep on piling up
the yellow metal.
Gold Just q Habit.
The use Of gold for monetary purposes
is a habit, convention. We know that
gold has been a fairly good store of
value since time immemorial. There
fore, thoughtlessly, we assume that it
will always continues to be SUCH But
that Is an unsafe assumption, a dan
gerous gamble. Let's take little time
out and think it over.
Gold is a measure of value; and it is
also store of value, because we make it
such. We are prone to think of the
measure Of value as value itself. But it
has value to us only If 1t has value to
someone else. If no one else will take it,
the structure of gold will collapse. It Is
like house of matchsticks.
In 1881 before England terminated the
rigid link between the pound sterling
and gold, the Macmillan Committee Of
hcially studied the gold problem. It
found that there was only one remain
ing monetary use for gold: the settle
ment OF international balances. Gold
was no longer needed for d-to- hand
circulation, no longer necessary as q
monetary reserve material.
England acted promptly. In 1881 it
adopted a managed currency. and 1t di-
rected its monetary policy toward do
mestic requirements. It was and is in
terested chiefly in the pounds value at
home. not in its gold value abroad. It
cut loose from the traditional gold
standard. Sterling exchange now floats.
But dollar exchange is anchored to q
$l4, ,7oo, ,o0o, 900 "sinker."
Old Gold Standard Dead.
~"AoC0 OVAACA OOAAL1lCS 1l&tC IlOW 6OOlGCu
the managed currency idea for home
use. Even We have. From Washington
to Toxic, from Moscow to Buenos Aires,
the old gold standard is dead. We no
longer see gold pieces, nor do we care
that we don't. And the money managers
have been adjusting bank reserve re-
quirements." buying or selling securities
In the open market, "sterilizing" gold by
stacking up bars of it in dark vaults, and
otherwise trampling In the dust I'VE olde
gold standard"
Yet most amazing fact is that the
Nation clings to the habit of buying all
gold offered the Government, and pay
ing SIS an ounce for it. Therefore our
gold policy is very different from Eng
lands. The British let the price of gold
In terms Of currency move where it will.
But We have again anchored the dollar
to gold.
Unless you have shares In . gold mine,
you probably do not care what Uncle
Sam pays for gold. But gold miners do.