Evening star., 1940-07-07
Hitler Victory Thought Likely
To Make i. S. Gold Worthless
Any Price Nation Pays for Unneeded Yellow Metal
Declared Too High, Since It Cannot
Be Resold in Market
By Herbert NJ. Braffer.

When in 1871 Germany exacted from
France a great postwar indemnity, the
former was enabled to substitute gold
for silver In its monetary system and
thereby long step was taken toward the
worldwide demonetization and aban-
donment Of silver as an international
standard of value. History probably will
show that the French capitulation to
Germany in 1910 has sealed similarly the
fate of the international gold standard
whose lingering "last illness" dates from
the great depression.
For the Nazi conquerors of Europe, as
self-confessed executioners of the gold
standard, intend that the reichsmark
shall be the unit of value in all their
far-reaching international barter deal
ings. AS reported recently from Berlin,
"after the Reich has conquered France
and Britain, it will declare war on the
gold Standard
This should give Americans food for
serious thought. We own about $2O,OO0,-
100000 of monetary gold, or nearly three
times as much as all the rest of the
world combined. More gold is pouring
in at the rate of billions of dollars worth
year. In one recent week $532 900 600
OF foreign gold arrived here and addi-
tional large shipments are believed to be
on the water as this is written.
The United States has long been the
only country ready to buy all gold from
all corners at fixed price. The Govern
ment need not buy all gold. The law
does not require it. But the Govern
ment elects to do so, paying the legal
price of $35 an ounce, as compared with
$2067 prior to 1888.
America Is the Market.
Some Americans, in self-delusion, ar
que that $35 is not too high price TO
pay for gold, that $35 is the world price.
What makes it the world price, however,
is the fact that we are the worlds big
gest buyer. We are the market. Just
let us stop buying gold and we shall
quickly see that no other buyer or group
OF buyers can take our place.
Even the most ardent defender of the
present American gold policy admits that
the price of gold would take dive or
vanish altogether the moment we
stopped buying. And, conversely, there
can be no shadow of doubt that we could
not sell our gold stock abroad. If we
could sell it, it would buy abroad only
fraction of the value we have given for
1t. Gold is too great luxury for the
outside world to absorb by the billion
Whoyo
fourths of the worlds gold, any price
is too high price to pay for gold we
do not need. The large excess reserves
OF our banking system, the close to 81
O00, 900 900 of gold held idle in the Treas
ury, the power to alter the legal reserve
requirements of the monetary and bank
ing system all are proof that any price
is too high a price for us to pay for
more gold. In the 1920s we ran up
huge speculative structure on $4,000 ,00o,-
600. Today we hold five times as many
dollars of gold.
Just as it is fiction to buy 20 cents
worth of silver for IS cents and then
put 1t on the Governments books as
worth $129, so it is self-deception for
the country to buy gold at $35 an ounce
and so value it on the Treasury's books.
1t cost $35. But it isn't worth $35.
There may be no better way now of keep
Ing our books on gold, but we should
be frank enough to recognize that $35
an ounce is an artificial price
Becomes American Legal Tender.
60 for &C II oooS tho EaJaro1 p,ror,,o
Bulletin is correct when it states: "The
purchase of the gold has cost the Treas
ury nothing" But the reader should
not assume that 1t has cost the country
nothing. The law that enables a for
eigner to get $35 an ounce for gold here
is law directing every American to
give the same consideration to those
dollars as to any other s35. The for
eigner's gold becomes American legal
tender.
The gold We now have we are "stuck
with" We cannot get rid of it. To talk
of employing it in postwar reconstruc-
ton abroad, as did high official last
year, is pointless, for what the post war
world will want from us is real wealth
such as foodstuffs, clothing and manu-
factured goods; not gold and silver
tokens of wealth, the receipts that
have been given us during past years
in exchange for real wealth. On the
books the cost of the bullion policies of
the 1930s as yet shows no LOSS, and for
silver indeed it shows an imaginary
profit; but the loss is none the less real
What about our future gold policy?