Milford chronicle., 1948-02-13

A LITTLE KNOWN but highly impOr-
tant event of 1947," according to Francis H.
Brownell a highly and widely respected au-
thOrity on monetary questions, ''was the in
crease in gold stocks of the United States of
over $2-billiOn'
Mr.. and Mrs. Average Citizen are likely
to skip this information as they hunt for adj
vertised bargains because they little suspect
that inflated prices in their local stores are
directly related to our Governments enor-
nous gold purchases. This relationship comes
from the fact that our Government after the
purchase, proceeds to store the physical gold
IN the Treasury and then to turn it into bank
credit money. 1t also increases by this amount
bank credit reserves, which makes possible
increases of bank credit through loans or
discounts to the extent of five times such
reserves. Thus the 1947 gold purchases SER
we'd as the basis for increasing bank credit
$10-billiOn, which, plus the original S2-bil-
lion, makes a total of $12-billion, or a pOss-
IDLE increase of bank credit money of SIS for
each 81 of gold.
Mr.. Eccles, chairman of the Federal Re-
serve Board, on November 25, 1947, express
ed the belief that the inflow of gold in 1913
would be between 2 and billion dollars and
then added, Multiplied by six, this would
permit an expansion of bank credit of from
II to Is billion dollars" Such an inflow
would mean a greater expansion of credit,
more easy money and consequent imitation
airy trend toward higher prices for every
thing you buy
Mr.. BrOwnell has been a leader in the
mining industry for a generation and a stu
dent of monetary affairs all of his life. He is
now Chairman of the Finance Committee of
the American Smelling and Refining Com
pany. In an open letter which he recently
wrote to Senator Charles w. TObey and Con
gresham Jesse P. WOlcOtt, respective Chair
men Of the Committee on Banking and Cur
rency in the Senate and the House, he spelled
out the direct indatiOnary effect which our
heavy gold purchases carry.
1t is easy to see from Mr.. BrownelPs let
ter how our ownership today of 500 of the
worlds monetary gold and our continued
heavy purchases of monetary gold stocks
serves directly to speed up the infiationary
spiral at home while it serves to increase the
dollar stringency abroad. Mr.. Brownell
suggests the way to remedy these situations
Is: I'D Rescind the prohibition of ownership
OF gold by United States citizens; (2) permit
a free market both in the United States and
elsewhere, for all gold, including United
States mine production, and (3) leave the
present gold policy otherwise unchanged,
continuing the obligation of the Treasury to
buy gold offered at $35 per ounce
1t is possible that some opposition will
arise to the program he suggests but as he
points out it is much more important to stop
the present infatiOnary effect by reducing
purchases than to follow the course which
has brought on so much distress.
$500
IN THE JUDGMENT of some of the
best authorities in the National Capital the
production of most things has reached prac-
teal ceilings. This is interpreted to mean
that pay increases now are not essential be-
cause the net effect is that price tages are
marked up. At the same time the national
rate of production has been speeded in the
last year and the price levels are not apt to
pc increased very much this winter