Evening star., 1950-10-15
Our Gold Pile
| Shrinks Some.
By |. Edgar Primo

By l. Edeor Primo
Americas gold stocks are fall
ing at the fastest clip in history,
but United States financial Of
| f1cials hope the run continues
at least for the present.
| In the year from September,
1949. to September, 1850, we lost
$1.1 billion worth of gold.
There's nothing to be alarmed
about. the experts say. The situa-
ton. in nutshell, is this:
We still have more than $23.5
billion dollars tied up in our gold
hoard. This means the precious
metal backs about Sc per cent of
our currency. more than twice the
legal requirement. Our gold
stocks could dip to about $11 bill
lion and we stiN would have a
sound dollar.
The present stockpile leaves us
with an estimated three -fifths of
the worlds monetary gold. We
have about 10 per cent of that
owned outside of Russia.
The outgowing flow of gold is
principally to Marshall Plan
countries $500 million to Britain
in the last year, and means these
nations are getting back on their
financial feet. Their all-important
dollar reserves are growing. They
are winning the battle for re-
covery. And the bite on the
American taxpayer for ECA ap-
preparations should lessen as a
consequence.
One top Federal official ex-
planned the current reverse flow
of gold this way:
Normal Trend
From 1945 to 1949, when West
ern Europe's effort to shake off
wars debilitative effects was
ouch-and-go. those nations had
to sell us gold or use it to pay for
goods supplied by the United
States. During this period we
acquired about 81 billion worth
in this way.
Since last autumn when the
pound sterling and other curren-
cies were devalued, the exports of
Western Europe, a great many of
which came here, increased ap-
preciably. Imports from the
United States dropped. and Euro
pean dollar reserve rose. In
fact. some nations had SO many
extra dollars they decided to con-
vert portion to gold.
so now we are in effect re-
turning the gold we got from
them during their difficult times
by selling it or paying for goods
with it. This is the normal, the
expected and the desired. It will
help the Marshall Plan countries
stabilize their currencies and, we
hope. eventually eliminate cur
rency and trade restrictions.
Thus, gold is pictured in the
role Kipling once described for it.
In one of his poems, he said the
metal was like a great under
ground river, winding about the
globe and fertilizing trade along
its course.
When EcA's vast econo-finan-
cial shot in the arm to Europe
is considered, a 1910 statement by
the then Assistant Secretary of
State, Adolph A. Berle, jr., on the
matter of gold and trade, stamps
him as formidable seer. Speak
ing at Yale University, he said:
1T seems fantastic today to
suggest handing over some of our
accumulated gold as a free gift
to re-establish international cur
1ency, to let other nations set
their houses in order and thereby
re-establish international trade
and normal life. But this may not
seem nearly as fantastic a few
years hence"
Varying degrees of credit are
given ECA aid in the strength
ened financial position of the
Marshall-plan countries. In fact,
one top. United States official said
he believed the most important
factor by far was the devaluation
of currencies.
Not all the $1.1 billion in gold
that has been transferred from
American ownership since Sep
tember, 1949. has left the coun-
try. Much of it has been ear
marked" for the particular nation
and kept in a Federal Reserve
bank or wherever else the new
owner decided.
Only little more than half our
gold hoard ($12.5 billion) is buried
in the vaults at Fort Knox, KY.
The New York assay Office has
about IS billion and the remainder
is distributed among the three
coinage mints, the Seattle assay
Office and Federal Reserve banks.
The mints still make gold coins
for other nations.