The Farmville herald. (Farmville, Va.) 1957-current, 1959-06-05
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Last YEAR the Unit e States
shipped about S2.3 billion of gold
to foreign nations At the start of
1889 the export vas at a much
lower rate. but recently the outflow
has increased substantially Fol the
year to date the total export has
been inst below $3.50 million. Among
the questions being raised are what
is causing the export and is there
any real danger 10 our monetary
position as result Of this loss9
AS to reasons for the loss Of gold.
the first thing that should be noted
is our changing international bal
ance of payments This is the total
Of all goods and services entering
into international trade, including
personal remittances. travelling. and
everything else Five and ten years
ago this balance was strongly in our
favor. and there was considerable
discussion about the so-called dol
lar-gap- meaning that foreign ma
tons were buying. or at least re
ceivlne more. in terms OF dollars.
than they were able to sell this
nation.
This is no longer true. Our ex- /,
ports have d ell inc d sharply
Foreign nations have recovered
from the war devastation Today
they are producing more and are
successfully reaching for sales in
this and other nations Not only is
there 40 longer dollar gap. but III
the case Of many nations there is
surplus Of payments due them
from the United States 1t is natural
to take this in the form of gold,
which improves the backing of their
currency and gives them a better
standing in the international field.
A second factor of importance is
that We have succeeded in getting
international money and capital
markets large y established
There is not yet completely free
convertibility of local currencies
into foreign exchange but enough
progress has been made in this d.
rectlon to make large foreign credit
onerations a reality. both long and
short term loans Such operations
are not routine, and never can be
because of national differences. but
there is no longer any worry over
yrrt,n
ceived from many Of the important
foreign nations
Third. in recent months there has
been sharp increase in foreign in
yestments. Both institutional inres-
tors and individuals have turned
more and more TO the securities of
other nations. An important con
sideration in this case has been
that good foreign stocks appear
relatively cheap as compared with
American securities The total vol
Ine of such investment is a small
item in our balance of payments.
but il is one that can influence gold
exports
On the question of whether or not
the loss of gold poses a danger to
our monetary syst e m. several
points need emphasis.
First. we still hold more than $40.
billion of gold, and that is one-half
Of the known monetary gold stock
in the entire world outside of
Russia. No one knows how much
Russia either holds or produces.
This is far in excess of the amount
necessary to meet p.esent reserve
requirements against our currency
and bank deposits.
Second. it has long been con-
tended that better distribution Of
the existing gold stock was desir-
able for the purpose of enhancing
world economic stability and i'm
proving international trade The
trouble has been that no one could
devise system for bringing about
such better distribution. Now that
it is taking place it would be I'M
thinkable anything should be done