THE GOLD STANDARD.

Auckland Star, Volume LXIII, Issue 78, 2 April 1932, Page 4

THE GOLD STANDARD.

POSITION OF UNITED STATES, EXPORT OF BULLION.

The Guaranty Trust of New York, in its monthly '"Survey," expresses the opinion that the United States, with half the world's money fiold in its vaults, will not leave the gold standard. Fresh suggestions have apparently been current in New York similar to those which, wore prevalent last October. The main cause of these reports is that .balances are being steadily withdrawn, resulting in large exports of gold, mainly to France. Even in the remote contingency of all foreign short-term balances now outstanding in the American market being called home at once, the demand could 'be met without reducing America's gold reserve to a dangerous level. The unfortunate feature of current developments is that the passion for hoarding has not ceased and the note circulation is rising. The contingency of a determined assault on Americas gold stocks driving her oil' the gold standard, need not .be seriously considered. The main problem is how the enormous gold reserves of France and America are to be legitimately dispersed. If all countries curtail their trade the relative position is unchanged. What is needed is that free trading conditions should be resumed and the bullion used in settling payments.

It is stated that ever since Britain went off the gold" standard there has been a steady flow of gold from the United States. Apart from the gold shipped, by individual banks in the United States, it is estimated that the Federal Reserve Bank exported from September 21. 1931, to January 31, 1932, approximately £92,000,000.

The "Statist," referring to the gold accumulations in Palis, states:

"France became unwittingly the principal factor in the gold exchange standard. As such she was. no doubt. the_ main direct sufferer from the depreciation of sterling and other formerly convertible currencies. The losses thus suffered have convinced French opinion that all the talk about the virtues of the gold exchange standard was a snare and a delusion. Hence the campaign against the system, against any kind of management of the gold standard, and hence the conversion at the most rapid rate of the remaining foreign currency assets, first into earmarked gold and then into gold safely deposited with the Bank of France. The French authorities have also decided to rid themselves of the worries and uncertainties that must surround their sterling assets. The preparatory work for repatriation was effected by a general coilversion of French fixed deposits into current accounts." A statement was made recently iby ilr. E. Fletcher, a director of E. and E. Fletcher, bullion dealers and refiners, of Birmingham, that the release or hoarded gold in England, and tlie consequent importations of French currency, was one of tho principal factors that enabled the Bank of England to repay in francs the outstanding balance of £15,000,000 to the Bank of France, using for that purpose a comparatively small amount oi gold. Mr. Beaumont Pease, of Lloyds Bank, in a recent address to shareholders, paid a high tribute to "the patriotic sanity and common-sense restraint of the people of this country in circumstances of abnormal difficulty. Instead of panic withdrawals of deposits there were," he remarked, "queues outside the Land Revenue offices ready to pay increased taxation. A more striking demonstration of unflinching courage in the face of •unprecedented difficulties could hardly be imagined. _ The steadfastness of the British public in the face of danger undoubtedly produced a profound impression abroad and helped to prevent a severe collapse in sterling. The pound depreciated, but not to a catastrophic extent, and the country was spared the evil of an inflationary rise in prices."