Panic Over Gold BANKERS TO REVEAL PLAN

Press, Volume CVIII, Issue 31631, 18 March 1968, Page 13

Panic Over Gold BANKERS TO REVEAL PLAN

(b.Z P.A.-Rculer—Copyright)

WASHINGTON, March 17.

Western world central bankers will reveal today how they plan to cut short panic gold buying which threatens the international monetary system.

An international gold conference hastily called by the United States will issue a statement after its final session today which the signatories hope will put an end to speculative attacks against the dollar and other currencies.

After seven hours of talks yesterday, a final closed-door working session followed by a luncheon was scheduled today for central banking chiefs of the United States, Britain, West Germany, the Netherlands, Belgium, Italy and Switzerland. The bankers maintained tight-lipped secrecy about their plans in advance of their formal statement.

They were hoping to devise a formula to keep private gold trading from unsettling currency relationships and restore confidence to foreign exchange markets and stock markets in the United States and abroad.

They were joined in their first session yesterday by the United States Treasury Secretary, Mr Henry Fowler, who has seen his gold stock dwindle in recent weeks to its lowest level since early 1937. Mr Fowler, asked by reporters after yesterday’s session if he were optimistic about the talks, said: “I’m always optimistic.” Participants in the first session also included Mr Gabriel Ferras, executive director of the Bank for International Settlements in Basle, Switzerland, and Pierre-Paul Schweitzer, managing director of the 107-nation International Monetary Fund. The United States central banking head, Mr William McChesney Martin, has given no hint of the proposals he made to his colleagues. Asked by reporters after the first session if the meeting was going well, Mr Martin smiled broadly, waved and said nothing. Dr Karl Blessing, president of the West German Federal Bank, said the bankers had “a quite good session” yesterday and that he was hope-

ful the talks would be productive. President Johnson disclosed yesterday a new effort to regain confidence in the dollar through higher taxes and lower spending, the Associated Press reported. “We must tighten our belts and adopt an austere programme . . . hard choices will have to be made. Some programmes of lesser priority and urgency are going to have to be deferred,” he said. The exchange offices of banks at airports and railway stations throughout Switzerland were open for business as usual yesterday. Most were limiting the amount changed to the equivalent of SUSIOO a person.

“This should be enough to see them through the weekend, and the situation should be clear by Monday,” one official said.

Rates of all currencies against the Swiss franc have been cut by about 2 per cent. All dealings in gold were banned in Mexico today after an order by the Finance Ministry aimed at preventing speculation. The ban would remain in force until after the meeting of Gold Pool nations in Washington. A spokesman for the Ministry said the measure was taken to prevent foreign speculators buying Mexican gold while other world gold markets were closed. Gold as the basis of an enduring world money system was ruled out by a former Chanceller of the Exchequer, Mr James Callaghan, at a meeting of the Labour Party at Taunton, England, yesterday.

It was essential to have a system that would lessen the world’s reliance on gold, he said.

He said the world would take a backward step if speculators won their campaign to boost gold prices and undermine confidence in the world’s monetary system. Mr Callaghan, who now has the Cabinet post of Home Secretary, urged the speedy implementing of the International Monetary Fund plan to create special drawing rights as a new reserve currency along with gold, sterling and the dollar.