U.S. panel rejects return to gold

Press, 15 February 1982, Page 6

U.S. panel rejects return to gold

NZPA-Reuter Washington The United States Gold Commission has ruled out recommending that the United States return to the gold standard abandoned in 1933. The commission was set up to study whether the United States should return to the system under which its money could be exchanged for gold. Although it opposed a return to the. gold standard the commission, with Reagan Administration support, recommended minting a new gold coin to attract people who have been exchanging their dollars for foreign gold. The group, created by Congress to study the role of gold in the American and international- monetary system. is chaired by the Treasury Secretary (Mr Donald Regan); Its panel in-

■ eludes representatives of the Federal Reserve Board, and the President's Council of Economic Advisers. . By a 9-8 vote the commission agreed that returning to the gold standard would, not be an effective way to combat inflation. When asked whether the vote meant the commission had rejected a gold standard or backing the dollar with gold, the chief presidential economic adviser, Murray Weidenbaum, said: “I would say so, for the present time." Instead of recommending a .return to gold .the commission asked Congress and the Federal Reserve. Board, the United States central bank, to study better ways of controlling the money supply. In recommending the new gold coin, all three Administration members of the commission including Mr Regan,

backed the plan. The action which would need Congressional approval, caused one member, a Democratic congressional. Henry Reuss, to walk out of the meeting in protest. He said the Treasury had “carved in to the gold lobby" by endorsing a coin free from . United States .capital gains taxes. Mr Reuss chairman of the Joint Congressional Economic Committee. said the coin would be "giving speculators a free ride in undermining the dollar.” President Franklin Roosevelt officially ended the gold standard in 1933 and the United States severed its last link-between the dollar and gold in 1971 when the then President Richard Nixon prohibited foreign holders.of dollars from converting them to gold. i-: . i,