PRICE OF GOLD

Dominion, Volume 30, Issue 265, 5 August 1937, Page 2

PRICE OF GOLD

Why No Reduction is Expected AxMERICA’S POSITION An observer from Europe, back in his hotel after a visit to Washington, told au American friend that he had received' assurances, that no reduction was contemplated in the price being paid for gold. “Did you,” asked the American, “come ail the way across the Atlantic to get that information first hand?” “Yes, that and other information,” was the reply. “Well,’’ drawled the native, “I don’t bother inquwing around here either about the gold price or the dollar valuation. I just look toward Liverpool and draw my own conclusions.” “What do you moan by that?” asked the foreigner, puzzled. “The best answer,” said the American, “that I can give you is to tell a story which was current a few months back. It seems that a certain high official was lecturing a group of bankers on the new order of things which had been inaugurated in Washington. His advice was that they forget their old-fashioned standards and brush up on managed currency and commodity dollars. One of his listeners, with studied innocence, broke in with this question “ ‘How should we regard our constantly swelling reserves which are due to the unexpected deluge of gold?’ “After a hem and a haw the official thought that the sterilisation policy, then just begun, together with the tripartite agreement might solve the problem. But It's questioner persisted: ‘Wouldn’t the solution be much simpler and effective if we permitted the dollar to seek its natural level, somewhere above the 59-cent. mark at which it has. been pegged?’ “ ‘My goodness!’ ” exclaimed the official, “ ‘if we were to do that we would depress the price of wheat at Liverpool.’ “The moral,” explained the American, “is that the gold and the monetary questions in the United States are as much political as they are economic, perhaps more so. It is strange how economists, statisticians, and speculators abroad never consider this political equation. They know, just as you and I know, that the American Government cannot go on indefinitely buying gold at 35 dollars an ounce to bury it under the blue grass of Kentucky. They wonder when and.how the end of 35 dollars gold will come. They ask Mr. Roosevelt and Mr. Morgenthau, and they are told 'that no action is imminent. Any politician' from the South or. West can read the riddle and arrive at this answer: “The.price of gold will be cut when the Administration is certain, that it can be done without doing real or fancied financial injury to the wheat farmers, the cotton planters, and the silver interests.”