GOLD STERILISATION

Evening Post, Volume CXXV, Issue 92, 20 April 1938, Page 9

GOLD STERILISATION

AMERICAN POLICY

ABANDONMENT ANNOUNCED

WASHINGTON, April 19.

The Secretary of the Treasury, Mr. Henry Morgenthau, announced the abandonment of the gold sterilisation policy, opening the way to sweeping increases in the available credit.

In future the gold acquired by the Government will be poured into credit arteries as needed.

The only qualification is that some of the incoming gold may be temporarily placed in the Treasury's working balance, in which at present there is 209,000,000 dollars' worth of free gold.

The European situation last year started a great flow of gold to the United States and bankers felt the need to "sterilise" this money because of its possible effect on the financial situation. Under the sterilisation policy undertaken at the beginning of last year the United States Government raised funds with which to continue a programme of gold purchases by selling securities to the banks. In this way it took out of the banking system, by its borrowing, just as much as it put into it by gold purchases, leaving the total of bank reserves unchanged. In the process, however, the National Debt was increased.