BRITAIN STARTS SELLING GOLD STOCKS TO U.S.

Greymouth Evening Star, 16 September 1947, Page 7

BRITAIN STARTS SELLING GOLD STOCKS TO U.S.

(Reed. 11.10 a.m.) LONDON, September 15. The Treasury has announced that the Bank of England has sold gold valued at £20,000,000 to the Federal Reserve Bank, New York.

Reuter’s financial correspondent says the sale did not surprise London official quarters, but some City of London quarters, though they recognised that Britain with the balance of the United States loan frozen must begin living on her gold stock, were decidedly surprised that it had happened so soon. They suggested that unless it was seen in perspective it might adversely affect the London Stock Exchange tomorrow.

The Chancellor of the Exchequer, Dr Dalton, recently disclosed that Britain’s reserves of gold and dollars were about £6t)0,000,000. It was learned today that the bulk of this is in gold.

It was disclosed that Britain customarily keeps only a minimum dollar balance in New York. Until now, when her funds in New York ran down to that minimum, she drew on the United States loan. With the final drawings on the loan spent, with the balance of the loan frozen, with discussions progressing for marshalling her reserves from various quarters and with the necessity of paying for vital purchases from the dollar area, the gold stock is a stopgap.

The drawing of £20,000,000 is not regarded as intrinsically formidable. More importance is attached to the question of whether it would be the first of a series and how rapid and large the series would be. Mr Snyder, the United States Secretary of the Treasury, told a press conference in London today that the United States had no intention of changing the United States buying price for gold. It was not a proper step to take at the present time. Last Line Of Defence

Britain’s sale of gold—her first since the war—will involve no actual shipment of gold from England, since it is already in New York at the disposal of the British Treasury, says the Daily Telegraph. It will simply be moved from one vault to another. The gold reserve represents Britain’s last line of defence, but it is an elastic line, because gold is accumulated in Britain from the goldmining industry of South Africa, and Australia recently promised to send the whole of her current gold production to Britain. The Daily Mail says the gold reserve belongs to all members of the sterling area, including some of the Dominions. It is thought likely that some of the transferred gold will be needed to pay for United States goods and services, including shipping. Another part of the gold may be destined to act as a goodwill gesture to the countries unwilling to trade with Britain because of the suspension of convertibility. The transfer will demonstrate that Britain is willing to do her utmost within her powers.