BEVIN STARTLES WASHINGTON

Gisborne Herald, Volume LXXIV, Issue 22426, 5 September 1947, Page 5

BEVIN STARTLES WASHINGTON

PLAN FOR U.S. GOLD EXPERTS SCORN REDISTRIBUTION TALK (N.Z.P.A.—Reuter— Copyright.) (10 a.m.) NEW YORK, Sept. 3. Mr. Ernest Bevin’s proposal that the United States Government’s gold in Fort Knox be “redistributed” as a solution to the universal dollar shortage took Washington officialdom completely by surprise, says the New York Times correspondent in Washington. The reaction for the most part was facetious, since officials could find no basis for it in economics or commonsense until Treasury officials suggested that, perhaps, Mr. Bevin had purposely withheld the basis for his proposal and meant something quite different than “redistributed.” Currency Stabilisation Aim? Fiscal authorities suggested the possibility that Mr. Bevin may have had in mind the use of American gold for currency stabilisation purposes. They pointed out that, in that case, Britain can have all the American gold it wants to pay for at 35 dollars an ounce, which is the official purchase price in the United States. On any other basis, such as the borrowing of gold on collateral security, an Act of Congress would be required. Treasury officials seemed dubious of

Congressional approval of any but a purchase basis.

One official said: “If Britain really wants to get gold, she should hold on to some of the South African metal being sold in America for dollars.” United States gold assets, totalling 21,766,000,000, arc held at Fort Knox. Much of it was purchased from other countries. Titus, officials pointed out, Mr. Bevin’s proposal boiled down to the suggestion that the United States should give back the gold it had bought so that it might be resold to this Government at 35 dollars an ounce. Holding: Three-fifths of World Stocks The United States, in effect, accepts gold from other countries in payment of debts resulting from their net purchases of American goods over and above sales to this country. Most of all the gold, however, is part of the United States monetary system, mostly as reserve backing against notes and deposits of Federal Reserve Banks. Some also is backing for paper money issued by the Government itself. The United States present holding on gold amounts to about three-fifths of the world’s monetary gold stock. The Republican chairman of the House Appropriations Committee, Mr. John Taber said: “My answer to Mr. Bevin would be: Forget it and go to work.’ Chaos ought to be eliminated bv Britain and her people by going to work.” Observers Puzzled The Times correspondent in Washington says: “Late tonight Washington financial observers were still puzzled over Mr. Bevin’s proposals. It was said that Mr. Bevin appears to be ignorant of the economic fact that gold is another form of dollars which, in this instance, lie had not mentioned. Other experts, seeking a rationalisation of Mr. Bevin’s suggestion, asserted that he might have in mind the possibility of obtaining gold for resale by Britain at premium prices. If Britain could obtain 50 or 60 dollars per ounce in private sales, the loan or gift of the equivalent of gold at 35 dollars an ounce by the United States would permit Britain to realise a profit that would absorb some of the increase in. costs since the United States loan to Britain was granted. Ignore Gold; Dig Coal

The New York Times, in an editorial, commends Mr Bevin’s appeal to the British people for an all-out production effort, but advises the Labour Government to forget about the gold buried at Fort Knox and concentrate on coal buried within the borders of .their own country and which, at the moment, is far more previous than gold in terms of Europe’s recovery. The editorial says: “The lack of intellectual maturity represented in Mr. Bevin’s proposal will be upsetting to Americans.

"This particular proposal is a very old chestnut. It is necessary every so often to repeat that the gold at Fort Knox is not idle and not useless since the bulk of it is held in trust as the nation’s monetary and banking reserve. ‘‘Even if it were redistributed tomorrow, unless the existing world maladjustments were rectified at the same time, it would be back in the ground at Fort Knox within a few weeks or a few months and things would be right where they are at this moment. "This is not the first evidence of the Labour Government’s penchant for seeking short-cut panaceas for Britain’s economic problems,” It describes the Government’s leadership as hesitant, erratic and lacking in anything resembling a clear-cut sustained policy. Proposal Declared Ridiculous The Herald-Tribune’s financial correspondent says that Mr. Bevin’s proposal was termed ridiculous by New York bankers, who viewed his remark as just another stick with which to beat the United States for the failure of Europe and the rest of the world to find a workable solution for their political and economic difficultiesThe Secretary of State, Mr. George Marshall, is expected to decide within a fortnight whether to recommend a special session of Congress for emergency action on the European economic crisis, says the Associated Press correspondent in Washington. State Department officials said that Mr. Marshall's decision will probably he made shortly after Mr. George Keenan, chief of the State Department’s policy planning committee, returns from Paris.

President Truman must make the final decision on the riuestion of summoning a special session, but he has already said ire would recall Congress if such action appeared necessary. Statement Held Important

The Secretary of the Treasury, Mr. John Snyder, before sailing for England today, when asked about Mr. Ernest Bevin’s reference to the re-distribution of the United States’ gold reserve, which is estimated at 21,766.000,000 dollars, said that, it was a matter of concern only to the United States. Nevertheless. Mr. Snyder _ indicated that lie considered Mr. Bevin’s statement was of tremendous importance. Treasury experts, however, frankly suggested that Mr. Bevin’s suggestion was “cockeyed.” They said that if the gold were redistributed, most of it would be turned into dollars and would thus constitute iust another form of loan. Experts also considered it would bo inflationary and send prices still higher. Moreover, the gold would inevitably find its way back to the United States.