SURFEIT OF GOLD.

New Zealand Herald, Volume LVIII, Issue 17932, 7 November 1921, Page 9

SURFEIT OF GOLD.

♦ AMERICA'S PREDICAMENT. PROPOSED LOAN TO BRITAIN STIMULATING WORLD'S TRADE. [iEOSt OUR OW.V COItRESPOKnEKT.] LOS ANGELES. Oct. S. A loan of 500,000,000 dollars in actual gold is being considered at the piescnt timo by international bankers in Now York, and the matter will shortly bo submitted to Washington for approval. If such a fund were mado available to the Bank of England, it is asserted in an interview in the Boston News Bureau, a well-known financial journal, it would improve sterling and givo English traders a chance to import goods from the United States. English bankers would bo enabled to givo credit to other nations. The ultimate object of the loan is to promote credit facilities throughout the wrld, but chiefly in Europe Because of the expected benefits to be derived, the proposed rat* of interest is placed at 1\ per cent, or 3 per cent. Tho plans are in the embryonic stago at present. It is realised that such a suggestion would not meet with popular approval in the United Slates, and tho difficulty of its being arranged through the Federal Rescrvo Bank is fully appreciated. It ia believed, howover, that some sort of an understanding can bo arranged between bankers in Now York and ia London. Germany's Obligations. Tho project bears a relation to tho necessity for putting Germany in funds. It is known in New York that German interests havo mado strong representations to London tliat they can meet forthcoming reparation payments only with the greatest difficulty. Financial advisors in London, it ia reported here, havo acknowledged tho difficulty, but urged the Germans to mako strong efforts to meet the payments, and that they would see the matter through. American gold will undoubtedly be sought by these London bankers to a very largo amount, and at present it is simply a question of discovering tho most practical way of arranging accommodation. Tho plan does not call for the shipment of gold to the other side, but it may have to be sent to Montreal. British Banker's Experience. It is realised in this country that for herself alone Britain is not in need of assistance. London bankers have recently made large loans and credits to several European nations, but, owing to the demoralisation of international trade and credit and the reluctance of American bankers to take risks in Europe, it is believed to be practicable to entrust largo credit ventures to English experience and 1 understanding of European conditions. "Our plethora of gold is a nuisance and a potential danger," remarked one prominent American banker, "yet it continues to pour in. We have already re--1 ceived 500,000,000 dollars gold to date ' this year." Incidentally it might be men--1 tioned that Australia contributed 11,690,487 dollars to this total up to ' August 31, while Now Zealand sent 1 2,178,897 dollars. England sent 143,108,454 1 dollars. "Should the gold flow continue," i said this banker, "the bulk of the world's i > supply will como here without the Ameri-! ! can s "receiving any commensurate return . in the way of trade improvement. Under - such conditions, even at the present r stage, gold must cease to be the basis of s circulation in many countries, as it is f impossible in trade to have a standard if 1 that standard is not in tho hands, in a , more or less direct way, of every interna- ] tionally trading nation." I Control of World's Credit. f "The only customer we have who can '■ be of any real value to us," said another 8 banker, *"is England. That is, in the ;1 present crisis. She still enjoys the highest. 1 credit, and through experience and knowe ledgo of other nations is in the best posi- • tion to administer the world's supply of > credit. English and all European trade " and credit agencies have been_ largely 7 shut off from tho United States in consequence of tho adverse position of sterling. 1 You cannot make sterling rise by legisla--3 tion or by somo banking arrangement as " existed during the war. It can be en- ' hanced only if there is at the Bank of England against its well-known paper a greater amount of gold. The idea now is that before we are suffocated with all the gold in the world we should make an arrangement to lend England a certain * quantity of gold for somo three years at f a moderate interest charge. From a bank- , ing point of view there is a profit in this. England can make that improvement of tho credit of other countries a chief con- ? cern. Wc can look to England as the only \ client who will be able to pay in a short ; time."