WORLD'S GOLD RESERVES

Poverty Bay Herald, Volume LV, Issue 17440, 11 December 1930, Page 7

WORLD'S GOLD RESERVES

AMERICA'S POSITION FOREIGN LENDING INCREASED (British Official Wireless.) Reo. 10 a.m. RUGBY, Doc. 10. Considerable attention lias heen paid in business circles, both in London and New York, to the hope expressed by the president of the Board of Trade, Mr. William Graham, that "American and British financial authorities will be able to arrive at an agreement in the use of gold reserves which will provide, on a sound basis, a great credit structure and so minister to a common reco\ery that necessarily depends on the control banks."

The Times city editor discourages the view that an event of importance is impending, and states that although rumors were current in New York yesterday, the Federal Reserve Board remained silent. New York bankers are reported as declaring that they saw no hope of any distribution of gold through the capital market until political conditions in Europe were more stable. The, Times points out that America holds about one-half of the world's gold stock, acquired in a perfectly legitimate way.' "This will not be reduced unless her trade balance becomes adverse., which would compel her to export gold in payment, or unless she embarks *jj>oi> an active foreign lending policy, which would give borrowers the right to draw gold from America. America has, in part, largely increased her foreign lendings this year, compared with last year, but this has made very little difference to her gold stocks, which are nearly £130.000,000 higher than a year «go. Shelent relatively little to Europe, probably because there is a dearth of really good borrowers, Britain being more adventurous in foreign finance, nod having more vested interests concerned in lending money abroad. "France, and not America, has been the. principal taker of gold in the world market since the spring of 1927, and she has ample gold with which to undertake large foreign business if she desired, but j American finance docs not feel the necessary confidence in foreign borrowers.

IDLE GOLD HOW THE WORLD SUFFERS VAST PARIS HOARD LONDON, Dec. 1. I have laid my hand on thousands of truncated ingiots* made of British gold, and on real gold bricks—those oblong yellow French-American ingots, says the Daily Mail's Paris correspondent. In a fierce bright light which illuminates enormous underground vaults, the ingots are piled in great steel cupboards, and they glisten dully behind a wire screen, with tickets bearing dates and ligures. The vaults hold £216,000,000 worth of i-old, more than half the Bank of France's reserve of £411,040.219, which is double the Bank of England reserve. The vaults are in a vast underground chamber, two and a half acres in extent. and 80ft below tic surface, witli a rock roof 36ft thick. The entrance is through :i 20ft wall of concrete and steel, m which a door 2ft thick, made of steel, is proof against any known blowpipes. Experts calculate that if the keys of this and other doors were lost it would take two mouths, working night and day, to blast a way through. Only a dozen bank officials know the secret of the mechanism which works the hidden doors, which are only to bo shut in time of greatest peril. These cannot be opened from the outside, but only by a "arrison which locked itself in with the .rold Alongside the vaults are kitchens in which meals for 2COO can be prepared, and there is also a gigantic refrigerator holding meat and vegetables.

WON'T GIVF, IT UP

These vast masses in the French vaults, and larger masses in the United States, represent the largest proportion of the world's gold, which is idle when it is most mgently needed to stimulate trade in other countries which are trying to maintain a gold standard with little gold. Unless their own markets are worse ■hit, there, appears no immediate, prospect of France and America releasing their gold. The world's supply of new gold is much below the rate of world production that the depression may become a crisis within a few years. Many attribute the depression to the failure" of an increase in the total gold stocks to equal the figure required to maintain stable prices in the world s principal commodities. The International Gold Committee deliberating at Geneva will issue its second report early in 1931. It is expected to emphasise the seriousness of the position, and it is considered here that immediate steps must be taken for a more effective distribution of gold throughout the world. In view of the, facf that new gold supplies are becoming) relatively smaller as world trade increases. British financial circles want the world's central ban\-s ►o reach a common understanding to reduce the proportion of total gold cover. It is held that there would be strong opposition from France, which asserts that Britain, with depleted stocks, is trying to weaken France.