THE WORLD’S GOLD

Southland Times, Issue 21197, 25 September 1930, Page 7

THE WORLD’S GOLD

ESTIMATE OF SUPPLY FINANCIAL COMMITTEE OF LEAGUE DECLINE IN PRODUCTION (United Press Assn.—By Telegraph—Copyright.) (Rec. 5.5 p.m.) Geneva, September 23. The Financial Committee of the League of Nations, which is examining questions concerning the world’s gold supply, has issued an interim report. It estimates the gold reserve in the banks and treasuries at about £2,007,000,000 also £183,000,000 in circulation in a few countries, in commercial banks and hoards outside Asia, of which £79,000,000 is in the United States. A considerable part of the latter is permanently lost for effective monetary purposes. The committee estimates the gold production of 1930 at about £80,800,000, after which it will increase for three or four years, eventually declining until it reaches £74,000,000 in 1940. After the last mentioned year the decline is likely to be accelerated owing to the gradual exhaustion of African mines unless new unexpected supplies are discovered or a new process invented for increasing the yield, enabling the reopening of old mines. The committee is of the opinion that although the demand for gold for monetary purposes is temporarily checked by economic depression, the evidence points conclusively to a serious situation arising when trade revives unless alleviating measures are taken in time. It believes the supply of new gold will be inadequate in 1934 without such measures. Believing that remedial measures can be found within 10 years to remove anxiety over a gold shortage, the committee welcomes a discontinuance of gold coinage in domestic currencies. It does not believe that such a course has weakened credit, and hopes gold will be concentrated in reserves in central banks accompanied by limitation as to the payment of international transactions. It believes that the minimuni legal gold cover against notes, which is largely traditional, could be reduced, effecting economies and not weakening credit. It would require an international agreement, but the difficulties are not insuperable. It suggests the extended use of cheques, the replacing of small bank notes by subsidiary coinage, also the adoption of the gold standard by countries which have not yet stabilized their currency, and urges that countries employing the gold exchange standard should seriously consider the consequences of any considerable conversion of the existing asset reserves into gold. The committee expresses the opinion that confidence in the gold exchange standard system should be increased if it were internationally agreed that reserves held abroad for the maintenance of currencies were not subject to seizure and confiscation in war time.