WORLD’S SUPPLY OF GOLD

Taranaki Daily News, 25 September 1930, Page 9

WORLD’S SUPPLY OF GOLD

ESTIMATION OF RESERVES

HOARDS BECOME USELESS / z FORECAST OF PRODUCTION ALLEVIATION REQUIRED By Telegraph—Pres? Assn. —Copyright. ‘ Geneva, Sept. 23. The League of Nations financial committee'. 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 is in circulation in a few countries, in commercial banks and hoard* outside Asia, of which £70,000,000 i» 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, I after which it will increase for three or four years, eventually declining until it reaches.£74,ooo,ooo in 1940. After the last-mentioned year the decline is likely to be accelerated owing to the gradual exhaustion of the African mines, unless new and unexpected supplies are discovered or a new process-for increasing the yield is found, enabling the rei opening of old mines. The committee is of opinion that although the demand for gfold for monetary purposes has been temporarily checked by the economic depression, evidence, points conclusively to a serious situation arising when 1 trade revives unless .alleviating measures are taken in time. It believes that the supply of new gold will be inadequate in 1934 without such measures. Believing measures can be found within ten .years to remove the ’ anxiety as to the effect of the gold shortage the committee welcomes the discontinuance of gold coinage in domestic currencies. It does not believe that such a course has weakened credit and hopes that gold will be concentrated in reserve's in central banks, accompanied by a. limitation as to payment in international transactions. The committee believes the minimum legal gold coyer against notes, which is largely traditional, could be reduced, thus effecting economies and not weakening credit. It would require- international agreement, but the .difficulties are not insuperable! It suggests extended use of cheques and the replacing of small banknotes by subsidiary coinage, also the adoption of the gold standard by countries which have not yet stabilised their currency. The committee expresses the opinion that confidence in the gold exchange standard system would 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..