BULLION STANDARD.

Star (Christchurch), Volume LXVI, Issue 20206, 17 January 1934, Page 1

BULLION STANDARD.

President Roosevelt’s Statement. MONETARY POLICY IN U.S. United Press Assn.—By Electric Telegraph—Copyright. WASHINGTON, January 15. An important portion of President Roosevelt’s message to Congress was his exposition of his thesis on what is popularly called “ The Bullion Standard,” which involves the complete removal of gold from the coinage. “The free circulation of gold coins is unnecessary,” said Mr Roosevelt, “as it leads to a possible weakening of national financial structures in times of emergency. The practice of transferring gold from one individual to another, or from the Government to an individual within the nation is not only unnecessary, but is in every way undesirable. The transfer of gold in bulk is essential only for the payment of international trade balances. Therefore it is a prudent step to vest in the Government title to the possession of all monetary gold within its boundaries, and to keep gold in the form of bullion rather than coin.” Certificates in Lieu.

In asking for the transfer of gold to the Treasury, the President stated that holders would be issued with gold certificates. These would not, according to the above thesis, be convertible into gold coin, and presumably not even into gold bullion in the customary 6000-dollar bars. Thus the position of gold holders, the greatest of which are the Federal Reserve Banks, appears to be paradoxical. In return for their gold, holders will get merely legal tender which certifies that such an amount of gold is on deposit in the Treasury, but gives them no more access to it than the holders of other currency. These gold certificates will be secured at all times, dollar for dollar, by gold in the Treasury of such weight and fineness as may be established from time to time.

Such legislation will make clear the Government’s ownership of any added dollar value to the country’s stock of gold, which may result from any decrease of the gold content of the dollar. It also of course with ,equal justice casts upon the Government the loss of such dollar value if the public interest in future should require an increase of the amount of gold designated as “a dollar.”

International Settlements. The title to all gold being in the Government, the total stock will serve as a permanent fixed metallic reserve which will change in amount only so far as is necessary for the settlement of international balances, or as many be required by future agreement among the nations of the world for redistribution of the world stock of monetary gold. If the Government assumes the ownership of gold as requested, it means chiefly a book-keeping shift in the title, as most of the Federal Reserve’s metal is now in the Treasury vaults. The Reserve Banks’ holdings are about 3,500,000 dollars and the remaining half billion or so of monetary gold is in Federal mints, or is held by individuals, private banks or others. Importance of Silver. The silver interests, which anxiously awaited the President’s message, are only partially satisfied. The President made no definite recommendations beyond restoring the limited buying policy already arranged, but he stressed the importance of silver as a monetary base. “Silver,” he said, “constitutes a very important part of our monetary structure, and it is such a crucial factor in much of the world’s international trade that it cannot be neglected.” The President declared that America had taken the first step to validate the London Silver Pact and he had to await action on the part of other nations, and the result of the working out of America’s domestic policy before recommending legislation, “looking to further extension of the monetary use of silver.” In the peroration of the message Mr