Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, 17th MARCH, 1932. AMERICAN GOLD.

Wairarapa Daily Times, 17 March 1932, Page 4

Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, 17th MARCH, 1932. AMERICAN GOLD.

During the past half year tlie gold holdings of the'United States decreased by 1,000,000, 1 0(10 dollars. According to the Federal Reserve Board these holdings now amount to 4,007,000,000 dollars. The rapid decline has raised a question whether the United States would not suspend the gold standard. Even in the Republic that fear has been expressed. The amount still held is a guarantee that there will be no suspension of the standard. With 40 per cent as the minimum gold holding against paper in circulation, the amount now held would provide for a maximum paper circulation of 10,000,000,000 dollars. On 14th January, Federal reserve notes in circulation were 2,635,770,000 dollars. With the object of dissipating the fears which have been expressed, the “Guaranty Survey,” which is the organ of the Guarantee Trust Company of New York, writes that it is difficult to understand how anyone can seriously entertain such a notion at a time when approximately one-half of the world’s money gold lies in American bank vaults, and any doubt on the subject should be dissipated by the ease with which foreign demands are actually met. “If the gold standard,” the “Survey” continues, “is not safe in the United States at present, then it never has been, and never will be, safe anywhere. Even in the remote contingency that all foreign short-term balances now outstanding in the American market should be called home at once, the demand could be met without reducing the gold reserve of the country to a dangerous level. Any serious consequences that might follow such a development would be purely psychological in their origin. If a forced suspension of the gold standard in this country under present conditions is out of the question, its voluntary abandonment is hardly more conceiv-

able. The United States has maintained the integrity of its currency for more than half a century, with highly beneficial results. To alter that policy would not only work great injustice as between debtors and creditors, but would shatter the faith of the people in currency stability, creating doubts that would continue to exert their paralysing effects on economic activity for years to come. The huge stocks of gold in the United States would decrease in value, and this country would be the loser. To offset these disastrous effects, the only clear advantage from the Government’s point of view would be to reduce the burden of public indebtedness, and this end would be achieved at the expense of citizens who, in good faith, had lent their money to Federal and local Governments. The situation is not likely to reach a point where such a step would be either necessary or justifiable.