FABULOUS GOLD

Waikato Times, Volume 125, Issue 20887, 19 August 1939, Page 15 (Supplement)

FABULOUS GOLD

Stored in United States : : Influx From Europe (American Paper)

TO MOST PEOPLE, the immense stores of gold coming in by every ship from Europe are just a few figures, a few short paragraphs of type on the financial pages of their newspapers; but to the “heavy money” men of “Level E,” 60 feet below sea level at Nassau and Liberty Streets in New York, the gold is just a Succession of Groans which, laid end to end, would reach around the world in about 7 h minutes flat. Most people never even heard of the “heavy money” men, much less know what or who they are, what they do. No group doing a super-responsible work could be more unsung than the heavy money men. To interpret, they are Federal Reserve Bank men, who tote, weigh, number and stow away in double-locked cells, the gold bars that foreign banks are sending to the United States day by day now. The latest figures say that 365,436,437 dollars came in in March—the largest sum for any month since September, 1938, when Europe was in the grip of emotions aroused by the Munich situation. The total for the week of April 10 alone was estimated at £175,000,000 dollars. At sea, the gold travels in ships’ strong rooms, reached only by a heavily guarded hatchway. The gold comes from the ships to the piers in special nets, slung over the side in small amounts, while both city police and Federal Reserve and other Government guards watch every inch it moves. When cargo is unloaded from a trans-Atlantic liner, incoming gold gets preferential handling. Two Things May Then Happen. The gold may be put in storage in the care of the Federal Reserve Bank, in which case it is taken in armoured cars to an unloading platform at Maiden Lane and William Street. There the boxes are carried downward five floors by elevator, broken open in the cooperage rooms behind a door lettered “Security Corridor,” and wheeled through a 90-ton steel door, cylindrical in shape, to the vault. At the vault it is weighed and identified, then ’placed in the steel cages where it is kept until foreign banks want to cash it by buying dollars with it. One day an official remarked casually,

“There’s a hundred million there today. Maybe you’d like to see some of it. Here’s about 900,000 dollars in dimes, and here’s 300,000 dollars in nickels. Yep, quite a few dimes and nickels—if you had 'em to spend.” Each brick of coin gold is about the size of the kind of brick you build a house with, is coppery in colour and worth about 14,000 dollars. The foreign bars are kept in cells separate from the coin bars—sort of Park Avenue and tenement district distinction. When the foreign banks Get Ready to Unhoard, the United States Government gives a cheque for 98 per cent of the stated value of the gold, which then moves dow’n to the Assay Office, at Old Slip and South Street. After the gold has been assayed, the remaining 2 per cent, is paid, and the gold stays in the assay office- No one has been able to find out how’ much the Government keeps on an average in the assay office. But then, what does it matter ? It is like knowing whether weather has corroded the top of the leaning Tower of Pisa. Then what ? Several reasons are given for the enormous influx of foreign gold. The favourable trade balance of the United States which, from 1937 to the first of 1939, was about 100,000,000 dollars per month, was paid off in gold at 35 dollars an ounce, and the Stabilisation Fund has bought it in. Then there is arbitrage. Which is to say that banks, taking advantage of favourable foreign exchange rates, and lower quotations on foreign markets, buy gold abroad and sell it to the Government at 35 dollars an ounce. And when the Stabilisation Fund Buys to Bolster Sterling, it converts its purchases into gold, returning the metal to the United States. The United States now owns over 15,000,000,000 dollars’ w’orth of gold —approximately 60 per cent, of the world monetary stock. The heavy money men are pretty good examples of the classic “water, water everywhere, and not a drop to drink,” translated into terms of money. And when they go home at night they’re just as protective of their chilly children as during the daytime.