MR. BEVIN STARTLES U.S. OFFICIALDOM

Chronicle (Levin), 5 September 1947, Page 5

MR. BEVIN STARTLES U.S. OFFICIALDOM

(N.Z.P.A.-

-Reuter,

Passing Suggestion About Hoard of Gold

Copyright )

Received Thursday, 10.5 p.m. NEW YORK, Sept. 3. Mr. Bevin's proposal that the United States Government's gold in Foi't Ehiox be "redistributed" as a solution to the universal dollar shortage, took Washington officialdom completely by Surprise, says the New Yorlc Times' Washington correspondent. The reaction, for the most part, was facetious since offieials , could find no basis foi' it in economics or commonsense until Treasury offieials suggested that perhaps Mr. Bevin had purpoSely .withheld the basis for his proposal and meant something quite different than "redistribution." Fiseal authorities suggested tlie possibility that Mr. Bevin may have had in mind the use of American gold for currency stabilisation purposes. They pointed out that in that ease Britain ean have all the American gold it wants to pay for at *35 dollars an ounce, which is the offieial purchase price in United States. On any other basis, sucli as the borrowing of gold on collateral security, an Aet of Congress would be required. Treasury offieials seemed dubious of Congressional approval on any but a purchase basis. One offieial said: "If Britain .reallv wants to get gold sEe should hold on to some of the South Afriean metal being sold in Ameriea for dollars." United States gold assets totalling 21,766,000,000 dollars are held at FortKnox. Much of it was purchased from other countries. Thus, offieials pointed out, Mr. Bevin's proposal boiled down to a suggestion that United States should give back tlie gold it had boughi so that it might be resold to this Government at 35 dollars an ounce. United States, in effect, aceepts gold from other countries in payment of debts resulting from their net purehases of American goods over and above saies to this country. Most of all the gold, however, is part of the United States' monetary system, mostly as a reserve baeking . against the notes and deposits of the Federal Reserve Barilc. Some also is the baeking for paper money issued by the Government itself. United States' present liolding of gold amounts to about threefiftlis of the world's monetary gold stock. The Republiean ehairman of the House Appropriations Committee, Mr. John Taber, said: "My answer to Mr. Bevin would be ' f orget it and go to work.' Chaos ought to be eliminated by Britain and her people by going to work." The Times' correspondent in Wasliington says late tonight that Washington finaucial observers were still puzzled over Mr. Bevin's proposal. It was said that Mr. Bevin appears to be ignorant of the economic faet that gold is another form of dollars wliieh, in this instauce, he had not nientioned. . Other experts seeking a rationalisation .of Mr. Bevin's suggesti'bn, asseiled tliat he might have in mind the possibility of obtaining gold for resale bv Britain at premium prices. If Britain could obtain 50 or 60 dollars per ounce in private saies, the loan or gift of the equivalent of gold at 35 dollars an ounce by United States, would perniit Britain to realise a profit that vv olild absorb some of the increase in costs since the United States loan to Britain was granted. A New York [Times' editorial commends Mr. Bevin's appeal to the British people for an all-out production effort Out advises the Labour Government to forget about the gold buried at Fort Knox and eoneentvate on eoal buried within the borders of their own eountrv and which, at the moment, is far more preeious than gold in terms of Europe 's reeovery. The editorial says the lack of intellectual maturity represented in Mr. Bevin's proposal, will be upsetting to Amerieans. This partieular proposa1 is a very old chestuut. It is neceissary every so often to repeat that the gold at loit Knox is no^ idle and not useless since the bulk of it is held in trust as the nation 's monetary and banking reserve. Even if- it were i'edistiibuted toinorrow, unless existing vvorld maladjustments were rectified at( the same time, it would be back in the ground at Fort Knox within a few vveeks or a few months and things Yvould be right where they are at this moment. The editorial adds that "this is not the first evidence of the Labour Government's penchant for seeking short cut panaceas for Britain 's economic problems. It describes the Government's leadership as hesitant, erratic, and lacking in anything resembling a clear cut and sustained poiicy. The Secretary of State, Mr. Snyder, before sailing for England today, when asked about Mr.' Bevin's reference to ihe redistribution of United States ' gold reserve which is estimated at 21,766,000,000 dollars, said that it was a matter of concern only to United States. Nevertheless, Mr. Snyder indicated that he eonsidered Mr. Bevin 's statement of tremendous importance. Treasury experts, however, " frankly suggested that Mr. Bevin's suggestion was "eoekeyed. " They said if the gold Yvere redistributed most of it would be turned into dollars and would thus constitute just another form of loan. The experts also eonsidered it Yvould be inflationary and send prices still higher. However, the gold would eventually find its way back to United ' States.