GOLD SHORTAGE

Hokitika Guardian, 25 September 1930, Page 3

GOLD SHORTAGE

INCREASE OK OUTPUT

WILL STOP IN FEW YEARS

1) mted Prea6 Association.—By Elei tri 1 o l egrapli.—Co pyngbi.)

GENEVA, Sept. 23. ■ The League of Nations’ jc mancial Committee, which is examining qaesii.ons concerning flue World's . gold supply, has issued an interim report. It cistimates the gold reserves in Urn Banks and the Treasuries at about 200? millions sterling, it states there also are 183 million pounds wort.i oi gold in eircuclation in a few voiintries, in the commercial banks, and the boards outside Asia., of will'd l seventy-nine millions is in the United States. A considerable part of the latter gold, it says, has been permanently lost for effective monetary purposes. The committee estimates the gold production of 1939 at about £80,800,000, after which, it says, gold production will increase for three or four years, after which it will eventually decline until it reached seven-ty-four millions sterling in 1940. Alter the last-mentioned year, says the Committee, the decline in gold production is likely, to be acpeler/ue.i owing to the gradual exha us cion of the African gold mines. Unless new and unexpected supplies of gold are discovered, or unless some new process for increasing the yield, which will enable the re-opening of eld mines, is invented. , , The committee -is of the opinion that, although the demand for gold for monetary purposes has 'been temporarily checked hv the economic depression, the evidence points conclusively to a serious situation arising when the demand is revived for gold for use as money, unless alleviating measures are taken in time. The committee believes that the supply of new gold will not be adequate even in. the year 1930, without such incurures are taken.

Believing that remedial mens: es can be found without ten years U remove tfie anxiety resulting fror the effect of a gold shortage, the Committee welcomes the discontinuance of the use of gold coinage in the domestic currencies. It says that it does not believe that such a course has weakened credit, and it hopes that gold o ,\v;ill he concentrated in reserves in the central banks, accompanied by a limitation as to the payment in gold in ‘international transactions.

.The Committee believes that the minimum legal gpld cover against notes, which is largely traditional, could be reduced, thus effecting economies and not weakening credit. This would, it says, require an international agreement, but the difficulties in the way of this are not insuperable ones. The Cbmmittee suggests, the intended use of cheques, and the replacing of the small bank notes by a subsidiary coinage.

It also suggests the adoption of a gold standard by those countries which have not yet stabilised their currency, and it urges that the countries that are employing a gpld exchange standard should seriously consider the , consequences of any considerable conversion of their existing) asset reserves into gold. The Committee expresses the opinion that the confidence in the gold exchange standard system should he increased if internationally agreed on reserves were held abroad for the maintenance of currencies, and if these were not to he subject to seizure and confiscation in war time.