GOLD SUPPLY

Hokitika Guardian, 15 August 1931, Page 2

GOLD SUPPLY

AN AMERICAN VIEW. Much fear has been expressed in recent years, and particularly during the past 12 months, whether the gold supply of the -world, with the repten•ishings from the mine will be suffieent for tile currency needs of the world. Mr G. E. Roberts (vice-presi-dent of the National City Bank of New York, and a writer.of repute on economics) does not think that a shortage of gold is responsible for- the present crisis, -nor does he think that a shortage of gold is in . sight. In addressing the American Club of Paris recently lie pointed out that as against the rise of prices and the need for a greater supply of credit on that account there might be set-off the fact that very large amounts of gold coin which were formerly in hand-to-hand circulation have passed out of circulation and into the reserves of central banks, where they afford larger facilities to business as the basis of credit.

“As a matter of fact,’’ be said, “the percentage of increase in central bank holdings since 1914 in the aggregate is very much larger than the average increase of prices or physical growth of trade. There is no evidence in sight of an actual scarcity of monetary gold, so far ns the aggregate stock is concerned. I am ready to admit on behalf of the United Stat s that we have obtained mqrtt of the world's gold since 1914 than we would have been ablo fo obtain upder normal conditions , and I bejieye that to be true of France also, and the defence on behalf of both countries is the same—to wit, that jt has not been obtained through any plan or purpose, but as the result of economic conditions and forces over which we have had no control.”

-Mr Roberts (according to the Paris edition of the ‘‘Daily Mail”) did not anticipate a world shortage of gold, as “the banking systems of the world are constantly learning to economise the use of gold. The use of currency in the United States is constantly declining in proportion to the volume of business handled. The use-of cheques increases and these, meet in the . clearing-houses and largely offset and cancel each other. '‘The function of monetary gold is being reduced to the settlement of international balances, and there are reasons for thinking that its use for this purpose will diminish as the world gets back to stable conditions. For one: thing, we have a constantly increasing body of international securities, known and traded in on all markets and when money is tight in one market there is a natural tendency for these securities to move to a market where money is easier, which will tend to reduce the shipments of gold in the settlements.

- “If we can have stability in international relations, trade and financial transactions will tend to settle themselves, , , We (the United States) as a people have as much to learn on that point as any people, If we insist upon policies which require continued balances in our favour which must be settled in gold, we will disturb the world equilibrium to tile injury of including ourselves,”