WELLINGTON NEWS

Hokitika Guardian, 29 January 1932, Page 2

WELLINGTON NEWS

GOLD AND ITS USE. Special Correspondent. WELJ4TNGTON, January 27. The price of gold in the London bullion market is £5 19s 5d per fine ounce, but the international value for monetary purposes is approximately £4 5s per ounce. There is sufficient gold in the world for all practical purposes, buit two cquntries—the United States and France—have between them accumulated about two-thiids of the world’s supply of the meital. Gold is the only metal that lends itself as an international monetary meital, the price is fixed, and any nation will be glad to accept bar gold in -settlement of accounts. It was never intended to serve -the purpose to which it has been put by the United Stated and Friance. Before the war there was never «*ny question as to the volume of gold, because international trade was barter, goods were moving out and moving in to every country, and any balance was easily settled. Then Britain was the principal creditor nation, arid her debtors were free to -send goods in settlement of their obligations, The New Zealand Government is required to pay in London £12,000,030 t 0 £14,000,000 this year and the bulk, if not • the whole amount will be paid in goods. When produce such as butter, cheese, meat etc., ig sold the money must now pass into the hands of the banks and they will provide the Government with the money required, and what remains will be available to exporters and' others. The overseas trade of the Dominion for 1931 shows

that the exports amounted to £35,153,028 and the imports to £24,812,-

j 958, .showing a surplus of exports of I £10,340,070. But this -surplus can- | nolt be taken at its face value because i the imports are taken in on the value placed on the export countries plus 10 per cent., and are therefore as correct as -they can be. The exports, on the other hand are the f.o.b. value in New Zealand currency, and therefore a. substantial allowance must be made for exchange. The actual surplus of exports is theoretically £10,340,090, but actually it is about £7,296,300 in British sterling. This is little more than half the amount required by the Government, and it- is obvious, therefore, that . there* must be a further contraction in imports. A rise in prices all round would give a little ease, so would a. substantial increase in exports, . but there is no likelihood of either of these- happening. Mr F. C. Goodenough, Chairman of -Barclay’s t Bank, indicated the iriimediate cause of our crisis and the world depresison. The immediate cause has boon the fall in the gold prices, and (the fundamental cause? were the problems of tariffs and the payment of war debts and reparations, War debts and reparations are not yet settled, and yet they have got to be. The United States and France are the ones principally concerned. -Some, leading politicians in the United States have repeatedly stated that the country would not consent to cancellation of war debts, or even

to reduction, and France is bitterly opposed to any variation of reparations. Dr. Bruening, the German Chancellor, has refused to accept a year’s moratorium, because that would be only postponing the evil day. The politicians in the United States, Franee and Germany are playing to the gallery, for in the three- countries named elections are to be held this year. The two problems have got to be solved and solved- before the end of 'the year. Most of the gold held by the United States and France is frozen, and is not available for its normal nse, and so long I 'as that obtains commodity prices must remain low.

The high price of (the metal tn sterling has brought a lot of hidden gold to the front. India was reported to have 'shipped £20,uu0,000 taken from secret hoards, and gold ornaments have been melted down in plenty. There would be a smart advance in commodity prices if the frozen stocks of gold were released. Tariffs constitute another problem that has to be solved, but the United States must suffer a great deal more in its export trade before there will be any let up in tariffs.