Now Mr. Philip Snowden has righ ly drawn the special attention of hia interrogator in the House of Commons to the fact that the measures suggested by the Gold Delegation of the Financial Committee of the League of Nations for dealing with the possible future shortage of gold require international action. It is true that the report on which this statement was, based is merely of an interim character and that until the main report with its recommendations is received definite proposals can hardly be taken into consideration. "Yet so vitally is the problem of gold linked up with the world's economic progress that the observations of the Delegation on the restricted issue with which the interim report is con-corned deserve careful study at the earliest possible moment. That no one nation can take action on them. is almost axiomatic for, apart from the fact that the Delegation itself thas been composed on international: lines, and comprises some of the ablest experts on currency and finance from the nations of the world, the necesity for reaching an international understanding before adjusting long-" tablished monetary practices will be recognized, especially in these days when widely accepted. The, interim report deals, "with the future of the world's! gold supply arid with the question whether the "current and ~prospective production of gold o& the tone hand and the normal increase in demand as world production and trade increase on the other are such as to make it likely that the general trend of prices
not] from short-term oscillations) will pye" & series of yours, (and short an. upward or downward direction." climatic nature is apparently It may be remarked at the outset that there is aniple evidence to support the view that the present fallin prices is not brought about by the scarcity of gold but rather by the prevalent over-production due to the greatly improved methods such as standardization and the lil Yet, in general, the association shortage of gold-with a fall in prices is an acceptable factor for serious consideration by' economists and national finanders. The conclusion therefore of the Delegation that the gold position is likely to demand concerted action on international Hines is deserving of careful attention, 'The Delegation accepted the estimate that during the" next! three or. four years the produ tion of gold will rise slightly above the present figure of $400 million per annum but that after' that lapse of time there would be a decline, ranging from $598
1940. The world's -.total of 1929 was estimated to tie $11,175 million: After - putting the average annual demand for gold on a non-monetary basis at about $200 million the report attempts to forecast the future monetary demand for gold on the lines of present practice. IL puts the annual growth in the: world's trade at either 2 per. cent. or 3 per cent. and, according to whether the interpretation by bankers of.their legal requirements calls for a cover of 33 per cent. or 40 per cent. it shows that the increment to gold reserves should range from $157 million on the lowest basis to $303 million on the highest basis in 1930 and, after rising progressively, from $204 million to $408 million in 1940, taking the same factors into account It points out that the present depression gives a check to the demand for gold but, when business revives, the, shortage of the metal wi assume serious dimensions less alleviating measures are imposed, especially as the South African' Mines, responsible for over 50 per cent. of the present annual production, will soon boxing to approach the condition of gradual exhaustion. Further complications may be intruded by the efforts of some countries to revert to the use of gold coin and of others to convert foreign asset, reserves into gold. In this connection special note is also made of "the possibility of China employing gold by one method or another for currency pu! poses," in view of the depréci tion in the value of silver. In regard to the distribution of the world's gold reserves the report points out that fifteen countries hold 90 per cent. of these reserves. It calculates that twelve of those fifteen countries hold. a surplus of $2150 million over. the 38 per cent. cover and of this latter sum $1,500 million were in the United States of America. The report says: "if the distribution. of gold is the result of excessive or abnormal competition by few countries, or if it has the effect of sterilizing important amounts of monetary, stocks, serious consequences will arise affecting the general level -of prices." The view, however, is
Text read from the printed page and cleaned; old type leaves the occasional error.