Mr. Morgenthau further points out that if a small decline in the price of gold were to be regarded as but the first of a series of drops, the result might well be to attract more capital to the U.S. for speculative reasons, and so to intensify the inflow of god.' On the other hand, a drastic reduction Gor example, to $25 an ounce) would have "disastrous" results similar to those of a complete cessation of purchases. "The 40 per cent. increase in the price of American currency to foreigners would constitute as severe handicap upon our exports.. Our domestic producer would be exposed to greatly sharpened competition in the American market." Unfortunately, this competitive advantage might be of dubious value to the foreign exporter, since the ability of Americans to buy goods depends chiefly upon the state of business, so that imports might actually be less than before. Nor, in Mr. Morgenthau's submission, would a reduction in the price of gold in any way help to Solve the problem of maldistribution, On the contrary: "Were gold to leave the United States it would probably find a resting place in the very countries whose currencies would for the moment appear most secure. Certainly no gold would flow into Latin-American countries in any substantial amount, nor would the Far East or the Balkans obtain more gold." Indeed, Mr. Morgenthau sees only one solution for mal-distribution, and that not as a result of any change in gold policy. "Redistribution can come only with progress toward the solution of the basic problems confronting world international relations."
Text read from the printed page and cleaned; old type leaves the occasional error.