Can Gold Hold Its

Value?

IT is difficult to see how gold is going to hold its present value, even if Nazi Germany is smashed. If the Nazis win, of course, the gold standard will be destroyed.

While the world, under British influ ence, was largely a free-trade world, the use of gold was essential for the con venient adjustment of international trade balances. When Britain, in the early thirties, abandoned free trade, and the disastrous period of “national self sufficiency” was introduced by the Ottawa Conference and similar short sighted panaceas, gold was in decreasing demand.

The metal got a new lease of life

because of the economic mess in which United States found herself, as a result of the Great War, the Great Depression, and the British Empire’s abandonment of free trade. It was essential to America’s economy that she continue to export oil, films, motor cars, and great masses of manufactured goods; but she had created a mad-headed tariff system under which few nations could sell America sufficient goods to pay for oil, films, cars, etc.

The position, in the thirties, became so acute—American economy was threat ened with collapse—that America decided to become an unlimited purchaser of raw gold, at a high price. Since then, most of the world’s gold production has gone to the United States, where it is stored in Fort Knox, Kentucky. Here is the world’s principal gold production (1939 or 1940 figures):—

America buys the gold: but actually she Days for it with oil, films, cars, etc., and thus keens going her vast producing industries, which depend on export.

If America did not buy that gold, and did not alter her import tariffs, a great section of American industry would col lapse. But America is not using the e-old—she is simply burying it aeain, at Fort Knox. Its use as a backing for new internal credits does not mean any thing. It is only being really used if it is flowing out again, naturally, as a medium of international exchange.

It stands to reason that this American process of buying gold, and immobilising it, cannot go on indefinitely—it must •break down, even under peace conditions.

There must come a point when America will realise that she has accumulated, in her “hole in the ground’’, all the gold this and future generations of Americans can possibly want. Actually, that point was reached some time ago. But Amer ica dare not recognise it.

Lately, discussions in the United States show signs of uneasiness, in relation to the gold position. It is oointed out, for instance, that thousands of men are working in Canadian gold-mines, to pro duce gold, wherewith to buy American dollars, wherewith to buv war materials.

“Wbv not a simple book-keeping entry under the Lease and Lend Act?” say the critics. “We do not really need Canada’s gold, so the dollars we pay for it are really a gift. And war goods supplied under the Lease and Lend Act will never be paid for. so they are a gift. So why not short-circuit the operation, and turn those thousands of Canadian men over from useless gold-production to useful war production?”

That argument was put forward in Washington by monetary experts in recent weeks, and it is significant.

Mr. W. H. Donald, Australian-born ad viser to the Chinese leader, General Chiang Kai-shek, who was in Tahiti for some months recently, writing his memoirs, has now returned to China.

Dr. C. M. Deland, Medical Officer at Manus. New Guinea, has been in Sydney with his wife and family, on furlough.

Mr. David Callender Campbell, Deputy Chief Secretary of Uganda since 1936, has been appointed Colonial Secretary of Fiji, in place of Mr. C. J. J. T. Barton, who has been transferred to Nyasaland. Mr. Camp bell joined the Colonial Service in 1919 and he has held administrative posts in Tanganyika and Uganda.

Fine ounces.

Canada 5,275,000 South Africa 14,045,000 United States 4,650.000 Russia 4.500.000 Australia 1,645,000