Feb.5. 1940.
gold'may be  In ths Treasury's
vaulta and other nations stripped
of the metal which has been the
traditional standard unit of pay-
ment for international balances.
The possibility that gold may be
reduced to a commodity status does
not seem to bother Treasury offi-
cials. I They ridicule the attempts
of Germany to substitute barter and
other methods of payment for the
traditional bullion standard.
Soviet Russia is the big question
mark In this picture, as the debate
last week between Secretary Mor-
genthau and Senator Townsend of
Delaware demonstrated. The Sen-
ator implied that the Treasury had
been aiding Russia by buying all
of Its gold, either directly or in-
directly.
Seoretary Morgenthau replied that
the Treasury had bought no gold
rOSSIDIIItieS 0l the Situation, directly from Russia since the first
of 1939 and had bought indirectly
Treasury Holdings, Record in
World History, Due to Pass
New Milestone This Week
_
DEVALUATION 6 YEARS OLD
Especially When War Ends,
Becomes Rising Topic
rr-v -fte>
By JOHN H. CR1DER
Special to Tn New Tone Thus.
| WASHINGTON, Feb. A—The
(Treasury's great gold stock, more
I than two-thirds of the world's
monetary supply of the metal,
should, at the rate of recent acquisi-
tions, reach a new high total of
$18,000,000,000 early this week. It
stood at $17,940,000,000 Thursday.
By coincidence the attainment of
the $18,000,000,000 mark will be
within a few days of the sixth an-
niversary of the devalued 69.06-cent
dollar and the establishment of the
$35 per ounce price for gold.
On Oct. 20 the gold hoard reached
the $17,000,000,000 mark. In about
three months gold worth $1,000,000,-
000 on the basis of $35 an ounce
has been added to a supply which
has strained the capacity of the
Treasury's depositories. In the year
only $10,500,000. worth. This was
determined, he said, by scrutiny of
Imported gold bars, a few of which
bore the Soviet imprint. These
were valued at $10,500,000.
The Secretary answered "ridicu-
lous" to the Senator's intimation
that the Treasury had bought all
of Russia's gold production and
that Soviet output amounted to
$175,000,000, to which Senator
Townsend replied at length In a
speech on the Senate floor.
The debate was largely confined
to the question of whether there
are available accurate estimates of
Russia's gold output, but the un-
derlying issue was a fundamental j
difference of opinion between the j
Senator and the Secretary over the
wisdom of continued purchasing of
foreign gold.
Secretary Morgenthau Insisted he
had never been able to find out
how much gold Russia was produc-
ing, although be had tried persis-
tently.
Estimate Offered by Mint
The Senator replied that the an-
ip I h
ended Oct. 20 the Treasury acquired riual report of the Director of the
$3,000,000,000 of gold.
Secretary Morgenthau has become
the world's greatest gold purchaser
and one of gold's stanch est defend-
ers. His denunciations of those who
are critical of the gold acquisitions
are understood by those close to
the Treasury to result from his
sense of trusteeship of the greatest
stack of pure gold ever accumulated
In history.
Nervousness on Various Sides
It is pointed out that if he Is a
bit nervous of his charge so, like-
wise, are those who urge a return
to a free gold market, the remono-
tization of gold, and other revisions
of a situation which is unique.
Not only has the Administration's
gold buying policy stripped other
nations of bullion, resulting in mal-
distribution of the metal and In-
Mint estimated Soviet gold produc-
tion In the calendar year 1938 at
$183,256,815, but the Treasury offi-
cials pointed out this was qualified
by a note to the effect that the es-
timate was based upon unpublished
data, principally Interrogatory re-
plies.
The Mint's estimate of Soviet
1938 gold output was 5,235,909
ounces. The Bank for Internation-
al Settlements, In its recent annual
report, estimated Soviet production
in that year at 5,000,000 ounces and
offered this footnote:
"No official statistics for U.S.S.R.
are available, but percentage
changes are given irregularly.
Present figures are estimates."
The Federal Reserve Board pub-1
lishes In its monthly Bulletin de-
tailed statistics on "Gold Produc-
tion Outside U.S.S.R." A footnote;
tense stimulation of gold produo-1 published monthly states:
tion throughout the world, but ltl "Gold production in U.S.S.R.: No
has swelled the excess reserves of I regular government statistics on
the domestic banking system to I gold production In U.S.S.R. are
such proportions that the Federal
Reserve Board's control over re-
serves Is no longer effective.
"The potential lending power de-
rived by banks from receipt of this
gold," said a recent Reserve Board
brochure, "creates an unprecedent-
ed problem of control, because the
unused reserves of the banks are
much greater than can be absorbed
by the Federal Reserve authorities
under present powers."
It Is apparent, however, from
statements of Treasury officials
that they regard the gold stock as
a "safety valve" of Incalculable
value in a world economy increas-
ingly controlled by totalitarian eco-
nomic policies.
The problem of putting excess
gold to use is, constantly receiving
attention from Treasury experts.
One plan now to the fore is its
possible use for credit purposes In
Latin America. Other schemes con-
stantly pass through the office of
Harry White, the Treasury's prin-
cipal monetary expert.
Ponders Post-War Situation
The Implications for the future
of the tremendous gold stock Is what
seems to bother experts most. Ex-
perts in and out of the government
Beem preoccupied by the question
of what Is going to happen after
the present hostilities, when even a
greater percentage of the world's
available, but data of percentage
changes Irregularly given out by
officials of tho gold mining Indus-
try, together with certain direct
figures for past years, afford a
basis for estimating annual pro-
duction."
For 1938, tho latest year for which'
estimates are Included In the foot-
note, production was estimated on
a dollar basis at $184,000,000, which
is fairly clo e to the Mint's esti-
mate Of $183,256,815.
"Is gold marked with the ham-
mer and sickle perfectly all right
for the Treasury?" Secretary Mor-
genthau was asked.
"Sure," he replied, "after we've
tested It."
The Secretary Insists that there
has been no discrimination between
countries in buying gold1, and adds
that there is likely to be none.