United States Gold in International Relations

March 25, 1940

Report Outline
Gold as a Stake in Post-War Settlements
The Gold Standard After the Last War
Future Possibilities of the Gold Standard

Gold as a Stake in Post-War Settlements

Possession of two-thirds of the world's monetary gold gives the United States a special stake in foreign relations, and particularly in the international settlements to come after the present war. On March 15, 1940, the United States Treasury held $18,293,374,630 of gold, and more is coming in every day. No such sum is necessary or even desirable as backing for American currency, nor could it be disposed of at anything like face value for commercial use. Its ultimate value depends therefore on whether or not an international gold standard can be re-established when the conflict ends.

Most of the major countries of the world went back to a gold standard within a few years after the last war, but all of them left it again between 1929 and 1936. The United States, alone, has been on a modified gold standard continuously since 1934, and during the last six years gold has flowed virtually without interruption toward this country. Unless the metal is generally accepted as the medium of international exchange after the present war is over, most of this recently acquired gold will represent an accumulated loss, just as surely as if it were a collection of repudiated foreign bonds.

Many economists believe that the gold standard as it existed before the World War has been outmoded by changing aspects of international trade, new policies of monetary control by central banks, and a vastly increased annual world production of newly-mined gold. Gold has never been even temporarily restored to the unrestricted position it held prior to 1914.

ISSUE TRACKER for Related Reports
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Oct. 17, 1962  Gold Stock and the Balance of Payments
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Oct. 10, 1956  Old-Age Annuities in Time of Inflation
Jan. 17, 1951  Credit Control in Inflation
Aug. 10, 1949  Dollar Shortage
Oct. 04, 1943  Stabilization of Exchanges
Jan. 21, 1941  Safeguards Against Monetary Inflation
Mar. 25, 1940  United States Gold in International Relations
Dec. 14, 1937  Four Years of the Silver Program
Oct. 04, 1934  Inflation in Europe and the United States
Jan. 30, 1934  Dollar Depreciation and Devaluation
Sep. 05, 1933  Stabilization of the Dollar
May 29, 1933  Invalidation of the Gold Clause
Mar. 15, 1933  Inflation of the Currency
Oct. 25, 1924  Bank Rate and Credit Control Federal Reserve Policies and the Defaltion Issue
International Finance