Dollar Is “Good As Gold” As Long As
Gold Price Remains At $35 An Ounce
Editor’s Note—The government
will announce this week that its
supply of gold has dropped be
low $18 billion for the first time
since 1940. Some of the reasons
are discussed in this second of a
series of three articles by Frank
Cormier, Treasury Department
reporter for the Associated Press.
By FRANK CORMIER
WASHINGTON, OP) — A few
years ago, every comic in the
land was getting laughs by poking
fun at Uncle Sam’s seemingly
unlimited supply of gold.
Americans chuckled automat
ically at every mention of the
bullion vaults at Ft. Knox, Ky.
Today, gold no longer is a
laughing matter.
In the past 3V£ months, other
nations have been buying U. S.
gold at the rate of more than $4
billion a year. The total Ameri
can supply—$18 billion—is at a
20-year low.
Foreigners are able to buy
heavily because, in their dealings
with the United States, they are
receiving more dollars than they
can handily spend.
Some of the buying is normal.
Some is abnormal and ominous.
The free world’s economic ma
chine operates primarily on two
brands of gasoline: Gold and U.S.
dollars. Gold and dollars finance
world trade and are the “re
serves” that stand behind the
paper money of most non-Com
munist countries.
Dollars Supstitule For Gold
Because there isn’t enough gold
in the world to back up all the
money, the dollar has became an
acceptable substitute. This is pos
sible because the dollar, literally,
is “as good as gold.”
Uncle Sam stands ready at any
time to sell gold to other nations
in exchange for dollars. One is
as good as the other, so long as
the price of gold remains un
j changed at $35 an ounce.
Will the dollar always be as
good as gold?
A few years ago, when Ft.
Knox was a joke, the question
wouldn’t have been asked. The
United States then was an island
of prosperity in the postwar sea
of ruin.
Today, however, a prospering
Europe can afford U.S. gold and
is buying heavily. Some of the
buying seems to stem from un
certainty about the future of the
dollar.
Officials here won’t concede
there has been any serious un
certainty in the foreign quarters
that count most governments and
their central banks.
Governments and central banks
are the only ones—except jewel
ry makers—who are permitted to
buy U.S. gold. Traditionally, they
buy gold with some of the dollars
they receive. However, in recent
months they have been using a
higher proportion of their dollars
to buy gold.
Ike's Emergency Measures
This appears to be a sign of un
certainty—the sort of uncertain
ty that feeds upon itself. It
doubtless was one reason why
President Eisenhower last week
ordered emergency measures to
attack the problem — instead of
waiting nine weeks for the in
auguration of President - elect
John F. Kennedy.
Eisenhower’s moves were de
signed to reduce the deficit in the
U.S. balance of international pay
ments. The balance of payments
represents the difference between
the amount of money coming into
the country and the amount going
out.
In 10 of the past 11 years, the
United States and its citizens
have paid out to foreigners more
than theyve received. These de
ficits have increased sharply in
the past three years, reaching
$3.8 billion in 1959.
Foreign governments and cen
tral banks normally wind up with
more than half of the dollars
which move overseas because of
the payments deficit. And since
they always use some of their
dollars to buy gold, big deficits
mean big sales of gold.
In the first half of 1960. the
U.S. payments deficit was shrink
ing. It dropped to an annual rate
of $2.7 billion on the strength of
increased exports. Gold sales
slowed to a trickle—less than
$200 million for six months.
Then came a slackening in the
American economy while Europe
boomed. Interest rates were low
ered in an effort to stimulate
business. European rates were in
creased in a move to fight infla
tion.
The result: Many Americans,
and Europeans with investments
here, decided lto shift their money
to Europe in order to earn better
interest. This meant more dollars
moving overseas.
Trickle Became A Flood
Almost overnight, the payments
picture changed dramatically. In
July, August and September, the
payments deficits increased to a
rate of $4.3 billion a year. The
trickle of gold became a flood.
FIRST WINTER TOURISTS
First winter tourists of the sea
son are Mr. and Mrs. Floyd Bax
ter of Hiram, Ohio, and Miss
Betty Shipp of Hickory, N.C., who
arrived with Alaska Airlines at
noon today. An interesting visit
has been planned for them, in
cluding a dog team ride, viewing
the winter parachute jump, and
several other things along with
the winter sights.
Interest rates here and abroad
are coming closer together now.
Officials will be watching to see
whether this lessens the gold
drain.
In any case, interest rates are
only part of the problem. So long
as the United States pays out
abroad more than it receives, gold
will continue to move into for
eign hands.
The question is whether income
and outgo can be brought into
reasonable balance before the
gold problem reaches crisis pro
portions.
Next: Administration plans for
solving the gold problem.
j Cleanest Pigeon In Town
SACRAMENTO, Calif., UR —
Gloria McGown opened her wash
ing machine, removed some
sheets—and the cleanest pigeon in
town.
The bird apparently had perch
ed inside the washer, in the Mc
Gowns’ open garage, before Mrs.
McGown put in the laundry. It
went through 30 agitating min
utes but Humane Officer Herbert
Dean said it rallied splendidly.
Grandmother at 30
UDINE, Italy, UP> — Caterina
Tonizzo has become a grand
mother—at the age of 30.
She married and gave birth to
a daughter in 1945, when she was
15. The daughter, Luciana, mar
ried last year, at 14, and gave
birth to a baby girl Monday.
NOME SANITARY
SERVICE
Phone Main 1
P. O. Box 460
SOLI iaund
Now you can finally say
GOOD-BYE
to all washing cares
Take the afternoon off ... or
an hour . . and we'll do the
washing and drying
NOME U-WASH
— PHONE BLACK 1 —
MACHINES DO YOUR JOB!
I
I
I OPENS FRIDAY, NOVEMBER 25th \
i PRESENTING THE STAR TOYS OF 1960 f
I ☆ FOR THE BOYS ☆
Mattel Gun and Holster Sets
Erector Sets - Gilbert’s Hall of Science
•it Satellites - Gyro Tops - Model Kits
•A Electric Pen Set* - Dart Boards
i Jig-Saw Puzzles - Bow and Arrows
☆ FEATURING #
Miniature Series of Ars and Trucks
☆ FOR THE GIRLS ☆
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Rocking Chairs - Dish Sets - Tea Sets
Drain Board Sets - Just like Mother’s
Jack Stones - Pocket Books
it FEATURING it
Chatty Cathy The Talking Doll
☆ FOR EVERYONE ☆ l
Games - For Hours of Fun & Pleasure Vj’'
Monopoy, Spot Cash, Checkers, Clue, x,
£
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SHOP EARLY! F
And be assured of a good selection I
if