14. Prices Quoted in Gold

Has not the time come for governments to take a 175 THE TRIUMPH OF GOLD position clearly and courageously in regard to the return to gold? To recognize, without equivocation, that no monetary stability is possible without restor ing the only known international money, and to turn firmly toward its reestablishment? For nearly twelve years, the governments have of one accord treated gold as an international delin quent. It is stopped at the frontiers; those who carry it are punished. Its sale, as well as its purchase, is forbidden to private individuals, as if it were cocaine. The most daring (also the wisest), like the French government, have authorized a free market within the country. Switzerland, though gorged with the yellow metal, still controls its entry and exit. Mean while, wherever it can do so without danger, the public shows clearly its desire to possess gold. The urgent step to· take is first to restore to gold its normal status as a precious metal. Gold is a merchandise which, like iron and steel, wheat and cotton, should be able to enter and leave according to its price, to be sold where it is best paid. This is the only way to prepare its future return to its mone tary status. The government that at the present time would allow gold to enter and leave freely, would allow the price of gold to establish itself freely in paper money, that would authorize its bank of issue to purchase gold in the market at the price it might wish (and perhaps also sell it), whether directly ·or through a special agency, and that would, finally, permit that prices be quoted in gold as well as in 176 THE TRIUMPH OF GOLD paper money, such a government, by showing its willingness to return to the only stable money, would immediately reassure the public, and would have no trouble in maintaining a more or less constant rate between paper money and gold.

The mere fact of declaring this willingness would serve as an example to the other countries, and would gradually restore monetary confidence. In France, such a policy, accompanied by the aboli tion of the estate-taxes in direct line (which is an additional pretext for the hoarding of gold) and backed, of course, by maintaining a strict budgetary equilibrium, would put a rapid end to these flares of alarm which appear periodically in the gold market, as well as on the Stock Exchange. The devaluation of money, of which one hears again, could not give in the circumstances any tangible results. Exports have reached their maxi mum, according to all appearances, and can hardly be increased. As to limiting imports, we have seen by the efforts made in the last five years in Great Britain, that this cannot restore the balance of payments. One can no longer conceal the fact that the In ternational Monetary Fund has clearly failed in its mission. Instead of bringing us closer to an interna tional monetary standard (which was its true mis sian), it has organized a supranational monetary management based on maintaining paper moneys and proscribing gold. The futility of these efforts 177 THE TRIUMPH OF GOLD showed itself a few weeks ago when the gold-pro ducing countries obtained permission to sell their production at a premium. Can one appeal to the Fund to obtain a reversal of its policy? I do not be lieve so. It is up to each country, therefore, to take the most efficient measures to protect itself against the occurrences of monetary crises.

An old prejudice caused certain minds to fear the simultaneous operation of two series of prices, the prices in gold and the prices in paper. This fear can be explained and is justified in the case of a purely local depreciation of the money. But the de preciation of the paper moneys has become uni versal. The dollar itself is worth, in merchandise, only half of what it was worth ten years ago. Main taining the purchase price of gold at thirty-five dollars per ounce by the Treasury of the United States no longer deceives anyone and is a hindrance to all. To come back to reality, one must allow gold to find its price in paper money in all the great markets. The day that is done the rates at which the indis pensable stabilization can be effected will be practi cally fixed. It will only remain to legalize them. And if, to maintain them, the aid of the United States should still be necessary, it can be granted without trouble, as its re-evaluated gold reserves will largely suffice to assure the convertibility of the moneys.

178 15 The Paradoxes of the European ((Payments Union" (L'Opinion) December 13, 1951) What is happening at this moment at the Euro pean Payments Union is very significant· and demon strates to the blindest the error of' trying to revive international commerce while refusing to restore the only known instrument of international payments" gold. Belgium is a country whose monetary policy has always deserved the praise of the entire world. Yet Belgium sells in Europe, to the other members of the E.P.U. more merchandise than it buys from them. This growth of exportation is a contribution to world economy and to European economy that should be encouraged. But by doing this, Belgium becomes a creditor of the E.P.U. and its credits must 179 THE TRIUMPH OF GOLD be paid part in gold, part in dollars. The amounts thus received enable Belgium to pay for the merchan dise she buys in the United States, for like all Europe, she imports more from the United States than she exports to it.