Economic and financial section > Interim report of the Gold Delegation of the Financial Committee

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which probably about $140 million were withdrawn from commercial banks and from private
hoards. Ten countries acquired $1,055 million during the three years ending December 31st,
1928—a sum equal to nearly 90 per cent of the total amount of new gold mined during this
period.
To some extent the acquisition of gold by a relatively small number of countries represented
the exceptional movement of gold to reserves which, for one reason or another, had become
depleted during or after the war; to some extent it was the inevitable result of the general economic
disequilibrium from which the world has been suffering. We cannot shut our eyes to the fact
that the question of the most effective distribution of gold is likely to become of steadily increasing
importance in future years as the supplies of new gold become smaller. It may, however, be
expected that the special causes which have determined the gold movements of the last few years
will gradually work themselves out and that the possibility of an optimum distribution being
achieved later by means of intelligent co-operation will steadily increase.
REMEDIAL MEASURES.
In view of all the circumstances to which attention has been drawn above, the probable
trend of prices in the future must obviously give rise to some anxiety. We wish, therefore, at
once to record our opinion that, if the need is recognised, remedial measures can be found which
may be expected, for at any rate the next decade, to correct the consequences we fear. We
proceed to suggest some directions in which these may be sought apart from the problem of
distribution, a matter with which we shall deal in a subsequent report.
There would without doubt be a serious shortage of gold to-day had not certain important
changes in general currency practice and legislation been effected which tend to economise the
use of gold. Others can no doubt be adopted with a similar end in view. Of the changes which
have already taken place, the most important is the discontinuance of the use of gold coin for
domestic currency purposes—one which, we are glad to note, has received very general public
support. The replacement of gold by notes for domestic use has in no way weakened the general
credit structure of the countries which have accomplished this reform. On the contrary, the
concentration of gold in reserves under the direct and immediate administration of those respon¬
sible for monetary policy has greatly facilitated their task. It has enabled banks of issue to
appreciate from week to week and from month to month the variations which take place in the
total demand for currencyin addition, it has helped to substitute savings which fructify for
gold in the pockets of the people or for gold in hoards which constitute a direct and useless charge
on the community, and it has enabled the world to judge how far the available monetary gold
stock and the accessions to it are likely to prove adequate for the needs of the future. We trust
that the concentration of monetary gold in the reserves of central banks and its limitation as
a means of payment to international transactions may shortly become generalised, and that,
in those countries where gold coin is still employed for domestic transactions or lies locked up
in the vaults of private banks, measures of reform may be adopted. In this connection,
we would remark that there is no essential difference between gold coin and gold certificates.
The latter are, in fact, simply warehouse receipts which enable the public, if it prefers, to hold
paper instead of an amount of gold exactly equal to the face value of that paper. They may,
it is true, prevent some wear and tear of gold and possess the advantage over coin that the amount
outstanding is always known, but on them no structure of credit can be built and thiough them