Ill

THE RETURN TO GOLD

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States are not those of India. Now that mostcountries have abandoned the gold standard, thesupply of the metal would, if the chief user of itrestricted its holdings to its real needs, provelargely redundant. The United States has notbeen able to let gold fall to its “natural” value,because it could not face the resulting deprecia-tion of its standard. It has been driven, there-fore, to the costly policy of burying in the vaultsof Washington what the miners of the Randhave laboriously brought to the surface. Con-sequently gold now stands at an “artificial”value, the future course of which almost entirelydepends on the policy of the Federal ReserveBoard of the United States . The value of goldis no longer the resultant of the chance gifts ofNature and the judgement of numerous author-ities and individuals acting independently. Evenif other countries gradually return to a gold basis,the position will not be greatly changed. Thetendency to employ some variant of the gold-exchange standard and the probably permanentdisappearance of gold from the pockets of thepeople are likely to mean that the strictly neces-sary gold reserves of the Central Banks of thegold-standard countries will fall considerablyshort of the available supplies. The actualvalue of gold will depend, therefore, on thepolicy of three or four of the most powerfulCentral Banks, whether they act independentlyor in unison. If, on the other hand, pre-warconventions about the use of gold in reservesand in circulation were to be restored—which