Homing Gold

Foreign exchange traders last week looked at schedules of sailings from France to the U. S., took sharpened pencils and calculated to a nicety the point at which it would be profitable to ship gold to the U. S. The result was a figure a shade under 3.91-c-. Last week the franc was selling 1/16 above that figure, having fallen sharply from its recent high of 3.97-c-.

An adverse balance of trade, poor crops demanding unusually large outside purchases, huge temporary investments by outsiders in francs, have convinced the Bank of France that it will soon start losing golda not unwelcome event since France's gold now totals the record sum of $2,656,000,000. But in last week's declining franc and rising dollar bankers were prone to see primarily a reversal of the situation which recently caused the great drain on U. S. gold. After England suspended gold payments (Sept. 21), the U. S. lost $730,000,000 in six weeks, heaviest gold movement in history. Meanwhile U. S. citizens, alarmed at the spectacle of vanishing gold and failing banks, began to hoard, putting a severe and needless strain on the banking structure. When National Credit Corp. was announced (Oct. 7), foreign bankers misunderstood its purpose, sold dollars so heavily that the pressure bore the appearance of an attack.

A week-by-week picture of what was happening is in the table below. Column 1 shows the total U. S. gold reserves during this period, expressed in millions of dollars. Since these figures provide for ''earmarked gold'' (withdrawn to be held in the name of a foreign bank), they do not reflect the difference between imports and exports but the actual reserve. Column 2 shows the Federal Reserve Ratio of gold reserves to notes and deposits. Column 3 shows, in millions of dollars, the amount of Federal Reserve notes in circulation. This figure is far from where it was before the strain, but the season is normally one of more money in circulation.

Federal U. S. Gold Reserve Currency

Week Ended Reserve Ratio Circulation

Sept. 16 3,485 74.9% 2,005

Sept. 23 3,327 73.4% 2,045

Sept. 30 3,138 73.4% 2,097

Oct. 7 3,036 63.8% 2,269

Oct. 14 2,836 58.5% 2,321

Oct. 21 2,764 56.5% 2,383

Oct. 28 2,738 56.5% 2,383

Nov. 4 2,772 58.1% 2,447

Nov, 11 2.826 62.4% 2.449

Nov. 18 2,874 64.1% 2,433

Year ago 3,040 81.9% 1,383

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