Gold: 150 Tons

Overnight the tone of talk in "The City"--London's Wall Street--changed utterly last week. Bitterness at Uncle Shylock changed to pride that John Bull had paid. Fear lest the pound fall vanished as Sterling rose slightly in terms of both the dollar and the franc. England was herself again. Blood had told. Hands across the sea. Honi soit qui mal y pense!

Lunch hour crowds, strolling down Threadneedle Street, paused to glance up at the brand new facade of the Bank of England, now being splendidly rebuilt on its old site while business goes on as usual. Bus drivers and bankers, typists and tycoons thrilled at the knowledge that on this day "The Old Lady of Threadneedle Street" was dipping into her chilled steel purse for the largest lump sum she had ever paid in gold in a single day, $95,550,000 worth, weighing about 150 tons and consisting of 11,500 bars.

White Tags. Without ceremony of any sort and in the notable absence of Montagu Collet Norman, fox-bearded Governor of the Bank of England, an emissary from Mr. Norman's office picked up a handful of white tags and an order for 11,500 gold bars, took an elevator down 60 ft. to the Old Lady's bullion vaults. With him went an ordinary detail of scarlet-coated British guardsmen wearing bearskin hats and carrying Army rifles with fixed bayonets.

At the door of the Bullion Room its foreman scrutinized the order, then beckoned to his helpers, strapping hairy-chested gnomes in leather aprons who had rolled up their sleeves for action. Striding into the spacious vault they advanced upon a mass of gold roughly eight times as great as the order called for. The bars, neither bright nor corroded, lay in faintly gleaming piles on low wooden trucks with small, rubber-tired wheels. To each truck slated for moving was attached one of the white tags, reading "Federal Reserve Bank."

Gold is such heavy stuff that a 17-in. cube weighs a ton. It took four husky gnomes to budge each little truck. They trundled the selected trucks a distance of 30 ft. across the vault, bunched them together against the wall. Having seen this done, Governor Norman's emissary returned upstairs and a cable was dispatched to the Federal Reserve Bank.

In Manhattan, where gold is not kept loose in one extensive vault but divided among what amounts to steel closets in the Federal Reserve bullion room, two closets had been prepared containing exactly $95,550,000 worth of Federal Reserve gold. At 10 a. m. Manhattan time the Old Lady of Threadneedle Street cabled to say in bankers' jargon that she had "earmarked" (with her white tags) $95,550,000 of Bank of England gold, thereby making it the property in London of the Federal Reserve. Promptly the Federal Reserve sent a blue-clad, barrel-chested guard to tie onto the two closet doors tags bearing no words but a number. This number served twice as an earmark in the next few minutes. It was first written down on the books of the Federal Reserve to the credit of the Bank of England, then transferred to the credit of the U. S. Treasury, thereby making the gold in the two closets the property of all the U. S. people.

Thus the transfer of nearly one hundred million dollars across some 3,000 sea miles was accomplished, to everyone's satisfaction, by mere "earmarking." Strictly speaking, that was all there was to the British debt payment last week. Actually the Federal Reserve decided not to leave in London the gold earmarked for it there, requested actual delivery. This meant more work for the Old Lady's gnomes. Grunting, they packed bars into wooden boxes. The boxes will be carried to Manhattan by seven British ships: Georgia, Carinthia, Majestic, Lancastria, Mauretania, Britannic, Aurania.

It also happened that the U. S. Treasury did not want gold bars but dollars last week. Therefore the Treasury sold its two closets full of gold to the Federal Reserve Bank which credited the treasury with a deposit of $95,550,000. After this the earmarks were taken off the closets in Manhattan and the gold they contained became again the Federal Reserve Bank's property.

Looming Chamberlain. Londoners agreed that tall, hawk-nosed, black- haired Chancellor of the British Exchequer Neville Chamberlain loomed in the Empire's eye last week as a future Prime Minister because of his potent and dignified handling of the debt issue in the House of Commons where anger, much less hysteria, was never permitted to get the upper hand.

With Prime Minister James Ramsay MacDonald held between sheets by a heavy cold, the Chancellor had to face such dangerous ranting in the House as a speech by David Lloyd George in which the Wartime Prime Minister cried: "The Mother of Parliaments is jibbering about unimportant matters while millions of her gold is about to be taken to a foreign land. . . . Were I the head of His Majesty's Government, I would say to the Americans what France has said: 'No parley, No pay!' (see p. 11).

"The Americans have repudiated Wilson's signature to the Treaty of Versailles. . . . We should tell them that our payments must cease!"

Chancellor Chamberlain showed himself a true John Bull of the old school when he said quietly that Britain's payment would be made even though it would unbalance the Budget by a sum equal or superior to that paid.

"Default by the British Government on a sum it could not truthfully say it was unable to pay," icily observed Mr. Chamberlain, "would have resounded all round the world and might have given justification for other debtors to follow that example.

"Default . . . might have administered a shock to the moral sense of our people. ... A plea in forma pauperis that we be let off with part payment would not have been dignified."

Last week the Empire found Chancellor Chamberlain's stand for payment tonic, found perfectly dignified his further statement that Britain will pursue at an appropriate time (perhaps not until after President-elect Roosevelt's inauguration) further negotiations with the U. S. looking to reduction by the U. S. of what Britain owes.

In these coming negotiations Chancellor Chamberlain is expected to lead. If successful he may well emerge Prime Minister. Making his only faux pas of the week, Aristocrat Chamberlain told the House that he will urge upon the U. S. "arguments which, indeed, may not appeal to the Middle West, as one Honorable Member has suggested, but which should appeal to the more responsible and more informed section of opinion in the United States."

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