Second Step

As a second step toward a better world of gold, U. S. Secretary of the Treasury Henry Morgenthau Jr. this week announced that the U. S., Britain and France had reached a temporary agreement for the exchange of that metal in the course of trade. Though Secretary Morgenthau called this pact, secretly negotiated by transatlantic telephone, a "new type of gold standard," it was really nothing more than a technical extension of the U. S.-Franco-British agreement of last month to use their respective stabilization funds to steady the dollar, the pound and the franc (TIME, Oct. ,5).

Hereafter international balances in gold are to be met by the purchase and sale of gold between the New York Federal Reserve Bank, the Bank of France and the Bank of England. The price of gold for this system is set on a day-to-day basis, the U. S. starting the ball rolling with gold at $35 per oz., less a tiny handling charge. No longer is the U. S. Treasury licensing private traders to export gold on their own.

No final pattern of world currency stabilization, this week's international deal set no ratio between the dollar, the franc, and the pound, left that to be developed by the course of trade. Any other country with a stabilization fund and a desire to end international currency fluctuation was welcome to join Secretary Morgenthau's party. As for the ordinary citizen of France, of Britain or of the U. S., this week's gold pact changed his monetary routine not at all.

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