The roaring 20 charts and statistics show a steady decline in US gold production, proceeding the Great Depression of the 30s. A similar rate of decline has now shown up once again in the 60s.
The gold price was raised and frozen in 1934 from $20.67 to $35 per troy ounce. The power to control gold, including the price, was given to the Secretary of the treasury by the gold reserve of 1934.
During World War II came the war production Board limitation order L2 08, dated October 8, 1942. The Order 08 was instigated by the assistant Secretary of the treasury, Harry Dexter White. And identified Communist and member of the Council of foreign relations, White was also one of the chief US delegate is, who engineered our country in today's sorry gold price like at the 1944 Bretton Woods monetary conference.
United Nations monetary and financial conference met at Bretton Woods, New Hampshire, from July 1 to July 22, 1944, at the invitation of former President F. D. Roosevelt. 44 nations participated in the work of the conference under the leadership of the then secretary of treasury, Henry Morgan Plaut Jr.
The conference was called by former President F. D. Roosevelt to formulate definite proposals for an international monetary fund (IMF) and international Bank for Reconstruction and development. Preliminary proposals for a fund or bank had been prepared in 1943 by the technical staff of the treasury. Operation with the technical staff of the State Department, the Federal Reserve system, and other departments of our government.
In 1944, the US held a 60% of the world's known gold reserve and was the dominant economic and financial power. Harry Dexter White, the identified Communist and member of the CFR, along with others, decided that there was a need for redistribution of our financial resources!
The frozen 1934 price of US gold became White's most effective tool in the redistribution of our nation's wealth. The Bretton Woods IMF articles of agreement, state in article 4 section 1. Expression of par values - a par value of the currency of each member shall be expressed in terms of gold as a common denominator or in terms of the United States dollar of the way in finance and affect on July, 1944.
Section 2. Gold purchases based on par values. The fund shall prescribe a margin above and below par value for transactions in gold by members, and no member shall buy gold at a price above par value, plus the prescribed margin, or sell gold at a price below par value minus the proscribed margin.
All we need to do is look at America's sorry gold predicament today for an example of how the above terms work. When four nations attain an excess of US dollars, making either purchase US goods or purchase US gold. Today our products are highly inflated, but our gold is still at the 1934 Depression Day Price. The world's greatest bargain!
Congress could reverse the IMF proposals of 1944, if it had the courage to assert its constitutional rights and abolish the 1934 Gold act!
by Warren D. Madison from the california mining journal feb, 1968
A newspaper article of January 15, 1967, stated the United States unqualifiedly had rejected any thought of raising the gold price. Such action was declared to be completely unacceptable. In the same article 1 of the treasury officials said the price of gold is determined by its relationships to the United States dollar, which was fixed at $35 an ounce. In 1934, and will remain there.
We suppose the statesman should be included in the so-called credibility gap. To begin with, the United States treasury, and even the Congress, has lost control of our gold price. If 13 1/2 billion or less in gold which this nation now possesses are mortgaged at least twice, and possibly three times over. Many foreign countries have gold claims against this nation, and anytime they choose to assert these claims, we would have no gold. True, the price of gold was last fixed by the United States in 1934, but in 1944. Harry Dexter White and the others in the infamous Bretton Woods monetary agreement made the dollar and the dollar only, interchangeable with gold at $35 an ounce.
Parenthetically, many United States citizens frequently asked, how come with all the money these foreign countries of the United States. They can demand payment and goal from us, while we have no corresponding right to demand gold from them and payment of their debts? The answer lies, first, in the fact that many of the debts which these foreign nations opposed to us. Our government debts, while the authority $2 billion plus in short-term liabilities, which we owe the foreign countries frequently are not government debts.
They can be almost any liability, such as a personal check, a traveler's check or an obligation of that nature. Once these short-term liabilities are turned into the central banks of various foreign countries, those banks can demand payment and gold, but we cannot demand gold from them.
The last issue of the Federal Reserve bulletin in, as reported recently in these columns, gives the total of the United States short time liabilities to foreigners as over 32 billion dollars, and again we say, any time the holders of those $32 billion in short-term liabilities, or the central banks of the countries in which the folders live, demand payment and goal from this country, they can start a run-on article which would lead it in very short order, and leave us without gold.
So the gold price, no longer is to be determined by the United States treasury, but by the foreign holders of mortgage is against that gold, and when they want to take it from us, they can do so and fix the price. If we have no gold, all of the talk by treasury officials will not affect its price or prevent a gold price increase by those who have gold.
The how and why of the gold price situation.
Whenever one nation, wishes is to purchase goods from another nation, it acquires the other nations money to pay for the goods. It wants. This is known as foreign exchange. Today, the cost of foreign exchange depends on the official exchange rate or the difference between the values of currency units. Based on goal for the US dollar and $35 per fine ounce of gold.
The dollar was handed this liability as a key currency by virtue of the Bretton Woods agreement, which was ratified by Congress in 1945, and which, would have become a worthwhile monetary arrangement had provisions been made to adjust for the de-appreciation of the US dollar in the domestic realm. However, instead, this international pact set up the dollar to act as goal and with gold at the standard values and common denominator to fix the par values of foreign currency at the given weight and fineness of gold on July 1, 1944. Without such provisions.
So the agreement simply says that gold at $35 per ounce is the final money of account and is a disciplinary authority over all money in the position of the dollar as gold must be guaranteed through an obligation of the United States. To sacrifice all for gold holdings, if necessary, to keep the value of the foreign held dollar equal to gold at a ratio of $35 to each ounce.
In plain words, it set up an exclusive gold standard for use through the conversion of American dollars into American gold.
Now, no one needs to be reminded that the rule for gold standard is the payment of gold on demand. Therefore, if the United States as a paper issuing agency pays out gold on demand through the redemption of its paper, it's gold will disappear and soulless standard of a practice of over issuing paper is followed.
This is the position we find ourselves in. We have over issued our paper and underproduced our gold, and now we are faced with the problem of finding enough gold to redeem more over issued paper.
Political action to discipline American citizens from monetary mistakes will not stop outflow of gold. It can only be done by equalizing the inflated dollar to a competitive level. So that gold can be produced and purchased by domestic dollars.
If this were done by an increase in the price of gold, the re-evaluation might be called dollar devaluation by the buyers of American gold, but not a single domestic price tag would be raised and export increases would result to solve the payments problem. This would be true even if a general reevaluation of foreign currencies followed; because the overall result would move the dollar to a more competitive position internationally.
However, there has been a continual disputes, between different factions of monetary theory, as to whether the dollar has value because of gold or whether gold has value because of the dollar. The latter puts our prognostic bet on the ability of the inflated dollar to function as a gold dollar after his conversion capability is lost.
Under the present strain on the dollar, it is apparent that this controversy will be soon resolved, either through the continuity of gold losses by the United States or by the ability of money management to stem the flow and still maintain the dollar gold lame of convertibility at $35 per ounce. At the present time, it looks as if gold will prevail. Although many stopgaps are still available by political decisions that will discipline people and the domestic economy. Rather than the money.
In an analysis of the difference between the tangible discipline of money and its intangible discipline. Manage people and paper, civilized order must be considered as it is today, not as it may be centuries from now, when intellectualism may become competent enough to end wars and eliminate jail, as well as honest enough to honor unsecured promises.
We constantly hear expressions from the advocates of magic money that gold is a barbaric relic, archaic, crude. You can't eat it, and why dig from one hole to bury another?
In this connection, we should remember that all through history such philosophy, so far, has caused paper money to be swept into the streets time and time again, not as food for the hungry because its softness allows it to be chewed, but as rubble because it was worthless. While on the other hand, during the same painful periods, those who had gold eight well and survive royally, without an urge to eat, either the gold for the worthless paper.
Last, the weakness of paper and strength of gold have created the largest international click of barbarians in history. Their belief and trust and goal has risen through the failures of paper to a tower of strength that cannot be toppled, at least, within the foreseeable future.
This has been abjectly demonstrated by the gold buying events of the past two years during which time the entire production of gold in the free world was added to the already bulging private hoards. In so far as digging out gold, from one hole to bury another; such is as silly as the talk about eating gold. The value of gold is not bested entirely within its beauty, charm and durability. The cost of digging it from the so-called hole. Also adds to its value. Without expending valuable services, time and effort in this endeavor. There could be no adornment of its charm and beauty nor commercial value, including money to its durability.
As for re-burying it, all valuables require safe keeping and holes have provided the best security from time immemorial. For this provision, are monetary managers should be grateful, because it was the burial of nearly 25 billion dollars worth of gold and a hole at Fort Knox, which enabled their prodigality dig up over $13 billion worth during the last 18 years. In order to display honor and dignity while bankrupting the nation.
by Lewis L. Huelsdonk, from the california mining journal,May 1968
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