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for dollars kept the dollar price of gold in London at levels which made shipments to the United States unusually profitable.78 As a consequence, the offerings were taken principally for American account.

Certain foreign central banks, which had participated in the movement of liquid balances from European countries to the United States during the second quarter of the year, continued to acquire dollar balances during the third quarter; and this factor was largely responsible for additional acquisitions of gold by this country in the London market.79 At the end of September, the rise in the dollar price of gold in London to a point at which gold shipments to the United States were no longer profitable brought an end to engagements there for American account. The price ranged above this level during the whole of October; and, early in November, with its continued rise, gold was exported to the United Kingdom coincidentally with the outflow of short-term funds from this country to Europe. This reversal of the movements of gold and of capital was attributed by some observers to the fear of a further devaluation of the dollar, but the widespread resumption of gold hoarding on private account indicated a general distrust of the stability of the value of gold in terms of other currencies also. During the remainder of the year, largely as a result of a sustained demand for gold and the flow of dollar funds to London, the dollar price of gold in London remained well above gold shipping point to the United States.

Imports of gold from continental European countries during the period January-October were irregular but, in the aggregate, substantial. Receipts from Belgium during this period were approximately $91,000,000, from Switzerland $54,000,000, and from France $26,000,000. Shipments to France from the United States occurred in November and December in connection with the extensive repatriation of French funds.80 Gold imports from Japan during 1937 which began in March and continued until the end of the year, were valued at $246,000,000.81 The proceeds of gold exports to the United States, which were used in large part by Japan to acquire sterling balances, served to meet the heavy excess of merchandise exports to Japan from the United States (approximately $84,000,000) and from other countries.

Gold continued to arrive during 1937 from Canada, Mexico, Colombia, and other gold-producing countries in this hemisphere, as

78 According to the Federal Reserve Board, the movement of funds to New York "was accelerated by a rise in sterling to levels which the market did not regard as permanent, and a consequent increase in the discount on sterling for future delivery which increased the inducement to move bank funds to New York. At the greater forward discount a better return could be realized by London banks through placing funds in New York and buying future sterling back at a discount than could be made by lending the same funds on the London open market." Ibid., Aug. 1937, p. 705.

79 Cf. Twenty-Fourth Annual Report of the Board of Governors of the Federal Reserve System, pp. 17-18. 30 Gold was probably lost to France also through earmarking operations.

81 Until these shipments were begun, virtually no gold had been exported from Japan subsequent to September 1933. On Aug. 25, 1937, the gold stocks of the Bank of Japan were revalued on the basis of 290 milligrams of fine gold to the yen, as compared with the former basis of 750 milligrams, thereby increasing the yen value of the stocks from 446,329,000 yen to 1,154,299,137 yen. Of the latter amount, 801,000,000 yen was left as the fixed reserves of the Bank of Japan against the note issue, and the remainder, amounting to 353,299.137 yen, was transferred by the Government to the newly established Gold Fund Special Account. This account also received the gold reserves of the Bank of Chosen and of the Bank of Taiwan, amounting on the new basis of valuation to approximately 50,000,000 yen, and other nonmetallic assets sufficient to bring its total resources to about 747,000,000 yen. The account was established primarily for the purpose of undertaking further gold shipments out of the stocks thus received and out of purchases of newly mined gold. Gold production in Japan (including Chosen and Taiwan) amounted to about 180,000,000 yen in 1937, according to provisional estimates. Most of the gold received by the Gold Fund Special Account was exported by the end of the year, and subsequent shipments were limited, therefore, principally to new production. The exchange value of the yen, which had already fallen in previous years to a point well below nominal parity on the basis of its stated gold value, was not affected by the revalua tion of gold reserves.

well as in significant amounts from British India, Australia, and the Philippine Islands. Receipts were generally increased over those from the same sources in 1936 (see table 31). As in the preceding year, imports from Mexico in 1937 were appreciably, and from British India greatly, in excess of estimated production. In the former case there was a loss of gold reserves and, in the latter case, a further release of gold from private hoards. Shipments of gold to this country from producing areas, although reduced in some instances through diversion to the London market, continued during November and December, while gold was moving at the same time out of the United States to Europe.

Table 31.-United States Gold Exports and Imports, by Leading Countries, 1934-371

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In accordance with the policy announced by the Secretary of the Treasury on December 21, 1936, gold acquisitions during 1937 were segregated in an inactive account in the Treasury, which stood at $1,228,000,000 on December 31, 1937, as compared with $26,000,000 at the end of 1936. The increase of $1,202,000,000 during the year equaled the addition of $1,502,000,000 to the monetary gold stock of the United States from all sources in 1937 (from $11,258,000,000 on December 31, 1936, to $12,760,000,000 on December 31, 1937), less $300,000,000 released from the inactive gold account in September. On July 9, 1937, it was announced that arrangements had been made for the purchase of a substantial amount of gold by the Government of China from the United States Treasury and for the reciprocal purchase of an additional amount of silver by the United States Treasury from the Chinese Government and, on July 16, that the United States had agreed to sell gold to Brazil at such times and in

such amounts as the Brazilian Government might request, up to a total of $60,000,000.82

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Exports of silver coin to Cuba in 1937, with a bullion value of approximately $4,300,000, were included. Silver exports in 1936 were revised from $3,000,000 to $9,000,000 to include shipments of coin to Cuba valued at $6,500,000. Import statistics do not provide a necessarily exact measure of payments for silver acquired from foreign sources during the calendar year.

Imports of silver into the United States in 1937 were $92,000,000 as compared with $183,000,000 in 1936. Exports of silver were valued at $9,000,000 in 1937; and net imports were $83,000,000, an amount less than one-half of net receipts in the preceding year and only one-fourth, approximately, of those in 1935.83 Net acquisitions of silver from foreign sources in 1934-37-the result primarily of purchases by the United States Treasury in accordance with the provisions of the Silver Purchase Act of 1934-have aggregated $679,000,000.84

Imports of silver in 1937 from producing countries in this hemisphere, which represented in large part official purchases upon the basis of understandings between the United States Treasury and the Governments of Mexico and Canada, exceeded receipts from all other sources. Arrivals from these two countries, $30,800,000 and $8,400,000, respectively, from Peru $6,800,000, from Chile $1,000,000, and from Central America $1,600,000, were in each case approximately the same as in 1936 (see table 32). Direct shipments of silver to the United States from China and receipts from the United Kingdom in 1937 were much less than in the preceding year. Imports from China were only $5,600,000, as compared with $70,000,000 in 1936, and from the United Kingdom only $34,000,000, as contrasted with $53,000,000 in 1936 and $245,000,000 in 1935. On July 9, 1937, it was stated jointly by the Secretary of the Treasury and the Chinese Minister of Finance that an agreement had been reached, providing for the purchase of a substantial amount of gold by the Chinese Government from the United States Treasury and for the purchase by the United States Treasury of an additional amount of silver from the Chinese Government. Shortly thereafter, on July 20, the inactive

82 A decrease in the inactive gold account on July 29 amounting to $42,000,000 followed these announce ments. The loss of gold through reported earmarking onerations during the month was $36,000,000.

The reduced value of imports in 1936-37 as compared with 1935 was partly the result, of course, of the decline in silver prices.

4Section 3 of the act provided that "whenever and so long as the proportion of silver in the stocks of gold and silver of the United States is less than one-fourth of the monetary value of such stocks, the Secretary of the Treasury is authorized and directed to purchase silver, at home and abroad," provided that no purchases be made at a price in excess of its monetary value of $1.29 an ounce. Despite Treasury purchases of substantial amounts of silver during 1937, and because of the continued heavy inflow of gold, the amount of silver required to establish the statutory proportions of gold and silver stocks was slightly greater at the end of 1937 than at the end of 1936 and not much less than at the time of the passage of the act in 1934. Total acquisitions of silver by the United States Treasury during 1937 were approximately 312,000,000 ounces, of which about 71,000,000 ounces came from domestic production. Purchases during 1936 totaled approximately 332,000,000 ounces, including 61,000,000 ounces from domestic production.

gold account in the Treasury was reduced by approximately $42,000,000 as a result, according to unofficial reports, of the sale of gold to China; and the net loss of gold through earmarking operations during the month was $36,000,000. Although there were no officially reported purchases of Chinese silver by the United States at that time, it was estimated in market reports that 100,000,000 ounces, with a value of approximately $45,000,000, were acquired by the Treasury.

Table 32.-Imports of Silver Into the United States, by Months and by Selected Countries, 1934-37

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Silver imports were relatively heavy in February and again in November and December (see table 32). Receipts of $5,600,000 from China fell entirely in the first of these months; imports from Mexico and Peru were unusually large; and there was considerable buying for American account in London coincidental with a fall in silver prices.86 Arrivals from the United Kingdom, amounting to $5,200,000 in November and $18,000,000 in December and consisting largely of Chinese coin, accounted for the heavy imports of silver at the end of the year and followed the shipment to London, for safekeeping, of large consignments of coin from Hong Kong on Chinese Government account. During the other months of the year, imports of silver into the United States comprised almost entirely receipts from producing countries in this hemisphere.

At the close of the year, it was announced that mutually satisfactory arrangements with regard to silver had been reached by the United States Treasury with the Mexican and Canadian Governments. In the former case, the Treasury agreed, for the purpose of carrying out the provisions of the Silver Purchase Act and of preventing fluctuations in world silver prices, to purchase 35,000,000 ounces from

Handy & Harman, 22nd Annual Review of the Silver Market, 1937, p. 9.

Reference is made to prices for spot silver in London. The price for newly mined domestic silver, established at 77.57 cents per ounce after the close of business on April 24, 1935, was reduced to 64.64 cents effective January 1, 1938. The New York "official" quotation for other silver, based primarily upon the United States Treasury's buying rate for silver of foreign origin, was unchanged at 44.75 cents during the latter half of 1937; in the spring of 1937 the "official" quotation was set above 45 cents following increases in the London spot price. In December, as a result of a fall in the price of silver in London and uncertainty as to whether the United States Treasury would maintain its buying rate for spot silver of foreign origin, a so-called "industrial base price" was also issued in New York to be used as a basis for buying and selling transactions with the arts and industries and representing a price level below that of spot domestically refined metal eligible for immediate sale to the Treasury. Cf. Handy & Harman, 22d Annual Review of the Silver Market, 1937, pp. 6-7.

accumulated stocks at 45 cents an ounce and to continue, on a monthto-month basis, purchases of newly mined silver in the customary amount of 5,000,000 ounces per month at prices to be determined by the Treasury. In the latter case, it was agreed, for similar reasons, to continue Treasury purchases of Canadian silver, also on a month-tomonth basis, at the rate of 1,200,000 ounces per month. At the same time, it was announced that the agreement providing for additional purchases of silver from China had been extended to July 1, 1938.87

87 The international silver agreement reached at the London Economic Conference in 1933, under the terms of which both newly mined and demonetized silver had been withheld from the market by the eight signatory nations (United States, Canada, Mexico, Peru, Australia, China, India, and Spain) in an effort to stabilize the world price of silver. expired on December 31, 1937. In view of the continued absorption by the United States of large quantities of silver from domestic and foreign sources, as well as because of other circumstances, the agreement was permitted to lapse without formal negotiations for its renewal.

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