MAJ—‘3:— I; U.S. dollar is still "as good as gold" despite its many troubles. It used than gold. Now there is some question. Problems Face U.S. Dollar As Gold Reserves Dwincll By FRANK l‘ORMIER WASHINGTON IAI’I i-S :- 'o decade: to be thought better 1' at a glance the implications of lworld. Today. US. bullion hold- . the. troubles that have assailedings amount to less than $16.- the U.S. dollar during the last Ten years government owned . .-. .000 of gold. or_64 per cent of all land Two sets of statistics showed the gold in the non-Communist that could be readily converted l total $19.2 . lmakes central dollars . of or resent . or 38 per cent of the total supply. 2. In 1952. foreigners had 99.- 000.000.000 o .5. bank depostts other liquid investments the U.S.. $23300 000 ago into cash. At present. these liq- uid dollar holdings of foreigners 00 000.000. , Because the U.S. government 1| seems a standing pledge to sell lpoint, no one can argue against ‘gold to foreign governments and 5the proposition that the danger banks at $35 an ounce, lof a “run” held by foreigners are lcreases as the bullion supply de- ucial importance. They rep— e potential ability of foreigners to buy U.S. In 1952. even if foreigners had exchanged all their dollars for gold. the United States would 1point. have We" .19“ “"m 3141309er To forestall such an eventual- 000 of bullion. COULD EMPTY IT Today foreigners have more'the gold supply by eliminating gold. the entire U.S. gold supply. deficit. . Although such a development inconceivable at this Iman enough dollars to buy up I on U.S. gold in- eigners clines and the dollar holdings of foreigners increase. If these trends continued long lenough. t h e r e unquestionably l ments deficit. would be a run on gold at some ' lty. the United States is deter— mined to defend the dollar and dollars than they the 0.8. balance of payments For the last decade. Ameri- cans have been spending. lend- ing. investing and giving away abroad more money have ‘ been lending and investing here. ‘Be- cause the outflow of funds has exceeded the inflow. the United States has been running a pay- DEFICIT HITS DOLLAR This deficit is the direct cause in turn. of the dollar's troubles. It weak- change these dollars for U. . ens‘ it on two ace 1. As foreigners collect more lcorporations cannot do. if the U.S. dollar is weak. for- States, they take an for- spending. in greater demand. dollars for other i ounts: care to spend, I lead or invest in the United their extra dollars to banks and exchange them for other currencies they find more useful. The dollar be- comes less valuable in relation to the other currencies that are 2. When foreigners exchange (tin-uncles. most of these dollars go intomutomatically the central bank in their parti- cular country. The central bank. has the authority to ex- igold_somethmg individuals amlipurchases of U.S. gold. 18 The Gnardhn. Charlottetown, Tues. Doc. 11. 1962. elgn central banks are more 500,000,000 in 1961 from $3.900,- likelyto buy U.S. gold. If it is 000.000 in 1960. 11 is expected to strong. they are more apt‘to in- be about in 1962 vest their dollars in the United‘ The gOVerni-nent's effort :6 tates and earn interest. .wipe out the payments def...“ 'is continuing. AGGRAVATES "03113" - l Since 1960. the United 5:... A large payments deficit tends lhas insisted that countries P! to weaken the I. . . . l‘P‘ - ceivmg foreign aid spend 11. international money 1bulk of the money in the Unite; s . dollar in . markets. 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