anticipation of the devaluation of the dollar; the repayment by foreigners of short-term loans previously granted by Americans; the repurchase or redemption by foreigners of their own securities from Americans. I might add that the liquidation of American-held securities continues.

Mr. ANDRESEN. Referring to the deposits of American citizens in foreign countries since 1933, has it been possible to convert those deposits into foreign gold and silver, and then to have that gold and silver shipped into the United States at the enhanced price in this country?

Dr. BECKHART. Yes; for various periods during that time it was done.

Mr. ANDRESEN. How was it done?

Dr. BECKHART. If an American corporation had a pound balance in London, it might direct the London bank to buy dollars. The purchase of dollars would increase the price of dollars in terms of sterling, and the British exchange equalization account, in order that sterling would not fall too far, would release gold to be shipped to this country. The shipment of gold was the result of forces operating in the foreign exchange market.

Mr. ANDRESEN. On the part of American citizens who had deposits in foreign countries?

Dr. BECKHART. That is, by reason of the fact that American citizens were selling sterling and buying dollars and thus were influencing the supply and demand factors in the foreign exchange market in London.

Mr. EBERHARTER. You do not have much hope, do you, that the political differences in Europe will be adjusted at any time in the reasonably near future? I ask you that question, because some of the statements you have made are predicated upon the proposition that, perhaps, the political differences over there may soon be adjusted.

Dr. BECKHART. I did not mean to predict an immediate settlement of the political difficulties that now exist in Europe. If European political difficulties should be solved, I indicated that some portion of our monetary gold stock would flow back to Europe, by virtue of the fact that the Europeans would withdraw their non-interest-bearing balances that are on deposit here, and would put those funds into productive employment at home. In addition, loans on private account from this Nation to Europe would be granted.

If we assume the other alternative, namely that the political difficulties are not going to be peaceably solved and if we assume that the situation will culminate in general hostilities, we can count upon a much larger inflow of gold by virtue of the fact that the belligerent powers will ship their gold to America to buy the goods that they will need.

Mr. EBERHARTER. Is it not more sound to assume that the political difficulties in Europe will not soon be adjusted from present indications?

Dr. BECKHART. That I would not venture to predict.

Mr. EBERHARTER. As between the two, which would you say we could look forward to with the most hope, either the adjustment of the political difficulties over there or a continuance of the present condition?

Dr. BECKHART. I hope very much, sir, that we may experience a peaceful solution of Europe's political difficulties.

Mr. EBERHARTER. But there is not much evidence that there will soon be any adjustment of those difficulties, is there?

Dr. BECKHART. That I cannot say, sir.

Mr. EBERHARTER. Would you say there is plenty of evidence that there will not soon be a political adjustment in the European countries?

Dr. BECKHART. I would not venture to commit myself in regard to that point. All I would venture to say is that there are these two alternatives. If we assume that a peaceful adjustment of Europe's difficulties will take place, we can look forward to a reduction of the gold supply in this country through the withdrawal of foreign funds now on deposit here to be employed in productive enterprises abroad. If we assume that a peaceful solution will not occur, then we can take it for granted that the gold stock in this country will increase very rapidly by virtue of the purchase of goods by England and France.

Mr. EBERHARTER. Even if there is no war and conditions continue as they are for some time, you must say that there is no prospect of adjustment of the difference, is not that true?

Dr. BECKHART. If the present armed truce continues with recurrent crises taking place, we could count upon a continuation of the present gold inflow from abroad at about the present rate.

Mr. SMITH. Professor, do you regard the monetary chaos that exists at the present time throughout the world as an important factor in the turbulent and disturbed conditions which exist at the present time throughout the world?

Dr. BECKHART. Yes, sir; I do. I think it is a very important factor. Mr. SMITH. Do you know of anything that the United States of America could do that would contribute more toward bringing about world stability and to alleviate this tension that exists at the present time in Europe and the other nations than to bring about a cure or a reformation of our money expansion?

Dr. BECKHART. I think we could make a very real contribution along those lines, and my suggestions are that we return to gold coinage and convertibility at the present price for gold, and that we repeal the various silver purchase acts.

Mr. ANDRESEN. No attempt was made in 1933 to attend the economic conference over in London?

Dr. BECKHART. I think the policy of this Government was largely responsible for destroying the hopes so fervently held at the time that the economic conference at London would result in a general stabilization of monetary units and in the gradual elimination of trade restrictions.

Mr. ANDRESEN. You mean the withdrawal of this Government from that conference had a great deal to do with that, because that stopped any of the other countries from going ahead?

Dr. BECKHART. Yes. I refer especially to the policy of the administration in refusing then to stabilize the foreign exchange value of the dollar, and in becoming absorbed in domestic price-raising schemes. When I was in Sweden, in the summer of 1933, I talked to some of the bankers in Stockholm about that, and they were heartsick by reason of the policy of this Government. They thought that

we had a very unique opportunity at the World Economic Conference to lead the world back onto the road of economic internationalism, which would afford a means of solving the unemployment problem and other pressing economic problems, that we had that opportunity, and did not avail ourselves of it.

Mr. SHEPPARD. Are you familiar with the minutes that were taken at that conference in London?

Dr. BECKHART. No, sir; I am not. I was not in London at the time.

Mr. SHEPPARD. Are you in possesion of any of the information and requirements that were offered to this Nation for its participation in that conference?

Dr. BECKHART. No; I have not seen the minutes or the diplomatic exchanges.

Mr. SHEPPARD. In the absence of having that information, do you think you are justified in coming before this committee and making the comments that you have made here?

Dr. BECKHART. Yes, sir, I do; otherwise I would not have made them.

Mr. SHEPPARD. On what do you predicate your statement?

Dr. BECKHART. Not on intimate knowledge of the negotiations at the time of the conference, but, rather, upon an appraisal of the entire situation, upon a knowledge of the policies inaugurated by various countries of the conference, and upon the reactions of various friends of mine, economists and bankers in Paris, Amsterdam, and Stockholm, who were present at the conference, and who were in a position to appraise the situation.

Mr. SHEPPARD. However, you still are not familiar with the requirements that were presented to this Government at that confer

ence.

Dr. BECKHART. No, sir; I was not familiar with the diplomacy incident to the negotiations or with those requirements.

Mr. ANDRESEN. Are the minutes of those meetings available? Mr. SHEPPARD. I do not think they are public property, Mr. Andresen. At least, that is my information.

I would like to ask the gentleman this further question: Then, the opinion you are giving us, insofar as your opinion is concerned in this respect is predicated upon conferences with the bankers in the different nations with whom you have talked?

Dr. BECKHART. Yes, sir; it is based on conversations I have had with bankers and economists, who were present, and on the basis of the economic forces flowing out of the London conference such as the various trade restrictions that were put into force in other countries immediately following the conference.

Mr. SHEPPARD. And you say that all of your opinions were predicated upon the results of that conference?

Dr. BECKHART. Yes; and that, of course, would particularly apply to the trade restrictions that developed as an aftermath of the conference.

Mr. SHEPPARD. All of them are predicated upon the results of the conference, however?

Dr. BECKHART. Yes, sir; in my opinion the conference led to those results.

Mr. WHITE. I will withhold my questions until the gentleman has completed his statement, but I would like to be enlightened just now on the mechanics of the importation of gold. You said that due to the flow of gold to this country we have an abundance of gold. Now, is it conceivable that in the case of certain disturbances in this country we could have an outflow of gold from the country? Dr. BECKHART. Yes; indeed, it is possible.

Mr. WHITE. I think it has been testified here that the gold as soon as received immediately becomes the property of the United States Government, the Treasury, and it could not be exported without special permission of the Secretary of the Treasury. Suppose the Government of the United States did not care to let this gold go out, and there was a disturbance in this country, and the Government became unstable, has not the Secretary of the Treasury of the United States the power, under the existing law, to prevent the outflow of the gold?

Dr. BECKHART. That is my interpretation of the present monetary laws, but not the practice or the policy adopted by the administration. Mr. WHITE. My inquiry is directed to factual matters.

Dr. BECKHART. Yes, sir; my interpretation of the law would coincide with yours.

Mr. PARSONS. You may proceed, Dr. Beckhart.

Dr. BECKHART. This country is in a very unhappy situation with respect to gold purchases. The gold deluge is apt to continue for some time, and apparently we must continue to buy all gold offered at the higher price that we ourselves established in 1934. To stop buying or to lower the price of gold independently of the policies followed by other nations would prove most disrupting to domestic and international trade and to business confidence.

This does not mean that we should passively reconcile ourselves to the gold deluge. It would be desirable, in my opinion, to commence once again the sterilization of gold imports. In addition, the Board of Governors of the Federal Reserve System might be delegated further powers over member bank reserve requirements in order to be able to impound that amount of the increase in the gold stock deemed necessary. As a further step, this Government might endeavor to enlist the cooperation of England and France in a simultaneous and proportionate lowering of the price of gold.

Personally I would welcome a lowering of the price of gold by this country, if this step were to be accompanied by a simultaneous and proportionate lowering of the price of gold by England, France, the British and French Empires, and the sterling bloc of nations. In its effect on gold production and on the monetary value of existing gold stocks, this action would seem to me to be a most constructive step to be taken toward a solution of the gold problem. Simultaneous and proportionate action would leave undisturbed present foreign exchange rate relationships. Incidentally the price of gold in this country could be lowered by about 13 percent without causing losses resulting from an upward revaluation of the dollar to emerge. Mr. ANDRESEN. If we lower the price of gold in this country, with the enormous stock of gold that we have on hand, and which we have already paid for, it seems to me we will increase our national debt, and that we will have disruption here in this country domestically.

Dr. BECKHART. There is no necessity at all, sir, for an increase of the national debt to take place, provided that the price of gold is not lowered by an amount greater than the remaining unemployed profits of gold devaluation.

Mr. ANDRESEN. But, certainly, we figure our gold is worth $14,902,000,000 as of March 3, this year, and if we lower the price of gold we will certainly have to lower that figure by whatever amount the gold price is lowered, and that will show we have that much more debt to pay.

Dr. BECKHART. I have before me a copy of the daily statement of the United States Treasury for February 28, 1939. The gold account shows gold assets of approximately $14,900,000,000. There are various liabilities set up against those assets. One liability is the exchange stabilization fund of $1,800,000,000. This represents that amount of the gold profits that have not been utilized.

Outstanding (outside of Treasury)

Gold certificate fund-Board of Governors, Federal
Reserve System--.

Redemption fund-Federal Reserve notes

Gold reserve_

NOTE.-Reserve against $346,681,016 of United States notes and $1,167,572 of Treasury notes of 1890 outstanding. Treasury notes of 1890 are also secured by silver dollars in the Treasury.

Exchange stabilization fund.

Total___

Gold in general fund:

Balance of increment resulting from reduction in the weight of the gold dollar

In working balance__

$142, 272, 297. 51

576, 909, 893. 79

$14, 874, 317, 055. 51

14, 874, 317, 055. 51

$2,889, 561, 519.00

9, 299, 275, 184.95 10, 258, 729. 33 156, 039, 430. 93

1, 800, 000, COO. 00

14, 155, 134, 864, 21

Total_

719, 182, 191. 30 14, 874, 317, 055. 51

We could lower the price of gold without increasing the Federal debt if the reduction in the price of gold were not greater than the amount of the profits of gold devaluation-exchange stabilization fund-on the asset side of this statement. I am afraid that I have stated that very awkardly. If we were to lower the price of gold by about 13 percent, that would reduce the asset side of the gold account by 13 percent. That in turn would be offset on the liability side of the account by the elimination of the exchange stabilization fund. If we further reduce the price of gold, the public debt would have to be increased.

Mr. ANDRESEN. And this should be done before we return to specie payments of gold in this country?