From the archive, 7 November 1931: Pooling the world's gold

http://www.guardian.co.uk/theguardian/2011/nov/07/archive-1931-pooling-worlds-gold

PARIS, FRIDAY

An important appeal for a bold international monetary policy, to be initiated by France, was made at the Radical Party Congress here today by M. Henri Clerc, who was for over twenty years an official at the Ministry of Finance, and accompanied M. Herriot to London as one of the financial experts of the French Government in 1924.

M. Clerc admits that the solution which he proposes is drastic, and he does not pretend that its application will be easy; but he claims that it is possible, and he insists that the evil is growing with such appalling rapidity that some drastic and bold remedy is vitally urgent.

The plan of M. Clerc is that the countries which are at present storing gold should hand over — or rather ear-mark — to the Bank of International Settlements whatever they have in excess of the necessary cover for their note issue. This excess, in his opinion, represents £200,000,000 for France and £300,000,000 for the United States, Switzerland, and Holland.

This ear-marked gold would be allotted — not by the Bank of International Settlements, but by the League of Nations — to the credit of the countries which are suffering from a shortage of gold, in proportion to the economic capacity of each one of them, and would thus support their currencies. The transfers of gold rendered necessary by the balance of accounts between several countries would merely be effected by the B.I.S. as a matter of bookkeeping on the earmarked reserves of gold. The national currencies would thus retain their separate existence, but would have common and regulated guarantee, which would ensure their permanent parities.

If it did, what then happened to that gold?

I don't understand the history of gold and our currencies or the real significance of our going off of the gold standard. But I know it seems to mean a lot to those who know about such things.

What might have been different, if it had taken place?

Honestly, I'm not being facetious, I just don't know, and would like to know.

I'm pretty smart about some things, but this gold business just doesn't stick in my brain. I understand the rudimentary basics of fiat currency, but that's as far as I can get.

to finance it. On the other hand, he was never one for obeying the rules and making good on his promises.