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BOARD OF GOVERNORS or THE FEDERAL RESERVE SYSTEM Office Correspondence *j»0 prom Chairman Eccles ~ " ~— — Mr. Knapp - — Date July 22,1947 Subject; Press release issued by Treasury concerning international gold transactions at premium prices. Attached is a copy of the press release issued by the Treasury Department on Friday giTing the joint statement by the Secretary of the Treasury and by the Board concerning international gold transactions at premium prices. The joint statement follows almost verbatim the statement which we proposed; the only significant change is that the request contained in the last paragraph is addressed not only to American banks but also to American individuals and business enterprises. c The New York Bank is circulating this press release to all of its member banks, and we are requesting the other Federal Reserve Banks to take the same action. Ve shall also publish the release, together with some technical changes in the gold regulations which the Treasury jflans to introduce this week, in the next issue of the Bulletin. Attachment t c c TREASURY DEPARTMENT Washington FOR IMMEDIATE RELEASE Friday, July 18, 19^7 Press Service No. S-402 The Secretary of the Treasury, John W. Snyder, and the Board of Governors of the Federal Reserve System today issued the following Joint statement: It is well known that active speculative markets in gold exist in various foreign countries. For the most part, these markets are illegal, though in a few instances importation or sale of gold is legal or is tolerated. Under present circumstances gold is traded in many foreign centers, often against U. S. dollars, at prices above monetary parities. The premiums differ from one center to another, so that speculators can make large profits by purchasing gold in one foreign market and selling it in another. The International Monetary Fund recently issued a statement deprecating international dealings in gold at premium prices, and requesting member countries to take such action as they can within their jurisdictions to prevent euch dealings. The Fund emphasized that these transactions tend to undermine exchange stability and cause gold to flow into private hoards rather than into monetary reserves. Furthermore, in countries where the gold is sold, payment is often made with dollars illegally acquired or held. Moreover, foreign exchange which otherwise could be used for sorely needed imports is diverted to the purchase of gold for private hoards. c In view of these circumstances, and on general grounds of the national policy, the Treasury Department and the Board of Governors of the Federal Reserve System request American individuals, banks and business enterprises to refrain from encouraging and facilitating this traffic and in particular to refrain from extending the use of their facilities and funds for the carrying out of such transactions. 0O0 C