View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

BOARD OF GOVERNORS
or

THE

FEDERAL RESERVE SYSTEM

Office Correspondence
*jĀ»0
prom

Chairman Eccles
~
" ~ā€” ā€”
Mr. Knapp

-

ā€”

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