Word: goldings
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Dates: during 1960-1969
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Most of the reasons for the gold crisis are rooted in the U.S. The country's continuing balance of payments deficit, its constantly out-of-balance domestic budget and its rising outflow of money to finance the war in Viet Nam are basically responsible for global concern about the soundness of the dollar. Concern has led to the belief that the U.S. would soon have to stop selling gold to all buyers at $35 an ounce and somehow raise the price. The possibility of a price increase touched off the worldwide run on gold...
That being the case, the U.S. had the responsibility of doing what it could to provide the remedies that would end the crisis and restore sanity to the gold markets. Treasury Secretary Henry Fowler and Federal Reserve Board Chairman William McChesney Martin last week invited the central bankers of Britain, West Germany, Italy, Belgium, The Netherlands and Switzerland to a weekend meeting in the massive, paneled board room of the Federal Reserve Board in Washington...
...along with the U.S., are members of the international Gold Pool; the pool members, in an effort to hold the price of gold close to the official rate, have been drawing on their own governmental gold reserves-now down to about $25 billion. France, because it is no longer an active member of the pool, was conspicuously missing from the invitation list. Piqued because of the omission, Charles de Gaulle decided to keep the Paris Bourse open last week after London's gold market had shut down at Washington's suggestion. The result (see THE WORLD) was wild...
Steps Taken. Alarmed by earlier buying of gold, the same central bankers, only six days before their Washington conference, had held a similar session in Basel. There the Fed's Martin reasserted the U.S. intention of maintaining a $35-an-ounce price on gold, persuaded his peers to keep the pool going. In spite of their agreement to do so, rumors spread-and were vigorously denied-that both Belgium and Italy were dropping out of the pool; the rumors only fanned the flames of speculation. Martin emerged from the Basel meeting to describe himself as "satisfied" with its decisions...
...rates to customers, went from 41 to 5%. The increase meant higher interest rates on loans, less available mortgage money and, just as the Fed intended, a hold-down on all but necessary spending because borrowed money would be more costly. That, for now, was the extent of the gold panic's effect on the U.S. man in the street...