Free Market for Gold

In an oak-paneled office on St. Swithin's Lane this week, six representatives of London's leading bullion houses gathered and quietly exchanged bids for the purchase and sale of gold bullion. At the end of the session, they fixed an official price of $34.976 an oz. v. the $34.9125 paid by the U.S. Treasury. By their action, in the "gold-fixing room" of Bullion Dealers N. M. Rothschild & Sons, the six men* gave the world its first official free-gold market since the war ended the meetings in the fixing room. The dealers hoped and expected that the move would restore London to its prewar status as the leading gold-trading center, lure business away from such unofficial markets as Paris, Tangiers and Geneva, where the price often varies from city to city.

For 15 years, all British gold dealings have been handled by the Bank of England under strict government control. By letting a free market function once more (but with restrictions on those who may buy gold), the British Treasury hopes to bolster confidence in the pound sterling, bring closer the day when it may become freely convertible with dollars and every other currency in the world.

With the same goal in mind, Britain's Chancellor of the Exchequer R. A. ("Rab") Butler last week slashed away festoons of government controls that restrict sterling transaction?. Since the war, there have been two major classes of sterling owned by residents outside the sterling and dollar areas: "transferable-account" sterling held by residents of 18 nations such as Italy, Holland and Russia; "bilateral-account" sterling in 24 nations such as Brazil, France, Belgium and Japan. Residents of transferable-account nations could not spend their sterling in bilateral-account nations, and residents of bilateral-account nations could not even^use their sterling among themselves without permission from Britain. Butler last week merged both classes of sterling and allowed them to be used freely in both areas interchangeably.

Economists agreed that both British moves would not only help bring convertibility of sterling closer, but encourage wider trade throughout the world.

* The six firms: Samuel Montagu & Co., Fixley and Abell, Sharps & Wilkins, Johnson, Matthey & Co., Mocatta & Goldsmid, N. M. Rothschild & Sons.

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