Peter Jeffries examines the latest moves by international 'economists' to eliminate gold from the monetary system What is future for gold?

AMIDST ALL the discussions about the 'reform' of the international monetary system now taking place in Brussels and Washington, there is absolutely no agreement on one key question: what is to be the future role of gold?

Latest to pronounce on the subject is US evedence this erary at the first hearings of joint sub-committee on international trade and payments into US gold policy, Volcker stated that the Administration remained fronetary moe. id said had importance d's gold 'should and must continue to diminish'.

Even more forthright is Xenophon Zolates, governor of the Bank of Greece until 1967. In a "Times' feature, called 'Eliminating gold from the monetary system', he wrote: 'I believe that the international monetary system cannot be stabilized as long as its links with gold are not totally severed.

Zolatas went on to urge that all currencies should be immediately linked to Special Drawing Rights (SDRs). These were the units created some three years ago in an attempt to find an alternative to gold following the March 1968 monetary crisis.

Not surprisingly such views are bitterly opposed in Europe, principally in France. Also giving evidence before the US Congress, Jacques Rueff, Paris professor and former deputy governor of the Bank of France, proposed that the official gold price be raised at once to $70 an ounce. This would almost double its present official $38 level.

If the gold price were doubled, argued Rueff, this would free the $31,000m of gold in other countries and international financial institutions outside the US. This amount, he suggested, could then be loaned back to the US as a sort of 'Marshall Aid in reverse' which would in turn allow the Americans once more to make all world dollar The French demands of course would only intensify the present chaos. All those countries, such as France, with a large proportion of their reserves held as gold, would find their reserve position greatly increased, whereas those with a low proportionate gold holding-such as Britain, Japan and all the colonial and semi-colonial countries— would find their reserves slashed in value if the dollar were to be devalued officially to half its Rueff's proposal was immediately denounced as *reckless' by former US Treasury and International It is inevitable that the ever-sharpening conflicts on monetary and trade matters should centre on the question of gold. For gold has been and must remain the basis of world capitalism's financial would like information about arrangements.

One simple point seems to have escaped most of the 'experts' taking part in the debate: gold, unlike paper currency, embodies real value. It is a simple point, but fundamental. As Marx showed in 'Capital' over 100 years ago, the measure and content of value is socially-necessary labour time. A small quantity of gold is "valuable' because considerable quantity of labour is necessary to find The quantity of paper money produced depends only on the speed at which the presses roll. In fact most 'money' in the international financial system consists only of figures in the ledgers of merchant banking houses!

Why was this holdings freely convertible into gold. present exchange rate.

Monetary Fund official Edward Bernstein. it, mine, refine and transport it.

paper 'money' able to represent real value for so long? Only because it was backed first by the British-gold reserve and tater by the US gold stock. After 1934 dollar holders were guaranteed a fixed rate of exchange against US gold-at the rate of $35 to an ounce.

It was this basic prop which Nixon knocked away last August 15 when he suspended dollar convertibility and left the holders of over $40 billion throughout the world without backing for their 'assets'. What had pre viously been means of raising credit were now turned overnight into their opposite-dollar debts which nobody wanted to hold.

Since that date the world payments system has been without corner-stone. It was only because Bretton Woods forced all governments ultimately to settle their balance of payments deficits in gold that any discipline and regulation was maintained within the capitalist system.

Trade war

It is this 'discipline' and regulation which the US is now forced to remove. With all currencies 'floating' against each other, , divorced from gold, the stage is set for a ruthless trade war and a series of devaluation cycles on the pattern of but many times worse than the 1930s, when currency undercut currency in a vain attempt to make exports competitive.

Despite what the 'experts' say and the labour leaders hope, the international monetary system cannot be 'reformed'. Bretton Woods reflected a big retreat before the strength of the working class. Inflation was the product of that retreat, inflation which undermined the dollar's position and paved the way for August 15, 1971.

To restore value to the billions of paper currency within the capitalist system and make it once more convertible into gold, means to extract that value from the backs of millions of workers in every country in the most violent and bloody manner. This is the real meaning of the now frenzied discussions which are taking place about the future of