Gold Reserves

a centralized reserve of gold in bullion and coins held by a central bank of issue or the treasury of a country.

Under the system of the free circulation of gold that prevailed until the beginning of the general crisis of capitalism, gold reserves served three purposes: (1) as a reserve fund for international payments (a reserve fund of world currencies); (2) as a reserve fund for internal (domestic) metal circulation; and (3) as a reserve fund for payments on accounts and for the exchange of bank notes. In 1913, 59 percent of the total world supply of monetary gold was held in centralized reserves, and 41 percent of the gold remained in circulation. The sphere of gold operations was narrowed after the changeover from metal to paper circulation and the discontinuance of the exchange of bank notes for gold. Opportunities were created for the more complete concentration of gold resources in centralized funds. Gold began to be directed toward the servicing of only nondomestic economic operations; that is, gold retained its significance as a reserve fund for international payments. This role of gold reserves was enhanced considerably during intensification of the currency crisis after World War II (1939–45), since the demand for gold increased because of disruptions in the balances of payments, inflation, and the depreciation of currencies. The gold reserve’s role as a military financial reserve also increased. Gold reserves were gradually taken over by the state in all capitalist countries, which concentrated most gold resources in central banks and treasuries (see Table 1).

Table 1. Centralized gold reserves of capitalist countries (in thousands of tons at year’s end)
	1913	1929	1938	1949	1965	1969	1971
USA	1.9	5.9	13.0	21.8	12.5	10.5	9.1
Great Britain	0.2	1.1	2.6	1.2	2.0	1.3	0.7
France	1.0	2.5	2.5	0.5	4.2	3.2	3.1
Germany (from 1949, West Germany).	0.4	0.8	–	–	3.9	3.6	3.6
Other countries and international organizations	3.8	5.3	5.0	7.6	15.8	17.8	20.1
Total	7.3	15.6	23.1	31.1	38.4	38.4	36.6

The world resources of gold are very unevenly distributed. Before World War I, the gold reserves of the European countries were almost double those of the USA. By the beginning of World War II the USA had 56 percent of the world gold reserves, and by 1949 this figure increased to 70 percent. The gold reserves of the capitalist countries of Europe decreased in the same period from 37 percent to 15 percent. By 1969 the USA’s share had dropped to 29 percent and that of the European countries had risen to 54 percent. Reduction of world gold reserves in 1969 resulted from panic on the gold exchanges after devaluation of the pound sterling in November 1967 and the sharply increased sales of gold to private individuals from the government gold reserves of the USA and other member countries of the gold pool. After the liquidation of the gold pool in March 1968 and the creation of a twotiered gold market—an official market and a free market-world gold reserves were virtually frozen. The sharply aggravated currency crisis of 1971 led to a further drop in US gold reserves to 25 percent (September 1971); gold reserves in the capitalist countries of Europe rose to 57 percent.

In the socialist countries, centralized gold reserves are used mainly as a reserve for international accounts associated with foreign economic relationships.

K. A. SHTROM