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ples of private property on which a free enterprise society rests. There is no difference in principle between this nationalization of gold at an artificially low price and Fidel Castro's nationalization of land and factories at an artificially low price. On what grounds of principle can the U.S. object to the one after having itself engaged in the other? Yet so great is the blindness of some supporters of free enterprise with respect to anything touching gold that in 1960 Henry Alexander, head of the Morgan Guaranty Trust Company, successor to J. P. Morgan and Company, proposed that the prohibition against the private ownership of gold by U.S. citizens be extended to cover gold held abroad! And his proposal was adopted by President Eisenhower with hardly a protest from the banking community.
Though rationalized in terms of "conserving" gold for monetary use, prohibition of private ownership of gold was not enacted for any such monetary purpose, whether itself good or bad. The nationalization of gold was enacted to enable the government to reap the whole of the "paper" profit from the rise in the price of goldor perhaps, to prevent private individuals from benefiting.
The abrogation of the gold clauses had a similar purpose. And this too was a measure destructive of the basic principles of free enterprise. Contracts entered into in good faith and with full knowledge on the part of both parties to them were declared invalid for the benefit of one of the parties!
Current Payments and Capital Flight
In discussing international monetary relations on a more general level, it is necessary to distinguish two rather different problems: the balance of payments, and the danger of a run on gold. The difference between the problems can be illustrated most simply by considering the analogy of an ordinary commercial bank. The bank must so arrange its affairs that it takes in as service charges, interest on loans, and so on a large enough sum to enable it to pay its expenseswages and salaries, interest on borrowed funds, cost of supplies, returns to stockholders, and so on. It must strive, that is, for a healthy

 
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