an international association of the central banks of several Western countries. The participants of the pool were the Federal Reserve Bank of New York and the central banks of seven Western European countries: Great Britain, the Federal Republic of Germany, France, Italy, Belgium, the Netherlands, and Switzerland.
The gold pool was in operation from autumn 1961 to March 1968. Its goal was to stabilize the market price of gold at the London market (the main gold market) at a level near the official price of $35.00 per troy ounce (31.1035 g) of pure gold. With this in mind, countries of the gold pool organized a joint consortium for the trading of gold in London. The Bank of England had the right to sell gold for the account of the gold-pool countries. Other participants were obliged to compensate it for its expenditure on gold within limits of quotas agreed upon in advance. The original percentage established for each country was as follows: USA, 50 percent; Great Britain, Italy, and France, 9 percent each; and Belgium, the Netherlands, and Switzerland, 4 percent each. By 1962 the participants of the gold pool agreed on joint purchases of gold in London. The gold purchased was distributed among them in proportion to their quotas.
The gold pool operated in the following way. During the calendar month the Bank of England sold and purchased gold on the London market out of its own resources. At the end of the month, the net total of the operations was computed. The deficit of the Bank of England was compensated (each central bank of the member countries transferred to the Bank of England gold in proportion to its share in the sum total of the agreed quota). If the balance was favorable, the Bank of England distributed the purchased gold among the participants in proportion to their quotas.
Information on the operations of the gold pool was tightly restricted; however, from unofficial sources it has been learned that from autumn 1961 until the end of 1962 the amount of gold sold through the pool was approximately equivalent to the gold purchased. In 1963–64, the gold pool basically bought gold; however, as a result of the weakening of the dollar and the sharp increase in gold demand, the gold pool was subsequently forced to sell a large quantity of the metal out of the state reserves of member countries in order to prevent an excessive increase in the market price of gold. After the devaluation of the pound sterling in November 1967, the gold exchanges were seized by panic. According to some evaluations, the loss to the state reserves of the Western countries by mass purchases of gold exceeded $3 billion. In the middle of 1967, France resigned from membership in the pool. In March 1968, the remaining members of the pool decided at an emergency meeting in Washington to discontinuethe operations at the London gold market. In effect, this meant the end of the gold pool. From then on, the market price of gold was determined only by supply and demand. In 1970–71, for example, the gold price exceeded the official price by 15–25 percent.
S. M. BORISOV