U.S. GOLD IMPORTS

Auckland Star, Volume LXVIII, Issue 162, 10 July 1937, Page 13

U.S. GOLD IMPORTS

A MINTING RUMOUR.

NEW PRICE-FIXING PLAN.

BUDGET BALANCING

(By PAUL MALLON.)

WASHINGTON

The ploughman in lowa may not have heard about it, but the financial world was leaning on its ear a few days back, listening to gold rumours. Markets trembled; money men were somewhat panicky. The White House insisted nothing was to be done about gold, but this did not stop the rumours. They continued coming from London, Amsterdam and all reliable financial capitals of the world. President Roosevelt reached for his old reliable whipping pillow, the foreign Press, and flailed it lustily. Thus he succeeded in convincing the world the rumours were untrue, even though the well-informed smirked at his suggestion that the foreign Press was really responsible for imagining such things. That pillow has been whipped too often. Arithmetic. One inside version is that the Treasury is again excited about inflowing gold, and has recently been planning further technical action to restrain imports. It has had in mind, they say, something like imposition of a service or minting charge for newly mined gold to prevent tl'.is country from becoming a dumping ground for the mining companies of South Africa, Canada and Russia. That would not involve any change in the dollar. Then Mr. Roosevelt has been talking strangely of prices lately, and it has become generally known to speculators that he has a price programme in mind. The best of authorities have been saying it does not involve.a monetary or financial change, and, in fact, it is expected to be somewhat insipid.

Foreign editors smart enough to put these two things together to corner the world are wasting their time working for a living. They could make their salary in a day of speculating.

One of the few speculators—beg pardon, investors —smart enough to do it, happens to be a good New York friend of this Government, and happens just now to be in London, where the rumours started. Those who know their way around in the financial world would give him more credit than the foreign Press.

A year ago the stock market went into agony over a report that the Administration would raise the price of gold. The tale in the street is that millions (meaning, at least, a t : dy profit) were made on that occasion by roulette experts who knew where the wheel wotild stop. Price-fixing Rumour. A more valid rumour heard in Government (not financial) circles is that the new Roosevelt price-fixing plan may be worked around the new N.R.A., as well as relief expenditures for consumers' goods. It is generally considered to be inevitable that some Covernment Price Bill must be presented. L T nless the administration takes some action, it will find itself up in the giddy price altitude of 1929, flying blind. "• " "',* ■ T" " Many wlio have talked with Mr. Roosevelt lately have been disturbed by what he did not say. To them he talked of financing taxes, etc., but did not once mention balancing the Budget. Their hopes of getting a constructive and settling relief message from the White House are frankly not warm. An inner fear exists that he will not go all the way along the road recently pointed by the Eccles-Morgenthau group. Since the Government bond market troubles the conviction has spread among economists of the new order that the Budget must really be balanced. By 'balance" they mean not a paper prospect of evening up the books some day, but a convincing prospect of a surplus. That is the only kind of balance which will safeguard Government credit from future misgivings. Few believe it will be either feasible or popular to increase the existing onerous burden of taxation to do it. The only logical way, they say, is to eliminate every cent of waste. Problems of Cost. The simplest way to look at the price problem is this: Four factors make prices—wages, hours, taxes and the cost of raw materials. In industry now wages are being increased, hours decreased. This action is bound to increase the cost of manufacturing and is bound to increase prices (note the -results of C.1.0. success in steel and coal). The movement is being officially encouraged by Administration policy Increased cost of raw materials is being officially encouraged by Government buying for ships, buildings, dams, etc. Now, if the Government tries to raise taxes again it will be encouraging the fourth factor in prices, while publicly professing to be fearful of a price rise. And yet prices are being officially blamed upon the foreign armament boom.— (N.A.N. A.)