The Press Friday, June 3. 1932. United States Finances.

Press, Volume LXVIII, Issue 20563, 3 June 1932, Page 10

The Press Friday, June 3. 1932. United States Finances.

Mr Hoover's address to Congress on the financial situation, summarised in yesterday's cable news, is a startling departure from the vague and soothing utterances which have been the stock-in-trade of American Presidents since the War. Less than a year sfgo Mr Hoover felt justified in telling the American people that they were economically more self-contained than "any other great nation," and that tin- United States would recover from the depression " irrespective of the "rest of the world." Now he has to tell Congress of " doubt and anxiety as " to the ability of the Government to " meet its responsibilities " and insists that stringent economies are necessary to stop the depreciation of the dollar In foreign markets. To see the situation in perspective it is necessary to recall that the United States, by raisI ing her tariffs to almost prohibitive heights, compelled her war-debt creditors to settle their accounts in gold and •finally drove some of them off the gold standard. This restriction of imports quickly recoiled upon her own head, for her relative disadvantage in foreign trade undermined the Budgetary position and caused a severe industrial crisis to follow the financial crisis of the last two years, in whicJi 3643 banks have succumbed. The Government's heroic efforts to "thaw " out the credit system" through the Reconstruction Finance Corporation succeeded neither in raising prices nor in stimulating industry. Still more serious has been the failure of Congress to balance the Budget. Irresponsible discussions in the House of Representatives led the Speaker to accuse members of " fiddling while the dollar " burns " and to declare that " unless " the Budget is balanced there will not " be a bank in the country able to meet " its depositors." Yet in spite of this and a presidential appeal Congress did not hesitate to reduce by 85 per cent. — from 200,000,000 dollars to 80,000,000 dollars —the extra taxation and economies that were proposed by the Government's Economy Committee. President Hoover then told the House of Representatives that "the imperative " need of the nation to-day is a definite, "conclusive programme for balancing " the Budget," and demanded a further reduction of the national accounts by 360,000,000 dollars. On the eve of an election Congress would not accept this drastic proposal. It maintained, and still a stubborn resistance to full economy measures; and the effect on the prestige of the dollar has been striking. In a single month the gold stocks of the States have been reduced by more than 200,000,000 dollars, a flight of capital which is all tho more serious in a country protected by a surplus of free gold of more than 1,000,000,000 dollars above the minimuta reserve. Further, it has alarming implications for the rest of the world-, for no country can escape the financial insecurity which such gigantic moyements of capital must create. As the ! Economist points out, "If the dollar [ " leaves the gold standard it will be due "to the breakdown of the machinery | " for stabilising exchanges during an " unexampled dislocation of trade and " finance and through inability to con- " trol capital not because j " there is any need to adjust Apierican " prices to world levels, as was the case "with Great Britain" The one encouragement is that America's extreme condition has driven her at last to listen favourably to an invitation to take pak in Mr Ramsay Mac Donald's international conference on currency and trade.