THE POUND AND THE DOLLAR

Press, Volume LXX, Issue 21081, 5 February 1934, Page 11

THE POUND AND THE DOLLAR

EARLY STABILISATION DISCUSSION RATIO OF FIVE TO ONE DESIRED FRANCE AND GOLD STANDARD (UHITED PRESS ASSOCIATION—ItY ELECTJSIC TELEGRAPH—COPYRIGHT.) (Received February 4, 6.30 p.m.) NEW YORK, February 2. The Washington correspondent of the "New York Times" says that ah early stabilisation discussion with Great Britain is authoritatively indicated to-day. Official conversations are expected to begin as soon as the first effects of the dollar devaluation are assessed. The administration is reported to be desiring for test purposes a ratio of about five to one between the pound and the dollar, with further adjustment to be made after the effect on internal economic conditions in both countries, has been studied.

Administration experts have carefully watched the developments in France, as admittedly a continuous heavy flow of gold capital to America would embarrass the French Government's determination to remain on the gold standard. In financial circles the opinion is held that France should not be vrced off the gold standard, and that within a reasonably short time the dollar should attain parity with the franc. FLOW OF GOLD TO AMERICA

COMMENT B.Y "THE TIMES" (BKITJSIJ OFFICIAL WI REI.ESS.) RUGBY, February 2. Commenting on the American gold bullion standard "The Times" expresses the view that its immediate effect is likely to be the loss of gold from gold standard countries to the United States. This, "The Times" says, is the inevitable outcome of, the under-valuation of the dollar, which arises from the fact that the rise in American prices has been insufficient to offset the depreciation in the dollar. "It becomes clear that the President is determined to stabilise the dollar at not less than the present figure," ■ states the newspaper, "and confidence should be recreated in those quarters where hitherto it has been lacking."

The devaluation of the American dollar to 59.06 per cent, of its old gold value and the fixing of the new American price for gold at 35 dollars an ounce, which, in effect, marks the return of the United States to a gold standard by establishing an international gold bullion standard, continue to be the dominating factors in the city. The outstanding event to-day was the rise in the price of gold in the London bullion market by 4s to the unprecedented price of £6 19s 6d an ouncej which greatly stimulated the market in gold-mining shares.

FOUR TONS OF GOLD BY AIR BIG DEMAND FOR SOVEREIGNS (Received February 4, 6.30 p.m.) LONDON, February 3. Two Royal Dutch air liners conveyed £1,000,000 worth of bar gold from Amsterdam to Southampton on the way to America. The gold weighed four tons. A Hatton Garden merchant received 4000 sovereigns to-day, in addition to 10,000 sovereigns in the last two days. A leading firm of bullion refiners states that the sale of sovereigns has risen with a bump in the last two days. A further increase is anticipated, but the firm does not believe there is a sufficient number of sovereigns left to allow another rush on the 1932 scale.

RISE IN GOLD PRICES AMERICA'S HEAVY PURCHASES LONDON, February 2. America again purchased the entire amount of gold offered to-day, £BOO,OOO worth, at the new record price of £6 19s 6d a fine ounce. A market sensation was caused by the announcement that the price was fixed on the basis of the devalued dollar instead of on the franc, as hitherto. A new boom developed, sovereigns bringing 325.

SPECULATIVE ACTIVITY

A STOCK EXCHANGE RECORD NEW YORK, February 3. The speculative advance which has been a feature of the markets since the Gold Bill was signed continued to-day despite the half-day trading. Bond sales were the greatest for any Saturday in the history of the Stock Exchange, amounting to more than 17,000,000 dollars. Stocks of commodities are stronger. Despite foreign reports of the general flow of capital, including much gold to the dollar, American currency depreciated almost one cent. The dollar closed at 104.8 of the new parity in terms of the franc. Sterling climbed to 4.93J, an increase of SJ, and the franc at 6.33, showing an increase of 10 points. It is assumed that Government purchases of gold have caused this depreciation.

Indicative of the renewed confidence in speculative markets, a seat on the Stock Exchange sold to-day for 190,000 dollars, 64,000 dollars above the low rate touched lastyear.