AMERICA’S CURRENCY

Evening Star, Issue 21621, 17 January 1934, Page 7

AMERICA’S CURRENCY

THE PRESIDENT'S POLICY ISSUES TRAVERSED Press Association— By Telegraph—Copyright. WASHINGTON, January 15. An important feature of President Roosevelt’s message is the exposition of the thesis of what is popularly called “ the bullion standard,” involvin complete decoining of gold. “ Free circulation of gold coins,” be said, “ is unnecessary, and it leads to possible weakening of the national financial structures in times of emergency. The practices of transferring gold from one individual to another or from a Government to an individual within the nation is not only unnecessary but in every way undesirable. The transfer of gold in bulk is essential onlv for the- payment of international trade balances, therefore it is a prudent step to vest in the Government the title to possession of all monetary gold within its - boundaries and keep in the form of bullion rather than coin. In asking for the transfer of gold to the Treasury, the President stated that holders would be issued gold certificates, but these would not, according to the above thesis, be convertible into gold coin and presumably not even into gold bullion in the customary 6,000d0l bars. Thus the position of the gold holders, the greatest of which are the Federal Reserve Banks, appears paradoxical. In return for the gold the holders will get merely the legal tender which certifies that such an amount of gold is on deposit with the Treasury, but it gives them no more access to it than the holders of other currency. These gold certificates will bo secured at all times, dollar for dollar, by the gold of the Treasury, of such weight and fineness as may be established from time to time. Such legislation makes clear the Government’s ownership of any added dollar value of the country’s stock of . gold which results in any decrease of the gold content of the dollar, It also, of course, with equal justice casts upon the Government the loss of such dollar value if the public interest in future should require an increase in the amount of gold designated as “ a dollar.” The title of all gold being vested in the Government, the total stock will serve as a permanent fixed metallic reserve, “ which will change in amount only so far as necessary for the settlement of international balances, or as may bo required by future agreement among the nations of the world for the redistribution of the world’s stock of'monetary gold.” If the Government assumes the ownership of gold as requested, it means chiefly that bookkeeping will shift in title, as most of the Federal reserves of metal are now in the Treasury vaults. The Reserve Banks’ holdings are about 3,500,000,000d01, and the remaining 500,000,000 or so of monetary gold is in the Federal mints or held by individuals, private banks; etc. THE SILVER PROBLEM. Silver interests, which anxiously awaited the message, are only partially satisfied. The President made no definite recommendations beyond restoring the limited buying policy, but stressed its importance as a monetary base. “ Silver constitutes a very important part of our monetary structure, and it is such a crucial factor in much of the world’s international trade that it cannot be neglected.” The President declared that America had taken the first step to validate the London silver pact, and he must await the action 6f the other nations and the working out of his own domestic policy before recommending further legislation “looking to further extension of the monetary use of silver.”

TWO PRINCIPLES. President Roosevelt declared: “ Permit mo once more to stress two principles. Our national currency must bo maintained as sound currency, which in so far as it is possible will have a fairly constant standard purchasing power and be adequate for the purposes of daily use and the establishment of credit. The other principle is the inherent right of the Government to issue currency and be the sole custodian and owner of the reserve of precious metals underlying that currency. I am confident that the nation will realise that the definite purpose of the Government is to maintain credit, and that the Government at the same time will provide a sound medium of exchange which will serve our people."

THE GOVERNMENT'S PROFIT ! WASHINGTON, January 15. It is estimated that the amount of the profit accruing to the Government under the Roosevelt plan will range between'2,ooo,ooo,ooo and 4,000,000,000 dollars. According to one source close to the Administration, the remainder of the profit, after 2,000,000,000d0l had been placed with the stabilisation, fund, would be held in reserve, whereas another reputedly well-informed source said the balance would be used for recovery purposes. | ' Mr Morgenthau (Secretary of the Treasury) states that the commodity dollar idea is not in any way attached to the steps contemplated in the Roosevelt programme.

HOSTILE SEHATORB WASHINGTON, January 15. Commenting on President Roosevelt’s message, Senator Glass (Democrat) said: “ Humanitarians can find some excuse for a man who steals when he has to, but what excuse is there when there is no need?” Senator. Hastings (Republican) described it as - robbery.,”

BRITISH BANKER’S COMMENTS LONDON, January 15. Sir Josiah Stamp, a director of the Bank of England, commenting on President Roosevelt’s proposals regarding the gold value of the dollar, says:— “ Sixty per cent, is apparently merely the limit. If it is the definite objective it is good, because we will then know where we stand. Its effect upon British trade depends entirely upon how the exchanges treat the dollar relatively to the changing internal prices. If the dollar depreciates more than the prices rise competition will be severe. If the dollar accords to the increase in prices it may not affect us, or may help indirectly by aiding the American situation.”

LONDON PRESS VIEWS LONDON, January 16.. President Roosevelt’s plans are given prominence in the newspapers, and the Cabinet is expected to review the position to-day.

The ‘ Daily Telegraph’s ’ political correspondent says:—“ With the dollar at eight to the pound intensified competition must be anticipated, but the Government will take all steps to protect the home market. The country is no longer in a defenceless state, and co-operation with other Empire Governments will be sought if it is found that British trade is suffering in those markets.”

In an editorial the paper says:— “ There need be no dread that American goods will permanently capture foreign markets, since the devaluation of the dollar has already been largely offset by the higher wages paid under the National Recovery Plan. Moreover, if the Budget is to be balanced within two or three years American industry is faced with higher taxation. The position does not require immediate action on our part.” (Received January 17, at 1 a.m.)

The newspapers emphasise that President Roosevelt’s action means that the Government has actually captured at least 40 per cent, of American capital, and is now hoping for a speedy arrangement for stabilisation with Britain and France. *

COLD PURCHASES CEASED WASHINGTON, January 16. (Received January 17, at 10 a.m.) The United States, Reconstruction Corporation ceased its gold purchases abroad on Monday.

YEN MAY FOLLOW DOLLAR JAPANESE COMMENT. TOKIO, January 16. (Received January 17, at 1.30 p.m.) The American dollar devaluation is not surprising to financiers here. The Stock Exchange was not affected today. The officials are not commenting pending' official advices, but it is understood that they have intimated ahat it may benecessary to devalue the yen.