AMERICAN CURRENCY

Evening Star, Issue 21637, 5 February 1934, Page 8

AMERICAN CURRENCY

STABILISATION SUGGESTIONS NEGOTIATIONS WITH BRITAIN EXPECTED Press Association —By Telegraph—Copyright. NEW YORK, February 2. The ‘ New York Times’s’ Washington correspondent says that an early stabilisation discussion with Britain was 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 a further adjustment to be made after the effect on the internal economic conditions of both countries has been studied. Administration experts have carefully watched the developments in France, as the admittedly continuous heavy flow of gold from the 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 will not be forced off the gold standard, and that within a reasonably short time the dollar should attain parity with the franc. THE PRESIDENT'S ADVICE WASHINGTON, February 2. President Roosevelt, addressing the State directors of the National Emergency Council, advised them to be 1 hard boiled ” if they found any little individual trying to take a political advantage out of “ the relief of human needs.” BONDS AND COMMODITIES REDISCOUNT RATE REDUCED. NEW YORK, February 2. Industrial and Government bonds increased sharply to-day on an unexpected reduction in the Federal Reserve rediscount rate from 2 to 1J per cent, and reports of a heavy flow of capital into the United States, including much gold from France. The dollar was somewhat stronger, which retarded the advance of Stock Exchange prices, which turned easy and irregular at the close. Commodities also were weak. A CONFIDENT TONE NEW YORK, February 3. The speculative advance which has featured the markets since the Gold Bill was signed continued to-day, despite half-day trading. Bond sales were the greatest of any Saturday in the exchange's history, amounting to over 17.000. dollars. Stocks and commodities were stronger. Despite foreign report's of a general flow of capital, including much gold, American currency depreciated almost a cent. The dollar closed at 104.8 of new parity in terms of the franc. ■ Sterling 4.93 i, up 6J points; franc 6.33, up 10 points. It is assumed that the Government purchases of gold have caused this depreciation. Indicative of renewed confidence in the speculative markets a seat on the Stock Exchange was sold to-day for 190,000 dollars, 64,000 dollars above the low rate touched last year. FURTHER DEVALUATION HINTED WASHINGTON, February 3. A record year’s deficit of some 1,900.000. dollars last week changed into a surplus of almost 1,000,000,000 dollars to-day, as the publication of the Treasury balance took into account the profit accruing from gold. This is merely a book transaction, as most of the profit has been allocated to the Stabilisation Fund. The actual deficit remains, and is sure to bo increased in months to come. The strength of the dollar on the foreign markets since President Roosevelt’s devaluation is causing some concern in official circles. It is understood that the President is determined to push it down to the parity at which he fixed it. In some quarters it is belived that another devaluation will be necessary. FINANCING EXPORTS THE PRESIDENT’S PLAN, WASHINGTON, February 2. President Roosevelt has announced plans for the formation of a bank, with Reconstruction Finance Corporation funds, for the purpose of the partial financing of exports, particularly for Russia. Although this is unconfirmed. the capital is expected to total 300.000. dollars.