INFLATION

Grey River Argus, 10 March 1933, Page 5

INFLATION

ROOSEVELT’S PLAN BANKS TO RESUME “Cut Through the Tangle” (Aus. & N.Z. Cable Assn.) (Received March 9 at 7. 13 pun.) WASHINGTON March 8. The advisability of extending the 1 n-.ted States banking holiday is strongly Indicated as it will be the subject of discussion at a conference of tin* Congressional leaders that was summoned at White House by President Roosevelt on Wednesday night. London's comment on the American crisis is reserved pending the meeting of the New Congress. “The Financial Times’’ says: It tho proposals cabled from New York re; -resented those being submitted to Congress, the President has cut thro the tango-, with a scheme that is sound and straight forward, though it will have its painful reactions. WASHINGTON, March, 8. President Roosevelt early or Thurs day predicted an immediate resumption of banking activities throughout the United States as the result of the enactment of an Emergency Bill, the speedy passage of -which is pledged to him by th e Congressional leaders. President Roosevelt, in a statement, said: “I have been in conference with members of the Senate and -the House. I have talked over with them measures which have been carefully stud ied and i repared, which will immediately relieve the situation, and will at once start banking operations throughout the entire country.”

2,800 Million Dollars

TO BE ISSUED IN BANK NOTES. (Received March 9 at 8.30 p.m.) WASHINGTON, March 8. America would appear definitely to have embarked on a policy of at least, “mild” currency inflation. Another day’s conferences between the President and his advisers has revealed various plans. The issuance of scrip has been abandoned. Instead some 2.800,000,000 dollars in Federal Reserve Bank notes, that are not to * be redeemable on Sold, will be issued. This means extending almost to the limit the forty per cent, gold coverage for notes that is provided by law, with indications this percentage might be reduced later, if necessary. To-night, President Roosevelt held a final conference with the Congressional leaders, and he outlined tho policies which ho will present to Congress to-morrow. These policies, according to the best information, consist of tho following:— THE PLAN. Firstly: The legislation necessary for the new currency issue. Secondly: The granting to the President of dictatorial powers in regard to the banking situation until permanent legislation is passed. Thirdly: Powers for the President to invoke such economics as are necessary to balance the Federal Budget. There is every indication that Congress will promptly agree to the President’s requests. A FREE HAND? If is being commented everywhere that the crisis, coming on his inauguration day, has been a boon to Mr Roosevelt. There is an overwhelming public reaction to the seriousness of the situation, which has so added to his prestige that he can now easily effect adjustments in the nation’s banking and financial structure that otherwise would require a protracted fight in Congress and then, not unlikely, ending in defeat. PRESIDENT v. BANK MAGNATES. Close observers interpret the abandonment of the scrip plan as a significant move below the surface, but, nevertheless, it is pointed that there is a conflict between the large banks, and notably the New- York group, and President Roosevelt over the gold standard, also over inflation and other questions which, even before the bank crisis, had loomed as major issues for the new Administration. BANKS WANTED TO RULE. During the post war years the money power has gradually been absorbed by the New York bankers. They have wished to issue scrip against their assets, which are relatively sound. They appear, however, to be willing to allow the exterior banking institutions to fare as best they can. Thus President Roosevelt’s decision to print tho new money is definitely a rebuff to them, at the behest of an evergrowing demand from Western agricultural sections for “easy money,” or for an inflation policy. THE WEAK BANKS. Nevertheless, despite President Roosevelt’s desire to make the benefits of the new currency as nationally uniform as possible, he has indicated clearly that he is aware of the realities of the situation, and that he would not keep irretrievably-weak banks bolstered up at the expense of perpetuating insolvency. In a conference with Governor Ritchie, of Maryland, to-day, the President admitted the plight of the small banks that are without the necessary securities, and admitted they will benefit to a large extent by the new issue currency, but he said that their problems “must be merged into the nec- ■ essity for nation readjustments. The Democratic leaders have esti-

mated that. Congress would require about three days to pass the emergency legislation, and would then adjourn for several weeks to allow time for the formulation of general bank law revisions. LONGER “HOLIDAY.’’ Meantime it is believed that President Roosevelt, -by a proclamation, will extend the bank holiday for at least a few days, and will continue the strictest, control of gold, which, he still insists, will remain the basis of the currency. The bankers* report that considerable gold is returning in deposits. If this movement continues, it is calculated to ease tho situation. The first definite adverse reaction to Mr Woodin, the Secretary to the Treasury’s regulations, developed when New York bankers objected to receiving deposits for new' accounts which must be segrated and kept in cash or Government bonds so as to be available for unrestricted withdrawal. The bankers complained that this worked to the advantage of hoarders and penalised those leaving their money in the banks, and that it, furthermore, made the limited payments also provided for in Mr Woodin’s regulations unfeasible.

Billion Dollar Issue

POSTAL SAVINGS TO CIRCULATE. G OV ER NMEN T G U A I? ANTEES ISSUE. (Aus. & N.Z. Cable Assn.) (Received March 9 at 10.30 p.m.) WASHINGTON. March 8. Legislation that is* intended to put into circulation one billion dollars which is now in the Postal Savings system is being drawn up for submission on Thursday, if possible, to the extra session of Congress. President Roosevelt remarked: “I am gratified at the outlook.” Senator Robinson, I he Senate Leader said: “The Bill will result in the opening of n large number of banks on Friday.” The details are not reported but it is understood that they are centred upon expanded issues of Federal Reserve Bank notes, based upon Government obligations. The Treasury has threatened to publish the names of the gold hoarders. Permission has been whitdrawn from New York Strict to issue State-wide scrip. Deposit Bank Speculation FLAN TO STOP IT. SEPARATION FROM COMMERCIAL BANKING. (Aus. & N.Z. Cable Assn.) WASHINGTON, March 9. From New York, Mr Winthrop W. Aldrich, the President of the Chase National Bank, which is the largest Commercial Bank in the world, and in which the Rockfellers are heavy stockholders, has issued a sensational statement, advocating sweeping banking reforms, calculated to reduce the present overlords of the New York money market to a position of relative impotence. lie has suggested the complete divorcement of the commercial and the investment phases of banking, which is a direct thrust at the J. P. Morgan firm. He would forbid private bankers to be directors of the banks of deposits. Such positions several of the Morgan partners now hold. The divorce would force all of the commercial banks into the Federal Reserve System. Mr Aldrich has also announced that his banks own securities affiliate, the Chase-Harris-Forbes Corporation, would sever its connections 'with the Chase Bank. Yesterday the National City Corporation, whose securities affiliate, was a storm centre in the recent Senate investigation, made a similar announcement. A TIMELY SCRUPLE. OTTAWA, March 8. Declaring that all interest was unchristian and contrary to the Bible teaching-, Mrs. J. J. Richardson has returned 83 dollars interest on Government bonds. A RETRENCHMENT POLICY. WASHINGTON, March 8. High Government officials, to-day, said that Mr. Roosevelt will ask Congress, this -week, to grant him the widest authority possible under the Constitution, to effect immediate economies in Government cost. The request will especially bo directed at veterans’ compensation. Under the President’s plan, it is stated that ho would ask for authority to review all cases relating to veterans, and power to merge major departments, and cut the statutory appropriations. RETURN TO REAL MONEY. (Aus. & N.Z. Cable Assn.) WASHINGTON, March 8. ! Representatives of the principal grain exchanges in tho United States asked for a modification of the banking rules to permit the immediate re-, opening of their markets to both cash and future trading, on the grounds that food supplies might otherwise be seriously disturbed. Mr. Woodin said to-day, that actual currency would be circulated throughout United States, in place of scrip or clearing house certificates, under a plan being formulated. He made it clear that tho formal plan for scrip or other medium of exchange issue, was being abandoned. NEW YORK, March 8. With the Federal Reserve system opening its coffers to facilitate necessities, and with the regulations clarified, banks in many localities of the United States were prepared to-day, for a more general lightening of the burdens of the emergency holiday

through the cashing of payroll cheques and providing of funds for essentials. Distinct stirrings of business in the banks inspired fresh hopes for an early lifting of the cloud of uncertainty. With Federal Reserve banks beginning, for the first time this week, to provide members with currency for necessities, tho scrip idea began to wane. Because many banks, not members of the Federal Reserve system, have prepared scrip, the plan might develop on a local basis in many communities. and New York State was ready with its new emergency certificate corporation to develop this form of emergency currency. “CUTS” AT HOLLYWOOD. HOLLYWOOD, March 8. The cessation of activities at all motion picture studios at Hollywood was ordered to-day by the Association of Motion Picture Producers, unless drastic cuts in salaries and wages for an eight weeks period, due to the banking situation, are taken by employees and artists. The Board of Directors of the Academy of Motion Pictures, Arts and Sciences shortly after the ultimatum, reeomniended its members to take the reductions. For salaries of more than fifty dollars weekly, a cut of fifty per cent, for the eight weeks period will be made, foreign exchanges, according to interpretation by experts, placed on quotations in London, Paris and Montreal. The relationship of the pound and the French franc has remained steady in the past few days, but the Canadian dollar has increased its value against others. Sterling opened here to-day at. four fourteen against Tuesday's four-sixteen at the close, then slid to four-ten. The French franc, quoted at four eighty over the -week-end, has fallen to four seventy-one and a-half. CANADIAN DOLLARS’ RISE. MONTREAL, March 8. The Canadian dollar is soaring on £99]. LONDON HOPES. (British Official Wireless). RUGBY, March 8. A better tone was revealed in the London financial markets when the Stock Exchange opened, there was a decided improvement in sentiment, operators taking a more favourable view of the United States situation. More interest was shown in South African mining shares, which showed a small general advance. The purchase of gold amounting to £3.283,639. which is announced by the Bank of England, has raised the total inflow of gold into England since the beginning of the year to £4,117,991. Dealings in foreign exchange, mean time, are again permitted in all currencies, with the exception of the dollar. On the Stock Exchange, British funds gained 1-8 to 9-16. War Loan with a minimum of 37} dollars. Those earning less than fifty will take . a twenty-five per cent, cut, with a minimum of fifteen dollars. The cuts are retrospective, starting from March 6. The Studios can no longer exist unless substantial cuts in pay are made, said the spokesman for tho producers. The studios will remain open pending action by the employees regarding the reductions.

British Financial Policy THE SLAP DASH IMPERIALISTS. ANSWERED BY CHANCELLOR. (Received March 9 a t 5-5 p.m.) LONDON, March 9. lit the House ,of Commons Sir S. S. Hammersley (Conservative) submitted a motion demanding that tho Government, without awaiting for any international consideration of gold prices, should give effect to a whole-hearted policy of raising sterling prices. Mr Leopold Amery seconded the motion. He said that the Government had at Ottawa, missed a great opportunity of linking an Empire fiscal policy with an Empire monetary policy. Ho appealed for bold encouragement for promising new industries and for Government assistance also to build a new Canard liner, and for the electrification of the railways, with help of a subsidy. Mr Chamberlain, Chancellor of the Exchequer, in replying, said that an Empire monetary p'olicy was “not pratieal polities.” Such a policy would mean that the Dominion would have to accept Britain’s control of the value of sterling. Mr Chamberlain said that sterling prices had remained remarkably steady though the gold prices in the United States had fallen by twenty p'er cent., in France and Italy by twelve per cent, and in Germany by sixteen per cet. He thought that these facts showed that Britain’s monetary policy had countered the effect of world forces. The foreign trade of Britain had been halved during the last few years. Tho idea, however, that all this Tall could b© replaced by any stimulus to the Home trade was doomed to be disappointed. If, said Mr Chamberlain, the taxpayers’ money were to be used to i grant subsidies for selected industries, ‘ would not other countries take steps I to counteract such subsides? The hard fact was Britain could not prosper while the whole world was depressed. The International Economic Conference agenda contained most of the problems which must be solved before world prosperity -would be attainable. Mr Hammersley’s motion was carried by 128 votes to 25