CURRENCY INFLATION

Hokitika Guardian, 10 March 1933, Page 5

CURRENCY INFLATION

u s. BANK CRISIS

POLICIES FOR CONGRESS.

(United Press Aseo iatioa—By .Electric Telegraph—Gopyriglit.)

WASHINGTON, March 8. America would ‘ appear definitely to have Cinb-rked on a policy of at least ‘“mild” currency inflation. • Another day’s conference's between the President and iiiis advisers, has revealed various plans, Th© insurance of scrip has been abandoned. instead some 2,800,000,000 dollars in .Federal Reserve Bank notes, that arc not to be redeemable on gold, will be issued. Tnig 1 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.'. , if President ' 'Roosevelt held a final conference with the Congressional leader?,’and he outlined the policies which "he will present to Congress to-morrow. ’ These policies, according ti> the best .information, consist of 'the following V—Firstly,:' 1 -The legislation necessary for the new currency issue. Secondly ! The granting to the P 1 ’ 03 * ident of dictatorial powers'in; regard to the banking situation until permanent legislation, is passed, Thirdly : powers the *. president to invoke eh oco&oiriies nre necessary to balance the .Federal Budget, There' is every indication' ithat o°ngresd will promptly agree tp the President’s requests. . It''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 sp 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. _ t Close observers interpret the'' abandonment of the scrip 'plan as a significant mov e 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 befor e the bank crisis, had loomed as major issues for the new Administration. During th© post 'War'years the money rowei’* has vra dually been absorbed by the New York bankers. They have ■wished, to issue scrip- yagainsttheir c-sets, which.Y,are v relatively sound. They, appear, however, to be willing to callow the exterior banking institutions to fare ns be3t they cm. Thus president Roosevelt’s decision to print ' the flew, money is definitely V rebuff to them,’; at the behest of. • an - evergrowing demand from Western, agricultural sections for “easy money,” or'for an inflation policy. Nevertheless; despite .....Plgrident Roosevelt’s desire to make. ; .th?,. benefits of the new currency a£ nationally uniform as possible, he ha© indicated clearlv that he is aware of tIL realities of th© situation, and that he would not, keep irret<rievably-weak "banks bolstered up at the expense o.f perpetuating insolvency. ■ In a -conference w>th. - Governor Ritchie, of Maryland, to-day,.the P res * ident admitted the plight of £hk email 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 prob’ems “must be merged into trie necessity for nation readjustments. The Democratic leaders have ".estimated 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 clank law revisions. ■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, wh’ch, he still insists, will remain the basis of the currency. The bankers .report that, considerable g°ld iff returning- in . deposits. If fchjs movement continues, it ;s calculated to ease the situation. r The first definite adverse reaction to Mr Woodin, th e Secretary to the Treasregulations, developed when New York bankers objected to receiving deposits for new accounts which must be Kegrated and kept in cash ov Government bonds so as to he available \ for unrestricted withdrawal. The banke r s complained that this worked to the advantage of hoarders and penflßsed those leaving their monev in the hanks, and that it. furthermore, made j.Ue Hmited. navinento dso provided for in Mr Woodiri’s regulations unfeasible.