To Inflate Or Not?

Manawatu Times, Volume LIV, Issue 7270, 25 September 1933, Page 7

To Inflate Or Not?

United States Facing A Financial Crisis

EARLY DECLARATION

URGED

United Press Association. —By Electric Telegraph—Copyright. Received Sunday, 7.35 p.m. WASHINGTON, Sept. 23.

It is felt in informed Washington circles that the monetary muddle in which the Administration finds itself is rapidly reaching a crisis, with a positive declaration of principle possible following a conference called by President Roosevelt at tho White House to-morrow night to discuss the situation with leading financial advisers.

It is no secret that the powerful Wall street financial community, as well as the President’s more conservative advisers, arc urging a positive position on currency inflation and that proposals be enunciated immediately. They hold that uncertainty over money matters is retarding long-term investments, which if it continues, is calculated to retard, if not defeat, the N.R.A. programme.

While the Administration's recent, credit extension schemes, commodity purchases and loan proposals are held to be desirablo to meet the immediate emergency, they are not considered strong enough medicine to instill confidence in the capital-investing class on the one hand, or silence the inflation agitators on the other. The majority of those called to the conference, it is believed, prefer no inflation at. all. However, if some degree of inflation is considered necessary by the President, they have a definite plan for immediate limited action, while another, it is understood, has been considered and may be submitted later.

The first proposal, which is ready for discussing to-morrow night, provides for the immediate issuance of about a billion dollars flat money, with a definite proviso that no other inflation will bo undertaken.

It is even suggested that the President should renounce the extraordinary inflation powers Congress granted him in the Thomas Amendment.

The second proposal, which has not yet been formulated in a definite plan, but which is said to have strong Wall street support, would immediately stabilise tho pound and the dollar through co-operation between London and Washington. It also envisages revaluing of the gold content of the dollar at the present depreciated level, which is about 35 per cent, off par. It is pointed out that the gold which the Federal Reservo Bank holds, while worth 3,591,000,000 dollars at tho old legal standard, has now appreciated to about 5,525,000,000 in relation to gold standard exchanges. It is believed that, with this amount of gold as the basis, sufficient currency with reasonable gold coverage could be placed in circulation without resorting to fiat, money or arbitarily halving the dollar’s gold content.

Although it is realised that such an action might have an immediate deflation effect, many leading financiers are believed to oppose .the President s police heretofore, in which they see manifold dangers, not the least of which continued, if not increased, the flight of capital to foreign countries, due to the nervousness of American investors.

It is admitted that neither plan recognises the power of Congress to force a broad scale of inflation over the President’ head, but it is believed that Air Roosevelt’s prestige, and asji final resort his veto powers, are sufficient to keep him controlling the situation.

“Inflation Indispensable To N.R.A, Success” DECLARATION BY SENATOR BORAH Received Sunday, 7 p.m. BOISE (Idaho), Sept. 22. A declaration that inflation is indispensible to the success of the N.R.A., was made on Friday by Senator Borah. France’s Fight to Remain on Gold MANUFACTURERS’ APPEAL TO M. DALADIER

PARIS, Sept. 22

A significant sidelight on France’s fight to remain on gold is the united manufacturers’ “supremo appeal” to M. Daladier to rcduco living and manufacturing costs to enable France to regain her lost’markets. Exports since 1929 have fallen from '50,139 million francs to 19,633 million, and the fall is continuing on the same scale. The appeal points out that many manufacturers have closed their exporting departments.

U.S. Studying Sweden’s Managed Currency MR ROOSEVELT RETICENT WASHINGTON, Sept. 22. It is reported that the economic advisers of the Government arc giving a close study to methods of controlling dollar fluctuation to the end that "constant purchasing power” and stabilised price levels may be achieved. The subject has been under consideration for weeks with Sweden’s managed currency system as a practical guide, but how President Roosevelt feels towards such an experiment has not yet been disclosed.