BACK ON GOLD

New Zealand Herald, Volume LXXI, Issue 21716, 3 February 1934, Page 11

BACK ON GOLD

AMERICA'S ACTION TREASURER'S STATEMENT DOLLAR DEVALUATION EFFECT ON BRITAIN REACTION AWAITED By Telegraph—Preas Association—Copyright (Received February 2, 5,5 p.m.) NEW YORK. Feb. 1 A message from Washington states that the technical question whether the United States is on a gold basis now or not was answered by the Secretary of the Treasury, Mr. Henry Morgenthau, to-day. " Wo are on a gold bidlion standard—l 934 model," he said. He refused to discuss the 2,000,000,000dollar stabilisation fund, saying that all operations would be strictly secret.

Tho total gold in the Treasury is declared to be 4,029,000,000 dollars worth at the old value, while the revaluation of the gold dollar at 59.06 per cent of its former weight will make a profit of 2,792,000,000 dollars, thus making the value of the Government's gold about 6,800,000,000 dollars. The Washington correspondent of tho New York Times states that in Government quarters it is emphasised that the devaluation of the dollar and tho other features of President Roosevelt's gold policy are not intended to punish other nations. The view is expressed that if the United States is to enjoy prosperity the rest of tho world also must be prosperous. It is believed now that before any conversations are undertaken, even unofficially through representatives of the central banks, America first will await the immediate British reaction to the devaluation of the dollar. In some quarters it is felt that developments shortly will demonstrate whether the British exhange equalisation fund will be employed to drive down the pound in relationship to American currency. Such a downward readjustment of the pound's value is considered very possible and perhaps eventually it would force France and the other gold standard nations to abandon that base. If this occurs experts believe the resultant chaos in international exchange conditions would force the nations of the world to meet and devise some basis for an understanding. LONDON OPINION POSITION OF DOLLAR MORE CLEARLY DEFINED (Received February 2, 10.05 p.m.) LONDON. Feb. 2 Mr. Roosevelt's proclamation provided the main topic of discussion in the city to-day. It is realised that the full implications of America's new policy are not yet known. The opinion is expressed that the solution of many of the present puzzles depends upon tho nature and severity of the restrictions on gold movements, which are understood to be pending. Otherwise the proclamation is welcomed, inasmuch as it restore the dollar to a more clearly defined position.

WALL STREET MARKETS AN IMPRESSIVE RALLY PRICES RISE STEADILY NEW YORK. Feb 1 On the New York Stock Exchange to-day there was an impressive rally on dollar devaluation. Buying ORtlers kept the " tickers " behind throughout, the day and the volume of trading was about 5,000,000 shares. Continual profittaking failed to check the steadily rising prices, which closed from a fraction to more than 4 points higher. Metals and high-grade industrial issues led the way. In spite of the speculative interest there were plenty of bidders for bonds. Many Government issues gained and none lost. Tho commodity markets were active and prices rose, but reacted in most cases on profit-taking. Tho dollar closed at 103.4 gold cents on tho new parity in terms of the franc. Sterling closed at 4.98 dollars and the franc at 6.41* cents.