DRASTIC ACT

New Zealand Herald, Volume LXXVI, Issue 23384, 28 June 1939, Page 13

DRASTIC ACT

AMERICAN SENATE PRESIDENT'S POWER MONETARY CHANGES AUTHORITY REPEALED By Tolograph—Press Association—Copyright (Received June 27, 5.5 p.m.) NEW YOT?K, June 20 As the result of a quarrel within the Senate over an attempt to raise the price of domestically-mined silver, Senators representing the silver-producing States combined with the so-called conservatives to repeal the- powers of the President to devalue, the dollar after June 30. The Senate's action is one of the greatest setbacks received by the New Deal. It has created complications threatening the Administration's entire monetary powers, and also has created a Parliamentary situation of a delicate character because the Senate went directly counter to the House of Representatives. Significance ol Vote The New York Times calls the move a masterstroke of illogicality, as the Senate itself had increased the price of domestically-mined silver. The Times says: "What logic there is may he reduced to this: if anyone is going to be allowed to tinker with the currency, it is Congress and not the President. The vote is significant as another declaration of independence." While the storm was raging at Washington, President Roosevelt was quietly fishing in the Hudson River valley—by a coincidence, close to West Point, where 10,000 tons of silver worth over 754,000,000 dollars are buried in the Federal depository. Potent Weapon Lost Treasury experts state that the drastic changes in the United States monetary laws have removed a potent Government weapon in international financial operations and have left the United States less able to meet emergencies arising from European unrest. In eliminating Mr. Roosevelt's power to cut the dollar's gold content to 50 per cent of its former worth, the Senate froze the value of the monetary unit in relation to the present level of gold. Experts regard the authority, which the President until now has held, as a means of protecting the United States against trade competition through debased foreign currency. The United States will have less flexibility of operation under the Tripartite Agreement, but it is considered Britain and France will not take advantage of the new situation, at least immediately. The ban on the purchase of foreign silver chiefly affects Mexico, which has | been selling the United States 5,000,000 ounces a month, and Canada, which has been selling 120,000 ounces a month. China's sales have dropped heavily. , '