“DANCING DOLLAR”

Poverty Bay Herald, Volume LX, Issue 18249, 18 November 1933, Page 5

“DANCING DOLLAR”

U.S. CURRENCY POLICY

UNCERTAINTY IN LONDON

PRICE-RAISING EFFORT

(Elec, Tel. Copyright—United Press Assn.) (Received November 18, 11 a.m.) LONDON, Nov. 17. “The dancing dollar” phrase is now seen even in staid financial columns.

To-day’s quotation places the value of the dollar at 5155 cents to the pound, while the price of gold has declined to £(1 Ss I’d an oz., the lowest for some months.

A lengthy editorial in the Times reviews the position and says:— “There is no certainty in regard to what‘Mr. Roosevelt intends to do. The ‘commodity dollar’ school hold that the level of American prices is mainly determined by the gold value of the dollar. Mr. Roosevelt, acting on that theory, is now buying gold at fancy prices in dollars in order to depreciate the value of American money and thus- achieve his desired rise in prices through working the exchanges. This, at any rate, is the explanation suggested by his pronouncement. - ‘ * There is a more disquieting version current in Washington, that the President intends, by control of the international gold market, to raise prices, not only in America, hut throughout the world. It. is expected that France will be driven oil’ gold by the drain of American buying. The way will then bo clear for the adoption of a new standard. “It is said that Mr. Roosevelt is convinced that nothing less than a new monetary system througnout the world is needed to remedy existing evils. A plain statement by Mr. Roosevelt might restore confidence, but that is unlikely at present, since there are no means of calculating what degree of depreciation will raise American prices to the desired level.” The Manchester Guardian says:— “The fall of the dollar is so stupendous that financial authorities here seem too dazed to express ideas on the subject. The drop from 3.40 dol. to 5.30 dol. in relation to the pound over seven months has temporarily extinguished the McKenna and other duties, but this is negligible because business is impossible with the present epileptic state of exchange.” Fresh evidence of the flight of capital from France is provided by a Bank of France return showing that the gold withdrawals were nearly £9,000,000 for the week ended November 10, following withdrawals of over £12,500,000 during the previous fortnight. It is believed that the withdrawals for the current week are on an evori larger scale. The Bank of England is believed to have bought hundreds of enillions of francs.

Mr. Montagu Norman, governor of the Bank of England, and his colleagues, fear that if Franco is forced from the gold standard, all hope of a return on the world scale is gone.