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Poverty Bay Herald, Volume LX, Issue 18254, 24 November 1933, Page 7

MORE DESERTERS

THE ROOSEVELT POLICY RESERVE BANK PROTEST (.JOED BASIS DEMANDED A NOTH ER RESIGNATION (Klee. Trl. ('ojjyrii;ht -liulixl J’rrss Assn.) WASHINGTON, Nov. 23. Tim most powt'i'lul attack Mr. lloosc volt has yet encountered developed early to-day, when it was revealed that the advisory council of the Federel Reserve Board had declared opposition to his gold-buying policy, and had recommended the re-establishment of currency on a gold basis, coupled with "safeguards to he agreed upon by international action. The council is composed of representative bankers of all tin; Reserve Ranks in 12 districts, embracing the entire nation from the mid-western agricultural section to Wall Street. They have been meeting during the past several days and have adopted a resolution which, without mentioning .Mr. Sprague’s name, embodies the principle lie expresses in ids resignation. Mr. Roosevelt declared : “Unless there is monetary stabilisation it will be increasingly difficult for the Government to finance its large commitments for reconstruction purposes and re-iinance maturing obligations.” Mr. Henrv Morgcntbau announced that Mr. Torn IT Smith, the St. Louis banker, bad been invited to confer with him regarding accepting the position Mr. Sprague has vacated. It is assumed that he is in full agreerent with Mr. Roosevelt’s policy. There is word from Warm Springs that Mr. Roosevelt is determined to follow his policy, and developments now indicate, according to observers here, a titanic fight on the monetary issue. SCHEME CANNOT WORK Mr. James Warburg, banker and adviser to the American delegation at the London Conference, advised the immediate abandonment of Mr. Roosevelt’s gold policy, and the establishment of an international gold standard, “improved and modernised.” He said gold buying as a relief for depression could not work in practice. Ho did not believe that as a practical matter there could be any such thing as a dollar of constant purchasing power. Mr. Warburg, who lias been regarded as the unofficial economic adviser to Mr. Roosevelt-, expressed reluctant opposition to some of the methods in the President's monetary policies. “What I reluctantly oppose,” said the Now York banker, “are some of the methods by which he seeks to attain his goal, some of the misconceptions that seem to becloud his purpose, and the disregard of the accumulated experience of centuries manifested by all too many of bis advisers.” Mr. Warburg expressed doubt that as a practical matter there can be any such thing as a dollar of constant purchasing power, which Mr. Roosevelt espoused in a message to the Economic Conference last ,Tvily, and revealed for the first time that he had resigned from the American delegation after the President s message had been received in London. lie did not let his resignation become known at that lime because he was still homTul of being able to convince the President that it would be a mistake to continue his policy of monetary uncertainty and experimentation. ROND MARKET DEPRESSED Mr. Roosevelt's monetary policy was commended and denounced by speakers before the American Academy of Political and Social Science. Senator Thomas, who defended the policy, outlined a programme he favors, and which it is thought Mr. Roosevelt would ultimately accept. In addition to buying gold he would purchase silver similarly to give currency a broad metallic base, lie estimated that, the nation’s gold supplies reach £1,600,000,000. 'this gold is not new money, but when revalued and again made into money the effect upon business and trade prosperity will be comparable to the discovery ol at least half that amount of new gold. Professor Irving Fisher, of Yale University, said, in an address on "Monetary Policy,” that Mr. Roosevelt is substantially right.

A rally in I lovernnient bonds was partially explained late this afternoon by an important announcement from Washington that the Treasury was purchasing its own bonds in the open market with file surplus funds from the sinking fund of the postal savings reserves and other sources.

Mr. Morgeuthau refused to disclose the amount, of money available for such a purpose, but said the extent of the purchases would he announced each week on AJonday.

Apparently on reliable information certain large holders of Government securities have been deliberately “bearing” the market to embarrass Mr. Roosevelt’s gold policy. The local Federal Reserve Board has ordered an investigation into recent exchange dealings, and has requested all members of banks-to submit a list of transactions since the decline in prices started. It is reported that there was much short selling, which is an unusual transaction in the bond business, indicating a desire to depress the market. During the last fortnight the sales of Government securities have been the heaviest for 20 years.