PROTECTING THE DOLLAR

Poverty Bay Herald, Volume LXI, Issue 18386, 2 May 1934, Page 5

PROTECTING THE DOLLAR

£400,000,000 FUND

USE FOR GOLD PROFITS

WASHINGTON, April 30,

In a somewhat ambiguous announcement of its policy to-day, the Treasury Department revealed that a £400,000,0GU fund had been allocated to protect the dollar abroad.

It appears that this is merely carrying out the idea proposed when the uoilar was devaluated on January 31, but not then put into effect. Of the fund, £360,000.000 will come from the

"profit” on gold revaluation, and the remainder will merely be placed to the credit of the Federal Reserve bank, which will handle the operations.

It is understood that the fiscal authorities have no intention of using the money unless it is necessary to.protect the dollar, and are confident that the establishment of the fund wifi have the desired effect.

It is pointed out that the original fund aimed at keeping the dollar depressed, but as several times recently it dropped to parity with gold standard currencies, they now wish to prevent undue depreciation.

Some observers interpret the creation of the fund as the first move in the establishment of a. permanent monetary policy, although Congress granted- the President power for two years to manipulate the dollar. CREDIT INFLATION WARNING BY BANKERS WASHINGTON, April 24. The Federal Reserve Board issues a warning tlfa't the huge expenditure under President Roosevelt’s - “new deal” and his monetary policy are driving the country towards an orgy of credit inflation. The board states that £300,000,000 of idle cash is piled up in the banks by the outpouring of Federal casymoncy and the devaluation of the dolls r. The country should be forearmed against a devastating wave of inflation when these huge stores of idle cash anil credit rush back into business and speculative channels.

As an antidote the hoard urges Congress to revise the banking reserve requirements so that they may increase automatically with speculative activity, thus putting the brake on any spurious ‘boom. GOLD PROBLEM FOREIGN PURCHASERS WASHINGTON, April 21. Now that the flow of gold into the United States has ceased, there is every prospect of it going abroad again this .week in order to bolster up tiie dollar.

Already the dollar is selling at such a discount in Paris that international hunkers find it profitable to buy gold in New York and ship it overseas. The Secretary of the Treasury, Mr Henry Morgenthau, . believes the French, with the idea of draining gold from America for their own Treasury, have been spreading reports that President Roosevelt will further devalue the dollar soon. At the moment, the Washington Administration is in a position that requires delicate political diplomacy.