BANKS’ SCHEME

Taranaki Daily News, 17 June 1933, Page 7

BANKS’ SCHEME

DOLLAR AND STERLING STABILISATION PROPOSED ‘ GENTLEMEN’S AGREEMENT ’ FRANCE PLEDGED TO ASSIST NO EARLY RETURN TO GOLD By Telegraph —Press Assn. Copyright. Rec. 5.5 p.m. London, June 16. “It has been definitely decided that the Bank of England and the American Federal Reserve Bank will conclude a gentleman’s agreement for the temporary stabilisation of the sterling and the dollar,” says the Daily Mail. “The rate is still undecided, but probably it will be 4.05 dollars to the pound, compared with the original par of 4.86. , _ . . “M. Moret has pledged the Bank ot France to aid both England and America to maintain the agreement, thus enabling pre-stabilisation, which was a necessary prelude to a final stabilisation based on a new gold content of the sterling. “The gentleman’s agreement does not mean that either the sterling or the dollar will be linked to gold,” says the News-Chronicle. “It is doubtful whether the figure at which the exchange is stabilised will be announced. There is no indication that the American representatives can guarantee that America will not be forced to devaluate if stabilisation checks the inflationary boom. “Mr. Chamberlain is informing the market that he does not wish money to leave England to purchase American securities, thus extending the Treasury ban. It is not intended to interfere with dealing; in American shares already held in Britain, but unless market arbitrage difficulties are overcome the London prices of American shares wiU be divorced from New York’s. , . ~ “The Chancellor is seeking the cooperation of arbitrage dealers but Ike request has not the force of law. Mr. Chamberlain’s request to the market suggests that the authorities realise that the pound is at present over-valued, to the detriment of Britiri. exports, and suggests that Britain made a rash bargain in an endeavour to patch an awkward failure at the outset of the conference to reach a durable agreement. “Mr. Chamberlain’s statement should completely reassure anxious souls apprehensive lest the British should be rushed into a premature return to the gold standard,” says the Times in. a leader. “Few will cavil at the British decision to remain off gold until there is a reasonable certainty of stability of exchanges and a higher price level. _ “Debtor primary producing countries have only too much reason to know that the post-war gold standard has become an India-rubber footrule. Many of Mr. Chamberlain’s conditions for a return to gold are incapable of early fulfilment. The real merit of the statement is that it clears the air and enables the delegates to concentrate on approximate stability between the principal currencies, also on measures to secure the conditions necessary for the re-establish-ment of an international standard.

STATES DENIES AGREEMENT.

MUST BE MADE AT WASHINGTON.

Rec. 7.45 p.m. Washington, Junes 16 The secretary to the Treasury, Mr. W. Woodin, in a formal statement tonight said that the United States Government had not agreed to any stabilisation of the currency. He stated that such reports from London could not be founded in fact. “The discussions in London with regard to the subject must be exploratory only, and any agreement on the subject will be reached in Washington and not elsewhere,” he stated.