MILLIONS OF NEW CREDIT

Timaru Herald, Volume CXXXVII, Issue 19511, 9 June 1933, Page 7

MILLIONS OF NEW CREDIT

UNITED STATES LEADS IN INFLATION

PLANS FOR REVIVAL OF NATION’S WORK United Press Association —By Electric Telegraph—Copyright WASHINGTON, June 7. The Treasury has announced the issuance of 900,000,000 dollars in Treasury notes and certificates to meet maturing obligations and to pay interest and provide funds for emergency purposes. BENT ON INFLATION. POLICY OF ROOSEVELT ADMINISTRATION. The Roosevelt Administration is avowedly bent on inflation, not imaginary, but real. The mere anticipation of its programme has already driven the American dollar to a discount of 16 per cent, below gold. With the nation thus on the brink, Mr Roosevelt’s advisers realise that they must effectively control exchange, and an international agreement on this subject may be achieved at the World Economic Conference in London. Sober minds in Washington realise that a sudden erratic drop in the dollar might bring a definite shock to confidence, or a wild, inflationary outburst, or both. For these reasons the achievement of effective stabilisation is a cardinal feature of Mr Roosevelt’s coming campaign. It is an interesting fact that Britain and the United States are by no means agreed as to the proper rate of exchange between London and New York. Unless the question of war debts is settled first, Britain will not rest content with four dollars to the pound. If Washington attempted now to stabilise exchange at four dollars to the pound, it would have to reckon with London. The American dollar, at its present exchange level, is generally conceded to be under-valued, and it is difficult to see how it can be held there in the face of resistance from abroad, unless its real value is reduced by real inflation. The Foreign Affairs Committee of the House of Representatives passed a resolution last week requesting that American delegates to the Economic Conference should be instructed to work for the stabilisation of international exchanges by “striving to secure an international agreement for the coinage of gold and silver at a definite fixed ratio.” A similar resolution, tabled the previous week, specified a ratio of 16 to 1.