CAPITAL EXPORT.

Star (Christchurch), Volume LXVI, Issue 20503, 3 January 1935, Page 7

CAPITAL EXPORT.

Restriction Removed in U.S.A. (By PAUL MALLONM WASHINGTON. November 30 Tlie most important step taken by the Administration lately to inspire confidence was hidden within that little squib handed out by the Treasury announcing the abandonment of restrictions on the export of capital. It did not cause a handclap out in the country, because the real significance was hidden under a lot of financial verbiage, but it made a detonation in the right places. What it meant was that the Treasury now is confident, whether you are or not. It proved that the Administration was at last ready to let Government bonds and the dollar stand on their own feet, against foreign investments and foreign currencies. Alao, it was a temporary assurance against further dollar devaluation. In simple words, it was the action which at least jiartiaily proved President Roosevelt's words in Mississippi: ‘‘All is well.” “If You Know of a Better ’Ole.” The Treasury order really told large investors, and. in fact, everyone else: “All right, if you think there are better investments abroad, if you are afraid of our money and our bond 8 , go ahead and ship vour capital abroad. We think the dollar U just as stable as foreign currencies, and. therefore, we see no need for restricting the export of capital.” It could not have said that if further dollar devaluation were contemplated, private capitalists could an up a neat profit by sending their money abroad now without restriction and bringing it back after devaluation, getting mora dollars for it then. The Treasury could not afford to lay itself open to encouraging sxioh speculation. It would have had to withho’d the order if dollar devaluation were in the picture for the near future. The Only Hitch. The only hitch in the guarantee is that it is not permanent. The Government can damp down the restrictions again at any time. Also, it is true that the restrictions did not materially impede the flight of capital when they were in effect, because there were ways of circumventing the rules. Few know it. but the Treasury did not veto a single request for shipment of capital abroad while the restrictions were in effect. The rule was more of a red tape deterrent than anything else. The flight of capital has not been very important since last January. At one time money was going into Canadian stocks and bond* at a rather rapid clip, but the exodus did not last. Bonus and Congress. The inside bonus news will not inspire much confidence. The administration surveyors of Congressional sentiment are convinced they are licked. All they can hope for is a compromise, and they (meaning, chiefly, Senator Pat Harrison) arc pushing plans for a compromise strongly. Harrison's compromise is supposed to lie based on the old Garner bonus plan for payment only of those who need the money, and for cancellation of interest. —N.A.N.A. Copyright.