MONEY CRISIS

Hokitika Guardian, 25 September 1933, Page 5

MONEY CRISIS

1 U.S. GREAT FIGHT PLANS NOW PROPOSED. .United Press Association—By Electric ’Telegraph— Copyright.) WASHINGTON, September 23It is felt in informed Washington circles that the monetary muddle in which the Administration finds itself is rapidly reaching a crisis, with a positive declaration of principle being possible, following on a conference called by President RoySevelt at White House to-morrow -night to discuss the situation with leading financial advisers, including the Budget Director Douglas, Professo r Sprague, and Mr James Warburg. It is no secret but the powerful Wall ‘Street financial community, a s vvel 1 as the President’s -more consevva-te advisers, are urging that positive position on the currency inflation proposals be enunciated immediately. They hold that uncertainty over money matters is retarding long-term investments, which, if lit continues is calculated to retard, if not defeat the N.R.Af programme. The Administration’s recent credit extension schemes, commodity purchases, and loan proposals are held to bo desirable to meet the immediate emergency, but they are not considered fitrong enough medicine to instill confidence In the capital investing class on the one hand, or silence among the inflation -agitators on the other. The majority of those called to the conference, it i s -believed, prefer no inflation at all. However, if some degree of inflation is considered necessary .by the President, "they have a definite plan for immediate and limited action while another plan, it is understood, has been considered-,, and it may be submitted later.

The second proposal, which is not yet formulated in a definite plan, but which is said to have strong Wall Street support, would immediately stabilise the -pound and the dollar through co-operation between London and Washington. It also envisages , the revaluing of the gold content of the dblla r at the present, depreciated 'levels, which is about thirty-five percent. off par. It is pointed out that the gold which the Federal Reserve Bank holds, while it is worth 3,591 million dollars at the old legal standard, has now appreciated to about 5,525 millions of dollars in relation to the gold standard exchange. It believed that with, this -amount of gold as the basis sufficient currency, with a reasonable gold coverage, could -be placed in circulation without restoring “flat” money, o-r arbitrarily halving the dollar’s gold content. Although it is realised that such action might have an immediate deflation effect, many leading financiers believe it to bo superior to the President’s policy heretofore,'"ln which they see -manifold dangers, n ot least of which would be a continued, if not an (increased, flight of capital to foreign countries, due to nervousness on the part of American investors. It is admitted that neither

,pl a .recognises the power of Congress to force broad-scale inflation over the President’s head, but it is believed Mr Roosevelts prestige, and, -as a final resort, his veto powers, would be sufficient to keep him in control of the situation. WASHINGTON, September 22. It is reported that the economic advisers of the Government are giving close study to the methods of controlling dollar fluctuations to the end that “constant purchasing power” and stabilised price levels may be achieved. The subject has been under consideration for weeks with Sweden’s managed currency system as a practical guide, but now Mr Roosevelt feels towards such an experiment has not yet been disclosed. DETROIT, September 22.

It is understood tlrt the Ford employees will work a 32 hours week from next Monday, conforming wi-h the automobile code, which, however, permits 35 hours. Ford’s schedules, hitherto have been 40 hours, and a minimum wage of 60 cents an hour. There has been no move on Fords part to sign the code. He intimated that he will conform strictly to . its reniiiremerifs, but, will register a silent protect against features distasteful to his economic theories,