U.S. BUDGET PLANS

Hokitika Guardian, 14 December 1933, Page 5

U.S. BUDGET PLANS

THEIR EFFECT ON INFLATION

LARGE RESERVE IN GOLD

(United Association —by Electric Telegraph— Copywgnt.)

WASHINGTON, December 12

'Consideration of the Federal Budget for the fiscal year of 1935 is attracting much attention in view of the reconvening of Congress less than a month hence. President Roosevelt conferred with hfs fiscal advisers touay, including Mr Morgenthau and the budget director, Mr Douglas.

It is understood that their chief concern is to bring the so-called ordinary budget into- a balance, and, at the same time, to keep the extraordinary expenditures—that is, the emergency relief expenditures—within reason. It is universally recognised that the success or failure of such aims will be an important factor in the inflation controversy, as a failure to maintain the Government’s credit would be regarded as a sure patch to inflation) "While the inflation debate has continued to absorb statesmen and economists, the Federal Reserve Bank figures disclosed on Tuesday that the system had sufficient gold resources to increase the currency now in circulation by more than 50 per cent, without i resorting to any inflationary measures. It was described as ready to do this as rapidly as a new note issue coukl be pushed as a now note Dels of industry and commerce. The difficulty is that the outlets are clogged. Loans by the member banks were shown to be continuing at a low level, with consequent small demands by the. latter upon the Federal Reserve Banks for cash. The member banks’ deposits were high. By utilising all of the eligibe resources, the Federal Reserve figures showed, it could issue nearly three billion dollars in new Federal reserve notes, every dollar of which would have a gold Decking above the 40 per cent required by law.