Evening star., 1933-08-16
DOLLARS UHURN
WATCHED ABROAD
Accompanying Loss in Price
of U. S. Staples Checks
Recovery Aims.
BY GEORGE T. HUGHES.

Special Dispatch to The Star.
=. NEW YORK, August l6.-The recov-
cry of the dollar in terms of gold has
been obscured by the interest in the
wheat situation and In the progress OF
the N. r. A., but 1t is compelling at
tention.
The low point of the United States
unit of currency was touched on July
10, Just when the stock market was on
the point of breaking, as it did later
that week. On that day. measured by
the quotation for the French franc. the
dollar was worth 688 cents in go4
This was depreciation from par of
3l.2 per cent.
At today's level for the franc, the
dollar is back to approximately rs cents,
or a depreciation of rs per cent. The
rallying tendency has been IN evidence
more in the last two days than at any
time previously during August.
The depreciation in the dollar Is arti-
ficial in SO far as it Is not a response
to trade movements More money Is
owed to the United States than the
United States owes to other countries
and the visible balance Of trade Is In
favor of the United States.
Two Factors Important. -.
fhe depreciation is due, first, to spec
ulation for the decline on the part OF
European operators - speculation
which obviously Is not distasteful in It's
results to Washington. for that is what
Washington wants-and partly to the
flight of capital from America.
This transfer of capital is effected by
the sending of securities with an inter-
national market to the other side and
turning them into sterling or francs
and leaving the proceeds there. 1t is
accelerated by the refusal Of exporters
to bring home sterling and francs OBJ
tanned by sale Of American goods
abroad
Now this speculation. this transfer OF
capital and this disipclination to bring
home proceeds Of goods sold in Europe,
are all based on the fear that the
dollar will be legally devalued. as 1t Is
within the power of the President to
do under the Thomas amendment to
the farm relief act.
incidentally, large bear" account
has been built up in the dollar IN
the continental centers. With the sea-
sonal demand for dollars abroad max
ing itself felt and speculation having
for the moment Matted and no further
transfer of funds being in progress, the
dollars gold value is rising
United States Plan at Standstill.
All of which brings up for imme-
diate consideration how much OF the
recovery in equities and in commodi-
ties has been due to the decline in the
gold value of the dollar. For various
reasons the commodity markets have
been reacting and the plan to raise
the price level to the pre-war average
Is making no progress.
The stock market has come to a
standstill That does not give the ad-
ministration so much concern, 1t may
be confidently assumed, as the setback
in the price of staples. What, then,
will be the next step? Will the Gov
ernment interpose to check the recovery
In the dollar and what means will be
adopted If that is the decision? On
the answers to these queries specula-
ton waits.
The French have long been fearful
that they would be forced of the gold
standard sooner or later by the de-
preciating dollar That also has been
the peril visualized by the Dutch.
Anxiety in both Paris and Amster-
dam has been lessened by the recent
course of the exchanges and Monday
the Bank of Netherlands cut its dis
count rate from 3l12 to per cent, tndi-
eating that for the present at least
there is no concern about the guilder
being forced off gold.
(Copyright. 1893. by North American News
paper Alliance. Incl