Evening star., 1933-09-21
|AMER|CANSfFOR
| OWN NDOLLAR DOWN
Fear of Initiation Has Sent
Capital to Four Corners
of the World.
BY DAVID LAWRENCE,

BY DAVID LAWRENCE.
American citizens are pounding their
own dollar. The day-by-day headlines
telling that the dollar u weaker" and
is constantly being exchanged for
fewer and fewer British pounds or
French francs have back Of them q
story of flight Of capital unlike any
thing In financial history.
There have been flights OF capital
before, but never when the money Of
the Nation from which the flight oc-
Cured was intrinsically as strong as
the American dollar really is today.
Why. then, is the dollar weak and
why does the Washington administra-
ton wink at the obvious violations Of
exchange regulations whereby Ameri-
can money is flowing abroad? The
answer is that the Government Is ex-
perimenting. while fear Of imitation and
talk OF increasing the number Of dollars
through an issue Of greenbacks have
scared capital and sent it to the four
corners Of the world for safekeeping.
AccPink money ADf010.
Here is what is happening:
Americans owning stocks or bonds
are ordering their brokers to sell these
securities either in Montreal or Lon
oon. and are not bringing back the
foreign currency they get in exchange.
American companies selling goods
abroad and being paid in French francs
or British pounds are keeping their
money abroad. and are not asking that
they be converted into dollars.
american commodities are being
snlpped to people abroad. who are put
tlng them in warehouses and holding
them with the expectation of getting
more dollars Just as soon as American
currency imitation starts 1t is said that
Six and . half times the amount OF
cotton that can be consumed in Europe
has already been shipped there for
storage
There are rules against sending Rold
abroad and currency. too. but the
the purposes for which exchange is
made are so numerous that no close
supervision is being kept over the many
exchange transactions for which Der.
mits are being granted.
Billions Have Gone Abroad.
The Government could stop the flight
of the dollar in so far as the sale of
securities is concerned by some form
OF cooperation with the stock ex-
changes. but this would not affect the
speculation In commodities which is
resulting in accumulations of Ameri-
can balances abroad
1t Is estimated that billions OF dol.
lars nave gone abroad since April
Hoarding Of gold on this side of the
Atlantic Is prohibited but Americans
nave been converting their securities
into gold at London, where the biggest
single hoard Of gold in the world now
Is located. The rise in the price Of
gold itself being recorded from day to
day Is due to the demand of Americans
for gold. which their own Government
denies them. The Bank of France
keeps q record of those who want gold
bullion but in England there is free
market. So Americans are paving a
premium in London for gold in wild
scramble to get the metal and keep it.
Value May Be Doubled.
All this is inconsistent with the spirit
OF what the. Government wants done.
but history shows capital is selfish and
self-interested always and when the
American Government announces that
it intends to cut every dollars gold
content down. perhaps in half, then 1t
Is obvious that some day a single god
dollar OF the old weight may be worth
two dollars IN American paper money.
All currencies held abroad can, of
course. be converted into American dol
lars whenever the downward curve stops
and stabilization occurs.
The danger to these spectators and
frightened owners of dollar is that
some fine day President Roosevelt may
Ill
ment of the dollar are removed and
that q natural level is desired. Experts,
familiar with the flow of gold normally
and the total amount Of god payments
due America from abroad. say that the
dollar would suddenly rebound so high
that it would cause all the shorts to
run to cover and there would be large
losses to these who have sent their
capital abroad For if the dollar grows
strong again. the American owner of
British pounds or French francs will
get fewer dollars back when he comes
to exchange then again for his foreign
holdings.
Capital Plays Safe.
Mr. Roosevelt has not said what the
dollar should ultimately be in value.
On the strength Of imitation talk ard
the devaluatlon powers granted Dy
Congress there is. of course. much un-
certainty. When in doubt. capital PLAYS
safe. American owners Of foreign cur
rencies probably think they can con-
vert quickly before the full effect Of q
presidential announcement Of policy is
known. This is the risk they are TAX
ing. And every export of American
dollars creates q demand for British
pounds and hence increases their
price while at the same time depress-
ing the dollar quotation. for whenever
there are more sellers of any article
than buyers the price goes down.
Americans are thus weakening Their
own dollar
The Government here is bound to
develop soon . definite policy on mon
etary reform. The uncertainty is hurt
ing business and causing apprehension
ernment securities, which were strong
week ago, are turning downward.
Commodities, which used to soar on
talk Of imitation, are not rising. Stocks,
which used to climb few points on
the slightest rumors Of imitation. are
at a standstill and actually losing
ground
Imitation medicine has about run its
course as q remedy for stock prices.
From now on the Government Is likely
to turn its attention to credit expar-
sion as q means of averting the de-
mand for currency imitation and as q
means Of creating the business improve
ment which in turn develops the very
confidence needed to bring American
dollars back home.
tCopyright. 1a33)