Evening star., 1933-10-31
MOVE TO BLOCK
U. S: PLANS LIKELY
Britain and France Expected
to Set Up Defense of
CurrenCieS.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, October 31.-The logic
of events, now that the second step
has been taken in the effort to de-
preciate the dollar and raise the do
mestic prices of commodities, Is for
Great Britain to defend her currency
and for France to 60 of gold and
put up an embargo against shipments
of it-in other words to "sterillZe" 1t.
Following this second part Of the
monetary program, which, having failed
OF its purpose. every one says today
was not the proper way> to go about
depreciating the dollar. the common
opinion among bankers and economists
Is that the Government gold opera
tions abroad also will prove disappoint
ing. This has been the immediate
judgment of Wall Street. where the
barometer of security prices is held to
be more correct than that Of quotations
for commodities.
Confusion worse confounded exists
among business men whose trade is
with foreign countries. It was difficult
enough two weeks ago to make COM
mitments in which forward contracts
in exchange were involved. Even more
complex was the problem of the i'm
porter or exporter when the admins
tration began to buy gold above the
world price. Now he throws up his
hands and resigns himself to the posi-
tion of an onlooker until some order
comes from the existing condition of
currency chaos.
Speculator Is at Sea.
The speculator in securities is more
at sea than he has been at any time
since the United States went off gold.
All Of his premises have been found
inaccurate. Markets go in the opposite
direction from that on which he had,
by orthodox reckoning, depended for
his profits. What he sees most clearly
Is that the unsettlement of the cur
rency and exchange markets Is having
a serious effect on business and that
the profits of corporations on which he
latterly had depended for a rise in
common stocks are steadily shrinking.
The threat of currency imitation as a
last resort, if the present processes do
not work. apparently has ceased to be
a factor in his calculation. What he
can understand is that the business
index is falling at a time when it had
been expected to rise.
One of the inconsistencies is that
common stocks and high-grade bonds
are moving in the same direction when
they should be taking opposite trends
1t may be said, however, that the latter,
and especially Government loans, have
held their ground much better than
most specialists in them predicted a
week ago.
The belief among bankers is that it
will be only short time before both
Great Britain and France will take Of
fetal action that will negative the effect
Of the purchase of gold in foreign
fhrnl1oh 10 ,cf,
Finance Corporation. London will not
permit any radical advance in sterling
which would enlbarrass her in her
movement toward increased foreign
trade and expanding employment.
Pact Held Necessary.
France will not allow this or other
countries to drain her of the gold which
she has been accumlating for the last
five years. In the event of such an
impasse, it is expected that an under
standing will be reached by the three
nations involved that will lead to in
ternational stabilization.
The natural effect of American pur-
chases of gold abroad at the high prices
quoted here is to start a movement Of
funds from Europe to the United States. !
bear down the exchange price of gold
and lift the dollar. great many per-
sons believe that under such a pro-
gram the dollar would show surprising
strength. though probably it would not
get to par.
The balances abroad to the credit of
American capital are most substantial.
Whether correctly or not. owners of
capital have regarded London as the
safest place in which to commit it dur
ing the period Of suspicion of the value
Of the dollar or the franc. A British
statesman recently said that one Of the
major problems of his government was
'the food of unwanted money that is
pouring into our banks" These funds |
are subject to quick withdrawal as cir |
market just as uneasy as did the call
loans in New York in 1929. The bal !
ances are estimated a. from $500 900 900 !
to $1,000 900 900 for American account |
and $4,000 900 600 for the account of |
American and European capitalists |
combined.
One of the interesting theories is that !!
the foreign private debt in dollars OF |
over $4,000 900 900 is closely tied in !
with the general scheme of dollar de-
probation. To confirm this 1t is in
stanced that Sweden has lust an !
nounced refunding Of her S3O.o00.oO0 ;
external 512 per cent dollar loan into /
an internal loan with a 81 per cent !
coupon payable in kroner. This. in ef- !
feet. amounts to paying off this loan
with about 65-cent dollars.
(Copvrirht 1g33)