Evening star., 1933-10-30
WORLD INITIATION
RACE IS FEARED
Dangers of Three-Cornered
Contest Realized by
Wall Street.
BY CLAUDE A. JAEGER,

BY CLAUDE A. JAEGER.
Associated Press Financial Editor.
NEW YORK, October 30.-A switch
from passive to aggressive control of
the value Of the American dollar Is
seen by monetary experts in President
F. c. will extend Its gold buying to for
eign markets
The distinct possibility of a gigantic
three-cornered international contest in
the world money markets among the
United States, Great Britain and
France Is noted by some Wall Street
observers. One economist sees signifi-
canoe in the fact that this step was
announced while the British war debt
negotiations were still in progress.
SO far as the United States is con-
cerned, as the new Washington none
tary policy was interpreted here, it is
not interested in the foreign gold itself,
but is determined to reduce the pur-
chasing power of the dollar, and to
whatever ;na tHna; extent this necsssitates buy
to buy it. % The American % naR gold dfoRosss s5oek
however. approximately some $4,323,-
100000, Is already more than a third
OF the worlds monetary supply.
Dollar Unresponsive.
The experiment of the last weeks of
posting a price for newly mined do
mestic gold independent Of the world
market has found the dollar unre-
sponsive in foreign exchange dealings.
While the dollar price of gold has been
boosted approximately per cent for
French franc, have advanced only
about per cent.
1t appears, therefore, that the United
States must sell dollars in the foreign
exchange markets 10 reduce the ex-
cnange value Of the currency, and buy
ing gold in London, for instance, would
teno 10 accomplish this, since selling
pressure against dollars would result
as collars were offered in exchange for
sterling to pay for the gold.
SO far as Great Britain is concerned
any sharp depreciation of the dollar
would be expected to bring retaliatory
measures. An unofficial warning that
such measures would be taken was made
oy Sir Robert Horne, former chancellor
OF the exchequer, In an address before
the New York Bond Club only last week
Great Britain is believed in interna-
tlonal banking quarters here to be de-
termlned for the protection of her posi-
tlon IN world trade to prevent the pound
from going above its old parity with
the dollar. 1t was not far from that
ieVei at the close of dealings yesterday.
Restrictions Likely.
In some financial quarters II Is felt
that an international currency contest
would quickly end free gold markets in
any important country and bring world
woe restrictions on currency dealings
winch would mean the end of the inter
national gold standard as it has pre-
Viously existed Chaotic international
monetary conditions would be likely to
result, according to banking opinion
mere, and hope has been expressed that
such situation will be avoided
On the other hand, few econom-
lsts' including John Maynard Kevnes of
England. have recommended a general
abandonment of the present gold stand
ara and general revaluation of curren-
cles or gold as way out OF the present
world economic situation.
Keynes writings along these lines re-
celved considerable attention from some
quarters IN the American delegation to
lhe World Economic Conference in Lon
don last Summer.
The chief source Of newly-mined gold
o0utn AFRICA. which sells to the free
market In London. American buvino
of that gold, it was pointed out here
might tend to depress the American
dollar to an extent that would lead
London to retaliate by a virtual ending
OF It's free market England already is
OH the gold standard so the metallic
reserves OF the Bank of England now
restored to close to 81 900. 900 900. can
not be tapped unless the bank is will
ing to sell.
France Threatened.
France, with its new stock of metal
approximately $3,30O,O0O.O 900. must sell
gold freely on demand as long as she
stays on the gold standard. but with
her present budgetary crisis and the
French popular fear Of imitation inter-
national banking quarters are inclined
TO doubt that any large outflow of her
metal would be permitted.
France could go off the gold stand
ard and maintain the value Of her cur
rency through restricting exchange
operations as Germany Is doing.
But under present conditions, for
eign exchange dealers here believe it
would probably not be necessary for the
United States to buy any large quantity
of gold abroad to keep the dollar down
so long as depreciation of the dollar
were not opposed
Opposition to the move, it was ex-
pected, would mean huge American
gold imports. which Europe presum-
ably does not want, or would mean Sc
we're restrictions upon foreign exchange
dealings in addition to those already
existing, which, it IS felt here, London
would be reluctant to see. in view Of
her pre-eminence as an International
banker and England's vital stake in
world trade.
The most obvious form of retaliation
which foreign countries would be likely
to take to further depreciation Of the
dollar, banking quarters pointed out,
would be further lifting of tariffs
and restrictions against American
goods.