Evening star., 1933-06-29
|PARLEY MENACES
| U. S. HOME POLICY
Repercussions to Gold Crisis
May Be Adverse to
Price Boosting.
BY the Associated Press.

LONDON. June 29.-The United
States faced a serious dilemma today
in the effort to save its domestic policy
from collision with the foreign situation.
While still hesitating to stabilize the
dollar in view of the severe reaction
on American markets resulting from
the stabilization trial balloon . fort
night ago. the Americans were warned
that a further drop in the dollar would
dislodge other currencies from gold,
which might also have adverse roper
cussions at home
1t was pointed out that fall Of the
continental countries from gold would
be likely to bring a quick rise Of the
dollar in terms Of otner currencies, and
there has been tendency for markets
to decline when the dollar rises.
Dollar stabiliZation has also brought
selling into the markets by SPECTATORS
feeling that it was a signal that de-
probation had reached its limit.
Care Held Essential
Important Americans expressed the
view that under the circumstances tho
effort to prevent foreign developments
from interfering with the American IN
ternal program had reached the point
where careful handling was essential
Some American sources had hoped
that a moderate degree of stabilizatlon
could be achieved early in the con-
ference without any fanfare OF publicity.
but it was found impossible to act
quietly in the glare Of great world
conference.
Repeated rumors have been heard in
London financial quarters that the chief
central banks had reached gentle-
mans agreement to prevent cratic
fluctuations in exchange, but the recent
slumps in the dollar showed no such
agreement had taken effect.
While the American representatives
have made 1t clear from the first that
sterilization was their ultimate ob1ec-
tive. the question Of the time to take
such a step has remained undecided.
The American official view from As
sistan. Secretary of State Raymond
Moley is that most Of the recovery IN
prices at home has been based on q
fundamental business recovery rather
than on fear of imitation. In this con-
nection it is emphasized that no none
tary imitation of any sort has actually
been made effective. Nevertheless, the
psychological effect of the knowledge
that the administration has inf1ationary
powers has been a factor in the rise
in the markets.
Disagree on Devaluation.
The question now arises whether the
administration may use certain OF its
inflationary powers to solidify the posi-
tot IN, ho
larly whether the dollar should be de-
valued in terms Of gold to the level to
which it already has fallen in the
international markets.
Economists and experts have shown
wide disagreement on this point. Sew
eral feel that gold devaluation may not
ultimately be necessary. Others urge
the advantages of a revaluation which
would greatly increase the effective
supply of monetary metal and should
have the lifting effect upon the world
price level that discoveries Of large
new gold deposits have had in the past.
Even among those who favor gold re-
valuation, however, there is considerable
disagreement as to whether it could be
undertaken at this time or whether it
should be done later after the proper
relationships Of the currencies have
been found by experience.
There IS strong feeling among some
Of the Economic Conference leaders,
including Americans, that it Is fortu.
nate that financial experts and finance
ministers of the great world powery
should be gathered in London at this
critical time to deal with the situation.
But other delegates, particularly the
French-and some Americans as we'll
feel that the conference has been called
at bad time and should reassemble
after currency problems have been clar-
fled
Each Out On q Limb.
For the moment the situation Is 50
complex that each Of the big powers
of the conference finds itself out on .
limb. and all Of them are struggling to
get back to the trunk.
The Americans must decide on the
consequences to themselves il they
stabilize or do not stabilize; the French
must decide whether to try to stick to
rigid gold standard program or fol-
low the American reflationary program:
the British are struggling vainly to
keep to the middle of the road, with
the knowledge that they must take
more definite action to preserve the
current stabilization Of the pound with
the French franc or to hook the pound
to the dollar
The British situation is particularly
confusing. The drop of the dollar, they
fear, will hurt their foreign trade by
bringing American goods into more
severe price competition in world mar
kets.
But if the British discontinue sups
port Of the gold standard countries. the
franc and other gold monies might de-
preciate in terms of the pound, and
British trade thus would lose the ad-
vantage on the continent Of the drop
in the pound in the terms of those
currencies since the pound was pushed
from gold
The gold standard countries are fear>
full that their position will become un>
tenable II the dollar and pound both
decline. but they face grave political
consequences at home If they permit
devaluation - their own currencies be-.
cause of the fears of their people cone
cerning imitation.