Imperial Valley press., 1934-01-30
GOLD RESERVE
BILL SIGNED
BY PRESIDENT
Far-Reaching Monetary Lsgis-
lation Put Into Operation By
Roosevelt's Act.
PROVIDES DEVALUATION
Nations Gold Supply Placed
Under Direct Control Of U. S.
Government.
PROVIDES DEVALUATION
By RICHARD L. GRuDLEY
u. p. Financial Correspondent

WASHINGTON, Jan. 80. (UR)-
President Roosevelt on his Sind
birthday today signed the gold re-
serve act, most far-reaching AM
erican monetary legislation in gen.
erations.
Immediately after signing the
gold bill and thus making it law,
the President and his financial adj
visers went to work on executive
orders carrying out its mandates
for 40 to so per cent devaluation of
the dollar, naturalization of gold,
and creation of $2,000,000, 900 fund
to stabilize United States currency.
WASHINGTON, Jan. 30.-Presi-
dent Roosevelt prepared today to
assume sweeping control of the
country's money as his newest move
toward pulling the nation out of
the depression.
Ready for his signature was the
gold reserve bill passed by congress
at his request, giving him power to
reduce the gold content of the dol
lar to so to so cents of its previous
weight of 1922 grains; to seize $3,-
600,000,000 gold reserves of the fed
eral reserve system; and set up a
$4,000, 100000 stabilization fund with
the profits to carry out the govern
ment's monetary program.
Approval of the bill by the Presi-
dent today was expected to be fol-
lowed by series of executive orders
formally taking title to the reserve
banks gold, setting up the stabili-
zation fund and devaluing the dol
lar to range of SO to 60 cents in
gold from its old value
With the SO 600, 600, 900 gold of the
reserve banks, the government will
have $4,011 900, 900 in gold resources
in its possession, or more than a
third of the worlds monetary gold
stocks. Temporarily the so to 60
cent devaluation will reduce the use
, of this gold to 11.61 to 1893 grains
as backing for each outstanding
dollar from the previous old level of
1922.
Under this plan the government
will assume theoretical profit of
S2,666 100000 to $4,O00,0O0,000 de-
pending upon the final stabilization
of the dollar because that much
gold would be set loose by the re-
duction of the gold content. This
will be bookkeeping operation not
affecting the country's domestic
business except insofar as it pro-
notes rising prices for commodities
the aim of the administration.
Huge Fund Set Up
OF the huge profit realized in this
manner, a S2,000,00O stabilization
fund is set up under the direction of
Secretary of Treasury Morgenthau
to deal in foreign exchange. gold
and government securities in such
manner as to keep the dollar within
the so to so cent gold value.
This fund will trade in foreign
markets either III conjunction with
or in opposition to the British fund
of like amount formed several
years ago to carry out much the
came aims as the American fund
protection of British currency and
domestic prices from foreign in
fluences.
The conflict between the two
funds, if any develops, is likely to
depend upon the course of world
economic developments and the
movement of domestic commodity
prices. A fall in American prices and
resultant rise in the dollar would
likely call for sales of dollars or
purchase of gold by the American
fund to counteract these influen-
ces. Too great rise in prices would
be Softened by the opposite action,
Relatively the same conditions pre-
vail in respect to protection of Bri-
tish price levels by similar action of
the British fund. This may bring
the two funds into conflict in
currency battle"