Evening star., 1934-02-01
j. s. ON 1884 MODEL
BULLION STANDARD,
MORGENTHAU SAYS
Secretary Asserts Operation
of s2,000,0 100000 Fund
Will Be Strict Secret.
DESTRUCTION OF FEDERAL
RESERVE SYSTEM is SEEN
Prof. Fisher Makes Statement at
Hearing Before House
Banking Body.
By the Associated Press

By the Associa ted Press.
The United States was described today
by Secretary Morgenthau as being on a
1894 model of gold bullion standard"
as a result of the dollar devaluation
program which netted the Government
a 2,7929405l7 profit.
He made this statement to reporters
as Prof. Irving Fisher of Yale testified
to House Banking Subcommittee that
the existing Federal Reserve System
will now be lucky if it escapes de-
struction altogether"
Fisher urged creation of a Federal
monetary authority with sole currency
Issuing power.
>~Morgenthau refused to discuss oper-
alton of the $4,000 5000 stabilization
fund created out of the devaluation
profits Its use is to be kept strictly
secret.
These developments followed an order
OF President Roosevelt late yesterday,
which devalued the dollar by 4094 per
cent of its former gold content. the re-
valuation being set at .06 per cent.
Early official indications were that
the stabilization fund also provided in
the order would not at once be welded
drastically.
Signs Gold Proclamation.
The first step was taken at $40 pm
yesterday when the Chief Executive
signed the proclamation cutting the
dollars gold content from 25.8 to
Is 5-2l grains of gold nine-tenths fine.
The next went into full swing today
shen the New York Federal Reserve
Bank, acting for the Treasury. offered
S35 an ounce for gold and was pre-
pared to buy or sell on Washington's
order.
Morgenthau expanded the gold pur-
New York Federal Reserve Bank will
buy imported gold bars. The bank is
acting as the Treasury's agent.
The secretarys new order said:
Beginning Thursday, February I,
1884 and until further notice. will
buy imported fine gold bars through the
Federal Reserve Bank of New York as
fiscal agent of the United States. and
other gold, foreign or domestic. through
any United States mint or the United
States assay Offices at New York or
Seattle, both at the following rate and
upon the following terms and conditions
deemed by me most advantageous to the
public interest:
Purchases at S35 Rate.
purchases will be made at the rate
of S35 per fine troy ounce. less the
usual mint charges and less one-quar-
ter of per cent for handling charges.
all subject to compliance with the re-
situations issued under the gold re-
serve act of 1894
M0rUenthan'S Statppopnt issued
in response to a flood of queries from
banks as to whether the Government
would buy from them at S35 an ounce
any gold they should import.
The Treasury said the phrase fine
gold bars" means gold bars of a fine
ness of .899 or finer such as are ordl-
narily used in the settlement of inter-
national balances, carrying a recog-
nized stamp indicating the weight and
degree of fineness The mints will pur-
chase imported gold in other conditions
such as unrefined gold and gold in
other forms than in stamped bars,
along with domestic gold.
Regulations as to boarded gold were
unchanged.
The international gold bullion
standard angle was explained as
meaning that for the first time since
March, this Government is willing to
ScIJle ulJ6TtdllOIldl thCIldIlSt
in gold.
Here are some of the results hoped
and looked for by administration ex-
perts as outcomes of the new move:
world gold price at the s35-an-
ounce level:
A rising response in commodity
prices beginning with the export group
of commodities and spreading gradu-
ally to others;
A firmly fastened exchange ratio be-
tween the dollar and the French
franc-a gold standard money-which
for a while will necessitate little gold
movement between New York ana
Paris
A variable ratio between the pound
and the dollar depending chiefly on
what England may do with her equal
ization fund;
Conservative employment of the
Treasury's $4,000 600 900 stabilization
fund
Hope for International Pact.
The administration also hopes event.
ually for an international stabilization
agreement. No signs of it have yet
appeared, however
Between the United States and Great
Britain and the United States and
France-the nations this administra-
ton considers essential to any inter-
national money agreement-one expert
used the simile of a stick to describe
the new exchange situation.
THE stick between here and France
Is fastened" he said, "but the stick
Joining us with London may move,
depending on what England does
Another official described the new
dollar as having "a roof and floor
of 5e.o6 per cent" but he emphasized
this could be changed at any time by
another executive order.
President Roosevelt announced his
devaluation proclamation at crowded
press conference. Among the i'm
portant phrases he employed we're:
Il find upon investigation that the
foreign commerce of the United States
is adversely affected by reason of the
rencies of other governments in rela-
ton to the present standard value OF
gold and that an economic emergency
requires an expansion of credit. .
Il find from my investigation that in
order to stabilize domestic prices and
to protect the foreign commerce against
the adverse effect Of deprecated foreign
currencies, it is necessary to fix the
weight of gold dollar at Is 5/21 grains
nine-tenths fine.
not altered or affected in any manner
by reason of this proclamation
Shortly afterward. Secretary Nor
eenthau announced he would sell gold
for export to foreign central banks
whenever exchange rates reached the
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