Evening star., 1934-02-04
BY OWEN L. SCOTT.

Two billion American dollars are
about to embark on an adventure such
as no dollars ever before have had.
They are to 60 out into the money
markets Of the world and fight to
make all dollars cheaper.
Many of these $4,000, 900 ,000-serv-
ing as part Of the Treasury's stabiliza-
ton fund-may be lost. If so, they
will be regarded as casualties in the
struggle to rid this country of its farm
surpluses, and then to bring much
higher prices within the United States.
Officials are sure that their sacrifice
then will not have been in vain
Or. what causes some worry in
Washington, these new dollars may
prove too successful In their tussle
to keep the dollar cheap in terms Of
pounds and francs and other curren-
cies, they might open the way for an
thrush Of q vast number Of newly
created credit dollars that would blast
the United States into another infa-
ton boom
Or, as another possibility, and one
hoped for here, the stabilization dol
lars may force q truce in the cur
rency battles that have been under
way through much of the world dur
ing the past two and one-half years
President Roosevelt let it be known
on Wednesday that conversations
leading to such truce might occur,
but if so they will be unheralded.
xx
Whatever the eventual effect, Wash
ington officials are agreed that the
$4,000 100000 stabilization fund will
engage in highly interesting adven-
ture. A searcher for information
about these possible experiences learns
q number of things.
One Is that the British equalization
fund and the American stabilization
fund-which now are eyeing each
other suspiciously-have essential diff
ferences. These may play part in
their maneuvers and in their effects.
Another is that the gold-standard
countries, France, Belgium. Switzer-
land and Holland, can upset the whole
stabilization struggle simply by going
off the gold standard.
A third Is that real concern exists
in responsible quarters that the use
of this huge fund might give this
country q credit imitation boom that
not only would blast the country out
Of one depression, but would drop 1t
back into another.
The original stabilzation fund was
created by Great Britain soon after
4R ~
ard in September, 1881. Her fund,
known as an equalization fund, start
ed out with about $800.000,000. Since
then 1t has been increased to about
$1,000 100000.
It was created out of British gov
ernment holdings of dollars and francs
and funds appropriated by Parliament.
The purpose, so the explanation ran,
would be to use this fund to free
sterling from the shocks that might
come as frightened capitalists of va
rious countries tried to find a safe
place for their holdings.
Thus, If American capitalists be-
gan to be concerned about their dol
lars, they would send them to Lon
don. The British equalization fund
would sell them pounds and take their
dollars. Then 1t would turn these
dollars into gold and take the gold.
The same thing applied to French
capitalists or other capitalists. And
II British owners Of capital became
concerned over the pound. the fund
would sell them dollars or francs or
other currencies and take their
pounds.
In other words, the equalization
fund became a sort Of clearing house
for pounds. It tended to relieve Brit
tsh trade Of the shocks that come
from q money fluctuating wildly in
terms Of commodities.
Everything went smoothly until the
United States left the gold standard
and set about deliberately to lower
the value of the dollar. Then it be-
came hazardous for the British fund
to buy dollars, because those dollars
could not be turned into gold. The
fund contented itself with keeping the
pound stable in terms of the French
franc, which was tied to gold.
But the United States since then
had its troubles, too. It wanted to
push the dollar down to the point
where 1t now takes S35 to buy an
ounce Of gold, instead Of the $2o.e7
which formerly sunced to pay for the
same ounce. That Is the 5e06-cent
dollar.
But to hold the dollar down around
that level In terms Of gold standard
French francs, the American Govern
ment had to sell so many dollars that
It became embarrassing. So now 1t
is devaluing the dollar-formally cut
ting its gold worth. That operation
gives. as If by magic. new dollars IN
the amount Of $2,792.87s. 900. They
are dollars that did not exist before.
Two billion Of these dollars, pulled
out Of thin air, 60 to make up the
stoh}1}zot1op tYnd 1vhA difference hA,