Evening star., 1934-01-15
ROOSEVELT ASKS
TO TAKE ALL GOLD
Message to Congress Urges
Dollar Retaliation
Authority.
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Authority.
Continued From First Page.l
direction"
The plan for a managed dollar" re-
vealed by the Chief Executive, If 1t is
interpreted as such, is somewhat in line
with the managed pound" Of the Brit
years. during which Britain has main
tanned a "stabilization fund" to control
the pound.
Under existing law the President is
authorized to fix the lower limit Of per-
missible revaluation of the dollar at
SO per cent. The President said, in his
message:
Careful study leads me to believe
that any revaluation at more than go
per cent of the present statutory value
would not be in the public interest. I,
therefore. recommend to the Congress
that it fix the upper limit of permis-
sible revaluation at so per cent"
Under such provision the President
would be left free to revalue and sta
bilize the dollar at between so and 60
per cent OF its present valuation. This,
in effect, is a 10 per cent leeway. He
could revalue the dollar at 81 per cent
or SO per cent, but he could not 60
higher than 60 per cent nor lower than
so per cent.
The $4,000, 900 900 fund which the
President proposes to set up out Of the
Government profit from the 'revalua-
ton of the dollar would enable him to
exercise broad powers for the stabiliza-
ton of the dollar for dealipg with for
eign exchanges and for maintaining
the credit of the Government. 1t Is ex-
planned in this connection at the White
House that it might become necessary
for the Government to 60 into the bond
market should efforts be made by in
dividuals In this country for one rea-
son or another to force down the value
of Government bonds. With such a
fund at hand it WOULD be possible to
check such attacks on the value OF
Government securities.
Plan Long in Prospect.
In the Spring of last year things be-
gan to go too fast in this country,
under the impetus Of the recovery pro-
gram, with prices increasing rapidly.
Manufacturers over produced, as in tex
tiles and steel, in the hope Of obtain
ing advantage OF the prospective In
creased prices and to get ahead of the
operation of the N. r. A. codes. As a
result there was a depression in prices
in July and In September a drift Of
operations of opponents of the N. r. A.
and Of foreign countries, who were seek
ing to offset advantage to American
commerce through the revaluation of
the dollar. BY October 10 wheat had
gone to 81 cents and cotton below
cents. 1t was then that the admins
tration adopted its policy Of making
purchases OF gold at higher prices.
The plan presented to Congress by
the President today was already in
prospect at the time that the policy Of
purchasing gold was inaugurated.
The profit to the Government In the
revaluation of the dollar will come
about simply. The Government will
take from the Federal Reserve banks
their gold. 1t will issue to the banks
gold certificates for an equal number
OF dollars now represented by gold in
the banks. These certificates, however.
Will not state the gold content Of the
dollar. The Government will have
possession Of the gold itself. When it
reduces the gold content Of the dollar,
obviously the gold held by the Gov
ernment will appreciate just that
much in terms Of dollars. The mum.
Der OF dollars in the banks of the coun-
try Will remain the same as before.
The Government will have the same
weight of gold Nevertheless because
OF the devaluation of the dollars gold
content, the Government will actually
have made dollars.
The nominal profit accruing to the
be between s3.40O. 600, 900 and $500
O00'000, depending upon the extent of
the valuation fixed by the President.
The President does not expect the
proposed devaiuation of the dollar
within the specified limits to bring
about any violent reaction Under the
present operation and force of ex-
change rates the dollar already has
been brought down to So cents. as COM
pared with its former valuation.
Avoids Present to Banks.
. The profit on the revaluation of the
gold dollar the President believes,
should go to the Government rather
than to the banks which now hold this
gold. Under any other procedure the
Government would be handing the
banks an enormous present through the
increase in the value of gold in terms
OF dollars. Individuals and private cor
porations turned In their gold months
ago, following the gold proclamation of
the President. They would receive no
profit from the proposed revaluation of
the dollar, and, in the opinion of the
President, there is no reason why the
banks now holding gold should be
treated any differently.
A tentative draft of the bill to put
into effect the recommendations of the
President has already been drafted at
the Treasury Department. This will be
turned over to Congress as a basis on
which to frame the legislation.
The purpose of the administration, It
is explained, running through its whole
monetary policy, is to bring the dollar
back TO the level in value at which
debts in this country were incurred so
that debts may be paid of In dollars
of the same value This result may be
obtained largely through the control by
the Government of the gold content of
the dollar and it Is only practicable
that the Government have control of
all the monetary gold in the country.
The President in his message to Con-
gresS declared that the free circulation
Of gold coins Is unnecessary. leads to
hording and tends to a possible weak