Evening star., 1934-01-26
SECRECY PROPOSED
FOR HUGE EU.S.FUND.
congress Would Enable
, PRESIDENT to Act Unham.
yered on Sterilization.
BY DAVID LAWRENCE.

eecrecy about wnat . government
sAoes with the peoples money is never
healthy, but the Congress is about to
vote power to the administration to
withhold the facts for three years as
70 what happens with the stabilization
fund Of s2,0O0.O00, 900.
The defense offered is that the
British treasury maintains secret
operation. The real reason for the re-
fusal to permit publicity at perlooic
intervals Is that large losses OF public
money may be anticipated and 1t Is not
desired to let the people know at a
given time Just how far in debt the
government goes.
Efforts to find out what the British
exchange fund has lost have proved
futile in the British Parliament. That
/ there will be losses for the American
| exchange fund is inevitable, but the
belief of It's sponsors is that there Will
Be gains, too, and that in the long run
k@hings will come out all right.
The Sterilization Fund.
! What is a "stabilization fund? 1t
3 speculation in international exchange
conducted by a government instead OF
by private profit seekers. 1t Is carried
on presumably for good cause.-The
public interest-but it Is nevertheless
a buying and selling of dollars, pounds
and francs in order to keep the unit
Of value at a desired point
The operation is not far different
from what the Hoover adminlStratlon
tried with it's $500 900, 900 stabiliZation
fund under the Farm Board. Then
/ the Government tried to peg price
dor certain commodities Unfortunately
FLOR the Hooverites, pitiless publicity
twas the rule, so they had to tell the
speople Just what they were doing with
'the money.
Unquestionably the Roosevelt admin
&tration will have q big advantage in
mot being required for three years to
itch the American people how the 81
coo. 900 900 is to be used. II billion
Is lost in the next six months 1t might
be regained in subsequent period. The
Federal Farm Board of the last admin
ttstration tried to guess at prices, but
,t1le world demand and supply affected
It's operation and virtually hall OF the
stabiiization fund was lost.
Hoover Plan Failed.
The Roosevelt administration believes
that the mere presence of the fund will
make it unnecessary to do much buying
Uf SeluIS VI lOitlSu tAdldusc AlIS
was the theory back Of the Hoover sta
bihzation corporations, too 1t didn't
work.
The request for the "stabilization"
fund has been regarded even by ortho-
dox bankers and financiers as logical
in the present condition of world cur
rencies. but the size of the fund and
the restrictions upon publicity are
looked upon as certain to provoke ru-
nlors as to the amount of the Govern
n1ent's losses, especially If foreign ex-
change f1uctuateS as uncertainty in the
future as in the past.
If, of course. stable conditions pre-
vail abroad there will be no losses.
But when a French budget Is unbai-
.anced or some other internal conditions
In country suddenly cause a foreign
government to depreciate it's unit of
value, the American fund will have to
come to the rescue to keep the Ameri-
tean dollar from rising above the 60
cent mark. For when the dollar rises
IN gold value, prices drop-and the
American people do not wish to see
def1ation resumed. The theory back
of the stabilization fund is that the
catse of the unsettlement of foreign
exchange may be temporary and that
panic conditions In one country should
not be allowed to affect another peo-
Piles prices.
The question arises then, as to what
4 is going to cost to keep the dollar
from seeking higher value than it
has today. If, of course, the dollar
! runs away from the point at which it
I Is now stabilized, that is, its upper
limit, the American Government will
have 10 pay for the privilege of hold
ting it down to an artificial level Such
. situation may require another re
1926, and so did France, but subse-
quent events proved that they did not
guess at the right point. Indeed, much
Europe have been attributed to i'm
proper stabilization.
Would Avoid Mistakes.
The American Government hopes to
avoid these mistakes, but it may cost q
pretty penny before we are through
Hence, with such things as congress
sional elections coming on in 1884 and
= presidential election in 1896, it would
not be politically desirable to have the
7 facts known. If the opposition were
10 elect enough seats next November
to bring about change in the law and
. demand were made for publicity,
there would be no way to prevent the
disclosure of the details In other words,
this Congress cannot bind its sue
cessors. but Mr.. Roosevelt would have
the power to veto any such demand
and it would take two-thirds strength
In both houses to bring about the de-
sired publicity as to the Stabilization
funds operations.