The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-02-01
DOLLAR SLASH
MAY LEAD TO
TRADE BATTLE
Immediate Domestic Effect
of DeVaIuation to
Be Nil.
59.06 CENTS IS VALUE
U. S., Great Britain War
for World Markets Is
Predicted.
59.06 CENTS IS VALUE
BvUniied Press


money markets today with a fund
of $4,000 900 600 while the American
people began doing business with a
59O6-cent gold dollar in conformity
with the most striking and vital ex-
pertinent of the new deal.
The immediate domestic effect of
President Roosevelt's devaluation of
the former gold content of the dol
lar was expected to be nil. Com
modify prices and the cost of living
should rise a bit, but it should be a
gradual process. accompanied, the
administration believes, by increased
income for the people. The dollar
domestically still is worth 100 cents,
but on the basis of its former gold
content of one ounce of gold equals
S2O.67, it is worth 59.O6 cents.
The foreign effect was expected
to be Notwithstanding.
In devaluating the dollar, Mr..
Roosevelt coincidentally created the
$1,000 900 900 sterilization fund with
which TO buy and sell gold. foreign
exchange and government securities.
A world wide battle for foreign
markets may develop around that
fund. and between Great Britain
and the United States. The funds
operation will be surrounded by the
strictest secrecy. with only Mr..
Roosevelt and treasury secretary
Henry Morgenthau cognizant of its
dealings. Under the law they may
they choose and need not report for
three years.
President ROosevelt's dramatic ac-
ton placed the American dollar in
a bargaining position calculated to
speed international currency sta
biuzation. It gave assurance to bust
ness and capital that the dollar now
is relatively stable.
Mr.. Roosevelt at any time can
change the value ne placed upon the
gold dollar, but under the monetary
law he is restricted to a range be-
tween so and go cents. The dollar,
therefore, can go down 906 cents,
no more, or it can go up four one
hunGredths of a cent.
Silver Not Affected
Silver was not affected by the new
monetary dispensation, but may
figure in bargaining for interna-
tional currency Sterilization.
Mr.. Roosevelt accomplished what
was probably the most far-reaching
new deal action. when he affixed
his signature to a proclamation a.
$40 D. m. yesterday. He pegged
the dollar in terms Of gold at 59.06
per cent of its former value in an
effort to:
l. Expand credit.
?. Stabilize domestic prices.
3. Protect American foreign mar
ketS.
The dealings of the sterilization
fund are calculated to maintain the
dollar at the 59.06 level in its re-
lation to foreign currencieS. They
are intended to drive Great Britain
and France to satisfactory inter-
national currency Sterilization
agreement. The alternative is in
ternational money war with foreign
trade the stake. Great Britain has
a $1,000 900 900 sterilization fund
France would be a vitality interested
third party because her gold stand
ard hangs in the balance.
First Change Since 1873
Mr.. Roosevelt's' action was the
first change in the gold content OF
the dollar since the United States
went on the gold standard in 1873.
It created automatically for the
treasury a profit on gold estimated
unofficially at S2.792,O00, 900. The
dolisr was devaluated 1904 per cent
The profit figure represents that
percentage of this nations store OF
gold. The government took title to
all outstanding gold in this country
Jan 30 All but S792 100000 of the
profit will be devoted to stabiliza-
ton operations. The rest will short
" appear on the treasury books as a
cash asset.
Neither the pegged position of the
dollar nor the SIS an ounce for gold
is necessarily permanent. The
President and secretary Morgenthau
have authority to change them
subject TO certain limitations
There is Immediately in prospect
now negotiation between London
and Washington for currency sta
bilization. AS he announced the new
money plan yesterday. President
Roosevelt told queStionerS 1t had
not bsen preceded by discussions with
foreign powers Discussion may be-
gin al any time and rather sooner
than later unless Great Britain Is
determined to put up a fight to keep
the dollar high in relation to the
pound sterling.
The vital French interest lies not
only in this titanic struggle for for
eign trade but in the possibility
that she and her small group of
supporters may be driven from the
gold standard.
The American gold price in effect
today IS $40 above the price yes
terday in London'S free gold mar
ket. The S35 American gold price
may force the London quotation to
that figure.
May Attract All Gold
Ofhcials concede the possibility
that the SIS may attract all gold in
the world market to the United
States, compelling France and her
allies to abandon the yellow stand
ard.
Our own position now is described
in some official quarters as "a re-
turn to an international gold bull
lion standard" That is. We will
make our international settlements
in gold.