The Washington times., 1935-02-04

and on several days was down
while stocks were up. Probably
this meant that. on further con.
Sideration the ,ignificance Of the
gold clause situation did not
seem so great. Thus stocks
which had been sold on fears Of
deflation were repurchaSed, and
bonds which had been bought on
hopes of more valuable dollars
were sold.
The stock market, however,
was so dull that it seems fair
to say that most people who
have commitments on the "long"
side are holding their position.
This may be interpreted favor
ably, since it at least indicates
no great fear.
1 would say that the general
feeling in Wall Street is that
If the gold clause decision sup.
ports the New Dealers, it will
help the market little; while
IL it is adverse" it will not
hurt the market much. And the
action Of the market seems to
confirm this feeling.
Probably a decision favorable
to the Government would cause
q little further decline in those
bonds which have been held in
the hope of payments on the
basis of old standard dollars.
But probably international COM
modities would recover, and
stocks favored as q hedge
against initiation would regain
some Of their recent losses.
AS to a decision against the
Government, my thought is as
follows:
1. There is no probability Of
. return to the old standard, or
to q price of S2O.67 an ounce
for gold. Such a development
seems out Of the question.
2. The establishing Of q
sort of double standard, with
certain debts payable in old
gold dollars, and other tranSac.
tiOns carried on in our present
damaged currency" is diff
cult to imagine. The Admins
tratiOn could easily take care
of" such a situation, and (un-
less prepared to go back on all
it has stood for thus far) it will
do so.
1t could directly or indirectly
have bond payments made in
the equivalent of the 900 cent
dollar" by issuing larger num-
ber of "59 cent dollars" in
Federal Reserve notes. This
would merely tend to make the
existing tential initiation
more effective as an actuality.
8. If an adverse decision were
to lead to definite revalua-
tiOn of the dollar, and put us
back on the gold standard, it
would probably mean q "59
cent" gold dollar, or a gold
price Of $35 an ounce.
The result of such course
would be to make the theoretical
devaluation of the gold dollar
actually effective in domestic
circles. It would tend to put
domestic prices up.
1t would also increase business
confidence, by removing fear of
further devaluation.
So, while the coming decision
may cause a little swing one way
or the other, it is not likely to
start any large or sustained move.
ment.
But aside from this gold clause
matter, the market seems to be
in a critical condition.
AS noted last week, a "tri-
angle" is being formed on the
chart, and this suggests some
change in trend. ~ The tech
nichal fact that the upper line
of this triangle is the declining
one, and ~ the prevailing
doubts concerning labor, taxes.
''hOlding companies" of all kinds
and profits, both suggest con-
tfnued caution in taking
''lOng" position at this time.
The market may "break out"
Zen the up side, but this is too
uncertain to bet on.
In answer to numerous in
quiries, will say that the stockI
of sound gold mine companie'
having established earnings, seen
In ma to ha y.A1o ti1,alNy sofa