The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-03-05
English Banker Forecasts
10 Per Cent Reduction
of Pound.

BIZ Times special
NEW YORK. March 5.-Great
Britain was held today to be def
nitely embarked upon campaign
calling for progressive depreciation
of the pound sterling in terms Of
gold and other currencies.
A London banker, visiting here is
reported to have expressed the con-
viction a few days ago that the aim
of the Bank of England and OF the
Exchange Control is for a deprecia-
ton of around 10 per cent current
levels.
The purpose of the program, it Is
declared, is to bolster the position
of British industry in the world
markets, recent severe competition
through currency depreciation and
other methods on the part of sew
eral countries having found ref1ec-
ton in substantial falling off in
trade activity.
Allowed to Slip
The pound sterling has recently
been allowed to slip definitely
through its old parity of S4S665, and
on the basis of reputed plans of the
British Control would appear to he
headed in due course for levels
around $40.
The trend of gold prices in the
London bullion market is the focus
of world wide interest at the mo-
ment, with the quotations for the
metal having mounted to unprece-
dented levels since the beginning OF
the week.
Private adviceS received in bank
ing and foreign exchange circles
from their London offices suggest,
it is said, that che rising trend OF
gold is not likely to be seriously
impeded until the quotation for the
metal is established above the $50
shilling level.
Considerable bearishness has pre-
vailed among foreign exchange
bankers in New York with regard
to sterling. Many have contended
recently that sterling looked defl-
nitely lower" and were convinced
that but for the activities Of the
British and American equalization
funds, the decline in the pound to
this point might have been much
more precipitate.
The internal BOOM" which had
served to cheer England homestead
Iy, has given definite signs Of
rounding off" it is declared. And
at the same time British industry,
which depends in a large way upon
world markets for consumption OF
its output, has been increasingly
hard put to maintain production.
Faced with a def1ationary move
ment in world prices, probably def
initely engineered through the OPP
Grafton of the British equalization
fund, this country today is threat
ened with a downward movement
in prices comparable to that which
took place during the Hoover Ad-
ministration, in the opinion of Rene
Leon, authority on foreign exchange.
The only salvation for this coun-
try, Mr.. Leon believes, is for the
government Immediately to alter its
monetary policy and definitely di-
vorce the dollar from gold.
Changes of fundamental impor-
lance are now taking place in the
foreign exchanges" declared Mr..
Leon. Gold prices have reached a
record high in London, rejecting the
widening of the disparity which ex-
lists between the pound and all the
gold cuTencies, including the dollar.
The pressure on the gold bloc is be-
ing increased at time when the
economy of the western European
nations can least withstand it.
Pound Influence Greatest
by reason of it's numerical i'm
portarce, as affecting the greatest
number of producers and consum-
ers, the pound sterling, of all the
worlds currencies, is the most po-
tent single factor influencing the
international price level. World
prices tend to readjuSt sterling
prices more surely than to any 9TH
er price level and we will do we'll
not to lose. sight of the fact that a
falling pound sterling will inexor-
ably undermine prices in America.
eff it is deemed to be to the best
interests of the people of the
United States that control over the
purchasing power of the dollar
shall not rest in foreign countries,
then we might as we'll decide to
detach the dollar from gold alto
gether until such time as Britain
makes up her mind definitely to
stabilize the pound in terms Of
gold Z"