The Indianapolis times., 1935-09-18
Trends
Dip in Alien Money
Raising American
Gold Hoard.
by VINCENT LYONS
Tines Financial Editor

WITH the possibility of war in
w Europe growing stronger, the
international exchange market is
beginning to move about trantical-
IL. Gold bloc currencies, especially,
are feeling the effects Of the de-
pressing outlook and in the last
few days several Of them have
slumpeG below the gold export
points in terms Of the American
dollar
The Holland guIder seems to be
the focal point of weakness at
present. This unit has fallen ap-
proMmately u points below the
level at which it becomes more
profitable for HOllanders to meet
their obligations abroad in gold
rather than in guilders. As a con-
sequence. the yellow metal is leav-
ing the country in increasing
amounts: more than S40,000,000
having been shipped on the cur
rent movement.
The Bank of Netherlands. CEN
tral banking institution of Hol-
land, on Monday lacked up the
bank rate from TO per cent in
an effort to stem the flight of gold.
This per cent rate. the highest
which has been in effect since
1873, had only a temporarily sober
ing effect. The guilder steadied
for while after the action was
taken, but before the day was
over fresh weakness was displayed.
zach guilder, on the basis of
L current foreign exchange quo
tations, is worth a trifle less than
67is cents. AS the total gold re-
serves of the Bank of Netherlands
approximate 500. .OCO,OO guilders, the
recent $40, ,2OO,OOO of gold shipments
represent about 10 per cent of the
total available supply In view Of
this situation, unadulterated dis
may is being shown in gold bloc
circles lest the outward flow con-
tlnue
That the outlook for the Holland
Cui!der is no brighter than the
present picture is demonstrated by
conditions existing in the futures
ma -ket. The futures market in for
eign exchange is the equivalent OF
the grain futures market. and it
attempts to translate in quotations
what a particular currency will be
worth a few months distant. OF
course. there is no denying that
the market is merely an approx
nation But the guess is pre-
dicated on many items.
Foreign exchange spectators feel
so pcssimistic, or wary. in regard
to the Holland situation that go
day futures are quoted 375 points,
or 81 cents. under the current
quotation. This means that certain
interests are willing to enter into
commitments today to take up
guilders three months hence 3%4
cents under today's figure. If at
the end of three months the guild
er has not declined 375 points the
person who agreed to take up the
guilders has a profit II the decline
has exceeded 375 points then he
suffers a loss on the transaction.
TINE French franc, recognized
i leader of the European gold
bloc. also has moved lower in re-
cent sessions. The point at which
gold can leave the country profit
ably is around 659 cents. 1t has
been both under and above that
figure in the last few days and
some of the yellow metal has
trickled out of the country. Whether
the outflow will assume the pro-
portions of a movement Is depend
ent on the performance Of the
franc over the next few days.
The bulk of the gold which has
left Holland and France was con-
signed to the United States. there
by increasing our already tremend-
Gus hoard. Monetary gold stocks of
the United States at the close of
AugU5t, according TO a statement
issued this week by the Treasury
Department, aggregated $9,203,OOO,-
600.
Undoubtedly much of the de-
probation suffered by alien cur
rencieS is a reflection of flight of
capital from European funds to
American funds. Such shifting
could easily be induced by the war