Evening star., 1938-09-27
TREASURY READY
G.. # WAR BREAKS.
Morgenthau Says Agency
Is Prepared for Any
EventuaIities.
~ the Associated Press.

~ the Associated Press.
Secretary Morgenthau assured the
Nation today that the Treasury wa.
prepared for any eventualities from the
European crisis.
He did not say what preparations
have been made, but he implied that
for the protection of American busi-
ness and finance, the administration,
financial leaders have drafted = pro-
gram dealing with these questions
which would arise in case Of war
abroad: .
l. Should the stock markets be
closed?
2. What should be done to protect
the dollar in foreign markets?
8. What should be done about all the
foreign money which has come here In
recent weeks in search of safetyi
The stock market question was an
swered on high authority last week
IN the negative. An official said the
United States had undertaken to act
as the financial center of the world"
and that it must keep Its market open
to prevent paralysis of finance and
commerce"
U. S. May Be Worlds Market.
Secretary Morgenthau apparently
had in mind primarily the other two
questions when he told reporters YES
terday:
1 like to think that the Treasury
always is ready for any situation. and
as lar as humanity possible to get
'eaoy' tne treasury Is prepared"
He declined to go into details. Ofn-
clals about him. however, are thinking
OF these things:
II Europe goes to war. the United
States will be the marketplace of the
world. Non-belligerent nations NAV
turn many orders here that would
otherwise go to the fighting countries
The warning governments will seek
1000 and other supplies that the Neu-
trality Act will permit.
Essential to wartime trade will he
the status OF the dollar. The demand
Tor dollars to pay for American goods
probably would be enormous. To con.
troll the currency markets. therefore
the Treasury will look to its $4,000
OOo,oo0 stabilization fund. Also, the
Treasury might impose an arbitrary
value OF the dollar in terms of other
currencies by the procedure known as
exchange control.
Foreign Deposits a Problem.
The foreign deposits already here
would figure Importantly in the buying
plans OF warning governments. These
governments night Immediately reoui-
sltlon the funds deposited here by their
nationals, as we'll as securities.
In the last three weeks alone. for.
elgners have sent $5.O00,0o0 here.
Altogether, foreign investments in the
United States amount to more than
$4,000. .000. 900.
II England or France, for instance.
attempted suddenly to liuuidate the
American investments of its nationals
the Federal Government might have
10 devise means for orderly liquidation
70 prevent decentralization of this coun-
try's markets.
The Ireasury's own position, in view
OF the deficit spending now going on.
Is cause for study. The spending
program authorized by the last Con-
gress will cost $4,000, 900 900 more
than the Federal income this year, and
the Treasury cannot avoid borrowing.
In the immediate weeks after a war
broke out, it might be difficult or un-
usually expensive for the Treasury to
borrow. Because of this, the Treasury
borrowed $Soo,ooo0o0 on September
Is and enlarged its cash working bal
ance to $2,500,000,0O0. This sum is
ample to pay all Treasury costs for
several months.