Flown Dollars

Dollars sank last week to the lowest level since the U. S. quit the gold standard --65-c-. Because President Roosevelt had not yet seen fit to devalue the dollar, the price is determined by supply & demand in international exchange. And because the U. S. has a 'favorable trade balance, demand is normally greater than supply. Whence the dollar flood that has eaten away 35-c- of every 100-c- in each U. S. dollar since last April? Continental money-changers, canniest of whom are reputed to be "the Greeks," delight in selling dollars short, but bankers know that that accounted for only a fraction of the drop. Last week from the British Commonwealth Relations Conference in Toronto came confirmation of what Wall Street has long suspected: that U. S. citizens have exported their dollars by the hundreds of millions.

"One of our problems," droned Viscount Cecil of Chelwood, chairman of Britain's delegation, "is the flood of unwanted money that is pouring into our banks. These funds, deposited in the main by U. S. investors, are subject to withdrawal at 24-hour notice and are of little or no value, though it has not yet been discovered how to get rid of them."

Standard Statistics Co. Inc., world's largest figure factory, estimated that $1,000,000,000 had flown the Atlantic, the bulk of it to London. France, whose tie to gold is none too secure, has received little, but Holland and Switzerland have been drowned in dollars. Unlike the export of gold which is strictly banned,* the flight from the dollar has been quietly encouraged by Washington; it pushed down the price without requiring devaluation by Presidential decree.

For those who have no faith in U. S. money, Max Winkler, well-publicized foreign investment expert, has compiled the four general methods of expatriating capital: 1) opening an account in a European bank and either leaving the funds in foreign currency or buying gold in the open market; 2) buying U. S. securities having a European market, selling them abroad; 3) buying foreign bonds which are payable in gold, particularly French, Swiss and Dutch East Indian obligations; 4) buying U. S. commodities (handiest: cotton), shipping them to Europe where they are sold and the proceeds left. But with one-third already clipped from the dollar, bankers believe exporting capital now is no more than locking the coop after the bird has flown.

Methods of hedging against Inflation within U. S. frontiers have become a favorite coffee-&-cognac topic. Purchase of industrial stocks is, of course, the most popular hedge, but commodities and land have been creeping up fast since the NRA threatened profits with higher labor costs. Some shrewd businessmen with little capital at stake argue that the best thing is to go as deep into debt as the banks (or friends) will allow; eventually they will pay off with cheaper dollars. Carl Sriyder, economist for the Federal Reserve Board, was asked lately by a wealthy friend how he could hedge against all possible contingencies, including deflation or stabilization, so that he would die as rich as he was at that moment. "One way," snapped Economist Snyder, "is to shoot yourself."

*But goldminers may export their output through the Federal Reserve. Last week as the first shipment (4,200 oz. troy) left Manhattan, gold soared to $31.69 an ounce. Old price paid by the U. S. Mint: $20.67.

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