THE HONGKONG TELEGRAPH,
SATURDAY, JUNE
18,
1938.
SPRING COSTUMES 1938
This Spring marks a marvelous advance in fashion technique--because it presents Anger- nalis tinted delicately or vividly by La Cross -in costume colors shudes to harmonize perfectly with each smart now fashion tone!
La Cross contume polishes are not only the finest, longest lasting They are actually no eway to apply you can change them your- self between manicures as quickly and ensily ns you change your gown. They go on like a dream over Stazon, the new La Cross polish base, which Insures you quick, professionally arnooth applications with higher luster. And La Cross new Glycerated Polish Remover can be used us frequently as you wish, for it will not dry nalis-helps keep your cullele soft, Ask your manicurist to apply one of these new shades to-day. And inke home several
to keep your finger-tips in fashion with your
new costumes.
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UFS
Candid camera study of King George and Queen Elizabeth of Great Britain, as the King was about to give his address, which opened the £10,000,000 empire exhibition in Glasgow, Scotland. He said the fair testified to "that willing cooperation which, I re- Jolee to thinit, is the ballmark of this commonwealth of nations."
U.S. New Recovery Programme Means Credit Inflation
(By Frank P. 5. Glassey}
United Press Staff Correspondent
New York.
The United States to-day possesses the greatest potentialitics for credit inflation in its history.
This situation was created by the administration's action in lowering bank reserve requirements and in "desterilising" about $1,400,000,000 Treasury gold, as part of the latest New Deal lending-spending-credit-expansion drive against depression.
The $3,000,000,000 spending-and-lending campaign, described in an earlier article, is counted on by administration financial advisers to provide a prompt antidote against the poisons of declining busi- The credit expansion phase of the programme will be supple- mentary, and is expected to prove of major importance only when -and if recovery is actually in progress.
neas.
President Roosevelt's latest drive The other addition to excess bank to spur
private busines Includes drastic monetary measures. The combined effects of desterilising $1,400,000,000 Inactive gold, and the reduction of bank reserve require- ments, will probably soon raise ex- cess bank reserves by $2,150,000,000 to an all-time record high of $3.880,- 000,000.
This total would be far above the highest level reached late in 1835 und early in 1930, when government omeials and leading financiers volced fears of runaway inflation. It would provide a potential base for creation of us much as $23,000,000,000 in bank credli-an amount roughly equivalent to 40 per cent. of the estimated aggre- gate income of all the people in the United States this year.
The Treasury's inactive gold fund approximated
Was "dest $1.400,000,000 when It
in mid-April. It was established in December, 1936, to protect the nation's credit struc- ture from the huge quantities of gold which were coming to the United States from abroad after dollar de- valuation, whereby the Treasury paid $35 for an ounce of gold instead of $20, as it had forraerly.
This $1,400,000,000 could be added
to bank reserves in one of the fol- lowing two ways:
1. The Treasury could deposit the amount with the banks and draw against it to meet government ex- penditures, thus creating comparable deposits in private accounts.
2. The Treasury could abandon its recent custom of raising $100,000,000 weekly by the sale of short-term notes In order to meet current ex- penses, and instead could use the former inactive gold fund until it is exhausted.
In Wall Street It is considered like- ly that the Treasury will employ a combination of both methods, and that when the present fiscal year ex- pires on June 30 all of the $1,400.000,- 000 will have been transferred to the excess reserves of the country's banks.
reserves, calculated ut $750,000,000, was effected by reducing the per- centage of reserves required to be maintained by commercial bunks to virtually the same schedule effective prior to May 1, 1936. An Increase mude at that time established the fol- lowing requirements:
Net demand deposits-central Re- serve city banks. 20%; Reserve city banks, 20%; country banks, 11%. The present schedule, adopted April 15, lowered these rules, respectively, to 22%, 17%, 12% and 5%.
The result of this move was that about $750,000,000 was added to the excess reserves of the nation's banks, which then stood at $1,739,000,000. The absorption of the $1,400,000,000
desterilised gold would bring the
exccas resorves total to $3,000,000,- 000, the figure mentioned above.
Not only did this step lift excess bank reserves to a record high, but by it the government also abandoned the means of control over possible credil expension which it formerly possessed, since with $3,080,000,000 of excess reserves the Reserve banks could sell out their holdings of $2,- 500,000,000 in government securities and still have
huge excesscurities excess reserves. Financial experts are agreed
that this is the greatest credit-expansion gesture ever made in this country. Bankers pointed out, however, that the mere existence of excess reserves does not result in the expansion of banit credit unless business men seek to borrow from their banks, new se- curities are floated in the capital
market
and general business is ob- viously on a steady up-grade.
These conditions do not obtain at present, and unill they do, the vast storehouse of excess reserves will probably remain idle. If, however. the Hoosevelt spending policy suc- ceeds in its object; if business and industry begin another rapid climb then, economists nesert, there will be at hand fuel for the wildest specula- tive fires ever to sweep the United Slates,
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