New-York tribune., 1918-02-04

Radical and far-rcaching changes in
MeXico's monetary system arc proposed
in report made by L. W. kcmmercr,
professor of economies in Princeton
University, who has completed an ex
haustivc study of the financial situa
ton in that country at the request of
that government. Among other re-
forms, Professor kemmerer advocates
raising the gold unit value in Mexico
so that it will be substantially above
the bullion value of the silver peso,
1t is pointed out that as soon as these
silver coins are worth more as money
or circulating media than as bullion
their melting or expectation will cease
and one of Mcxico's greatest problems
will be solved.
Professor Kemmcrer makes the point
that the most important single prob
lem in the reorganization of Mexico's
currency system is that relating to the
method which should be adopted for
the maintenance Of the parity Of the
various kinds of coins with the unit Of
70 centigrams of pure gold established
by the currency law of March, 1905.
The present necessity, growing out of
the high price Of silver, of rccoining
silver coins with a substantially lower
pure silver content involves the whole
subject of the proper machinery for
maintaining the parity Of silver coins
with gold. The proposed new lighter
coins, according to Professor Kem-
merer, should not be introduced into
circulation until an adequate gold re-
serve for their redemption is cstab-
lishcd. The continuance of the gold
standard and the maintenance of the
parity with the gold peso of all the
different kinds Of coins require, first,
the free coinage of gold; second, the
restricted coinage of fiduciary coins;
third, the proper regulations to adjust
the supply Of fiduciary coins to trade
! needs, and, fourth, an adequate gold
reserve.
Gold Standard Principle
"The principle of the gold standard, ;"
says Professor kemmerer in his re-
port, "is that the value of gold coins
as bullion and their value as money
should be the same. Under a strict
gold standard gold coins should never
be appreclably more valuable than the
gold bullion they contain, plus d charge
merely sufficient to cover the actual
expenses of coinage; and they should
never be appreciably less valuable than
the gold bullion they contain. less the
expenses of melting and converting
into bars These conditions can only
be realized CD when the mnts arc
open to the public for free coinage Of
gold, SO that any holder Of gold bull
ION can have it converted into coin
within reasonable time, on demand,
and GU when the expectation of gold
from the country is permitted If COIN
age is not free, the value of gold coins,
under pressure Of increasing currency
demands, tends to become greater than
the value Of the bullion which they
contain, and thus the unit of value is
raised, and the gold standard is. to
that extent, departed from. If, on the
other hand, the expectation of gold
coin is not permitted, the amount Of
gold in circulation tends to become
relatively redundant under the inf1u-
ence of declining currency demands,
exchange rates become strongly unfa-
vorable to the country and the coins
depreciatc in terms Of foreign gold
(namely, as measured by the foreign
exchange rates., which means a de-
probation in the unit of value. 1t will
probably be wise rs soon as monetary
conditions in Mexico and abroad be-
come normal, to remove the existing
prohibition against the expectation Of
Mexican gold coin.
"a second postulatc of the gold
fiduciary coins, namely, in Mexico, OF