Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1920-02-25
WHY MONEY IS OFF.
(From Des Moines Register.)

(From Des Moines Register.)
Those Of our readers who are
puzzled to- know precisely what it
is that determines the value OF
British, or French, or German money
ais related to our dollar, and are find
ing it hard to explain why the German
mark has fallen to but little over a
cent, while the British pound sterling
is worth only about half as much as
formerly, will do well to read this
paragraph from the recently released
report Of the Comptroller of the cur
rency:
There is some confusion in the
public mind as to the real meaning
of the collapse in the rates OF for
eign exchange. II France, England.
and Italy, and other countries were
still on a gold basis that is to say,
were still redeeming, their paper mon
ey in gold, as this country is doing and
has always done since the resumption
Of specie payment in 1S97-the pound
sterling would be steady at Its gold
equivalent OF $4.8665; and the franc
and lire at 1913 cents. less merely the
cost OF ocean transportation, interest.
and insurance on the English, French
and Italian. coins to New York where,
with the free coinage of gold which
this country maintains, they could be
converted into dollars on the above
fixed basis. The whole trouble arises
from the fact that the foreign nations
whose paper currency has SO shrunk
in value are no longer on gold basis.
The enomous amount OF fiat money
which it became necessary for them to
issue during the war although still
a legal tender for the payment Of
debts in those countries, cannot be
exchanged for gold on the old basis.
AS the value of paper money declines
in purchasing power, the prices OF
commodities in those countries adj
vance. While their prices for COM
modities are quoted in foreign coun-
tries in pound sterling, francs or lire,
the value Of the American dollar as
expressed in foreign currencies moves
rapidly upward" (.
The reason why Great Britain and
France and Germany are not trying
to maintain their paper money re-
deemable in gold is suggested. They
do not have the gold, and they have
printed enormous quantities Of paper.
Europe is really not 80 much better off
that the southern confederacy was ct
the end Of our own civil war. For
that matter, we were In about their
situation at the close Of the war Of
the revolution when Washington COM
planned that wagon load Of money
would not buy q wagon load OF Sup
plies.
Y The director Of the mint gives the
total amount OF gold In the world
at $7,797, 113,OoO, OF which the United
StsteEshas now Ss.l65.226,o0O. II ISL
not hard to understand wbyJ Giuseppe
isSHot pdyaihtaEa ii e6rd ort /, Fed emin its
paper money iHkbldti EnY6td As lSwn
where 1t is either az, exchange Of cpm-
modities or no trade Europe must
pay in what can be produced or not
pay, European money has nothing
substantial back Of it.
But this showing OF the reasons
for the upset Of European money does
not go to the larger question, namely,
why all money, American rs we'll AS
European has lost In talue. For
while European monies has gone down
ID dlasstr6saydmsa sdFed hthe dollar.
dollar itself has gone down.
measured in comodities.
It is not necessary here to more
than hint at the reason for the gem
eral decline in money, indicated by
the rising prices Of everything money
buys. 1t is all explained in this one
statement by the comptroller: "The
country's stock Of coin and paper cur
rency has increased since June Of the
year the federal reserve banks began
operation (1914) to June 30, 1919,
from $3,73S,300,OOO to $7,51S, 800, 000."
In other words, we have more than
we have more than doubledour money
stock in the. war years, and while
that does not mean necessarily that
we have cut our dollar in two, still
1t does mean that we have greatly
reduced the purchasing power of
For at the very time that
money has become so common we
have fallen off in the production of
many Of the staples.
While we have the gold to carry
our paper money at par. and have
that advantage over Europe, We
have still done in degree just what
Europe has done, resorted to Inc
flation to pay for the war, and must
now do just what Europe must do,
dig into the ground for actual wealth
with which to pay for the imitation.
In other words we did not pay for
The war at all, we left that over
Tor the years ahead Of us.
#
PENR0sE ON THE JOB
Senator Penrose has so far inn
proved, 1t is announced, that he can