Evening star., 1920-01-30
j. s. IS IN DANGER
] OF BEING CARRIED
OFF AGOLD BASIS
Treasury Officials Warn of
Menace of Inflated
Currency.
URGE EXTREME CAUTION
AS TO APPROPRIATIONS
Say Another Bond Issue Would
Result in Undermining
of Credit.

Impending danger that the United
States may be swept off a gold basis
and into the same financial whirlpool
of inflated currency as the countries
of Europe unless extreme caution is
exercised with regard to large ap-
propriations has been impressed upon
House leaders by Treasury officials.
Warming that another bond issue
cannot be f1oated under per cent,
and that this would drive the pres
ent liberty and victory bonds down
to rs or so, thus undermining the
government credit, also was given.
The leaders on both sides of the
House. 'and especially those charged
with responsibility of handling the
appropriation and the revenue meas
ures. have had a real fear of conse-
quences put into their hearts They
want to see a similar appreciation rf
the gravity of the situation brought
home to the people throughout the
country who are making persistent
drives upon Congress to authorize
appropriations of all sorts and for
great amounts.
Committee Holds Conference.
Sorely perplexed by three big and in
sistent demandS-Somethingi like s., ,50O-
100000 for soldiers bonuses. approx
Inately $500 900, 900 for universal military
training and s15o.000.000 to feed the
starving in Europe-the republican leg
1SidliNc SlccFlnS committee, unQeF the
leadership of House Leader Mondell and
Speaker Gillett, invited the Treasury
officials into conference. Chairman Ford
ney OF the ways and means committee
and Chairman Good of the appropria-
tions committee also were called in.
Then, to get the greatest possible CO.
operation. Champ Clark. the democratic
leader. and Representative Kitchin, the
ranking democrat on the ways and
means committee were brought in.
Secretary Glass, Assistant Secretary
1.effingwell and Gov. Harding of the
Federal Reserve Board were asked to
give these leaders the real facts on gov
ernment finances. and they did it in
way that startled the members, even
though in a general way they have felt
there must be economy and preached il.
The spectacle of all the countries of
Europe off the gold basis, because they
issued bonds and currency recklessly.
has been an impressive warning for the
leaders in Congress They realize that
these European countries eventually will,
have TO pay at least three times the
cost They appreciate, too. that the
United States. currency Is. daagerQpSlYs
Inflated and that already che Seon61iiIer
in consequence has to pay twice as
much for many things as before the war.
May Lose 10 Billion Loaned.
With the impossibility of floating
q loan except at prohibitive cost i'm
Pressed upon them the leaders are
pretty well agreed that any extraordi-
nary expenditure must carry with 1t
a tax to raise the necessary amount
AS the echoes of this important fis-
cal conference have spread among the
members there is increasing convic
tion that the United States stands to
lose the s10.000.O00.000 already loaned
to Europe. The financial students ad
wise that Europe is so plastered with
paper now that they are reminded of
the days of the old Confederate shin
plasters."
The people of the country are eau
ticned not to do anything that would
help to create a financial panic. which
might easily be brought about. but
which it is believed can be happily
averted if conservatism and hard
headed business methods are employed
by the leaders in Congress.
The seriousness of the situation
was touched upon in a speech in the
House by Chairman Good of the ap-
preparations committee last Friday
He was asked about the proposed
soldiers bonus He replied that he
could not support il in view of a
statement made by the Secretary of
the Treasury. because such measure
would call for very large amount of
money, and that if put through it
would cause financial havoc and was
Mr. MondeI Gives Views.
Shortly after the conference with the
Treasury officials House Leader Mon
dell also spoke on the floor. although
few of those who heard him appre-
ciated the real import of what he said
The problem of financing the war
did not end with the signing of the
arnistice.'' he said, nor were all our
problems met during the war when
in the spirit of patriotic enthusiasm
anything could be accomplished. We
have had trying problems since the
close of the war. We are still con-
fronted with them, with the outside
world. the European part of it on the
verge OF bankruptcy, We are trying to
take up the war-overhang. reduce the
tremendous war expenditures. and save
the fnancierS of the country in these
days of peace from the financial disaster
that thanks to the patriotism of the
country. did not seriously threaten dur
ing the period of the war"
Then, after discussing the ACCESSIBILITY
OF postponing universal military train
ing. he warned: We are passing
through the most trying financial period
OF the war, though the arTnistice was
signed more than a year ago We
are entering upon the financial period
tnat is going to determine whether or
no. having piled up national debt of
S26,0O0, 100000. having an unbopded
overhang of $4,000. 900. 900. we are To
pursue policy which will bring us
SdieiS l1TOuSn tne period OF war financ-
ing, or a policy under which a wear and
half after the war is over we are tn
be enguifed in financial difficulties which
We happily escaped during the period of
conflict" Va
Mr. Fordney Sees Danger.
Chairman Fordney of the wavs and
means committee explained that the
caneer or being thrown off the gold
standard is due to the fact thar tbe
gold supply is going out faster ma n
II is coming in. 1t is going to Soutn
America and the Orient. and il is No.,
coming in from. Europe. because En-.
rope hasn't 1t. The balance of trade
with Europe is in favor of the IrnitsG
States-and Europe hasn't the pold
10 pay. The balance of trade 1itb
South America and the Orient ia in
their favor-and United States cold
is going to pay e'-'
Mr.. Fordney argued that this sbouId
be discouraged He points out Thai
on May %. 1919. the railroad admin.
1sration put into effect new seanor,
10 interior rates 20 to 79 per cent
below the rates charged on dOmestiC
goods between the same points Tht,
encourages imports. he says. and ne
expectation Of gold. He gives twc
illustrations: The freight on a car
load of imported wool from Paciti,
coast ports to Boston is s5I5, incIud
ing the 3 per cent government tax
On domestic wool between the same
points on the same car eight the
freight is 1890, plus s29.70 war tax
Thai eprOnraDeS ir,nor