New-York tribune., 1921-12-18
stabilizing Purchasing Power Large
Factor in Readjustment Of Business

arations and still more by the HIGH
tariff walls being erected against these
payments We have the ridiculous
spectacle of the Allies demanding pay
ments from Germany and at the same
time legislating against receiving that
payment!
Imagination runs riot as to the re-
lanons OF reparation to monetary in
sIaolllty we can imagine that the
same herman chemists who worked
OUT the hldeous chemical warfare will
work out a chemical way of paying
their debt. This seems now as chime
rlcai as, before the war, the propnosti-
Glations of Ieppelins bombing London.
hehtlon 1T as serious possibility
because ! have just been credibly in
formed that German chemist has al
reapy succeeded in the laboratory in
maklng synthetic gold out of baser
metals by means of the electric vacuum
furnace 1t only remains to cheaper
lhe process sufficiently to so flood the
worid with chemically manufactured
golo as to make it worthless. in which
oase 'he reparation payment will be-
come farce and Germany, instead of
paying the penalty, will get enormously
rich by exploiting this new "philoso-
phers stone" Then shall we realize
Inat Germanys payment should have
oeen tiXed III kind or, if in money. bv
reference to an index number.
What Is more to the point prices in
gold standard countries will 20 sky
rocketlng like those of Soviet Russia
ana we shall have repeated, much in
tenslhed, all the evils of imitation.
AT present the most promising pro-
gram seems to me to be as follows:
ha
ance their budgets, stop initiating and
def1ate very little.
Secondly, let each country decide in
It's own way what the gold content of
ITS monetary unit shall be, whether it
be the prewar figure or not.
Thirdly. after this unit has been
chosen let it be put into effect, not
at first through the costly process of
introducing great gold reserves and
gold redemption, but by the device of
the gold exchange standard as it was
introduced by England for India a
quarter of century ago. This device
makes the currency virtually redeem
able not in gold at home, but in ex-
change on gold abroad. But if every
paper money country could virtually
become gold country simply by main
tanning its rate of exchange on gold
country substantially fixed. France
and Italy would buy and sell bills of
exchange on say, New York at fixed
rates.
Fourthly, let the great state banks,
under international agreement, recog-
nlze their obligation to regulate prompt
~ the rate of interest, whether up or
down, IN such way as at least never
greatly to upset the level of prices and
so upset business.
BY these four measures virtually the
whole world would soon be on a com
mon gold standard and we would have
it cycles disturbing the purchasing
power of money.
F1fthly and finally, let the metallic
base itself be stabilized Without this
last step, complete stabilization would
still be lacking Professor Cassel has
proposed, and Lloyd George has spoken
favorably of his proposal, to stabilize
the value OF gold by means of an Anglo
American agreement to control the out
put OF gold. Another way of accom-
pilShlng the same purpose, at less cost,
of a break with tradition, is that pro
posed IN my book on this subject and
proposed much earlier by Aneurin Will
l1ams, now member of Parliament.
plan conceived on an entirely diff
terent basis and designed to cover not
me fltth step, but rather to take the
place of the first four, is that of the
American banker, F. A. Vanderlip,
This is to create an international bank
issuing notes for use in all nations.
especially intended for international
transactions.
Whether the Wlliams's method. or
the Cassel method, or the Vanderlip
method, or some other method which
has been, or may be, proposed should
be adopted is not now the question
The question at present is to get the
leading governments of the world to
join in securing a report of a small
committee of experts who can be
trusted to approach the problem with
courage and minded
ness. If this be done their report
would bear the same relation to the
Great War as the Bullion Report bore
to the Napoleonic wars, and with con-
sequences much more profound and
important in affording sound and
stable monetary standard In default
of such an official study there has been
formed in the United States Stable
Money League devoted to the study Of
the problem and the development of
practical solution.
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