New-York tribune., 1921-12-17
Ford's Energy
DoIlar Useless,
Treasury View
!, Million in Paper 10 Pay
: for Muscle Shoals Com
s,ruction Could Not BE
Circulated at Any Price
Must dave Gold Backing
Meter Car Maker Urged to
Put Up Money and Take
gouds Without Interest
xa...nr ntspatcA 70 Ths Trioune

FnruS ldeS ci Sohap'S"''ia VIC AiuSS'S
c.osjs nlant by an issue of paper dol
,.~< rather than by sale OF interest
..s~;nr bonds is economically entirely
n,ssuud. in the opinion of virtually
...-v official ard expert experienced
n matters OF finance in Washington.
Yr Fsrd's proposal was for the gov
.rnmest to issue s40,0oo,0oo of cur
,s,sy. the estimated cost of completing
,Ae project. secured by the specific
prppcrty at Muscle Shoals, which is es-
.;sssed to be worth several simes that
.,rornt By this course Mr.. Ford
.rrues the government would be saved
sers than $50 000. GOO interest, which
: would be required to ray If the
menev should be raised by the usual
ss.aod Of issuing bonds.
aWhy should the government. which
.,,o;nsiIv manufactures the money
NV for the privilege Of borrowing this
ssms money back from private hold
srs1 sIr. Ford asks III effect.
Urged to Pat Up Money
There is Just one way, say the au-
.aer;t;es here. that the Muscle Shoals
'sorx can be carried through without ar
interest charge That is for Mr. Ford
n mt I'D the money for it and take
N exchange an issue OF forty-year non
interest bearing government bonds.
raese bonds could be made to look
s~sctlv Ike paper money and they
xould be secured by a first mortgage
n The whc!e Muscle Shoals project,
s-timnted 20 be worth at least S120,-
Na90o. More than that. they would
- backed BY the faith and credit OF
rte United States government, pledg-
;ne their REDEEM ption at 100 per cent
gaIue at the end OF forty years.
VI. Ford would be privileged to cir
ealate these bonds as money-that is.
n usy his bills with them--if he could
set anybody 20 take them.
"0f course, no one would accept such
bonls at full money value, and therein
les the fallacy of Mr.. Ford's PROPOSE
ton" said one o. the Treasury ex-
peYts. "Mr. Ford Will not accept such
a pronosition because ii would tie UP
$4,000 900 of his own money without
earnings for forty wears. He could
sos d~pose Of the forty-year. non~in-
serest bearing bonds at 10 cents on the
dollar.
@Mr. Ford says that 4o,o00.oo0 paper
ioars, secured by Muscle Shoals and
sacked by the faith and credit OF the
United States government, would cir
cslate exactly as any other currency.
Thai is true. The point is that it
would be the faith and credit of the
United States government and not
MUSCLE Shoals that would cause these
dollars to be accepted.
@The faith and credit Of the United
Sates government is something more
than mere promise TO pay 1t is
bscked by actual gold in the Treasury
rsnlts TO redeem the paper currency,
not tomorrow or next week or next
year or at the eEd of forty years, but
1t this very moment. This gold de-
post may not at all times equal the
paper money issued, but it is so nearly
equal as to establish confidence in the
government's ability to redeem without
notice any amount of paper currency
that can be presented for redemption.
Paper Always RedeemabIe
The reason uon-interest bearing
paper dollars circulate as gold is that
they carry no time limit. They can be
taken out OF the Treasury and one
minute or enc second later they can
cs turned back at full gold value. If
even 4 one-morth period Of redemp-
ton was affixed to a paper dollar IT
would immed lately drop in value as
compared with gold, It might still be
vortn 80 cents, but it would be de-
pFeciated and every day that the
period OF redemption was extended it
would still further depreciate it.
Muscle Shoals. 1t Is conceded. can
not begin paying its cost from It's own
earnings for some years. This means
taat some one must put money into Ii
and wait years TO get it back. If the
government pays the cost, whether in
energy. paper dollars or ordinary Fed
erai Reserve notes O. gold. the practi
cal result IS the same. 1t must de-
prlve itself Of the earning power OF
this money for the period it is in use.
TO make the energy dollars circulate
as others they would need to be re-
deemable at any time in gold. The
government would be compelled to keep
the gold or its equivalent in its vaults
for this redemption. Otherwise this
gold could be placed where it would
earn interest, or it could be used to
redeem bonds on which the government
is now paying interest. The result is
the same
'The point Of all of which Is that
paper dollars secured by the future
earnings If the Muscle Shoals project
alone would not be taken as currency
sSy any cne. Mr.. Ford is perfectly at
liberty to take this sort of money IN
payment for tho project if he likes.
Backed by the faith and credit of the
government these dollars would un-
dountedly circulate, but only because
Of the assurance that there will be in
me United States Treasury gold sui
dieicnt for the Immediate redemption.
me value of these dollars would not
De the value Of the Muscle Shoals
proleet They would still be measured
IN gold
WASHINGTON, Dec. 16-A "Na-
tonaI Honest Money Association" was
created to-day at the closing session
o. the monetary conference called by
senator Ladd, Of North Dakota to dis
euss agricultural relief from what was
described as present day inequitable
4aancial and credit system.
omcers Of the association are W. II.
harvey, Arkansas, chairman; r. Hun
ssf Oreech. New York; James Fulton,
pennsylvania; Francis c. Cary, Min
psa; pgesota; Miss NJ. B. Meister and Charles
aau~ard Russell, Washington: John G.
N, NNooa, Pennsylvania, and y. 3. Gibson,
"orth Carolina.
Inc conference also adopted resolu-
sa; lug lndorsing the opposition recently
Fas. r@'u 10 have been expressed by Henry
- iu ana Thomas A. Edison to the use
Ia soid as basis for credit and favor
ens the establishment of a national
sS'rency ~ through the issuance OF bonds
w;,h ,ihuggested by Mr.. Ford in connection
'a Tue Muscle Shoals project.