New-York tribune., 1922-02-26

would be the approximate market value
Of troy ounce of pare gold If all the
governments Of the world should de
monctizc it?
Answer Market value in terms Of
what? At present troy ounce Of pure
gold is s20.67. At present a dollar is
1922 grains Of pure gold. Market
both medium and measure. In
what medium and measure is the
market value (of the question: to be
stated?
The world will never "dcmonetize
gold" as long as gold continues
to be, as it is, the one kind OF sub
stance always, everywhere (in the
civilized word) acceptable in exchange
FOR other things. If from some cause
or other, as. for example, discovery of
a way TO make it in virtually unlimited
quantities at very low cost in labor
and material, gold should lose this
universal acceptability the world would
very quickly demonetizc il and use
some other substance i'll its place. How
can any one tell what would be the
market value OF gold in such case?
This question is not susceptible Of
answer as it stands, any more than
would be the question, What, in your
opinion. would be the approximate
number of larks prccipitated an acre
if the sky should fall ~
(2) g. If the United States govern
ment were to build iireproof concrete
sectional warehouses at desirable
points. using therefor money received
from taxation. and should receive, grade
and store for stated periods Of time
say, one year, selected nccessaries Of
lite, receive a certificate or receipt for
same. and should enact a law that t. e
United States district treasury or the
cdcral Reserve Bank might issue 90
per cent of the market value OF these
commodities in money (such market
value being based on the average sell
ing price over period Of twenty five
years and so indorsed on the certifi-
cate), would this money, so issued be
sound money? If not sound money,
give your reason
l2) A.-This money would be "sourG'
only so long as it was in fact e.
changeable at par for gold. The chances
are that this would not long be the
case, for the volume issued. having no
necessary relation to the actual com
mercIal requirements for currency.
would presently become excessive and
result in driving out OF ejaculation
NE ultimate money. i. 9. gold When
CHS happened the remaining currency
would not in fact be exchangeable at
par for gold and it would cease to be
Sound money"
CD Would the money thus is
sued be as sound as a dollar secured
Oy. say. 80 cents worth OF gold and
the promise Of the government?
mean III the ultimate analysis and NOT
considering the gambling chance that
il is very unlikely that every one
"onld want their gold at once.
t5) Money is sound" oolv 50
long aS It is in fact exchangeable for
gold if desired Money. issued bv th.
government with 30 per cent cold
reserve held for its redemption. prob-
ablN would he sound provided that il
was not issued in excess Of commercial
requirements. 1t would proba 6iv he
more sound than the "monev" de
sc1i5cd in Question 2. It is CERTAIN
that this latter money" would NOT br
- sound as is our present currency
The soNndness Of our present cur
tency lies in tire fact that II il So
cured by ample gold reserves and tha+
tAe Federal Reserve system sunnlios
the means OF adapting CURRENCY
volume to commercial requirements.