Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-08-25

Washington, D. c.. Aug. 22.-The
proposal of a great gold loan to Eu-
rope-a al sum Of perhaps one or
two billion dollars to be divided
among the nations of Europe having
the most severely deprecated cur
rency-persistently refuses to be
shelved. In view of the fact that the
European allies already owe h Unit
ed States some ten billions of dollars,
Americans to the proposal is that If
is out of the question to throw good
money after bad. But still the plan
crops UP, fostered not only by dis
%tinguished Europeans, but by thought
full Americans.
The theory OF the plan lie this: Eu-
rope owes us ten billion dollars and
cannot pay because she has too little
capital with which to start her indus
tries; therefore II we lend her, say.
two billions more. she will be able
to start her industrial machinery,
make money and pay back not only
! the new two billion loan, but the ten
billions also.
The situation is likened to a man
who has a mechanical piano. 1t has
cost him a lot of money and he Is
anxious to hear a tune to get his
moneys worth. First, he must put
a. nickel in the slot before the thing
will function. .-.r
The reason it Is suggested that the
American loan be made in gold is
that gold is what Europe needs more
than anything else to form q stable
basis for her deprecated currency.
The reason that an American citizen
can take a piece of paper marked
one dollar to a store and get n dol
lars worth Of potatoes is that every
body knows there is n dollar in
gold somewhere in the treasury with
which to redeem that paper. The Eea-
son a German cannot take a paper
mark to his store and get the old pre-
wal marks worth Of potatoes for it is
that everybody knows the German
treasury hasn't gold enough to re-
deem more than a hundredth part of
the mark. Therefore the paper mark
becomes worth only what the gold
behind it is worth, or perhaps a trifle
more. II the gold behind American
money disappeared, American dollars
would ~depreciate just az marks have.
Indeed, during and for some time
American paper dollar that is worth
100 cents today was worth less than
so cents because there was only so
cents worth OF gold behind 1t.
We Have q Surplus Of Gold.
Now the United States has more
than enough gold to keep her paper
money up to par. Europe has not
nearly enough. Trade with Europe
is extremely difficult and precarious
because Of the fact that exchange is
changing almost from, hour to hour
and no n can be sure what the
money he will be paid in will! be
worth tomorrow. Americans want to
trade with Germany and other Eu-
ropean nations. Therefore, some
Americans believe that we should
lend our surplus gold abroad to stab
ilize foreign. ~currencies and start a
trade which would result in the coun-
tries on both sides Of the Atlantic
making more money and paying OF
debts. i
An interesting argument in favor
Of such loan il the warning which
has beon issued by competent econ
omistS against keeping all the gold in
America. Gold has been coming in
for years until we have more than
any other nation ever had In the his
tory Of the world. It still IL coming
in. Our hoard Ii rising and Europe's
dwindling. The warning IL this: Eu-
ropean countries, having sent all their
gold here might ray. Gold 10 an ar
tificial medium OF exchange having
value except BY common consent.
It has no value to US. We will not
deal IN It any longer and will not rec
oGnixe It ~ asthing Of value. We
can't eat It Or wear 1t for warmth
and this ID no time to talk about
The United states would find that
1t had given food, clothing. machin-