The Rock Island Argus and daily union., 1922-08-26

psopossl Of . great gold loan to
Eufope-a vast sum Of perhaps one
OF two billion dollars to be divided
among the nations Of Europe hav-
Ing tie most ssvsssly deprecated
curHsncy-DePsistsntly refuses to
be sheived. In ytsw Of the fact that
the European allies already owe
the United eeatss some ten billions
Of dollars, the natural early reac-
ton Of most Amesicaus to the pro-
possi ID that Il II out OF the Ques-
tion to thror good money after
bsd. But still the plan c.ops UP.
fostersd not only By distinguished
Europeans. but BY thoughtful
Americans.
The theory Of the plan is this:
Europe owes us ten billion dollars
and cannot pay because she has too
little capital with which to start
her Industries; 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 iikened to a man
who has q mechanical piano. 1t
has cost him Z lot OF money and
he is anxious to hear . tune to get
his moneys worth. First, he must
put . nickel in the slot before the
thing will function.
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 a
stable-hasis for her deprecated
currency. The reason that an
American citizen can take q piece
OF paper marked one dollar to .
store and get one dollars worth OF
potatoes is that everybody knows
there is one dollar in gold some
where in the treasury with which
to redeem that paper. The reason
a German cannot take a paper
mark to his store and get the old
pre-war marks worth Of potatoes
for it is that everybody knows the
German treasury hasn't gold
enough to redeem more than .
hundredth part of the mark. There
fore the paper mark becomes worth
only what the gold behind it is
worth. or perhaps q trifle more. II
the gold behind American money
disappeared, American dollars
would depreciate just as marks
have. Indeed, during and for some
time after the American Civil war
the same American paper dollar
that is worth 100 cents today was
worth less than 50 cents because
there was only so cents worth of
gold behind it.
We Have a 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 precar-
ious because of the fact that ex-
change is changing almost from
hour to hour and no one can be
sure what the money he will be
paid in. fill be worth tomorrow.
Americans want to trade with Ger
many and other European nations.
Therefore, some Americans believe
that We should lend our surplus
gold abroad to stabilize foreign
currencies and start trade which
would result in the countries on
both sides of the Atlantic making
more money and paying of debts.
An interesting argument in favor
of such q loan is the warning which
has been 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 history of the world. 1t still is
coming in. Our hoard is rising and
Europe's dwindling. The warning
is this: European countries, hav-
ing sent all their gold here might
say, "Goid is an artificial medium OF
exchange having no value except
by common consent. We have no
more gold and therefore 1t has no
value to US. We will not deal in it
any longer and will not recognize
1t as thing of value. We can't
eat it or wear 1t for warmth and
this Is no time to talk about adorn-
ment."
The United States would find
that it had given food, clothing. ma
chinery and other valuable COM
modities and received in return
what had become . very heavy, un-
wieldy and useless metal.
This seems an extreme state