New-York tribune., 1922-02-26
~ ould Depreciate

(' A. Yes. 1t would be virtually i'm
possible, IN such case. for the Govern
ment to maintain a sufficient gold re-
serve against this "money" and il
would suffer depreciation in consc-
qucnce.
(sl Of England had government.
warehouses wherein were CERTAIN Sc
lected articles from her colonies. which
artlcles America buys and Will prob
ably a ways buy, and such articles arc
lnSpected by and guaranteed by the
tngNsh government which should is
sue special currency on this ware
house certificate at onc-half the mar
ket value Of the goods, would this
special currency facilitate the ey-
change OF commodities more than now
with present difference in money?
(S) A.-There is no reason to suppose
that it would do go. The English "cur
rency' so created would either be in
fact convertible into gold at par or it
would not. If it were, in fact, con
vertibc INTO gold it would enioy rate
Of exchange with the United States
anchored to gold point" which
would be stable ratc.s If it were no,
IN fact convertible into gold the rate
OF exchange would fuctuate as now.
Nothing could assure stability Of cx
change rates except actua! exchange
ability of currency with gold, on both
sides
l9) 9. Would not this special cur.
rency, issued in the manner stated bv
any stable government in which we
nave confidence, purchase more goods
IN the United States than their nor
maj currency based on a small quantity
o1 gold and credit?
(Q1 A-I'Na
lorelgn currency in the United States
depends upon the rate OF exchange be
tween the two countries and the pre-
ceedlng answer deals with that
tl0) Q.-Assuming that the Unitcc
States government still owned many
square miles Of territory which. il irri
gated. would be worth many times US
much money per acre than land sub
rect to the vicissitudes Of climate. and
should build a dam and reservoir for
power and irrigation. leaving the land
on rental and contracting out the
power and should issue currency to
build the dem and bitches and con
struct the Dower station, would this
currency be sound money? It is backed
by actual value which continues for
ever. oNld it not have value as
great a. the 100000, 900 Of first mort
gage bonds Of the Union Pacific Rail
road, the property Of which is far less
permanent bringing lower income,
leaving out Of consideration the danger
which all such projects contain of be
nc abused by legislative action in
times Of financial peril?
100 A.-The currency issued in this
way would be Sound money" lust so
long as the government stood ready to
redeem it in gold if required and no
longer. Value of ''propcrty" has in
such case nothing to do with the
"soundness' of currency
(l1) eff sou answer that it is not
sound money. is it by reason OF its
tack Of ready conveltibili1y like .he
currency issued for Goods in the ware
house, which may be sold al once
Why is the lack Of convertibilitv Sc
fious? Explain what bad effects would
occur III case OF q depression or panic.
when. say. 80 per cent OF our currency
was issued for one-Eal1' Of the value
OF necessarles Of life and 10 per cent
.ssaed on projects like this land and
lf1ganon operation, not separately.
but both back Of uniform curTenc,'
q one character snd made unchanpe
able b. amendment to the Constit,1tfon
by popular vote. so tina. this ratio a.
W per cent and 10 per cent could not
be changed? ''''
II A-The answer Immediately
preceding covers this question. Cur.
rency issued against either necessaries
OF life in storage or projects Of the
@lnd described is Sound money" only
so long as it is in fact convertible into
gold 1t is extremely unlikely that the the
goernment could maintain such con~
Iyertibility in the case of either Of
these kinds u
Il2) Q.-on the other hand, suppose
tne government operated the dam and
sold the land, charging rental for for
water, would this enhance the value Of
.he currency issued to put the scheme
IN operation? The currency would ne
y,e:deemed in this case rather ou;clIv
Would this make the currency mora
sound and desirable?
ll2) A.-Provided that the issnc ~
currency were only temporary, thot
Il was kept, while outstanding. n fact
convertible into gold, and that it was
cancelled when redeemed, Il would hs
sound money. But the effect 50 far ar as as
sae government We're concerned would