Every evening, Wilmington daily commercial., 1922-04-08

washington. April s.--Students OF
finance and economies
nre aware OF a now development In
connection with the deprecated cur
repcies OF Europe. These currcncics
baye constituted ono Of the most
yexcd problems brought on By the
war.
Tho need for greatly Increased gums
Of money, brought about by the war
eo-t was met by most OF the nations
by the issue Of paper currency with
out relation 10 gold reserve. In nor
NAL times tho paper currency OF
nation has definite goih reserve
generally about 40 per cent. inc
emergency Of war caused the sban~
donmsn, Of this reserve by all beiiig-
,r~nt nations excepting the Dnit@o
States because the national treasur-
10, Of these nations lacked adequate
gold % maintain the reserve ratio.
In the United States the Treasury
ana ths Federal Reserve Banks dis
couraged use Of gold and gold corfu
icstes for general circulation and
accumulated the greatest stock OF god
ever assembled IN the history OF the
world n was Withdrawn gradually
from circulation and piled up In tne
Treasury and tho vaults Of the Fed
erai Reserve Banks.
An inevitable result OF This policy
was that. during the war and follow
! ing the arrnistice. the European print
( ing presses, being definitely cut loose
/ from the retarding element OF a gold
reserve, kept On running at hieh
speed. turning out reams OF paper
money which went into circulation. II
! il a natural rule that the increase Of
the supply Of anything makes II cheap
or. This IL an true Of money as OK
coal or potatoes. The result was thai
this plentiful supply of paper mone3
made money cheap. In other WORDS
people who had consumab bic goods 4
sell would not exchange them for a
small a quantity Of the cheap none.
= as Of the old fashioned money. backe
, by gold. This meant that prices ross
The United States experienced infa
ton OF currency but Of milde
. character The gold standard was NJ
: abandoned here. Prices rose In tn
3 country one or two hundred per Ger
r In some cases, but In Europe. the
rose thousands Of per cent.
n Exchange Hurts Europe.
!, a further result was that Europea
= money being cheaper and more plent
:. full than American money, foreign Q,
J. change became unfavorabie to Europ
; That Is, European money would n
:, buy as much here as American mon
- would in Europe.
a There is a law Of economics, know
- as Gresham's Law, which lays do7
+ the rule that where two kinds
money are in circulation and one
r. much inferior in value to the 9TH
u. the more valuable type will reti
x People who have II, believing IL
n be of greater value and therefore me
IN worth keeping. will hoard It ava
Id This was done 70 n great extent
over Europe. Az the imitation pro
t. ressed, people who had gold piec
W or silver money or paper money
V. nations In better financial shope I'll
c. their own hid this wealth away a
II. used the more plentiful cheap par
currency.
re The extent 70 which European
fation has gone Is notorious. 7
he European news cables every day {
&, something Of the difficulties being
perienced al a result OF the infiati
w The Russian ruble and the Germ
,ir mark are favorite comic picture q
s. vaudeville theatre Jokes because Il
h have become so cheap. Il now co
IN more than 100000 rubles to buy
In, meal in Russia
IN, The German mark, which in norr
IN. times was worth. at what ls cal
ais the par of exchange. nearly a quar-
TO- in Americn money now is so che
c. ened that you can buy three marks
rst an American penny. The Austr
us crown has been as cheap as 1000
ar 81. A $40 bill OF American money
a Russia would exchange for eno'
1t rubles TO make what would have b
cal a Russian fortune before the war.
of Trade. especially interna tional tr;
Tor has become very difficult under th
by conditions. The problem OF restor
,ad these currencies TO something