Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-10
HEADS OF GREAT BANKS
DISCUSS '.PRICE FIXING"
Sterilization Is Important Topic at
Parleys of Leaders Being Held
in United States.

| tutions and not knowing precisely
| how far or how straight they can fly
or what the invincible forces of ma
| ture in wind and storm and fog may
| do TO them.
They, therefore. most humanity like
| to get together and exchange con
| fidenCes on their troubles and maps
| and charts and weather prospects
and new possible flights AS pilots.
$1,000, 100000 i'm Reserves.
| lens may be sufficiently illustrated by
just one startling fact. Foreign
central banks" now have in this
country more than one billion of dol
lars of assets held here as part of
their operating reserves" They can
change these assets into gold at their
pleasure. In principle they can take
this gold abroad if they care to do so.
/ 1t can be clearly seen that any such
, tendency on their part would necessi.
tate action toward establishments of
our internal gold and credit situations
by our own Federal Reserve Board.
But these matters of outward and
inward flows OF gold or of gold
assets and Of consequent internal re.
adjustments are of remote visible i'm
portance to the average man and
woman in comparison with the pos
sible control by central banks" Of
the general price level of the things
which the average man and woman
buy for their daily sustenance.
The price level of industrial COM
modities in this country since Janu.
airy of last year has had a distinctly
downward trend. Competition has
been intense. Prices have been de-
pressed. Profits have been contract
ed. Nature has been allowed by the
Federal Reserve Board to take its
course. But suppose that any fur.
Their downward movement might be
thought by the Federal Reserve
Board to be "unfortunate." Suppose
that central bank" sees prices 60
ing lower than it thinks they ought
to be. Can it-and should it-pro-
coed to try to stabilize" them
through its power over the money
rate" and the supply OF credit?
Two Schools of Thought.
On this point two great conflicting
schools of thought have appeared in
our Congress, in our Treasury De-
partment, in our Federal Reserve
Board and in the conversations in
which Sir Montague Norman and DR..
Rist and DR.. Schacht have been in
VOWED during their present visit to
this country.
One school is typified by Mr.. Ogden
Mills, Undersecretary of the Treasury,
who outrightly maintains that the
power to stabilize" prices through
control of credit does not-and should
not-exist.
The other school is typified by the
congressional supporters of the bill
which provides that "all of the pow.
ers of the Federal Reserve system
shall be used for promoting stability
in the price level"
Sir Montague Norman and DR.. Rist
and DR.. Schacht find that after the
Napoleonic Wars in Europe the price
level kept going downward for 80
years.
Should nature be allowed now to do
it again or should central banks"
with their new powers, proceed to
try to arrest and correct nature?
That is the fundamental vital prob.
lem which has been touched upon in
the exchange of ideas between our
American financial leaders and our
present powerful European financial
visitors. and it looks as If it might
develop into the basic economic issue
IN the next few years of American
politics